Meyer v. Dolan
| Decision Date | 11 December 1944 |
| Citation | 145 F.2d 880 |
| Parties | MEYER et al. v. DOLAN et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Mackenzie, Smith & Michell, of Syracuse, N. Y., for appellees T. Frank Dolan, Jr., and Laurence Sovik.
Martin & Langan, of Syracuse, N. Y., for appellants, Robert R. Meyer and Mokava Corporation.
Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
This is an appeal from an order of the District Court for the Northern District of New York made after hearings on a plan of reorganization proposed by the trustee of a debtor in proceedings under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., which have been pending in the above court for several years. Amendments were offered by the appellants in the interest of the debtor's stockholders and by the appellees, which were favorable to secured creditors. The court found that the debtor was insolvent, and the order from which the appeal was taken was to the effect that its common stockholders had no interest to be protected in the reorganization proceedings. No plan of reorganization has been approved, and this appeal is by the owners of a majority of the debtor's stock from the above finding and conclusion.
This is one of several plans for reorganization which have been proposed and which have failed of adoption for one reason or another and the present issue is a rather narrow one. Whether or not the debtor is insolvent and its common stock is, therefore, to be treated as worthless in proposing and considering a plan of reorganization depends, of course, upon whether the amount of its liabilities exceeds the fair market value of its assets. 11 U.S.C.A. § 1(19). That is a question of fact which the judge below decided adversely to the appellants, and the issue on this appeal is whether that finding was clearly erroneous. Unless it was, the order should be affirmed. Harris v. Mills Novelty Co., 10 Cir., 106 F.2d 976; Stewart v. Ganey, 5 Cir., 116 F. 2d 1010.
It is admitted by the appellants that the total liabilities of the debtor are to be considered as amounting to $1,111,208.20 and there is apparently no dispute about that. Its assets consisted of the land and buildings known as the Onondaga Hotel, made up of a main building and an annex situated on the northwest corner of South Warren and East Jefferson Streets in Syracuse, N. Y., and the furniture, fixtures, operating equipment and related personal property in the two buildings. The fair market value of those assets is much in dispute.
The evidence as to the fair market value of this property given by the witnesses for the appellees placed the worth of the real estate at not over $838,800 and that of the personal property at $197,487 which would be less than enough to show the solvency of the debtor. On the other hand the evidence produced by the appellants put the fair market value of the real estate at not less than $1,500,000 and of the personal property at not less than $514,216.19, which would show the debtor solvent by around $900,000. Such a variation in the evidence as to value is so marked both in terms of percentage and in terms of dollars that it is apparent that if the evidence on one side is believed to be fair and reasonable the testimony on the other must be put aside as unreliable.
That the trial judge, who was thoroughly acquainted with these proceedings through long association with them, gave little credence to the testimony of appellants' witnesses as to the fair market value of the real estate is made plain in the record, and, though it is here less clearly shown, about as much may be said as to their testimony concerning the value of the furnishings and...
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