In re Murel Holding Corporation, 314
| Decision Date | 11 March 1935 |
| Docket Number | 315.,No. 314,314 |
| Citation | 75 F.2d 941 |
| Parties | In re MUREL HOLDING CORPORATION. In re ABMAR HOLDING CORPORATION. METROPOLITAN LIFE INS. CO. et al. v. MUREL HOLDING CORPORATION et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Tanner, Sillcocks & Friend, of New York City (Henry Sillcocks, of New York City, of counsel), for appellant Metropolitan Life Ins. Co.
Leon Leighton, of New York City, pro se.
Goldberg & Levitt, of New York City (Harry Goldberg and Arthur Levitt, both of New York City, of counsel), for appellees.
Max E. Sanders, of New York City, for trustee.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
This appeal is from an order in bankruptcy denying a motion to vacate a stay of the prosecution of a suit in foreclosure in the state court; it arises upon the following facts: The Metropolitan Life Insurance Company held a mortgage upon an apartment house in the borough of Manhattan amounting to $400,500, owned as cotenants by the two corporations which are the petitioners herein. There was a second mortgage upon the same property, but for the purposes of this case it may be disregarded, for it was executed between the present co-owners and a company which holds all their stock. The mortgage being in default, the mortgagee filed a bill of foreclosure in the Supreme Court of New York on December 8th, 1934, and Leighton was appointed receiver of the rents. Immediately thereafter the owners filed petitions under section 77B of the Bankruptcy Act (11 USCA § 207), and procured an ex parte stay against the foreclosure. The mortgagee and the receiver moved to vacate this on December 19th, 1934, and the judge denied their motion on January 16th, 1935. They appeal from this order. When the bill was filed the defaults on the mortgage amounted to nearly $100,000; about $20,000 of taxes and assessments, $43,000 of interest and $36,000 of amortization payments. The properties were assessed at $540,000, and the rentals came to $3,600 a month. On December 26, 1934, the debtors filed with the court a "plan of reorganization" under subdivision (a) of section 77B, 11 USCA § 207 (a), by which the second mortgagee was to provide $11,000, to be used by the debtors to alter the "line C" apartments in the building; this advance to have priority over all liens but the arrears of taxes and such new taxes as fell due during the nine months that the alterations were in progress. The debtors estimated that during this period there would be a slight deficit in interest and taxes, but that thereafter the "line C" apartments would be much more readily leasable. The expected rentals should then come to $59,346 and the expenses would be only $20,400, leaving a yearly surplus of $38,946. Against this there would be taxes of $14,280 and interest of $22,027.50, leaving a surplus of $2638.50; enough to discharge existing arrears of taxes and leave about $3,000 at the end of ten years. In consideration of these expected benefits the mortgagee was to release the amortization payments ($9,000 per annum) and extend the due date; it was to receive its interest, 5½%, and all taxes were to be paid, both those in arrears and those to accrue. The mortgagee refused to consider this plan.
The argument and the briefs have taken a wide range, being for the most part directed to the powers of the court. We do not find it necessary to discuss the points raised, because it seems to us that though for argument we assume that the judge had power to grant the stay, there was not enough before him to justify one. The debtors' assumption is that under section 77B not only may a company effect a reorganization among its creditors, when two-thirds of each class consent,...
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