Simon v. New Orleans, T. & M.R. Co.
| Decision Date | 28 April 1917 |
| Docket Number | 2973. |
| Citation | 242 F. 62 |
| Parties | SIMON v. NEW ORLEANS, T. & M.R. CO. et al. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Gustave Lemle, of New Orleans, La., and Walter L. Gold, of Milwaukee Wis., for appellant.
Morgan M. Mann and Carl A. De Gersdorff, both of New York City George Denegre, Victor Leovy, Henry H. Chaffe, Wm. C. Dufour and H. Generes Dufour, all of New Orleans, La., and Frank Andrews, of Houston, Tex., for appellees.
The following is the opinion of the District Court on opposition to sale, etc.:
On July 8, 1913, the New York Trust Company, as trustee under a mortgage securing an issue of bonds of the St. Louis & San Francisco Railroad Company, known as 'New Orleans, Texas & Mexico Division first mortgage, gold bonds,' of which $28,582,000 has been issued, filed its bill for the appointment of a receiver for the New Orleans, Texas & Mexico Railroad Company. A receiver was appointed and took over the operation of the property. Later, on July 31, 1914, a decree of foreclosure was entered. Owing to the extraordinary financial condition existing in the United States because of the European war, it was considered impracticable by all parties in interest then before the court, and by me, to order the sale of the road at that time. On September 17, 1915, the order of sale was entered, and the date of sale fixed for November 15, 1915. On October 29, 1915, Julius Simon, a resident of Milwaukee, Wis., and owner of 50 of the said bonds, of the par value of $1,000 each, asked leave to intervene to oppose the sale or to require the fixing of an upset price. On this petition an order to show cause issued and was heard on November 5, 1915, by me, and the relief prayed for was denied, but the petition was ordered filed and petitioner was allowed to intervene for the purpose of opposing the confirmation of the sale, if the price paid be considered inadequate, and his right to so do was reserved.
The New York Trust Company then filed a petition, suggesting error in allowing the filing of the petition of Julius Simon, and praying that the order be rescinded and set aside, and on this petition an order was entered on November 11, 1915, requiring Simon to show cause why his petition should not be disallowed and stricken from the files. It was also ordered, pending the determination of the rehearing, that the clerk be directed to refuse for filing any other paper presented by the petitioner. After the entering of the order of November 11th petitioner presented to the clerk what he termed an answer and cross-bill, setting up substantially the same issues as presented by his original pleadings, and asking, in addition to other relief, for the postponement of the sale and the fixing of an upset price, which had already been denied. On the day of sale Simon appeared through his attorney and protested, and his protest was disregarded, and the master proceeded with the sale, and adjudicated the property to Walter F. Taylor and Carl A. De Gersdorff for the price of $6,000,000, and received as a deposit a certified check for 3 per cent. of the bid.
The master reported the sale in due course, and his report was received on November 19, 1915. On November 27, 1915, the purchasers appeared through counsel and obtained an order for confirmation unless opposed in eight days. On December 7 1915, Simon appeared and filed his opposition to the confirmation of the sale, setting up substantially that the sale was really to a reorganization committee of the bondholders, attacking the fairness of the plan of reorganization, alleging the bidding was suppressed, because of an agreement between the reorganization committee and the reorganizers of the Frisco Railroad, whereby, in exchange for certain cash and securities, the reorganization committee agreed to forego any deficiency judgment against the railroad, and also setting up, as he had previously done, that the value of the property sold was upwards of $41,000,000, but without praying that the sale be set aside and the property readvertised, but praying that the sale be not confirmed, except upon condition that the reorganization committee be compelled to pay him par and accrued interest for his bonds. It...
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