112 F.2d 949 | 5th Cir. | 1940
Pursuant to a Plan of Adjustment of appellee city’s debts, the holders of 93% of the indebtedness, accepted and received refunding bonds, issued August 1, 1936. Appellants are the holders of 188 of these bonds. As such holders, appellants sued the appellees, City and Cook & Company, alleging that the City, in abandonment and violation of the terms of the January 1, 1936, contract,
The prayer was (a) for specific performance of the City’s agreement not to permit non-assenting creditors “to obtain any preference or priority over assenting creditors”, and (b) for an injunction preventing the City from carrying out the Cook contract, or in the alternative, (c) that the contract of January 1, 1936, be rescinded as to plaintiffs and that plaintiffs be restored to their position as holders of the original bonds.
Defendants answered, admitting that the facts weré substantially as they were alleged by plaintiffs, but they insisted that these facts failed to state a claim on which plaintiffs were entitled to any of the relief they sought. Appealing from a judgment on the pleadings, dismissing their' complaint, plaintiffs insist that the judgment was wrong and must be reversed. We do not think so.
Section 902 of the Bond Plan oil' which appellants place their reliance is not, as they claim, an agreement, that the City will not enter into a voluntary plan of adjustment with nonassenting creditors on better terms than those the assenters have accepted. It is an agreement that the-City will not voluntarily suffer, or permit its non-assenting creditors to obtain, a. preference or priority in payment over those assenting. By the section in ques-
But, if the meaning appellants claimed for it could be read into the section, this would not avail plaintiffs here, for the contract for the plan has been merged into and superseded by the refunding bonds which plaintiffs accepted in execution of the plan,
The case at bar is one at best for plaintiffs in which, after agreeing with some creditors that it would not deal on better terms with others, the debtor openly and without concealment, gives other creditors better terms.
Such a situation makes out merely a case of breach of contract and not one for rescission. Re, .Sturgcs, Fed. Cas. No. 13,565; Clarke v. White, supra, Argali v. Cook, 43 Conn. 160; (1) Black on Rescission, page 8.
Nothing in the bond plan required or looked to the assent of the holders of all the securities. On the contrary, Article 8 of the plan styled “conditions precedent to the obligation of the creditor to accept new bonds” conditions everything on the assent of creditors holding 60% of the bonds and it also provided that compliance with the conditions of this section might be waived by the holders of 60% of the debt to be extended. Thus showing plainly that while it was no doubt the hope, it was in no sense the condition of the plan that all bondholders should assent, but on the contrary, the only definite commitment of the plan as to the number to make it effective, was that 60% must agree to certain conditions and that 60% could waive those conditions.
If then, the invoked section is a promise that the city will not refund the bonds of non-assenters on better terms than those of assenters and if it persists with the issuance of and follows into the refunding bonds so that plaintiffs as assenters to the plan and acceptors of the bonds, may still sue upon it, they still make out no cause of action. For they neither make nor attempt to make any showing, that as holders of the refunding bonds they llave sustained or will sustain
The judgment was right. It is affirmed.
Affirmed.
Section 902; 11 U.S.C.A. § 403, sub. j. The City will not voluntarily suffer or permit a creditor who is not assenting creditor to obtain any preference to or priority over assenting creditors.
State, ox rel. Lawler v. City of West Palm Beach, 127) Fla. 623, 170 So. 697, 174 So. 737; State, ex rel. City and County Holding Company y. Board of Public Instruction, 120 Fla. 599, 163 So. 8; City of Winter Haven v. State, 114 Fla. 527, 151 So. 879.
lie City of West Palm Beach, 5 Cir., 96 F.2d 85; Folks v. Marion County, 121 Fla. 17, 163 So. 298, 316, 102 A.L.R 659, (4), Williston on Contracts, page 2604; Van Weel v. Winston, 115 U.S. 228, 6 S.Ct. 22, 29 L.Ed. 384; Clarke v. White, 12 Pet. 178, 9 L.Ed. 1046; Brown v. Farnhan, 55 Minn. 27, 56 N.W. 332; 15 C.J.S., Compositions with Creditors, page 685, § 11; Cf. City of Miami v. State, Fla., 190 So. 774.