148 F.2d 757 | 5th Cir. | 1945
Bids for all the race track assets of Hollywood Jockey Club, Inc., a bankrupt, were considered in open creditors’ meeting, adjourned over twice for further consideration, whereupon that of James Donn, as trustee for Gulfstream Park Racing Assn., Inc., was recommended by Gerstel, trustee in bankruptcy, for acceptance as against one made by T. E. Bragg, who is connected with another race track. The referee, making a careful statement of his reasons, directed the acceptance of the Donn bid. Bragg and several creditors brought the matter for review before the judge, offering to make certain proofs as to Donn’s connections with the Homings, whose connection with the bankrupt will later appear. The judge held the offered proof would make no difference, and confirmed the referee’s decision. Bragg and four creditors appeal. Of the four, one has dismissed his appeal. Another is a lien creditor whose lien is not affected by the sale, and who it is argued has no reason to appeal. The third creditor’s appeal was in the name of Dulaney Vernay Company by its attorney at law named in the allowed proof of claim. It appears, however, that before the judgment appealed from was rendered the claim had been sold and transferred to another, and shortly after the appeal was taken was sold to George M. Gillett who in this court, appearing by the same attorney, moves to be substituted as appellant. Appellees resist this motion, asserting the appeal to be void. They also say that Bragg, as an unsuccessful bidder, has no standing to appeal, citing Certified Associates v. Foundation Properties, Inc., 2 Cir., 75 F.2d 286.
Bragg’s bid was not made at an auction, or on terms fixed by the trustee or referee as those on which bids were to be received. The creditors’ meeting was called to con
As to the appeal of the secured creditor, for a like reason we make no formal ruling. Another creditor, Minton, seems to be uncriticised as an appellant, except that Bragg’s counsel represent him. As to the claim of Dulaney Vernay Company, title to which seems to have changed several times since it was allowed with a named attorney designated io represent it, and who is still representing it, we are of ■opinion that its purchasers might allow it and its attorney to stand unchanged in the record, so long as their assignor made no objection. Before non-negotiable debts became freely assignable it was the practice for the assignee to use the assignor’s name in court, and he was held to have a right to do so, on indemnifying the assign- or against costs. We do not think the appeal thus taken by an authorized attorney in the name of the original creditor was void. Gillett, the present owner, is properly to be substituted in the record as the true litigant on his motion, thereby assuming directly the costs to which he may become liable. We thus have an appeal with at least two proper appellants.
The bankrupt, Hollywood Jockey Club, Inc., was organized to go into the racing business in 1937. It leased for twenty years, renewable for another ten years, a tract of land for substantial annual rentals, agreeing to erect thereon by Jan. 1, 1939, a race track, and all appropriate buildings, which were to become at once the property of the lessors, free of all liens; lessee to pay taxes and not assign or sublet the premises nor use them otherwise than as a race track; if the lessee should become insolvent or be adjudicated a bankrupt lessor to have at his option the irrevocable right to cancel the lease, and receipt of rent from any receiver or trustee not to affect this right. The Jockey Club erected the race track buildings and equipment at a cost of about a million dollars, a large part of which was unpaid, it owing its contractor and the contractor owing materialmen and subcontractors and architects, who filed liens against the property for more than $400,000. After a few days’ operation on Feb. 11, 1939, the Jockey Club filed a petition under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., for composition of its debts. No plan was adopted, and the trustees appointed undertook to operate the race track. Their operation was unsuccessful, resulting in a large deficit. On Oct. 19, 1942, the Jockey Club was adjudicated a bankrupt and appellee Gerstel made trustee. The assets included no cash, $10,000 worth of vehicles and paraphernalia, and the lease. The claims filed were $861,537 unsecured, $566,695 secured by liens, and $16,147 having priority.
The contractor who built the race track was a corporation operated by one J. C. Horning. Many of the subcontractors and materialmen required the personal guarantee of Horning and his mother, Mrs. Marie Horning, persons of wealth. Though not original stockholders of the Jockey Club nor interested in the real estate at the time of its lease, the Hornings became interested in the enterprise and bought up a majority of the capital stock, and Mrs. Horning in 1938 purchased the tille to the land subject to the lease, thus becoming the landlord. At the time of the bankruptcy adjudication the Hornings, by taking up the debts they had guaranteed and by purchasing others, owned nearly three-fourths of the indebtedness. On Feb. 4, 1943, Mrs. Horning filed a petition to require the trustee to surrender possession of the leased premises on the ground that he had not within sixty days from the adjudication elected to assume the lease, according to the Bankruptcy Act, 11 U.S.C. A. § 110, sub. b. The trustee by answer as
It was objected that there had been no appraisal of the property to be sold under 11 U.S.C.A. § 110, sub. f. The words “It shall not be sold otherwise than subject to the approval of the court for less than 75 per cent of its appraised value” is a restriction on the power of the trustee, not of the court. The court unquestionably ought generally to appoint appraisers as the section requires before a sale of the estate, but this is for the information of the court, the creditors and bidders, where it can be of help. It is not a condition precedent to a sale. Here the personal property was slight, and its value cuts no figure. Appraisers might have valued the race track as a whole, but they could not well value a lease of it whose existence was clouded and whose value depended on legal questions more than anything else. The question before the referee a.nd judge was not one of ordinary values, but of law and practical business judgment. Discretion was not abused in proceeding without a formal and useless appraisal.
It was also objected that the law questions about the lease ought to have been decided by litigation of the pending petitions. There was risk, as well as expense and delay in so doing. Donn’s bid was limited in time. If it expired, Mrs. Horning might successfully declare the lease forfeited by bankruptcy, as she was threatening to do. The estate would then lose everything but the slight amount of personal property. The overruling of this objection was within the discretion of the court.
Judgment affirmed.