Old Colony Bondholders v. New York, NH & HR Co.

Decision Date23 June 1947
Docket NumberDocket No. 20048.,89,No. 200,200
Citation161 F.2d 413
CourtU.S. Court of Appeals — Second Circuit



Ely, Bradford, Thompson & Brown, Joseph B. Ely, and Richard Ely, all of Boston, Mass. (Seibert & Riggs, of New York City, of counsel), for appellant Protective Committee for Bonds of Old Colony Railroad Company.

Robert H. Davison, of Boston, Mass. (Haussermann, Davison & Shattuck, of Boston, Mass., of counsel), for appellant Webster & Atlas National Bank of Boston, Trustee.

Damon E. Hall and Rutherford E. Smith, both of Boston, Mass. (Hurlburt, Jones, Hall & Bickford, of Boston, Mass., of counsel), for appellant Mutual Savings Bank Group Committee for Boston Terminal Co. Bonds.

Henry W. Anderson and Lewis F. Powell, Jr., both of Richmond, Va., and Curtiss K. Thompson, of New Haven, Conn. (Hunton, Williams, Anderson, Gay & Moore, of Richmond, Va., and Parmelee & Thompson and Thompson, Weir & MacDonald, all of New Haven, Conn., of counsel), for appellant Institutional Group for Boston Terminal Bonds.

Clarence A. Barnes, Atty. Gen., and George P. Drury, Asst. Atty. Gen., both of Boston, Mass., for appellant Commonwealth of Massachusetts.

Oliver & Donnally, of New York City (Fred N. Oliver and Willard P. Scott, both of New York City, of counsel), for appellee Mutual Sav. Bank Group.

Ropes, Gray, Best, Coolidge & Rugg, of Boston, Mass. (Charles A. Coolidge, of Boston, Mass., of counsel), for appellee Old Colony R. Co. Plan Committee.

Stewart & Shearer, of New York City (William A. W. Stewart and McCready Sykes, both of New York City, of counsel), for appellee United States Trust Co. of New York, Trustee of Harlem River & Port Chester Mortgage.

Root, Clark, Buckner & Ballantine, of New York City (William P. Palmer and Philip E. Gregg, both of New York City, of counsel), for appellee Bank of New York, Trustee under New England R. Co. Mortgage.

Wm. Meade Fletcher, Jr., of Washington, D. C., for appellee Reconstruction Finance Corporation.

Davis, Polk, Wardwell, Sunderland & Kiendl, of New York City (Edwin S. S. Sunderland, Judson C. McLester, Jr., James L. Homire and William D. Tucker, Jr., all of New York City, of counsel), for appellee Insurance Group.

Choate, Hall & Stewart, of Boston, Mass. (John L. Hall, James Garfield, and Charles H. Stockton, all of Boston, Mass., of counsel), for appellee New York, N. H. & H. R. Co., debtor.

White & Case, of New York City (Fitzhugh McGrew and Jesse E. Waid, both of New York City, of counsel), for appellee Bankers Trust Co., Trustee First and Refunding Mortgage.

Davies, Auerbach, Cornell & Hardy, of New York City (H. C. McCollom, of New York City, of counsel), for appellee Irving Trust Co., Trustee 6% Collateral Trust Indenture.

Beers & Beers, of New Haven, Conn. (Edmund Ruffin Beckwith, of New York City, of counsel), for appellee Protective Committee for Holders of Boston and New York Air Line First Mortgage 4% Bonds.

Before L. HAND, SWAN, and FRANK, Circuit Judges.

Writ of Certiorari Denied June 23, 1947. See 67 S.Ct. 1754.

SWAN, Circuit Judge.

On March 6, 1944, the district court approved a plan of reorganization for the New York, New Haven & Hartford Railroad Company, principal debtor, as certified in the Fifth Supplemental Report and Order of the Interstate Commerce Commission. One feature of the plan was the acquisition by the reorganized New Haven of the assets of Old Colony Railroad Company, a secondary debtor.1 The order of approval was brought up to this court by numerous appellants, including the Protective Committee for Bonds of Old Colony. Upon the Committee's appeal the district court's order was reversed "so that the Commission may make its own independent findings of value and of price." In re New York, New Haven & Hartford R. Co., 2 Cir., 147 F.2d 40, 50. Thereafter, on February 13, 1945, the district court referred the plan back to the Commission, but only for limited purposes. The terms of the order of reference are set out in In re New York, New Haven & Hartford R. Co., 2 Cir., 150 F.2d 169, where this court upheld the order against the charge that it did not conform to our mandate. After the plan was referred back to the Commission the Protective Committee for Bonds of Old Colony requested the Commission to hold further hearings and to reconsider its findings with respect to the price to be paid for the Old Colony properties in the light of material changes in conditions that have occurred since the close of the hearings before the Commission in 1942. The Commission, however, denied the request and without further hearings made, on May 14, 1945, its Sixth Supplemental Report and Order, reported in 261 I. C. C. 195. This effected no change whatever in the plan reported in its Fifth Supplemental Report and Order, but it discussed in detail the evidence presented on previous hearings relating to the elements of value comprising the Old Colony properties and it stated the reasons which led the Commission to adhere to the same purchase price as it had formerly approved. When the Sixth Supplemental Report and Order came on for hearing before the district court, the present appellants again filed objections to the plan and offered evidence in support thereof, but the district court determined that the evidence did not require a return of the proceedings to the Commission and, on September 6, 1945, made the two orders which the present appeals bring up for review. The first (No. 821)2 is in effect an order approving the plan; the second (No. 822) confirms the plan.3

I. Appeal of Protective Committee for Bonds of Old Colony.

1. The appellant contends that certification by the Commission of its Sixth Supplemental Report and Order without the granting of a hearing after the plan was referred back to it was a procedure inconsistent with the opinions and mandate of this court and contrary to the requirements of Section 77, Bankr.Act, 11 U.S.C.A. § 205; consequently the Commission's Report and Order were invalid and the district court's orders based thereon are erroneous. In its former opinions this court did not determine whether the Commission was required to hold a hearing after the Old Colony features of the plan of reorganization were referred back. We held that the Commission's prior Reports and Orders were defective in that the price proposed for Old Colony properties appeared to be a figure arrived at by compromise and not by an independent exercise of judgment by the Commission, and we reversed the court's order of approval "so that the Commission may make its own independent findings of value and of price." We recognized that the Commission might "wish to take additional evidence and to modify the plan in the light of new facts," 147 F.2d 40, 54; but there is nothing in our opinions which required the taking of evidence. So far as the appellant's argument rests on supposed inconsistency between the procedure adopted by the Commission and the procedure directed by our opinion, it is based on a faulty premise.

There is more substance to the statutory argument, but we are not convinced by it. Subsection e of section 77, 11 U.S.C.A. § 205, sub. e, provides that if, upon disapproval of the plan, the proceedings are referred back to the Commission, "it shall proceed to a reconsideration of the proceedings under the provisions of subsection (d) of this section." Subsection d provides

"After the filing of such a plan, the Commission * * * shall, after due notice to all stockholders and creditors given in such manner as it shall determine, hold public hearings, at which opportunity shall be given to any interested party to be heard, and following which the Commission shall render a report and order in which it shall approve a plan * * *"

The appellant argues that our reversal of the district court's order of approval based on the Fifth Supplemental Report and Order was a judicial disapproval of the plan and rendered mandatorily applicable the above quoted statutory provisions. But the Commission rejected this argument and we agree with its rejection. The provisions relating to Old Colony constituted but one portion, although an important one, of a comprehensive plan for both the principal debtor and the several subsidiary debtors. Our disapproval of the Old Colony provisions was upon a very narrow ground, namely, that the Commission's Report did not show that the proposed price was arrived at in the exercise of its independent judgment as to the value of Old Colony properties. The Old Colony provisions were referred back in order that it might exercise its independent judgment upon the record already made before it and such additional evidence, if any, as in its discretion it might wish to receive. Having declined to receive new evidence, we think the Commission was authorized to make findings as to value and price based on the old record without holding public hearings. As the court stated in Ford Motor Co. v. National Labor Relations Board, 305 U.S. 364, 373, 59 S.Ct. 301, 306, 83 L.Ed. 221:

"It is familiar appellate practice to remand causes for further proceedings without deciding the merits, where justice demands that course in order that some defect in the record may be supplied. * * * If findings are lacking which may properly be made upon the evidence already received, the court does not require the evidence to be reheard."

To such a situation the above-quoted provisions of subsections e and d do not, in our opinion, apply. In other words the remand of a part of a plan does not require the Commission to reopen the record as to the entire plan nor to take additional evidence if in the Commission's opinion the evidence already in the record is adequate for the correction of its error. See Interstate Commerce Commission v. Jersey City, 322 U.S. 503, 514-516, 64 S.Ct....

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