*1 OLD COLONY damages exactly the demand for same BONDHOLDERS et al. YORK, NEW H. grounds. H. & CO. Thus raised N. the issues R. pleadings precisely each case were Nos. Docket 20048. No. cotfrt, well same. Appeals, Circuit Second Circuit Court of discretion, might per- exercise have Jan. complaint to plaintiff’s mitted stand as a Writ of Certiorari Denied June cross-claim the Administrator’s suit. But See 67 S.Ct. 1754.

just prejudiced certainly the taken as action no think situation no one. We reflects

justification for a declaration discretion, plaintiff pre-

abused its every right

served for determination

sought protect in its suit. particularly ap-

The court’s action seems

propriate because in- circumstances Price control services

volved here. terminated; plaintiff’s has for dam- suits

ages, instituted, than the already other one

are barred the statute of limitations. power

The Administrator to in- without Except any

stitute such suits the future. pending suit, questions all as to

plaintiff’s exemption and claimed as to prices ceiling whether it violated are end, entirely

at an Those are moot. issues and,

existent suit pending toas present

them, plaintiff liberty is at all

legitimate including all defenses those re- declaratory

lied on in its claim for relief.

Consequently, do inasmuch courts questions,

concern abstract themselves with recognized legal purpose could have been suit, plaintiff’s the retention

served all moot, except issues in which are

apply as defenses Adminis- suit

trator.

Plaintiff in other insists that cases juris

where the court has declined take declaratory

diction of claims for be relief pending in which cause case the same had,

relief could be had been filed the latter declaratory judgment

before the action. respective filing

We dates think do necessarily test. The ques furnish the is, rather, whether the circumstances

the time of the determination such as prosecution

make further the suit

declaratory relief useless. questions pro-

Other venue and as to plaintiff’s

priety action under circum- argued, but, been view

stances conclusions, necessary our it is not that we

discuss them. judgment is affirmed.

áU *3 Smith,

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

Henry Anderson F. W. and Lewis Powell, Jr., Richmond, Va., both of *4 Haven, Thompson, Curtiss K. of New Anderson, (Hunton, Williams, Gay Conn. Moore, Richmond, Va., & Parmelee of and Thompson & Thompson, & Mac- Weir Donald, Conn., Haven, coun- all of New of sel), appellant Group for Institutional for Boston Terminal Bonds. Gen., Barnes, Atty. Clarence A. Judge, dissenting FRANK, Circuit Gen., George Drury, of Atty. Asst. P. both

part. Boston, Mass., appellant for Commonwealth of Massachusetts. City Donnally, & York

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

Ropes, Gray, Coolidge Rugg, of & Boston, (Charles Coolidge, of Mass. A. Boston, Mass., counsel), appellee of for R. Co. Plan Committee. Shearer, City & York Stewart of New (William McCready A. W. Stewart and Sykes, counsel), City, New both of York of appellee for United Trust Co. of States York, New Harlem & Trustee of River Mortgage. Port Chester Root, Clark, Ballantine, Buckner & of City (William New York Palmer and P. Gregg, City, Philip both of York E. New appellee NewYork, counsel), of for Bank of England under New Mort- Trustee Co. R. gage. Fletcher, Jr., Washing- Wm. Meade of ton, C., appellee D. Fi- for Reconstruction F.Supp. See also Corporation. nance Brown, Bradford, Thompson & Ely, Davis, Polk, Wardwell, & Sunderland Ely, Bos- Ely,

Joseph B. Richard of all Kiendl, New City (Edwin of York S. S. Riggs, York ton, & (Seibert of New Mass. Sunderland, McLester, Jr., C. Judson James appellant counsel), Protective City, for of Tucker, William Jr., L. Homire and D. all Rail- of Old Committee for Bonds City, counsel), appellee of York New of for Company. road Group. Insurance Boston, Choate, Stewart, Davison, Boston, & Mass. Hall Mass. Robert H. Shattuck, (John Hall, Garfield, Davison & L. Charles (Haussermann, James Stockton, Mass., Boston, Mass., counsel), appellant Boston, for all H. of coun- Boston, sel), York, appellee & National Bank New & R. Atlas for H. Webster N. H. Co., Trustee. debtor. City (Fitz- York Case, findings price.” White & of New and of re value In Waid, York, both of Co., New hugh E. New & R. McGrew Hartford Jesse appellee Cir., City, counsel), Thereafter, for 147 F.2d York on Feb New Co., ruary First Trust Trustee Bankers district referred Mortgage. the plan Commission, Refunding back to the purposes. limited terms the or Auerbach, Hardy, & Davies, Cornell der of reference are New out in set re McCollom, (H. City York C. York, Co., New Haven & Hartford R. counsel), appellee Irving City, York 150 F.2d upheld where this court Co., Trust Trustee Collateral Trust In- 6% charge order that it did denture. conform to our mandate. the plan After Haven, Beers, & Conn. of New Beers was referred back to the Commission the Beckwith, (Edmund Ruffin New York Protective Committee for Bonds City, counsel), appellee Protective *5 requested the Commission hold Holders of Boston and New Committee for hearings further and to reconsider find its Mortgage York First Air Bonds. Line 4% ings respect price paid to be the HAND, SWAN, FRANK, and Before L. the Colony properties light Old in the Judges. Circuit changes material in that have conditions hearings occurred the since close the SWAN, Judge. Circuit before the Commission in 1942. Com 6, 1944, ap mission, however, On March the district court request the and denied reorganization plan proved hearings made, for the without May further on York, 14, 1945, Rail New New Haven & Report Hartford its Supplemental Sixth debtor, Company, principal Order, reported road certi and in 261 195. I. C. C. Supplemental Report in change fied Fifth and This the effected no whatever the in plan reported Order of the Interstate Com Supplemental Commerce in its Fifth plan Report Order, feature the was the mission. One and but it de discussed acquisition reorganized by the tail evidence presented previous on hearings relating of the Old Railroad Com assets of to the elements of value pany, secondary The order debtor.1 of comprising properties Old and approval brought up was this court it stated reasons which Commis led appellants, including the Pro numerous sion purchase same adhere to tíre for Bonds of approved. tective Committee Old Col formerly When ony. appeal Upon Supplemental Report Committee’s dis Sixth and Order came court, was “so that hearing trict court’s order reversed the on for before the district independent present appellants Commission make again objections its own filed petition receipt Report” 1 for re New Havenfiled its of the “Joint organization 23, Compromise on 6, October 1935. On On Committee. October 3, 1936, peti Sup June 1942 filed the Commission Third filed its proceeding. plemental Report, incorporating same Inter in the reorganization plan Commission, provisions state Commerce after hear ings, reported plan Report, Joint parties 254 63. I.C.C. Certain plan rehearing 239 I.C.C. This did moved for 337. which was Colony. rehearing plan again include Old and the denied On submitted Supplemen before the full Commission a modified Commission’s Fourth plan proposed Report Order, which tal and did include I.C.C. 405. Colony, judge disapproved plan 244 I.C.C. 239. On The district March respects plan pro modifications of some were and invited the Com posed by Supplemental report. file a Second Re mission to further In re port Order, York, D.C., Co., N. In H. & H. I.C.C. 521. De R. Judge disap F.Supp. Supplemental cember 1941 the 595. Its District Fifth Re proved port February Order recommended to was filed on report Compro plan pro the Commission a 257 I.C.C. 9. The posed approved by mise Committee. See I.C.C. therein was the Dis February Judge hearings trict Supp. on further were March 54 F. Commission; had before the the hear ings kept open April 4, were until opinions re- support is nothing evidence in there plan and our offered quired .thereof,- taking evidence. So far as court determined but the district require argument supposed appellant’s return the rests on the evidence did adopt- and, inconsistency procedure proceedings between procedure by the di- September made the two orders ed on a appeals bring up opinion, rected based present for re our 821)2 faulty premise. (No. effect view. first plan; (No. second approving order statutory There is more substance plan.3 822) confirms argument, it. arewe convinced e of Subsection section U.S.C.A. § Appeal of Protective Committee I. e, disap- provides if, upon Colony. Bonds proval plan, re- proceedings áre appellant 1. The contends Commission, back to the “it shall ferred Sixth certification the Commission of proceed- proceed to a reconsideration of without Supplemental Order ings provisions of subsection under after granting hearing (d) provides section.” d Subsection procedure back to was was referred filing plan, “After the such a the Com- opinions man- inconsistent with * * * shall, after due notice mission contrary re- date of this *6 given in and to all stockholders creditors Bankr.Act, 77, quirements Section of determine, such it shall manner as hold 205; the Commis- consequently U.S.C.A. § hearings, opportunity public which shall Order were and Report invalid and sion’s heard, given be be party to interested to are based the court’s orders thereon district following the shall and which Commission opinions this erroneous. its former report shall a in which it render and order determine the Com- did whether court ” * * * approve plan a hearing required to hold a was mission of plan appellant argues that reversal the The our after Old features of the approval reorganization were back. the court’s order of based district of referred Report Supplemental Re- and Or- prior the Commission’s on the Fifth We held disapproval plan judicial the in that of and Orders were defective der was a ports applicable proper- mandatorily the rendered price and proposed Old the statutory figure quoted provisions. But arrived at above appeared ties rejected argument this and compromise independent the Commission and Commission, rejection. provisions agree The judgment by the we exercise of but ap- relating constituted one order to Old we reversed court’s of and the important one, may although portion, make proval "so that the Commission principal the findings comprehensive plan for both independent value and its own subsidiary several debtors. recognized the and the Com- price.” We debtor Colony pro- disapproval might Our of the Old “wish mission to take additional ground, plan upon very the narrow modify the visions was evidence Report facts,” namely, the Commission’s did 147 F.2d but light newof enlarged, all this re- the record as thus It orders “That record spects upon plan proceedings bo be reinstated as an order this Court Supple enlarged in full force effect.” Court to include said Sixth During appeals pendency Report Inter and Order of mental approv- together order of March from the Commission state Commerce hearing ing plan, submitted Commission evidence received at with all plan upon and, De- Court be voted on the order herein and ap (Order 734) to the district No. cember certified March plan accepted proving been in the as contained Supplemental all classes creditors entitled Order of the Com Eifth except thereon, mission, being holders of Housa- the re vote consistent with opinions appellate quirements bonds and bonds. The tonic of 1945, January 2, January 23, of Housatonic filed ob- bonds holders jections appellate to the order confirmation and with the man appeal January light 30, 1945, therefrom. taken no date ar- February hearings, was con- price but proposed it that the not show independent price paid for nothing of its tained at in exercise as to to be rived price Colony properties. purchase The of Old judgment the value Report proposed in Colony provisions was first properties. Joint April 4, might February hear- dated order that it referred back were reception ings except had been upon closed independent judgment exercise its Report made provision was and such already made before it record Joint filing dis- of briefs after that any, evidence, as in its additional d, Having per- received. Section might to receive. cretion wish “before, plans mits to be filed evidence, think new we declined to receive during, consent make authorized Commission was hearings” says that after filing findings as value based shall, due after hearings. holding public without old record notice, public hearings. appel- hold in Ford Co. v. court stated Motor As the argues Report plan lant Board, 305 U.S. Relations National Labor Joint February filed after close of the 301, 306, 221: S.Ct. hearing. premise With this cannot appellate practice “It to re- is familiar agree. hearing dming was filed proceedings with- mand causes for further open which remained receive merits, justice deciding where out op- allowed briefs be filed thereafter de- in order that some demands course position during it. Since was filed supplied. fect in the record hearing, public notice under findings lacking If may properly February hearing should suf- held re- already be made the evidence fice; we do not construe d to subsection ceived, require the evi- court does require new every notice time modifica- *7 to be dence reheard.” plan proposed during the of is the above-quoted pro- the To such a situation progress hearing Appar- of a thereon. not, in and of subsections e d visions do request ently appel- no was made the opinion, apply. our In other words the Report lant after was filed on Joint part plan of a does not re- remand of April 1942 take to have Commission - reopen quire record the Commission to additional evidence relative and to value plan as to entire nor additional take price Colony Only of assets. Old after the opinion evidence if in the Commission’s Supplemental Report Commission’s Third in ade- already the evidence the record is adopted price proposed and in Order quate for the See correction its error. present appellant did Joint Interstate Commerce Commission v. aggrieved. feel The contention Jer- that City, 503, 514-516, sey U.S. 64 S.Ct. public hearing such requires as statute 1420; In Chicago, M., re respect had was ever pro- to plan Co., Cir., & P. St. P. R. visions as to Old sus- cannot be Group certiorari denied Park v. Institu- tained. Investors, tional principal objection 3. The 860, 89 L.Ed. 1415. appellant purchase is price to be appellant The further con paid for the pro assets of Colony as Old public there never tends that plan been vided certified the Commis provisions on the sion, to Old hearing approved as and Judge, is District point argued Colony. was This on the for inequitable and unfair. assets consist passed appeal mer but was not upon is properties and both of railroad “non-oper and report Compromise open.4 still properties, ating” the latter comprising before Committee Commission at four Union items: Stock of Freight Rail- we said in 150 F.2d As of value and and re- statute Colony appeal, quired Old “decided it should. Hence the Com- nothing respecting provisions report subject affect- new will mission’s to Colony except ing any legal ground Old the Commis- attack when it independent findings sion made before the district comes court.” securi- $3,- equivalent appraisals more than $235,000; value road a book having re- And reorganized debtor. ties 600,000 first New (face) of in- appraised although is the assets against Bankers true bonds; a claim funding “non-operating” property well clude covenants breach of Company Trust The func- property.5 railroad “operating” trus- assigned to it Colony lease Old whether is the court to see refunding tion of first and Haven’s under New tee improper applied “the Commission had against Ha- a claim mortgage; and 6 Hence, ap- statutory standards.” liquidated by dis- ven, been which had has conducted parent $47,186,963, aris- sum trict court given to hearings, has consideration fair by the repudiation of the lease ing out its value concerned in element of each exchange trustees. principal debtor’s wrongly de- appraisal, has not over-all re- Colony assets New Haven to for Old prob- legal questions involved cided Col- prior claim Old lien lease of valuation and allotment lems December ony amounting . on securities, equivalent we believe interest Terminal bond $6,081,048, pay requirements of statute are satisfied. expenses of. $4,413,796,and deliver estimated at assumption Even First $4,398,305(face) new appellant it, the the law is as we have stated $3,298,728 Bonds Refunding objections raises a number the Com The Com- (face) new Income Bonds. appraisal. is that the first mission’s assets each mission considered appraisal by the Commis finality of an bearing upon of record evidence reorganization, a true limited sion definite and, determining without value is, property for one where the or an valuation value for over-all each belongs securities are to issued new dollars, equivalence be- in value found bar case debtor. Since in the was to transfer what tween contemplates as sale of Old reorganized what it New Haven and Haven, reorganized sets exchange. Judge Hincks to receive could argues appellant determining equivalence by affirmed this proceed did, lawfully as it “permissible what valuation” calls Nat. applied doctrine First follow the involved; although each the items Flershem, S. *8 Bank v. U.S. “permissive his valuation” corre- does not 391, 307, 465, 298, 78 90 L.Ed. A.L.R. Ct. spond any finding with in the Commission’s appraisal must which “A under * * * detailed Report, any- neither does it with corporation’s conflict be made of short, thing Report. cannot sale, we up of the based as of the date assets appraise say possibility that of not dis did on values and the then properties parcels, in the same manner did well as an en posing of them in “ * * * Judge; indeed, anything say Again, cannot val tirety.” detailed * * * n about appraise them, many how it did for the items was of the uation intelligent prop does disclose its How- bidding not method. for the essential ever, scrap.” it is established Pacif- parcels Western is erty in or as It true case, Corp., Ecker ic v. Western Pac. R. 318 is the transfer of assets that if 692, 448, 892, the sale or execu judicial S.Ct. L.Ed. on foreclosure like a case, Group appraisal of not tion, Milwaukee Institutional In- the Commission’s M., Co., Chicago, pur vestors P. & But we think it is not. The St. valid. P. R. 959, 727, 523, required appraisal in pose 318 U.S. L.Ed. kind S.Ct. of the protect & Rio case those Denver Grande case Recon- is to cred the Flershem in; Corp. Finance not struction v. Denver & G. do to come is itors who choose it R. Co., 1282, “upset price.” R. The provide an honest W. S.Ct. June required valuations L.Ed. the Commis- is not under procedure sec same expressed minority the reason nor sion need not dollars in items; plan, not with into content broken be no down need creditors page 473, page at 63 S.Ct. at 318 U.S. S.Ct 318 U.S. See page 87 L.Ed. 892. upset price,” urged is provi not than a fair less down” court, under the “cram force that the Commission was bound to set can added in 49 Stat. sions opinion upset price not, reject in But our dollars. in in; must and if it does them optional, provision man- upon quoted turn is plan. nothing should Hence passes property conveyance datory, as to must the fact that deeds reorganized or com- securi the debtor to the new exchanged for new executed and sup- indeed, ties, pany; are described there is some reason transactions these pose interpolated pro- in “trans that was 1935 to appropriate sale. to a terms against possibility reorganiza the “cram- part vide fer” as much a true introduced, provision, in down” also then had been the assets tion as if the title to might prove treats itself unconstitutional. New Haven. statute a, transaction, for section such a said, As we have over- the Commission’s corporation, subsidiary railroad allows a expressed valuation all was not terms stating Colony, petition such as Old to file However, analyzing dollars. the record reorganization effect a that “it desires to as to tentatively assigned values cash with, part or as a connection make values certain assets order to principal debtor. of” the sure prior that New Haven’s lien claims adopted now under consideration could be satisfied. then considered Old because the Commis the second alternative Colony’s properties railroad deter- integration sion of the two determined capitalization mined what might their on required railroads interests hypotheses. various By aggregating public. un In such a situation we cannot assigned values so appellant attempts slightest dif derstand how it make the can prove that the total value assets ference, appraisal so far concerns “price” greater $2,700,000 some than effect property, there be deeds to to be received for them. Such method subsidiary’s the transfer assets justified, attack for the values “as- securities, the new the release signed” by the Commission were but “ten- principal prior debtor’s lien claim As the tative.” Commission stated con- subsidiary payment and the discussion: cluding its principal subsidiary’s debtor reor “The Colony properties value of Old ganization expenses are treated as consti solely by assets be determined tuting “price.” appel agree We mathematical calculations since it is essen- argument properties lees’ tially a matter judgment based Colony are, purposes plan, intangible consideration of as well as tan- same footing respect general gible elements knowledge *9 system whole as are lines a securing divi system requirements.” mortgage sional of New Haven. In St. equivalence The finding Commission’s of case, Paul 318 U.S. L. in value between the assets to trans- it Ed. was held that bondholders price paid up- ferred and the to be can be whose upon claims were secured part of a set the court if the Commission single railroad —a division —were not en “applied improper legal standards.” separate titled appraisal. to a Yet wiped which their transaction lien was appellant The urges it that did they given out and were new securities improper apply legal an with re- standard as much a “transfer” “price” a $3,600,000 spect to the of New Haven first therefore a proposed “sale” as is the extin refunding that bonds in Old was guishment of the lien of Old bond $928,000 paid credited interest of exchange holders for new securities. special bank these bonds into a account subject Because section further (5), b and held orders of sub. Report (5), expressly The men- U.S.C.A. b declares a court. does that provide adequate “shall Colony’s right tion this item interest. means plan, adjudicated execution of the which never been Dis- in it has * * * Court, clude any part purpose testing the sale of all or but for trict of the property of debtor as- Commission’s valuation pro- Haven, against strenuously asset be an Judge sets assumed it Hincks damnum against setting the full ad construed tests off Colony and belonging to Old Compa- “as against the suit Bankers Trust treated Commission’s ny. compromise value determining value proper claim tlie unliquidated du- a claim, was independent judgment of a deals Commission which its province valuation comprehensive matter which ly in its is also within reflected presents an asset validity assets and as the court. The claim all Old upon pass necessarily New Haven legal question would must which pro- purchase payment of com- determining taken into account in at- He Colony assets.” promise validity were indis- posed for all Old If value. relating putable, judge absence of discussion we believe the district tributed that oversight by the inadequate compromise disapprove item not to the interest could standards; absence of contention but to con- violating legal Commission value as the asset. and amount of existence doubtful, he versely, very if the claim were ruled that he this mean understand We disapprove valuation. could an excessive claim an treating the as Old opinion Judge shows that The Hincks did $928,000 the Commission asset worth compro- permissible $3,250,000 thought appellant, legal standards. not violate against Bankers mise for the claim value were course, legal standards agrees that appellant does not Company; Trust and the was included interest if the item observed de- much should be this. How controvert valuation, and over-all in the Commission’s the breach setoff ducted because were argues that violated question fact primarily lease claim is Judge Hincks We think not included. agreed parties what the depending Report mean construing the right Whether supposititious settlement. necessary It is not included. it was agreement produced their settlement precise show the Commission to for the disap- require judicial unreasonable as to val- it reaches its over-all method assume, proval also, a matter objector to the valuation uation. Judge province of court. within the “legal standards” were violated. show opinion expressed the view that Hincks’ law” “perfectly matter of obvious as a objection similar A somewhat liquidated in the were if the claim respect to appellant with urged by the lease $3,250,000, the breach of amount of 'against Trust Colony’s Bankers claim same by only the should be reduced claim Commission noted Company. The Report as read the He did not amount. for Old special counsel record shows comprehen- predicating Commission’s compromise this suit Colony offered to process whereby the upon a sive valuation for the special counsel $4,000,000and lease of. breach value the unsecured compro trustees recommended by the ad damnum claim was reduced se $2,500,000,while certain mise suit. The Commission the Bankers Trust only a asserted it had cured creditors possibility of merely deduct- considered said value. nuisance *10 damnum, say that ing the full it ad did proceeding we of this purposes the “For lease value the breach of claim did value it having a claim as consider this will Supplemental Re- Third The Later, basis. considering $3,250,000.” sug- port referred of October Colony’s $47,186,- claim of of Old amount $3,250,000 fair would be a gestion that for breach against compromise value of suit “that “if suggested that lease, claim should Colony’s unsecured lease the full recov Old deducted from that be there only by the latter amount.” reduced Bankers be against the sought in suit ery opinion when Judge Hincks was of Company ($13,379,215), the claim Trust ” ** * stated $33,807,748 had thus the correct the Commission be reduced to would setoff, recital the Sixth Re- object using the does not basis appellant form value, port hypothetical extreme $3,250,000, of claim compromise parties did New Haven Company of certain Trust as a set- claim against Bankers that the Commis- justify the inference breach of lease claim off adop- sion’s was based formality valuation less plan again to submit agree. tion of such contention. We to those already creditors have voted who in favor urged plan, of it. appellant objects also 7. submitted, when was invalid taking December the cut Colony bondholders, and must therefore date, apparent off since it is now that the be resubmitted at least to them. This plan years until will not be consummated technically logical argument woxxld have initially pro later. When the Commission persuasive more acceptance force if posed it in futuro. this cut-off date requisite bondholders were appeared an When it from the trustees’ for confirmation plan. But section reports nual that estimates of permits e, confirmation even inaccurate, up earnings to that date were though rejected certain creditors have the Commission made corrections to con if judge statutory finds that con- form to actualities. Because un ditions Judge are met. Hincks found that expectedly consummating long delay they were. Hence resubmission plan see no reason they bondholders would be futile. If voted postpone prac As cut-off date. favorably, confirmation would man- follow closing matter time tical some set datorily; again rejected (as ap- postponed progressively and it cannot be pellant says they discretionary would) con- reopening making without the issues and firmation only ques- would follow. So the findings, resulting appeals. new new importance is whether judge’s By the time these are finished conditions findings (a) equitable as to fair and treat- may again changed, and so on ad ment, (b) rejection, unreasonable (c) Comm, infinitum. See Interstate Commerce conformity with clauses (1) to Indeed, Jersey City, supra. if the clos first paragraph of subsection e are war- ing date were advanced ranted. In sustaining ap- the order of change probably be detri proval we passed have already on con- appel mental rather than beneficial (a) and (c). urged ditions It is lant, judicial for the court take notice cannot have been unreasonable for earnings war have ended and costs of reject plan bondholders to which did labor and materials have advanced. represent independ- Commission’s judgment, ent subsequently court urged It is order plan held the not. did But there is little plan confirmation is erroneous because suppose reason to this formal defect was submitted prematurely. to vote plan was the nega- basis for the prior appeal vote was takexxwhile the dissenters, tive vote of the rather than pending from the December order of plan provided their belief that unfair provides Subdivision e of section 77 treatment. In the Denver & Rio Grande judge approved after case, supra, page 1303, 66 S.Ct. at plan, certify opinion he shall his and order says plan gives that “If a fair and plan “The Commission. shall then equitable dissenters, treatment the ele- be submitted the Commission to the ments make the equit- fair and acceptance creditors or re- able cannot reasonably the basis for a jection, within such time as Commis- ** justified rejection.” Judge Since Hincks specify, shall sion find We has found the fair and equitable, a nothing the statute to suggest that resubmission followed rejec- plan may pend- second not be submitted for vote accomplish tion would nothing. appeal ing approval. from the order of *11 any good why we Nor do see reason this Appeal II. of Boston Terminal done, saving be thereby time Bondholders. approval the order Al- of is affirmed. though appellants order was ap- the reversed on These are the the trustee under Colony Company’s of peal mortgage interests because Terminal of and two groups formal defect which the of Commission’s holders of mortgage its bonds. cured, Report has appeals Sixth be question a use- In so far as their and power adopted by procedure New Haven discharge subsequent former statutory obliga- or Old of their the district court tions under is needed. the Massachusetts of appeal, Act no further discussion by they their presented they principal questions hence contended were not cred- rejected itors. We appeals are the bondholders the contention that whether Haven, obligations New statutory not be creditors could modified.7 unsecured Consequently, them provision purposes present for for plan makes of the whether the al- appeal, appellants has such, claim been claim to be creditors their whether they and lowed, given Haven reason and whether New upon plan before opportunity contingent obligation vote of the of each payment be confirmed. make it can in such sums Massa- Supreme may chusetts Court determine Company 1'. The Boston Terminal event that a is established deficiency corporation is a Massachusetts created mortgage. foreclosure of the Terminal act, 516, for special Acts of c. statutory contingent obligation This providing a purpose union terminal abrogate. Although their proposes specifically railroads, among for five named contingent unliquidated, claim is and and the Old which are the plain think with- are creditors im- Colony. The Massachusetts statute statutory Indeed, definitions.8 upon the five three dis- posed railroads appellees dispute but this, do not contend obligations: (1) tinct To use terminal n claim not presently prov- that'the (Section nay Act); (2) tc 9 of able. cost,, (most- Company’s operating Terminal Company Terminal a creditor also ly taxes), interest and each railroad bond of New Haven and based of Old proportion (Sec- own paying in use its statutory pro- obligations pay on their any deficiency pay and 10); (3) to portionate operating expenses. shares of its mort- upon established foreclosure of Strictly, question not be before Company’s securing the Terminal gage reorganization us its has because trustee paying pro- bonds,, each railroad such appealed; consideration of Supreme portion as the Court Judicial right proper, seems since the amount of (Section 4). determine Massachusetts shall deficiency claims will ma- bondholders’ expenses operating runs obligation affected enforcement terially Company, directly to Terminal right Company Terminal to collect reorganization been whom a trustee part expenses operating from New bankruptcy appointed by the court Colony. Haven and Old Massachusetts, any obligation but the deficiency to the bond- foreclosure runs plan, 2. Article 1(a) N of the mortgage or trustee. holders their margin,9 provides out is set appeal, appellants

Upon prior reorganized these charters that the com- bankruptcy position pany that the shall (New took the and Old Haven) tory obligations reorganized certiorari denied See 147 com- pany any Colony (including of Massachusetts of Old Commonwealth and Co., charter, franchises, statutory obliga- York, & H. R. N. H. acquired reorganized L.Ed. tions com- S.Ct. acquisition b; pany § 11 U.S. 8 11 U.S.C.A. sub. connection with the (8). properties, assets, franchises C.A. reorganized any company operator railroad, shall N. The other and as part group) acquire of its Boston as a shall amended superseded franchises, (1) reorgan- properties, as- all of Colony except company ized re- sets of the Old those will be Colony’s (those obligation group Boston lieved the Old to continue 12614) property Finance Docket No. use Terminal covered in Boston Company, any obligation conditions fol- the terms make any payments lows: for such use if when reorganized 1(a) discontinued; use The charter shall be *12 reorganized company obligation company be and shall amended, and statu- and to and and their franchises trustees from the them from release further Com- as to of the Terminal be so use amended terminal, reduce pany’s to “file claim for dam- property use and obligation to 1939,10 ages proceedings” accept retroactively in these to to October or for such paid proposed compensation plan in the for con- to terms annual propor by thereby to a tinued date use railroads subsequent such “and to that use to and abro $275,000, damages all from percentage arising waive claim of tionate deficiency compensa- pay any rejection and all claims for obligation to gate the property issue. Since the bond tion for the use of its other than on foreclosure reorgani compensation provided by Terminal’s such as bondholders and plan.” creditors We understand mean that are unsecured this to zation trustee proposes acceptance by to re- plan thus Terminal’s trustee will rights whose made take lease New provision must modify, v. Irv only any damages Kuchner claim for but also claims. See from care of their S.Ct. for use and any from administration claim ing Co., Trust plain 1(b)11 occupation during reorganization N in excess Article L.Ed. $275,000 proportion claim of their of the annual respect ly so does pro appear compensation. provisions reorganization trustee. These Terminal’s right provide adequately to elect have the for claims of the shall vides he terms, bankrupt railroads rejects the offered he trustee. If to exclude

whether Boston Terminal appointed by any bondholder of ceiver in sion payable by ly make an from however, ton Terminal erator mation of the gers using the South the shall be limited expenses ing for itself and and time of less total use of such date erator annum newals or the Company, reorganized company on organized company the last pany standing make or including (b) increase in the any said obligation thereafter use will property principal on which The trustee in rentals and represented payments debt other claim with than a (and $275,000 percentage bonds, payments equitable consider an equity that, if the bonds after any deficiency refunding thereof) satisfied principal Company the Terminal (at maturity the Boston reorganized company. of the Boston Boston Boston year) shall, that rate for operators (or any deducting pay operating expenses on revision of the amount concessions; provided, property Company by future, prior court of the amount of such (for trustees use account Station of the Bos- number application by any bankruptcy of an obtained account by payment by percentage its group); itself debtor shall substantial- group) respect itself long Terminal Com- extensions, on foreclosure presently of Old this Commis- from time all or hereafter be Company the consum- amount any period competent as the otherwise, or by apply- (including after shall Terminal revenues trustees thereto) passen- interest interest of the made out- op- re- per use op- re- re- minal’s which the their last using bankrupt Terminal aas ceedings, weeks next stockholders of claim time thus tee, election der of submission shall cessor-receiver however, thereafter as this Commission of all claim of rejection tion for the use cised than such or erty and file a affairs terms tinued erty by jurisdiction further clude them, these rejection See October Bankruptcy damages against right his creditor or creditors in these of the proposed occupation operating expenses. note of such plan, such by rejecting occupation successor-receiver, that if such trustee or or from proceedings, Company be barred from payments using bankrupt damages to elect whether he will limited, the submission to compensation proof succeeding, under shall, railroads and Boston damages such election all claims supra. railroads. manage Act and within shall not exercise Ms corporation and use of such prosecuting any of claim of its and its section and shall not and uso each and herein within on account of Ter plan Terminal the estate of the or will plan arising is the date on then such trus- property as is trustees made for fix; provided, railroads thereby creditors property participating for for the Boston Mm this every within acceptance shall have accept compensa- such from Company be exer- any provided the con- damages file waive claim prop- prop- other e, from pro- time suc- one or- ex- *13 may damages cred- ferently necessary for' claim as unsecured what from hold we plan validity, itor Article ac- namely, its trustee’s J(17) and under that the ceptance will stock effect entitled to receive common no offer can have Haven; damages against his claim New for for bondholders’ claim deficiency for arising will claim repudiation also have an administrative out reorganiza- obligation Act occupation against use section 4 of under Col- 1896. assumption tion trustees New Haven and Old On the consumma- terms, he ony. accepts If he be carried out plan the offered will views, think voluntarily relinquish conformity will these claims with these we or- unnecessary it cause in accept in therefor reduced to remand the substitution ex- compensation may offers. der 1(a) judge Article district make an which N plicit ruling what does mean plan parties accord The are hold must mean to valid. trus acceptance Terminal’s to whether argue The further operate a release bondholders tee is intended plan damages inequitable for based because it fails claim the bondholders’ deficiency provide payment for their deficiency obligation abrogation of the against Colony. claim N Old Article bond Under event foreclosure 4 substantially 1(b) all the of Old assets clause of Article N final issue. The are recognized to be transferred shall provides if Terminal’s trustee pay Haven and new plan securities rejecting the exercise his election for them are to be issued and delivered to damages file a claim and shall not Colony’s Old Col bondholders. Thus Old succeeding, next “then within two weeks ony will have assets sat successor-receiver, with which to trustee, his isfy any deficiency judgment the Terminal Company its creditors Terminal Boston may it, against bondholders obtain and the shall, every one each and stockholders plan require reorganized does not them, participating be barred from obligation to assume this of. proceed in these a creditor or creditors Colony. However, in nothing there is prosecuting any ings, or from claim equitable in this in result. against using damages the estate of solvent; hence its unsecured creditors are appellants bankrupt The assert railroads.” nothing entitled to until bondholders its Terminal, are creditors since paid have been The new full. securities its quoted provision means that trustee which Old re bondholders extinguish plan can their by accepting the equal ceive do not face value of their damages Haven and right against New bonds. Colony. Obviously that would be un admit, appellees parties at least and the lawful are also not in accord as to what, assert, however, that by implication. They Company if the offer Terminal purport rejected the be trustee, provides plan plan does affect “The arising respect of with out rights of the bondholders to the claim administration any deficiency be established for property use reorganiza- during Mort tion trustees through proceedings. Terminal these foreclosure finally appellants “if such a claim de gage” (a) puts and! assert N 1 that Article claim, termined,” “ceiling” upon Article which reserves the amount of such J “is creditors, proportionate percentage limiting common stock unsecured $275,000 compensation. compensate if of adequate Only for it.” annual accepts appellees’ appellees judge Judge answer both Hincks the district contrary. meaning of the this court have held the This concession as F.Supp. 625; approving is correct. See page order sustained. at can his ibid, page page 147F.2d at that “The construction 51. The provides R Article argument proposed shall be final plan by amendments to the court reorganized the charter conclusive,” company shall have the court any greater payment would make ultra defect” therein. We vires “power cure opinions to is not sound. Such charter will limitations nothing Judge Hincks’ find not affect administration dif- claims that he construed indicate *14 should, appellants argue, serve Payment of reorganization trustees. Hammer effective See statute, “allowance.” 11 U.S. required is claims Cir., In re Tuffy, 2 145 F.2d L Article a, C.A. sub. sub. § § Cir., F.2d Jayrose Co., Millinery claims, plan priority provides of the Co., 475; In re Two Rivers Woodenware Colony, be “shall except against those Cir., be force 199 F. There reorganized paid by the in cash or assumed bondholders’ argument not the were priority as company relative with the same un and contingent foreclosure claims on respect to the other now with obligation liquidated in amount. Article obligations And such debtors.” under section running to the bondholders company reorganized 4N states * * * of the guaranty Act is not (c) cur- pay shall and “assume bonds; obligation indemnity it is obligations of Old Col- rent liabilities deficiency upon a fore good any to make reorgani- during the ony incurred trustees securing mortgage them. closure of proceeding.” the administra- zation Thus Moreover, deficiency after is ascer properly cared for. claim apportioned tained between it has be appellants contend that 3. The Supreme obligors by railroad several subsequent with together Order No. ap Court of Massachusetts. Judicial cause, constitute a suffi- proceedings in this pellants bankruptcy concede that the court their claim to entitle cient allowance power mortgage or foreclose upon plan. The New them to vote apportion any may deficiency petition, upon which Order No. 45 Haven’s established foreclosure in Massachusetts. entered, principal alleged was upon We are at a to understand loss what outstanding amount bonds of Terminal theory supposed can be bank $15,155,000, “Debtor, stated that to- claim, ruptcy court has “allowed” the when gether companies, railroad other power it is without determine the amount deficiency any following liable pay fore- of it. mortgage securing closure of said provides Bonds.” The order 4. But why we see no reason petition debtor’s constitute a sufficient shall plan lawfully cannot evidencing said claims filing or provision unliquidated claim, make for an nothing shall contained in the order constit- provision why, or if such adequate, ute a the nature determination of or extent cannot approve plan before the liability or of the debtor’s constitute the liquidation and allowance of the claim. See any allowance the court claim Akron, Youngstown Co., re Canton & R. Paragraph 6 of debtor. the order 964. Section sub. granted any party in interest leave of c(7), 11 U.S.C.A. c(7),12 seems any right “protest” court the claim with- recognize creditor that a who has filed sixty days, concluding with the sentence: may participate reorganiza his claim protest “In the absence the aggregate tion, subject to the later allowance of his bonds other amount or securities out- (17) provides Article claim. J standing prima be considered as shall facie reserve enough court shall of the new com purposes correct for proceed- of these equal mon stock to proportionate allow ings.” distribution to unsecured creditors whose claims “at the time of order, coupled This consummation” with the fact that no liquidated.” then are “not Since the protest ever filed and amount of common stock recognizes reorganized existence of the bondholders’ company is authorized to undertaking to deal issue them, claims is of neces “12 judge allowed, promptly shall or evidenced and for de filed accept purposes fix reasonable termine time with hearing, may ance, after in which the claims creditors notice the divi evidenced and after creditors and stockholders into filed which no sion according may par filed or evidenced to the nature of claim classes their re * * *M except ticipate spective interests. shown, claims order cause in which such the manner claims * * * *15 give limited, way to claims of whatever character

sity exists but no other whether such otherwise proportionate or not claims would to each his unsecured creditor Act. provable under number frac constitute claims shares determined * * *” to section claim, liquidated, proviso bears added But tion which his when 57, 93, 1938, sub. to sub. liquidated the whole claims. d U.S.C.A. § amount of d, states presupposes The Article the reserved that enough meet shares will be more than contingent unliquidated “That an or claims, pro liquidated value of if the claim shall be allowed not shall “any vides that excess reserved” capable not determine it is court shall that among proceeds be sold and the distributed liquidation estimation or of reasonable stock, the holders of common thus the new liquidation would or or estimation effecting perfect equality of distribution. delay es- unduly the administration tate title.” any proceeding or under this question 5. There remains be must Terminal bondholders whether the procedural regulating the This section given opportunity vote rights bankruptcy in “straight” creditors 77, sub. Section before it can be confirmed. applicable reorganiza is made to railroad e, 205, provides e, 205, 11 U.S.C.A. sub. 77, l, tion § section sub. U.S.C.A. § be submitted plan, approval, after shall I, sub. since it is inconsistent with the acceptance to creditors rejection or provisions of section 77. filed allowed.” been claims have “whose To deficiency ascertain for which appellants’ been claim had Since Terminal bond- New Haven is liable allowed, two court district certainly unduly delay con- holders will exclude bond alternatives—either plan, unduly but will not firmation of the all, postpone or to from holders vote delay payment to the bondholders out of the claim their confirmation of until reserve of common stock held under Article liquidated allowed. It chose be say plan. liqui- Are we J We think this was alternative. the former claims, of their will not un- which dation 77, Section permissible under Act. sub. duly final delay step administration— 205, I, I, provides sub. 11 U.S.C.A. § distribution of the securities—must new this section and proceedings under “In postponement step, cause the an earlier provisions thereof with the consistent * * * voting, liquidated? like until the claims are rights and liabilities creditors unreasonable, That for it be would * * * if voluntary same as shall be the subject all the other to that kind creditors adjudication had filed and petition for been 57, delay proviso sub. to § adjudication entered a decree had been d, meant to avoid. think was We petition day when debtor’s correct construction of the statute is filed.” say creditor that a whose claim cannot liquidated or “estimated” “straight” bankruptcy otherwise without right unreasonably given step delaying limited creditors claims vote “whose estate, administration allowed.” U.S.C.A. sub. been debtor’s § step; “may approved not share Among debts but if his claim a. allowed,” “contingent liquidated can or “estimated” are included without liabilities,” unreasonably contingent delaying step contractual a later debts and is to step. a(8), 11 U.S.C.A. sub: and “claims be to share in that allowed § As anticipatory contracts, many cases, breach execu- choose between part, complete justice tory including part in whole a more or unex- those in- personal pired property.” leases of real and an delay or volved indefinite detrimental a(9). Similarly group. reorganization sub. 11 U.S.C.A. § whole are contained procedure definitions in the sec- broad devised interest of dealifig expedition, Continental Illinois Nat. Bank b, railroads, 77, sub. Chicago, section Trust Rock U.S.C.A. & Co. Island P. & b, defining Ry., “claims” 294 U.S. to include “debts, liquidated experience unliquidated,” although shows, whether often un- fortunately, accomplish “creditors” to include “all that it fails holders of HAND, did purpose. L. Judge Judge (concurring). Hi-ncks true Circuit unduly expressly it would decide that agree opinion, brother Swan’s my upon as- delay confirmation to have it wait accept exception, my it as own with one deficiency amount of the certaining result, though and that to the same leads me bondholders. But to remand claim of the by a slightly different course. Under the unnecessary, finding such a cause Supreme decisions of *16 Court the Com- the perfectly clear that such ascertain- it is appraise mission may property all the of a unduly A delay ment would confirmation. “operating” “non-operating” railroad — an decision otherwise should consider we n —at a sum; may bulk more it than of abuse discretion. paid by fix the in to be an award new securities, prior appellants argue translating without into dollars that on the transferred, property either value the appeal the of plan that held “The enables New or acquired. the value of new securities reject to Haven to what in effect amounts fixing sum, such a bulk not lease,” page only is the burdensome at b, Commission not to “operating” confined paragraph that last of sub. § properties, “non-operat- appraising but b, provides if sub. that U.S.C.A. § ing” properties may it value unexpired rejected any the debtor’s lease “shall be against claims persons, third even when injured plan,” person rejection by such validity involves amount of purposes “shall for be all section this claims, depends upon questions and when deemed to be a creditor of the debtor law, special- which the Commission’s damage extent actual deter- injury or experience ized skill and do not extend. principles mined in accordance obtain- with however, happens, so in the case at bar that ing proceedings”; hence, say, equity Colony’s “non-operating” property, on right upon their vote cannot be chiefly controversy rejection arisen defeated. Our reference up unusual kind. It is of a made of four way burdensome only by lease was (1) Freight items: shares; analogy; (2) The Union analogy but if the even were against claim the Bankers perfect quoted provisions Trust Com- above of § pany; b, (3) upon interest provide do not the Refund- sub. are the what Fours; ing rights the claim lessor for New Haven’s when the his extent of repudiating layI actual lease. aside the damage cannot ac- first be determined once; it is dispute these principles cordance at equity obtaining with appraisal proceedings, must, here, Commission’s of it deter- anyway. be final special The second mined would be Supreme tribunal —the merely against person, claim ex- Court third In such Massachusetts. Judicial a cept mortgage case, stated, which secured already for reasons we think provided that, d, Refunding d, pre- Bonds if sub. U.S.C.A. sub. § § mortgage procedure. such, trustee became liable scribes the Accordingly we hold pay whatever it had the bondholders added were not entitled mortgage Flence upon against vote debt. claim and that the order of prior it was really against claim premature. confirmation was New Haven; and so course too interest Appeal of III. Commonwealth bonds themselves. last item to be whether the credit Massachusetts. allowed lease, claim for breach shall appellant contentions raised settlement, amount or the face of the require separate They discussion. either appears claim Thus which it settles. repeat objections which we overruled on the against these are three items claims prior appeal, 147 F.2d certiorari Haven, as assets as well Colony. denied 325 U.S. S.Ct. L.Ed. provides (7) of Subdivision c among § 1999, make common or with the other cause things judge other “the prompt- shall appellants respect to matters dealt fix ly determine and the manner appeals. our of their discussion * * * claims may in which be filed or appealed allowed,” from The orders c, affirmed. evidenced and Bankers against shall settlement only claims provides “allowed” claim Hincks, Company. three Trust I do not share, divorce the think I cannot vote. aspect J., power that claim controversy, in their “allow” items here in aspect of New figure way half between offers Colony, from their assets Haven, Colony. a claimant Haven and Old When as claims compromise, agree upon a jurisdiction and the debtor Hincks, aspect J., had exclusive amount; bankruptcy doubt “allow” validity judge nomay their determine might fair; set although figure, thinks claim at that value, liquidated, in terms their when power by but I know of no which he party new securities. cut force each the Gordian knot and accept own choos- figure middle of his does Swan my brother understand *17 However, in can ing. at only the bar we far; I because case differ he and dissent difficulty, that Supple- avoid because neither enough that the it Sixth he thinks ob- Com- Haven nor bondholders Report show that the the Old does not mental ject figure- $3,250,000— in bulk settlement appraising property the in the mission — details, incidentally the any the three which the value is one few take as did not than that at which figure only one other the which the items Commis- them, content Hincks, or was has seen fit to itself. J., “allowed” sion commit There- is here fore, question It only should “allowed.” whether can they the that is we cannot agree; I learn I cannot understand what was credit which Com- the the that the appraisal of all why deducted lease the Commission’s mission from the claim be- claims, the hotchpot cause of settlement. the in that As that includes the assets suffice, silent, sum merely Report entirely the bulk because Sixth is no doubt will Hincks, language supposed the “permissible” because the Commission that the is —in lay amount Commis- appraisal face the of the claim as much whatever lease J. —at any liquidated powers the The claims. within its as that of other asset. sion have over possible says, question variables my two the is problem is of brother Swan As had Commission terms settlement really one of the of the that, decided itself; if it Company fact Bankers Trust claim power; and the beyond its see, one that was wrongly might, as to the these so far as I can been have compensated lawfully have might might it of three kinds. The settlement powers, appraisal higher assigning merely by extinguish against for its error claim It mind irrelevant. other, my Company, leaving Trust is the whole Bankers might only in we case relevant could become undiminished; (2) might in claim lease appraisal the actual properly substitute extinguish addition the lease claim Commission which the property, other settlement; (3) might amount ex- of the make, power made, which it tinguish claim whole face lease made, might but appraisal which it against Bankers of the claim Trust to be parties entitled not. All Company. any did I see that of these cannot Commis- another; value at which the judged probable inherently more than power it had appraised what actually sion I think that have evidence we that the what appraise, Commission that settlement assumed It must of the claims. face proposal “allow” as the presupposed the second. first to learn in the record possible appears somewhere Supplemental Report in the Third take did Commission, at amounts what it is clear that where claims, can know before we kind; negotiations face were of the second jurisdiction; within its it remained unlikely the last degree whether is to and it that so, enough. is not that it did possibility Commission, starting with understand- ing, should have in in- fact assumed that formal Nevertheless, spite of this other to either two. in shifted enough there .that adequacy, I think passage Report one Sixth though order, I true affirm record to possibility mentioned the Commission welcomed I should have must own might the settlement reduce the report. lease declaration clearer by the full amount of claim the claim allowed the items is amount first organization necessarily Company; but under will Trust the Bankers speedier re- be reorganizations than used everything else almost like of the to think, be. Nor can Com- one because the discussion port, merely a was justify the mission in the out might come Sixth hypotheses, various appraisal prop- as evi- with not be taken result, final and must erty figure fact was as it did exactly at same dence that Fifth, changed justified having we reading negotiations as duty. in imputing I think to it evasion of reasons For these to the third kind. Indeed, in our particularly claim decisions lease last we say that the we are entitled declared all we wished to at which be assured appraised amount compromise of was been willing it. had not Hincks, to “allow” J., was accepted independent valuation, without on the interest last is the item expressly that might said turn out Colony. Fours Refunding held change prove in the award would Hincks, J., whether had never decided necessary. Colony, and deposit due to Old bank opinion suggests a doubt in his indeed FRANK, Judge Circuit (dissenting however, Since, about it. part). *18 it, dispute Colony’s right Old does not My solely dissent my relates col- is satis- only there question the is whether leagues’ opinion concerning the method of in- the Commission factory evidence fixing Colony property, of the Old Report leaves the cluded it. The Sixth as disagree which I alternative on two Report question First treated open; but the grounds. part as 2, 1936 Old from interest June I. claim, deposit yet Colony’s be- the bank Plan, Colony, as to Old However, based on been it had ing existence. a a property.” “sale filed, Such was created the Third before ***<?/ governed Plan is b(5), sub. which which, § appendix as in those in the requires upset fixing a price.” Reports, it treated as Fourth Fifth “fair from interest credit deducted a to be Briefly my stated, ground first as fol- appears to a me This bonds. a, lows : due Under sub. § that, telling bit evidence particularly have formulated could a Plan for the re- Hincks, regardless J., have of what organization Colony “in (1) Old either deposit bank keeping as intended part connection with” or a of the “as item, “suspense” least sort reorganization” New For Haven. had allocated it Commission several times later, reasons I shall state I think Com- Colony, unconditionally to other- since Old clearly mission elected the method. first reduced interest would have Having wise it so, done it have could devised charge. Again, as the case the lease “recapitalization” Plan Colony. for Old claim, highly unreasonable to Instead, would be provides the Plan up to now —as that, came when it Sixth assume everyone has agreed Colony an Old —for changed Report, Commission its mind. reorganization through “sale” of the Old Colony property and the distribution of regret I form the case proceeds among Colony the Old bond- us, spell we have to comes before b(5), Section sub. holders. authorizes out the actual decision such roundabout type reorganization, of “sale” methods, indeed when would been have upset “at not than price.” less In path possible our fair easy make cate- affirming approving the order Plan, my However, findings. since, gorical for the effect, colleagues, in read have that sub- give, appears I have tried to reasons section out Act. In order to make kept Commission to me within the plain why regard as erroneous ju- such a jurisdiction, I conceive that limit of the statute, amendment of dicial I must first further prolonging no reason for have pertinent note some facts. which, everybody litigation agrees, as already expectation, 23, 1935, far exceeded On October the New Haven hope bankruptcy ironical sadly re- went into makes reorganiza- (b) “part with” Connecti as of” the District Court States United system. running tion the New Haven been had New Haven cut. As 99-year lease under lines Old ac 3. Had the proceeded Haven trustees Colony, the New from alternative, Old the Old cording to the second so, part as bankruptcy do continued to Colony Plan have been written would sys Haven operation New their the severance from the of Old months, However, seven after some tem. system operations hap never Haven disaffirmed the trustees, on if, pened, eleven during the entire June i.,e., that, although pur The result was lease. years now, trusteeship Old and until were 77,' trustees c(6), suant Colony’s operations had been conducted operate lines obliged to the Old “divisions,” were those of the New Haven interest, operation, as public Colony. for the and not “account Old of” “involuntary,” held,1 Supreme *was Court words, other a Plan entirely “for being, says, c(6) as subsection ignored “prior claim of lien” creditor Colony. The conse account Old of” Colony, New Haven Old the deficits re quence has been allotted, Colony bonds would have been sulting operation, the New Haven from that securities, “value” new Colony, with a system a creditor of Old of the Old assets —without a deduc assets in the “prior lien claim” on its $10,500,000 representing the tion of some $10,500,000. In other of some amount operations Colony during deficit

words, the deliberate trusteeship. Plan, June toAs such a trus valid action the New Haven case, 318 of the Milwaukee doctrine from, tees, wholly divorced (and S.Ct. re *19 to, system op stranger became a applied. 3) lated cases would have Haven; of' that status erations New But the Commission not construct 4. did years up maintained for some ten chose, It proposed Plan on that basis. present to the moment. propose New instead, (a) to for the a 3, 1936, day Haven, simultaneously, after that (b) Not until a June occurred, Colony officers of Old divorce connection with” the New did Old “in Colony petition reorganization. Colony file (a) a for its Plan: Plan Haven Old * * * majority a the New Haven owned expressly Because calls for “sale a stock, Colony’s voting petition of Old property,” as authorized sub. § [its] a, filed, lawfully pursuant expressly to sub. was b(5); The New Haven Plan (b) § includes, the United Court in Con- provision States District among things, other a necticut, trusteeship where the “purchase” “acquisition” for the Colony petition, pending. The Old Colony property thus U*i- Old sold. subsection, with stated scheme, accordance entirely proper it was der that Colony reorganiza- a Old “desires to effect did, provide, Old part a tion in connection or as of the claim, pay “prior Colony lien” reorganization” plan of the New Haven. through the deduction of the amount of that “price” pay lien from Haven is to a, 2. Section sub. reads alter- for the assets. But such a reorganization of such a sub- native : The Plan, sale, a grounded must meet all sidiary may “in (a)' be either connection requirements b(5). of subsection part reorganiza- (b) “as of” with” or a refer to that parent. Consequently, the I subsection because of the Com- 5. there, nowhere else in does Con reorgan- authorized § mission was devise reorganization gress * Plan the Old one of authorize a “sale. ization * * bases, e., (a) property” either of a debtor “in connection i. these Corp., R. & Atlas National Ecker v. Western Pacific Palmer v. Webster Bank, S.Ct. L.Ed. U.S. Corp. 642. Reconstruction L.Ed. Finance colleagues My Co., & Rio refer to the St. Denver Grande R. Western 10, 1946, 66 1282. June S.Ct. Paul case. proceeds left position the Commission in a choose “the distribution * * * among either from the sale That it the first derived alternative. selected appears from Plan as having interest therein.” Such the nature those For, must, then, comply Colony. repeat, with that Old reorganization had it selected second, expressly provides, without have the sta- subsection. would restored quo exception, tus lease-disaffirmance, “not less than such a sale at ante the upset price.” disregarded “prior would have lien” fair deducting claim from allocation My colleagues disregarded $10,- to the Old some bondholders because, appli- they say, has no b(5), 500,000. Instead, the Commission treated a sub- cation a sale from is where there reality, by the disaffirmance as stema deal- principal sidiary reorganization ing entity, as a distinct * * * plan “part of the debtor property of which the new New Haven debtor; principal reorganization” of the acquire is to at a “sale.” case, they suggest, the “cram in such a reorganization 8. To Col- dispenses with provision the need of down” ony, “sale,” via a the doctrine of the Mil- upset price. has, think, I waukee case no relevance. reasoning agree With that For solely do with an in- case had to were the of Old a tra-system reorganization, by way of re- part system reorganiza- the New Haven capitalization, and with the allocation of parent But where the sale tion. new securities holders claims system part parent’s re- of” the “[a] integral divisions or several organization, merely “in connection Court, parts system; therefore, it, b(5) with” no less within sub. sale had occasion to consider a “sale” under property subsidiary because the provision statutory directing parent. colleagues (My do sold upset price.” Commission fix “fair suggest, they reasonably, nor could that the spoke divisions, Court each of which b(5) word “debtor” in sub. does not include earnings to a common contributed fund subsidiary reorganized in “connection “system earnings.” problem there *20 reorganization parent.) with” the of finding “the method for of bringing I following And the analysis think * * * mortgages divisional into a new my colleagues way shows that in err in capital structure so that”- —what ? “So that which reason to the conclusion that each will relation retain in to the other the “part type a reorganization: of” of formerly respect same in position it had of They recognize earnings that subsection a author- assets and at various of levels.” e., (i. mortgage izes alternative methods “in But here the on Colony, the Old connec- part with” ever of”). they say or “as But lease-disaffirmance on since June 2, 1936, “adopted any had relation whatever no has second any part mortgage on of the New alternative because” it Haven “determined that in- respect tegration earnings.” “in assets of Con- required of two railroads is sequently, method of public.” reorganization in the interests of the That seems non-sequitur. valuation as between divisional mortgages, Unquestionably, me approved in the Milwaukee case public that it is in Su- decided preme Court, not fit properties the case of Colony interest that the Old does be- part Colony mortgage. only fit, It could reorganized Old come of the as New Haven system. suggested, I if the Plan that decision But re-established did not constitute quo ante the of the status alternative”; choice “second lease-disaffirmance.5 (1); 77, (5) says 010(7) plan § § sub. b “shall Castle that a 11 U.S.C.A. Corp. Bldg. Machiewich, adequate provide Apartments v. means for the execution * * * 59; Country Cir., plan, 149 F.2d of the include Inc., Buckley, Apartments, part property the sale all of or Life * * * of the debtor 938. at less than 145 F.2d ” upset treatment a fair discussion of the of bonds, provisions Chapter X, See similar Haute Milwaukee the Terre subsidiary system had parent and are the New Haven on Where both June so re- pursuant separate entity then

bankruptcy-reorganization, become a § a, plan is a sort any plan of for the mained. character sub. A of that hippogriff. nothing I au- the Act subsidiary (1) must be either unrelated see - parent. creature. plan thorizing (2) related the creation of such a, named in Both alternatives my colleagues’ position weakness of refer, course, where the to situations appears appellee’s also contention plans My colleagues' view related. my opinion colleagues’ approves: seems “in with” be that connection des- pur- Appellees legislative assert “the ignates simultaneity in relation merely a pose” a “is to enable continui- of subsection plans, effectuation “as proceed- ty system operation during part possible designates of” other rela- all put ings ef- after been into interpre- tions. I see basis for such fect,” securities and that “in cases the part I of” includes tation. “as think subsidiary are in debtor the same sta- which, plans purposes, for all those principal debtor’s securities tus as subsidiary part is dealt with as obligations,” conse- with the divisional parent’s system. provisions in the re- quence “the Colony are Old the same my lating colleagues’ rea- The basic flaw Housatonics, that, relating to the think, footing as those inconsistently, is, soning Englands,6 and the various other ways”: purpose For (1) “plays it both liens,” which, together all of Commission's method divisional approving the Colony, fam- “are of the same property, members in ac- Old “valuing” the Old outstanding ily.” here doctrine, my But fact case the Milwaukee cord with lease-disaiflrmance, there was no after the colleagues it had deal with system operation during “continuity part integral (or always operated as been con- far proceeding” system, division) the New be a cerned, ceased to entity, for Old never, separate for “the account aas However, family” A pur- “member Colony. (2) of” Old June operate its divi- right, “system” one of does sustaining Haven’s pose the New division, of” that “for Colony, collect its sions account of Old a creditor a collec- claim, (with creditor my colleagues become the deal does not “prior lien” division, for that separated prior claim) lien it had been from tible ifas interest). reducing things, pages 546-555, case, 63 S. other point: Haute elected If bondholders is not Terre L.Ed. Ct. *21 oiler, accept majority retained not to a (1) owned Milwaukee The Haute; on the Terre Haute lien voting but intact their of Terre stock the including properties properties, a in those re not itself Haute was Terre the against damage es the (see page Milwaukee claim organization at 318 959). the disaffirmance. tate on account The 87 L.Ed. note Court, page 550, long-term U.S. at 63 S. lease The under Haute was a Terre page that, among providing, said Milwaukee, Ct. the lease to pay it to things, “if the Commission deems desirable the Milwaukee in other system, keep line principal of, on, the leased necessarily the Terre the terest (2) dis must have rather broad No disaffirmance Haute bonds. providing during modifications cretion in of the the Mil had occurred lease the where, here, the lessor trusteeship; as lease Milwaukee but the waukee reorganized along being operate with the debtor. Terre the continued to trustees assumption part the modifica under For the Milwaukee lines as Haute sufficiently in operations; must be attractive to “system” the Mil therefore acceptance or sure the lessor Terre its cred claim no waukee question Thus, “involuntary” operation. itors. whether a an for Haute rejected provided if lease should be (3) Plan Milwaukee part disaffirmed, be what terms assumed is one should be as the lease judgment.” reorganization, of business unless Milwaukee spec- are the names of two of These (a) executed at a a new lease mortgaged (b) divisions of New Haven Terre rental ified reduced system. agreed a to modifica- bondholders Haute (among of their the terms bonds tion of During the meaning deficits. operating b (5) division’s sub. if the transfei were earnings of the true trusteeship, gross an “recapitalization” incident of a (as, gone instance, into for when, part have all plan, New Haven divisions as of such a expenses of each hotch-pot principal out of which assets of the debtor of the principal have subsidiaries, been and benefits paid. Burdens debtor and its are Colony. conveyed It Not to Old company). new shared. so as a been that, per- Haven is the New then, follows Plan for Since Commission’s against the Old claim mitted to collect its Colony provides reorgani- for explicitly Old will not be Colony, Colony bonds Old “sale,” statutory zation a real com- Haven’s “in as the” New the same status must, think, I concerning mand such a sale obligations.” “divisional Old If true, be If that met. be part considered a as Plan were price” upset erred in “fair finding a neces- “family,” it would the New Haven acquired by property the Old to be forgive sary to annul the divorce reorganized Haven. New i.e,, $10,- divorce, consequences Commission, I price, such a fixing present 500,000 “prior lien” claim. sale val- (1) the fair cash believe, find Haven creditors both allows Colony property thus to be ac- ue the Old to eat and have cake.6a their probable quired, (2) values market therefore, cannot, my agree which, with securities of the new that, reorganization colleagues together “prior under a of a with cancellation of divisions, containing claim, in the Mil- system sale equal as Hen” that cash value will case, clearly, “transaction a first, waukee which” Colony. of the Old “wiped out” and which try lien is (I divisional not done. shall Commission has given addition, the divisional later, II, that, new securities show Point lien-holders, “is second.)7 much a ‘transfer’ a as not even done pro- is the ‘price’ ‘sale’ and therefore a as argued that, might perhaps It because extinguishment lien of the posed contemplates not Plan as Old exchange new bondholders single a merely sale to public sale (1) suggestion That confuses securities.” upset requirement purchaser, “recapitalization” reorganization, literally inapplicable. sug- That price is foreclosures and fore- eliminates which 77§ merit, light without I consider gestion sales, reorganization (2) closure fact, well known to Con- notorious b where actual accordance that, enacted when gress when it “property” and where “sale” of occurs there “public” connection with the is held sale * * * “distribution actual is an railroad, seldom if ever aof proceeds from sale derived one bidder. But than conced- there more having therein.” among those an interest literally, upset ing, arguendo, (as later) accident that I shall show apply to such provision does not sale Colony has con- the “transaction” Haven, the New that of “sale,” sistently while the been called clear me it seems nevertheless *22 as to the New Haven divi- “transactions” policy pro- in that congressional embodied never been described. sional have liens in guide such vision must policy obviously pro- That was I that I think that should add a transfer case. a road, security-holders of re- a when would not be a “sale” within tect the of assets estimating probable 6a Plan, Haven un Under sion proper values, it would use are creditors New Haven market secured date,” 31, participating. Colony 1943. December be the However, the Old were “cut-off If reorganized ing all part I am not at sure a “as the New of’ purposes proper reorganization, system date a would not is “sale,” are be taken since those values creditors unsecured money’s participate? sale cannot worth at a Under the also entitled years place Plan, they more than three take will not a cent. receive 1943, 1, and since the Plan December 7 f the Old were “re after a long delay capitalization” plan, ascribable Commis- I would unhesitat is agree colleagues’ ingly my error. with sion’s conclu- 436 827, Corp.

organized through Tremaine, Cir, 2 through and not Ins. v. F.2d a sale 133 guide recapitalization, 830: “There is no inter- by having the Commission surer pretation purpose its as- statute than when fair value of a cash sale determine disclosed; any sufficiently nor sets. is surer mark of over-solicitude for the letter than ex policy, We must heed that not even if purpose be- carrying to wince out plicit. longer doctrine For novel formally quite the words do cause used not policy although plainly implied, a 11 match with it.” expressed, should control a-statute interpretation. put time, equity-receivership- At As Mr. 12. one Holmes Justice statement, Legislature upset reorganizations, prices em “The were often classic policy ployed minority decide what the ac power has club dissenters into be, ceptance reorganization plans.11a. intimated its shall if it has Such law will, indirectly, surely purpose up however that will of -the “fair recognized obeyed”; price” requirement that “it The added set section 77.12 to, adequate discharge duty think, purpose, is not an fairness I to ensure say: driving you of, persons having courts to We see what not coercion those claims at, it, you have and therefore being reorgan not said railroad which 8 go we event, before.” That statement through shall In since ized sale. recently been (as several cited and times of Old is not quoted approval Supreme it) part system-re see of the New Haven Cabell, In persons Court.9 Markham v. 326 organization, having U.S. interests those 404, 409, 193, 195, said, the Court “minority” 66 S.Ct. in Old are not re policy “The letter spect as well as the the law security-holders and creditors 10 guide (per we said decision.” As majority of the New Haven. Nor do a Deposit Judge Learned in Federal Hand) the Old bond-holders favor Cir., 8 States, Cir., 243, 245; 163 tate, 1 Johnson v. United 2 129 F.2d Com L.R.A.,N.S., 30, Cir., 32, Ickelheimer, 18 F. missioner v. 2 F. 132 Hutcheson, 9 662, 660, 556; v. 312 U. States 2d United 145 A.L.R. Burstein 788; 219, 235, 463, Co., Cir., L.Ed. S.Ct. 61 85 v. United 2 S. States Lines 134 89, 93; Arden, Inc., Fi & Keifer Reconstruction F.2d Keifer v. Elizabeth v. 4, Corp., 381, C., Cir., note 132, 135; 391 F. Stone, 2 nance 306 U.S. T. 156 F.2d cf. 784; 516, Beeck 83 L.Ed. Van The 59 S.Ct. Common Law in United 351, Towing Co., 342, 4, States, (1936) 50 v. Sabine 300 Harv. Law Rev. 452, L.Ed. 685. 13-14. 57 S.Ct. 11a Weiner, Conflicting American United States v. See also Functions Associations, 534, Trucking Upset Corporate 310 U.S. Price in a Reor 1345; 1059, 542-544, ganization, (1927) 84 L.Ed. 60 S.Ct. 27 Col. Law Rev. Dickerson, 132; Gerdes, Corporate Reorganizations 310 U.S. United States v. 554, 561, 562, (1936) 1690; Finletter, Law 1356; Bankruptcy Reorganization 486; (1939) N. E. Rosen- States United v. Lines, Frank, Truck 315 U.S. blum Some Realistic Reflections on Aspects Corporate Reorganiza L.Ed. 671. Some S.Ct. tion, Markham, Cir., 19 Va. Law Rev. 563- Cabell v. 565; Guaranty Judge said, per Trust Co. v. Seaboard Ry. Co., D.C., F.Supp. Air Hand, Line that “it is one of the Learned 613, 614; developed American Brake mature Shoe & surest indexes of a Foundry Interborough Co., jurisprudence Co. to make out R. T. fortress dictionary; 122 F.2d but to remember that ' always purpose Finletter, cit., some statutes loc. Bon object accomplish, sympathetic bright, Property (1937) whose *23 to Valuation of Vol. imaginative discovery II, 882, is the surest note 83. meaning.” guide provision to their See For also L. comments on similar a Judge 77B, Hand, Far Is 207, How a in former Gerdes, Free 11 U.S.C.A. § see Rendering (May 14, 1933), cit., 1689, Decision? a part loc. 1690. See also dissenting opinion quoted Frank, cit., loc. at cf. First Na Commissioner, 504, Flershem, 2 Bank McAllister v. 157 tional 290 U.S. 3, 235, 298, 465, 239 note 240 note L.Ed. 6. 54 78 S.Ct. 90 A.L.R. See Commissioner v. Es also Beck’s 391.

437 here many of before the Com some witnesses considerations Plan.13 relevant which mittees. entirely unlike those are therefore price upset when an play tnto came that, I point have on stressed the to a cash offer minimum a used to ensure 2, operations Colony 1936, the of Old June corpora security-holders of a minority of part sys ceased be a the New Haven recapitaliza reorganized under a being tion operations, distinctly tem non- became that, in this, conclude plan. all From I crucial, system operation. point As this upset price,” the Commission fixing a “fair amplify I think it well it as follows: ap but, by bludgeon as should use not Bank, 312 & Palmer v. Webster Nat. Atlas price which praisal, determine cash should 156, 542, 642, U.S. 85 L.Ed. property fairly value of the measures question trus was whether New Haven be sold.14 tees, 2, 1936, were, after within 28 U. June 124a, “appointed by” officials S.C.A. § my col- agree I not Wherefore do “United Court” to “conduct” States slightest cannot “make the leagues Colony “business” of the Bos Old appraisal difference, far concerns so said, ton & The Court 312 U. Providence. property, there must be deeds to page 160, 544, at page S. 61 S.Ct. at 85 L. that, trans- effect the transfer” and this that, 642, Ed. the New Haven filed when fer, pay is to Old reorganization petition, the “lines of Old “price.” Colony axid and Providence in Boston came re- 77, I have assumed sub. b § part custody court upset price by the

quires fixed that the be system.” It New Haven referred then Commission, stat- judge. disaffirmance Old lease But, explicitly ute state. since does not trustees, the New Haven price (if the determination such a 1936, petition 3, filed on Old Jtxne necessarily price meaningful) in- and the disaffirmance the Old Congress, valuation, volves I think that Boston & Providence trustees lease. 77, c, assigned since in the task of spoke orders, pur The Court then Commission, valuation intended 77, (6), suant to section sub. c under which price. I fix am If “the New Haven trustees continued to have respect, wrong think I nevertheless operate Colony and Boston both Old here so that the district reverse Providence for the railroads account of upset price, judge using find the said, former The Court 312 U.S. lessors.” suggested. criteria above page 163, page at at S.Ct. L.Ed. 85 suggested trustees, It legislative has been that the question whether 642: “The history upset-price provision that the agents shows appointed by are who officers adjunct was intended as an to foreclo solely conduct business of employed by sure sales could Haven, those also within the intendment provision who statute, feared that “cram-down” agents are conducting who unconstitutional, held Colony. business Wei therefore, Congress does not had no such intent.” The think contemplate sale, upset Court, said, foreclosure explanation, page 312 U.S. at fixed,14 agree 842, that, need here be do page L.Ed. S.Ct. at suggestion. rests, leg disaffirmance, operation on after the reports islative Colony by Committee or remarks in the New Haven trustees was operation.” Congress Chairmen, involuntary (see “\_an\ Committee It also solely page page strained inferences from testi U.S. S.Ct. at voted, majority suppose Of those who reason voted that “there is some upset-price provision Plan. that” the in- “was Flershem, terpolated provide against Cf. First National Bank v. 1935 to possibility provi- S.Ct. the ‘cram-down’ introduced, might sion, prove A.L.R.. also then 14a colleagues My ar- stated this unconstitutional.” *24 gument elliptically saying somewhat

438 Colony the 842), spoke New Haven the New Haven of the as Old trustees, prop acquisition busi of railroad conducting are not the “an outside “who description. erty.” apt That consider Colony ness Boston Provi Old of dence, su'h, who, the constraint under proposed “transactions” (6), operating merely c [sub.] respect New of lines Haven with New Plan pub companies prevent those Haven divisions never once these of * * *”15 inconvenience lic proceedings the been called On “sales.” hand, never, my colleagues’ pres- until other opinion September 19, 1941 In his of proposed opinion, ent has any of the several (with respect the First Commission’s Colony plans reorganization of for the Old Report), judge Supplemental the district by anyone except been of in terms described said, correctly, legal sit and I think “The “acquisi- property * * * of and the “sale” its changed Old when uation reorganized tion” New thereof proceed Colony rejected in lease these “price.” Haven at record are the Here Thereafter, only obligation of ings. facts: operations Colony New Haven for Old * ** op initial Plan for The Commission’s obligation limited to anwas * ** Report New contained in its No- reorganization Haven pending eration necessary implication called of Palmer vember is the Such Bank, system separate New en- National 312 U.S. of & Atlas Webster tity, Colony leaving held severed Old 542, 85 L.Ed. 156, 61 S.Ct. separately reorganized Col at some later date. involuntary operation of Old that the Then, Supplemental Report First Trustees its ony New Haven under February 1941,17in long-contin which the Commis- Bankruptcy Act, even after its lease, provided Colony jus for an reor- operation sion Old under the does first ued ganization, to “the to be disregarding separate referred the Court tify * * * principal paid in securities debtor legal entity Colony the Old * * * implication properties for the is the assets Such also Palmer v. say, “In Palmer, Colony,” on Cir., it was Old 104 F.2d went wherein convey- transfer and segregation a consideration formula was held that reorganized debtor of principal of accounts ance to proper for the settlement basis assets, properties and operation the all franchises of Colony after Old * ** reorganized basis, On this Old Old rejection of lease. * * * charged deliver Colony, course, was debtor shall issue and its fair Colony’s trustees, overhead; New etc.” The dis- common Old share op opinion Report, judge, in required furnish the trict his Haven Was said, subject only “The exon gratuitously amended eration required expense. out-of-pocket proposes And the' Haven be eration for acquire properties all accountings sep the Old' purposes now if for paying (now) be rec therefor the follow- entity must arate Supplemental its Third Re- properties ing be held sub ognized etc.” said, “As a basis for rights port,18 charges, the same ject to such equal recognition determining price of Ithe must have liabilities ” Colony properties.”16 opinion judge’s In the district of Old the valuation Report, Supplemental 21, 1943, Re December on this twice Sixth In approving his price” paid order now on “the port connection referred to judge property referred Haven for the district appeal, the acquisition plan, previously for the “In this like that providing cer- Plan said: Emphasis Emphasis added. added. said in Palmer v. War- As this Eren that discussed “the ac ren, in- quisition” by the New Haven “of the Old operate ability road to after lessor Colony’s properties.” “falsify the rela- disaffirmance ” * * * C. C. I. roads two tions between

439 *** * * * separate may modified deemed state be the Commission tified plan princi- reorganization for New capitalization of proposes that pal debtor.” $365,000,000. fixed at be Haven shall capital contemplates however, that the plan, always spoken of judge The district has may expanded to fill out structure be proposed Colony as several Plans Old ” * ** Colony Old price of the purchase heretofore, so, upon built a sale.22 And Report,19 the Supplemental In Fourth its that have we. In 147 F.2d we said previous our “since said Commission independent Commission exercised Old Col- approval acquisition of the of price purchase judgment fixing “in for " price con- purchase properties ony’s and its compro- and that the Old assets templated that the additional mise dominant factor the Com- “was the connection there- issued in he securities to purchase finding mission’s formal in addi- * * * apart from and justified were equitable. price We is fair and by approved capitalization total tion to the that the order district court’s conclude debtor, we reorganized principal for us approval must reversed so that the Com- provision will make independent may mission make own its find- be increased capitalization shall over-all ings In 150 price." value and correct- necessary include the amount prior appeal said: “The issued as to be new securities ed amount of approving from of re- an order was then, in price.” purchase Since part of the organization provisions which contained Reports, subsequent the Commission its purchase Haven Old reorgani- theory * * * to this adhered prior appeal assets. decid- one founded as sation Old nothing provisions respecting ed affect- in its “sale” to the New Haven. Thus ing Colony except that Old Supplemental (approved Fifth independent findings had not made Sixth)21 said price pro- statute value [so acquisition the Old provided for “the Supple- Discussing the Sixth vided.]”24 reorganized Colony’s prin- properties by the Report,25 say mental we went on cipal a certain consideration and debtor for only could an inde- if it “made sustained upon certain conditions.” Sixth pendent finding to ‘value’ as as well as repeatedly speaks Supplemental Report, it ‘price,’ not this to be seem cm “acquisition” of the New Haven’s price step inevitable but it was fixing Colony property “the Old states required opinions." plainly our acquisition.” paid And the for the descriptions These consistent recognized that explicitly Commission has Colony Plan “sale” have founded on a part of” but Plan is “a the Old been accidental. was not a mere separable Haven Its Plan: from the chance that the Commission so character- order, Report, again appended its Fifth it. a locution has never been .Such ized Sixth, provides approved system concerning the New Haven used provisions part of the Plan as to good divisions, very reason invalid, held the “court de- 26a being “sold.” ** * provisions relating all lete Because, then, non-compliance principal debtor New acquisition (5), b Section I think we property assets reverse and remand. whereupon order thus Colony, this proposed not as Sixth 19 254 20 It had Emphasis Emphasis Tims 257 I. Report, yet I. I. and the C. C. 405. C. C. 9. C. C. 195. before then been his added. added. opinion concerning “purchase price.” speaks us. published but “price” appellees thesis, the Old sion, by garded appeal. sented 26a 26 Emphasis So far as a “divisional to, Oolony mortgage in their briefs on the think, or district discussed added. previous know, first judge, lien” by, opinions; should be re- suggested the Commis- was not thesis present pre- *26 .440 record' tain his reveal of decision —were to

II. that process was that actual his decisional Colony Assuming, arguendo, that appellate Bridlegoose,29 of Judge "divi- having as may regarded bonds be judgment. to reverse his would hesitate lien,” “valuation” sional the Commission’s here: Substantially that condition exists defective, because fatally is nevertheless Commission, Report, pub- latest in its inde- exercise its did not which, or- formula valuation lished a Colony judgment fixing pendent circumstances, dinary Milwaukee case if the “valuation.” judicial applies, preclude doctrine would my assume, arguendo, that I shall now to strongly inquiry; but the record tends 77, b that correctly colleagues hold from, valuation show that derived lien may that the (5), forgotten, and pur- Commission formula mortgage properly the Old ported but from unauthor- to use methods from regarded (despite the deduction ized by the statute. “prior claim) lien” if “price” part Commis- integral began The trouble when were lien on a divisional Report,, Supplemental that system. First the New Even on sion’s Haven so-called 1941,30 the- assumption, erred. February before think Commission came that,, Report provided That judge. district that, assumption, agree 1 do On to< “price” of the Old assets as the valuation the Commission’s Haven, to the New the Old be sold assets, apply doctrine must receive, fair bondholders were and! “as case, 523, 63 318 U.S. of the Milwaukee equitable” treatment, Haven se- new 959, and cases. 87 mated L.Ed. S.Ct. $16,448,000! face amount of curities agree Also, assumption, I $2,467,200 (consisting of of new First valuation, although the Commission’s meth- Bonds, $3,298,600 In- Refunding of new beyond opaque, effective od would be Bonds, $5,345,600 new Preferred come noth- there were criticism this court —if stock, $5,345,600 stock).. of new common ing of record occasion most serious this, whether Commission doubts judge, holding district conclusion reached exercise of “price” excessive un- therefore . independent judgment. own security-holders, re- fair show, But, try But, I shall there is much the Plan to C. C. before manded I. so, amply justify (un- judge saying, such doubts. he in his record did — opinion is like that September here which some- reported) situation respect procedure pre- occurs to a trial: jury (explicitly times usual verdict, general A statute) once has been by the val- entered scribed jury discharged, uation, usually undesirably delay reorganiza- cannot impeached by committee, appointed “compromise” evidence that it reached tion — However, throwing persons dice.27 before not of consisting, if chosen a vote general security-holders, verdict entered jury persons he dis- of the but charged, the jurors represent judge inform the the Old named employed interests, obvi- gambling techniques, respectively. New Haven This. ously nullity.28 verdict be held having re- tentative Committee rendered Similarly, if judge port proposed jury- compromise, judge, trial who tried a of a although special Committee, made find- in returning less he the Plan case— ings ordinarily, sup- of fact which when in effect recommended that act on ported evidence, report. connection, substantial In this judge would sus- said:: .S. F.2d 660. gruel, ris v. See Cf. United States See, General Bk. Rabelais, Gargantua e.g., McDonald v. Pless. 238 Foods. Chapters Corp., Pleva, 39-43. Cir., Panta- Judge Fab U used Bridlegoose explained ties ings were decision few, and much big voluminous, so that a case had I. C. C. by shaking dice. evidence, he used little elaborate filed issues dice. were If the after reached his. dice; plain, papers, plead- par- ho- *27 $5,435,600 common. of ample demon- ferred and of already had "“But we by new secu- net proceeding reduction in amount difficulty of of stration of face controversy $8,790,967. This re- rities was accordingly litigation in of the process in- December price on of that “was fundamental as duced basis complex so and of Old disposition 1943.”33 proper in volved problems. There is Colony that conceded The Commission explicitly prop- evaluating difficulty that in than this was "smaller amount ap- (on difficulty which also erties but ex formerly which we determined" but made) progress yet been little had parently had plained by that it saying this reduction at appropriate formula ‘an evolving compromise adopted the because "afford approximate ascertainment’ least an prompt progress,”34 prospect best ed the which the Commission, consideration value of alone, On basis that properties, pay for Old Haven shall "price" and this was "found" "fair by the set the standard in accordance equitable." Rock Prod- Supreme in Consolidated Court Plan, this revised embodied in When DuBois, 312 U.S. Company v. ucts Third, Supplemental Fifth Re- Fourth and pros- best 85 L.Ed 982. ports, judge, he came before district by progress appears prompt to be pect of approval approved. appeal his On from Compromise compromise.” The reasonable order, 48- we reversed —2 en- Committee, subsequently somewhat one ground if there 51—on the was the district engaging what larged, after by compromised which matter could “negotiations,”31 revised judge later called parties, and which the I. C. some of a so- proposal issued compromise guided required own, act C. on its was Report” received which was called “Joint independent solely by judgment, its by the Commission. evidence remanding, we “valuation.” In matter was compromise emphasized modified fact changes, minor this With hut adopted “adopted Plan with- compromise by was in a revised had been Commission * * * Third, enor- stating Fourth out reasons by I. C. or C. f Reports.32 new Supplemental valuation” of Fifth This mous reduction its earlier assets,35 Plan, pursuant compromise “negotia that the Com- said tions,” “formal valua- finding” to the Old bondhold allotted mission’s * * * $7,697,033 equitable se “fair face amount of new ers but was price” curities, equitable perhaps “fair might suffice if the Commission as the acquired the reor reasons re- by for the to be stated the led assets ** * Haven, $16,- ganized place prior We duce valuation.” 448,000 possible, course, previously “price” as that added: “It is allotted figures First Re Supplemental Commission still the Commission’s adhere port. are the same This reduced allocation consisted of which as those of the Joint $4,398,305 Refunding Report. correspondence First not of bonds Such would $3,298,728 bonds, invalidate Income itself the Commission’s conclu- state aggregate face amount new ‘shall fully securities sions reasons $7,697,033. its conclusions’ Thus the face and such reasons amount pressure amount First and was are com- bonds exerted Refunding promise.”35a $1,122,105, very elim But this far increased but there was from $5,345,600 saying “correspondence” inated the allotment Pre- that such a D.C., equitable’. F.Supp. 595, See ‘fair and 611. ; heart of such a C. determination I. C. C. 405 257 a find C. ing of fact I. C. C. 9. Commission as to the property. F.Supp. 595, value of the Sec 54 debtor’s fol finding lows See 254 I. C. Em cannot be based C. upon phasis the consent of some the interest added. parties 35 Emphasis ed but must a conclusion in added. dependently pages 49, 35a said, reached Commission 147 F.2d at We requires independent a consideration evidence. 50: “Section 77 purposes of section 77 One (cid:127)determination acceptable Supplemental Report (261 regardless of the character Sixth I. C. C 195) Colony,

the “reasons.” arrived a valuation for Old consequent and a securities allotment of mandate, Pursuant to our district bondholders, judge C. remanded the Plan to the I. C. precisely the That exer same as those body purporting time contained — *28 improper cise its judgment compromise its we had untrammelled Plan which —in away prevalent purchase price proposed find do evil in with an reor in the ganization through equity joint receivership- report equitable, and, the fair i-s proceedings, namely, customary prac opinion, principles in the our conforms submitting plan opinion tice of ready to the court al which the in a its indicated by large proportion governed, modify a consented will and we the security accordingly.’ of old the holders and thus ex ' erting pressure approve “Again, page on the court to C. C. the I. at * * * against objections minorities, of be Commission said that ‘the court opinion cause to do so the would mean indicated prospect failure in its the best accompli upsetting,of doing prompt progress appeared un a fait the of compromise.’ of an immense amount of effort be reasonable It said negotiation. principal Section 77 also that the New Haven while Congress parties Colony intention ‘manifests of and agreed the Old an ‘have evolved place reorganization leadership under the basis for of the inclusion Old (Ecker reorganization,’ of the Commission’ Western v. in the of certain page 468, Corp., Colony’-s repre- security R. at Pac. 318 U.S. holders and page 705, 892), 63 S.Ct. sentatives Commonwealth of Mas- the ‘strongly oppose agree- that the we cannot doubt Commission sachusetts such approve opinion, the in' the exercise ment.’ added ‘In then our judgment independent found, agreement uninfluenced and we have so the parties respect the Colony, fact interested with minor agreed upon Consequently by us, terms. its made therein modifications a offers departure equitable would be a serious from fair and solution of these approved problems." statute if Commission a valuation for Old assets because “We find it to read third difficult any other, supplemental report any it fix fears and draw infer previous agreement negotiated by a agreement sub ence other than that security parties stantial number interested the the wa-s dominant factor consequent up-set, finding holders would be with formal that the Commission’s delay consummating reorganization. purchase price equitable. is fair and supplemental finding might perhaps Commission’s third “The This formal suffice report, respect 254 I. if the C. C. Commission stated the reasons purchase price sub- $10,000,- the Old stantially is which lead it to reduce some copy of the Joint 000 face value of new securities its changed requirements prior valuation, meet no but we find reference report by causing change of a Commission. facts unless it be said, page compromise approved by parties. C. at 96: I. C. principal Moreover, supplemental herein, ‘As debtor seen fourth re major creditors, port (254 405, 422, [433]) secured the Old I. C. C. savings Commission, discussing proposal and the mutual bank after holding group, the latter more than one- the Commonwealth of Massachusetts Colony, respect Colony, with following significant half of the bonds the Old to Old makes representative public, assist- statement: ‘It is attorney general mod-'fy materially ant the Common- dear that likewise (it provisions joint report wealth of Massachusetts was under- of the in re agreement spect any stood attorney of the assistant the Old nul would be to lify general binding compromise agreement would not be on reached agreed upon negotiations Commonwealth), have after extended the compromise with little or purchase price. expectation suggested The basis of that the modifi compromise fully explained. acceptable prove has been cation would in desirability, parties. situations, again terested some The result The compromise delay been a further stated Su- consummation preme Ang- principal et Co., Court Case al. Los Ltd., Colony.’ eles Lumber Products debtor and 308 U.S. 1, 84 L.Ed. read this “We cannot While the otherwise than as price meaning agreed purchase accepted the Commission is smaller joint compromise report formerly than that amount termined, upon which we de- consideration, it, further fear that material modification present being disapproved (the price again Plans doubt gravest raises the present product whether 1943).36 December oí independent judgment, Commission’s certainly striking coincidence Such a acting whether it still the basis on sure, explanation. To rational demands a compromise. of the invalid Because indicated, abstractly we had it would doubt, show, grave try as I shall impossible (1) result intelligent explanation by allayed by any independent utilizing its own Commission’s astonishing coin- the Commission of this might exactly judgment coincide cidence, requires I think it reversal. previous result when But, frequent expressions of accepted compromise. rely unlawfully Here appropriate judicial undeniably, highly towards matching attitude would be *29 improbability, improbable coinci improbable.37 improbabilities. ade- While True, an since, it susceptible quately explained, proof,39 are not rever- dences would warrant sal; said, things poss “almost all improbable by for the definition be- has been — ible,”39a, eyed yet have often impossible not occur.38 the courts ing does —sometimes suspicious “afterthoughts,” improbable, however, skeptically, The does call highly put been explication. To it evidence a new trial which for considerable at has bluntly, complete identity, changed as to the to meet the a court which views of previous The “pi'ice,” judgment.40 former and reversed

course tention chase lowed independent a would result ment is whether or would compromise. holders of which pendently embodying by the binding upon sure of the reorganization. Joint appellant Commission and plan be it could fear immaterial unacceptable materially approved New Haven would not its Commission easy for Old judgment was influenced compromise provisions has those who The delay Commission exercised it was a route large be substantiated its That appellees as fair different. We it caused binding not might consummation exercising block fixing is to agreement signed binding assets and accepting by judge. approved until parties and argue have inde- agreement equitable, the Com- say, security but fol- consent it. agree- think pres- pur- con- But Of no A Preface hen and into the and Phen. Res. Nagel, Riechenbach, which the ability, colloquial its dividual and od * * * Symposium Porter, perience Ch. See, e.g., Jevons, (1934) (2d ^[37] Fortuuately, 38 See, e.g., Fourth acquisition” (2d XXV; Bridgman, “Improbability” ed. philosophic 426; Russell, Philosophy ed. in 12 1877) 2 Nagel, Logic refinements of the and Prediction relating sense of Cir., Commission had and 1936) Society Logic cases there is Ch. Encyc. Probability, 154 Fifth (1945) theories to the 13-16, 151-172; “unlikely Principles X; (1944) cited is used (1938) and Scientific The Reports. no need here Riechenbach, of Soc. (1938) Ch. 449-532; price Carnap, 464, Intelligent Ch. mathematical to occur.” 98-101. approved Arnstein here probability. of Science 469, Williams, VI; Sciences be 5 assets, Cohen, (1927) Meth in its Prob V; Phil, paid Ex Co In go v. A *30 will not "be by blinded” propor incredible statem strong must be bility,”55 “beyond pale degree statements of improbability.56 ents,47

Mo. 181. Thomann, 14 Fed.Cas. 104 Mo. 246; Gurley 369. v. 1172, Co., C., Moore, Tr. The William 417, v. F.2d Quock Casualty 709; Moore, 467, 469; 1302. 721; matic Tool Carter v. et al. v. Ueberweg Transatlantique, Phettiplace 777 Co. v. ^[46] 43 45 44 Ramopa 42 The 41Moore, Moore, Harbin, Commissioner, 278 Co., Kramme v. The Hook Fowler v. Hunter 116 N.Y. (Taney, J.); 88, 420, 779; Allen v. Fire Ass’n v. 22 L.Ed. 378. Ting Grismore, loc. F. loc. 8 Argo, 211, 16 89. Dauntless, Davis, C.C., loc. Co. v. v. Missouri Cir., 110 Wis. Carter, Timolat v. Emanuel v. Kansas 557, v. La 154 loc. v. cit., § v. S.W. page 852, Co., C.C., cit., Co. v. v. United v. Missouri Collins, cit., Roe, Gray, 1 Rob. 615, Sayles 127 F.2d 559. cit., C. 2 S.W. Windham, § 137. 2 9 § Pacific Steam 1059. 5 Fed.Cas. Weathered, Cir., A. Guston 11 Compagnie 140; Cir., 733, 9 Cir., York, Ship §§ 8 29 Fed.Cas. 598, 601, 34 F. Philadelphia et Pac. No. N.J.Eq. 11, 17; N.E. Cir., 131 F. Cir., States, 93, 175, 158, 159, 60 F. al., Pacific R. see 117 F. 148 F.2d Cf. 7,930. O. W. Ry. Co., 783, 784; 1146; 52 F.2d 129 5 19 180; also N.W. 205, & City & 5 American 257, 263; 461, 6 L.R.A. 140 England, Groth 14 Generale Fed.Cas. Whaling Cir., F. Co., 68, 70; quoted Hardy Cohen Pneu Smith 1300, S.Ct. T. & 210; U.S. 336; 501; 464; 708, Co., 715, 107 D. R. 54 cf. Moore, Latin 763; 479, 481; Bank, F. F. 514. 783, 621. The Gratitude v. The North German 479, 481; George App.D.C. 389, 127 F.2d 744. Sharpe p. 219. Gardner, Whelen v. Moore, Iowa A. 70 N.Y.S. Co., 131 F. States, 32 N.Y.S. 56, Optical For those who are 56 Murray White, ^[55] ^[53] 54 ^[52] Dougall ^[51] 50 George 49 625, 627; 692; 564, 566; Haworth Mintz v. Premier Cab 21 A. Chandler v. Town maxim, New York & Cf. 787; 28 Merritt & than Smith 533, 535; 169 Va. loc. 9 T. 625; v. Mfg. Co., 102 N.Y. R.I. In re Gaines’ Vreeland v. 564, 2 The El Cir., Morrison 336; Moore, Bisel Co. English Crispin, 627; Osgoodby, 398, cit., v. A.C. T. Bisel Co. v. v. et al. v. 180, “In Moore, v. Wood v. Gorman v. Hand Lloyd, 566 94 America, Dougall, Chapman Lee Stark, 402; Dorado, Gardner v. obscuris 66 C.C., F. (Eag.) 723, 667, Brooklyn Ferry ; v. Dominion L. Vreeland, loc. A. v. D.C., D.C., 834, 4 Amer.Law Rev. Sing Eutaw, D.C., more Davis, 62 American, Will, R. 52 Mack v. 6 N.E. Hubbell, loc. Welsh, C.C., 209; 61 D.C., cit., D.C., N.J.Eq. 571, Attica, C.C., D. S.E. 838. F. P. & Ass’n, 9 F. 120 F. Far v. United inspici App.Div. 282, impressed cit., Welsh, C.C.,. 84 Hun & C.C., 819, Weston, §§ 88 F. Gardner v. 95 F. 48 27 F. 707, 711; 730, 736; W. Co. v. 562, 293, 298; C.C., 165, National Brewing I, there D. Spencer 75 U.S. N.J.Eq. 821. 34 F. soler» 14 F. § Co. v. 564 N.Y. 762, 191, 512, 611, 172, 605. 27 520, 22 18 50 ; ; “pre pitifully They he in the lame. read of the so-called Because here: So fact, above, light their also noted officials do public sumption” Reports, Commis- when in earlier ordinarily Com its because duty,57 and freely compromise, adopted sion findings not “formalize need mission compromise, that, because of the admitted ex it relied on which data numerous “price is smaller amount than judgment,”58 expert, informed of its ercise formerly determined.” reduced discussion of Commission’s (al Report Sixth price in its given “reasons” Re- its the Sixth show, opinions colleagues’ though, my effect, port seeks, to re- lucid) exquisitely means admission; says tract that the now expressive of the broad sufficient as been price present actually smaller. Its reasoning of its outlines (not my “reasons” discussed by colleagues) —i/ Reports. previous preceded not been solely following consist statement: unmistakably Reports prior But, those purchase “It is true that the modified adoption com improper disclosed price is smaller face amount reor heavy rested on the Com burden promise, purchase securities ganized than the exercise to show rational mission approved report in our of February when, in the Sixth judgment, informed own seen, however, -win i>e 1941.59 com “negotiated” Report, it adhered probable market value the total ines price. promise overcome To amount of first securities impropriety engendered suspicion capable approved by equitable us as fair coincidence, improbable to rebut computed assigned rates such secu statutory a continued inference of resultant expert record, rities testimony of *31 Commission, by it was neces violation an aggregate $5,277,966 valuation (com think, “state sary, I Commission at puted the same rate) for total amount extensively reasons” far more than by securities found us as theretofore, for it had not employing equitable fair Third, Fourth, means, very price. bidden fixed the same Reports.”59a Fifth Sixth was, believe, report I necessary that conclusion, This the Commission showed convincingly, detail, reasoning some note, was “probable taking reached again arrived at its determina (as market values” 1943) of December price.58a tion of this Commission securities, according for the new to the “ex- Report nothing of its Sixth did the kind. pert testimony,” as follows: above, rejected As noted when we “Computation of values market of secu- previous Reports Colony, earlier toas Old purchase comprising rities price approved specifically said that Commission had report February for given “reasons the enormous re- & 90 — valuation,” duction in its earlier First ref. bonds.........$2,467,200 at $2,220,480 —40 3,289,600 Income bonds ............ at 1,315,840 “possible” that the would —20 Preferred 5,345,600 stock at .......... 1,069,120 adhere to compromise figure, and that Common —10 stock 5,345,600 at ............ 534,560 correspondence "such would not itself Totals 16,488,000 ................ >,140,000 invalidate” such a the Com- conclusion —if mission fully “Computation should “state the reasons” market values of secu- therefor. purchase But “reasons” given comprising the rities price approved Report by report Sixth for “correspondence” October as modified quod quod morally possible est, plerumque Bridlegoose verisimilius aut should have long space

fieri solet.” been for such a of time so 57 See, e.g., continually aleatory way United States fortunate v. Chemical in that Foundation, 1, 14, 15, deciding Epistemon 272 law S.Ct. debates. said Corp. Pantagruel good Peninsula v. United sooth States, D.C., 164, 180. F.Supp. perpetuity good such a luck is to be ease, Rabelais, cit., Milwaukee 318 U.S. at.” wondered loc. Ch. 43. 59 I.e., Supplemental Report. 87 L.Ed. 959. The First 58a “Panurge 59a Emphasis was somewhat incredulous added. believing in the matter of it was

M6 Income and corrected First 1944.60 Totals & bonds ref. bonds .............. ......... .... $4,398,305 report 3,298,728 at 7,697,033 ^[40] ^[90] February — - $3,958,475 5,277,966" 1,319,491 he estimated that vestment “market conditions as funding ruary 7, 1942, At a Commission bonds would sell at banker, Davis, first testified the new First hearing they exist experienced about held on that, 90, and today,” Feb- Re- in- which, appraise (to that the Income bonds “reasoning” of the Commission This said, considerably job”) “is a harder place, first In the features. notable several would 45. He sell between 40 and effect, practical maintains it now asked: then testimony,” the “expert on the basis of “Bearing in as those mind same facts higher than slightly $7,697,033figure you discussing have mind in figure fixed in $16,488,000 previous as probable price market for New Haven February 1941. Commission’s bonds, new fixed interest and new income objection on the judge, Yet the bonds, you opinion to the mar- rejected security-holders, earlier Haven preferred ket of the new stock and high $16,488,000 price too new common He answered: stock?” security-holders; to those unfair “Well, ques- suppose I answer that I from the com- $7,697,033price had resulted which, avowedly I most reluctant do so because tion. mi “negotiations” promise, to, preferred when it appraising comes previous price. intended reduce the were $7,- stock, common more many there are is correct —if If equation higher enter into the 697,033 fact somewhat price is in factors quess much more hazardous. make $16,488,000 price than earlier —it same set that I why say, to understand difficult of facts bonds, mortgage make $7,697,- my guess ect security-holders obj do for bonds, say the income I would around re- why the figure, judge did too, preferred stock and around 10 that the strange, Commis- ject it. It is stock.” three sen- common On those last suggestion mentioned sion nowhere tences, more, rests Third, Supplemental nothing *32 the Commission Fifth Fourth and its explanation alleged inde- of how its the entire Reports, explaining instead then that of happens price pursuant pendent judgment reasoned had lowered the match, adoption penny, negotiated compro- compromise to the because to a compromise prospect of mise. best “afforded the progress.” Pretty plainly, Commission’s explanation re- becomes more alleged “probable recent resort mar- (1) when it is observed that Da- markable values,” justify order to reduc-

ket only vis testified as to market values as tion, “afterthought.” is feeble testimony e., gave (i. time he his February 1942), place, but date second Commission rests that

In the computations attempted avowedly pur- which the Commission thereby its as of —and price ported accept his justification re- estimate of those mar- “enormous” of all on its determination ket values is December duction —not at own 1943—or ” Surely “probable market values Decem- months later. estimates of of 31, 1943, entirely “probable ber market values” of more than what? On —on computations Common, assigned $10,000,000 “at the ex- Preferred rates pert exclusively on testimony Inasmuch as based Davis’ 22-month-old record.” brief, principally exceedingly the reduction resulted hesitant and from the tentative $5,345,600 of alone guess, justify elimination of new Preferred cannot serve Common, $5,345,600 the “enormous reduction” in the “fair of new importance price, equitable” supply utmost nor serve just to see what ra- “expert testimony explanation amazing record” that as to tional coinci- entirety: it is those securities. Here in its dence.

60Emphasis original. as in misconduct, stances create Commis- an inference of following shows party explain so that relying exclusive- has the burden deliberately in sion acted inference, pro ing away that failure his knowingly testimony, and ly on Davis’ him, evidence, peculiarly duce available prob- its own estimates failed make explanation, yield which opinion of De- In his able market values: supports strengthens inference. judge, dis- district cember See, g., v. United treatment, e. Interstate Circuit cussing the Commission’s States, 208, 225, 226, claims Reports, of the Fourth Third and 467, 474, where the Court L.Ed. it could banks, had said that of certain said, circumstances, produc “The in such and Re- only First be sustained if the new strong weak when evidence market funding had an estimated bonds available can lead the conclusion say he could went on to value. He strong would have been adverse.62 by the Commission as finding discover value, record contained to that * * * Silence then becomes evidence nothing Davis’ other than on score convincing of the most character.” And testimony, and until the Commission party on evasive answers a crucial subject, he finding itself on that made a point drawing warrant of an inference Plan.61 approve could not that item the that a candid answer would have been ad- specific warning from face position.64 Wherefore, verse al- to his “probable judge market values” though judicial acceptance I would favor unless based on the Com- could not be used opinion the Commission’s own about the Commission, finding, own mission’s values,65 probable think the market Com- Report, purported justifica- in its Sixth explanation, sedulously mission’s price, tion of the Old made no such opinion statement of own avoids finding. exclusively refers Davis tes- timony, rejected.

Perhaps significant more fact: bearing probable Reliable mar data on judge, opinion The trial in his elaborate values, date, ket as of the critical Decem 31, 1945, August conclude, “I said: ber 1943—far more reliable than Davis’ therefore, Supplemental that the Sixth Re- reluctant guess twenty-two half-hearted port, Supplemental no more than the Fifth peculiarly months before that date —were preceded it, discloses the use accessible when made improper standard in arriving Report, May its Sixth some corresponding purchase valuation and the sixteen after the months critical date. The approved.” which I heretofore Which *33 Commission’s failure to to say refer such re was to that he still believed that data, and make finding, previous liable to own Commission’s reliance cannot, think, ignored. Apposite I compromise here no “use of im- involved an are the holding proper cases when circum standard.” Thus approaching the 61 particular item, i.e., States, As to that 293, Local 167 v. United 291 U.S. 298, claims, Report 396, Banks’ the Fifth took 54 78 S.Ct. L.Ed. 804. judge’s objection, care of the See also Charles Ritz Dist finding payment by providing Corp. C., Cir., 676, but F. 2 v. T. 143 F.2d ; Reikes, Cir., cash. 679 Lowenstein v. 2 60 F.2d 4 62 Citing 936; Equipment Clifton v. United States, 933, Acceptance Co. v. 247, Mfg. Co., 242, Cir., 11 Arwood Can 442, How. L.Ed. 957. 6 117 F.2d Burnham, 63 Citing Galloway States, 445. Cf. Runkle 153 v. United v. 216, 225, 837, 372, 386, 387, 1077, 319 U.S. U.S. 14 S.Ct. 38 63 L.Ed. S.Ct. 87 94; Kirby Tallmadge, 6 160 L.Ed. 1458. v. U.S. 64 See, 379, 383, 463; e.g., 349, Isherwood, 40 L.Ed. Cardoza v. 258 Bilokumsky v. 153, 165, 859; Tod, Kirkland v. Mass. 154 263 U.S. N.E. 221; Vajtauer Kirkland, 44 236 181 S.Ct. 68 Ala. So. L.Ed. 99. 65 Approach v. Immigration, Davis, An Com’r of 273 See U.S. Problems 560; 111, 112, of Evidence the Administrative Pro S.Ct. cess, States, (1942) 364, v. Mammoth Oil Co. United Harv.Law Rev. 416- L.Ed. 423. S.Ct.

44-8 opinion dis- (cid:127)subject, nowhere in his My reaction here must not taken as problem posed expression any general hostility cusses the central an an ade- Sixth there was agencies (nor administrative C. C. fhe I. —whether quate startling explanation of the similar- in particular).67** contrary, I On ity compromise price pres- and the detail, my objec elsewhere stated in some price. ent agen tions blanket denunciations those cies as engaged in “administrative absoluti then, submit, I the Commission’s think, often, Such bodies ate “valuation,” unaccompanied it is as sm.”68 demonstrably indispensable parts aof demo startling explanation rational co- of that government complicated cratic in a econ incidence, As should not be sustained. Mr. hamper omy; unduly their activities judges Holmes once suggested,66 Justice ne,ed judicial overmeticulous de naive. We review would extraordinarily ought stroy swamp their wordly-wise least needed to be at usefulness and recently: philosopher done, eminent who courts.69 Whatever is said the work theory dealing, agencies fair ex- these perfect, “On the will never be tremely improbable opponent be, more my per will than that of courts will hold four aces twice succession. When fection human matters is unattainable.70 happens, Especially actually hypothesis is that true when the undertak refuted; may ing “valuation,” exquisitely fair dealing is not relates ambiguous it, and prediction, well reconsider entertain the con- term describe a inherently trary satisfactory one a more account fallible human guess,71 of the situation.”67 course cannot be reduced to “mathematical Douglas, Democracy Holmes, Papers (1920) & Collected Finance (1940) XX; Guiseppi Walling, Ch. 608, 622, 623, 144 F.2d 155 A.L.R. Cohen, Logie A Morris Preface 761; Frank, Angels (1942) If Men were (1944) 111. 143, 146-147, 163-166, 179-181, 184-186. Maloney’s Pertinent here is de Russel 70Frank, loc. cit. lightful story Bainbridgo-, heard who fallacy argument “The stems chimpanzees that “if six set were largely recognition from lack of pounding typewriters work at ran six eely character word ‘value.’ dom, they would, years, in a write million bewitching which, years, word all Museum.”1 books the British peace disturbed mental and caused num experiment reported He tried * * * erous useless debates. Reams chimpanzees, mathematician that his good paper gallons good ink typed books, time, a short numerous have been wasted those who have including works, Twist, Oliver Pareto’s give precise to. tried it a constant writings Anatole and Trev France meaning. The truth is that it has differ elyan’s Macaulay. Outraged Life of meanings contexts, ent in different even theory this assault on the scientific in the restricted field ‘tax law.’ And probability, the mathematician shot there, always, as almost ‘value’ involves chimpanzees. Maloney, killed the See It’s conjecture, guess, prediction, proph Maloney Still esy. purposes corporate For 67a my opinions (favorable See reorganization, value, generally, a rea *34 C.) I. Cornell C. Steamboat Co. v. capitalization earnings sonable of future D.C., F.Supp. 349; States, United 53 reasonably foreseeable at the date Corp. States, Fordham Bus v. United D. reorganization; upon an reliance is had , 712; F.Supp. C. 41 see Woodruff also v. guess peering future, educated into the 949; States, D.C., F.Supp. United 40 Adi being conjecture, may a human States, rondack Transit Lines United v. * * * wrong. Anyone who wants to Royal C., F.Supp. 503; D. Cadillac 59 eliminate uncertainties from ‘value’ will States, D.C., F.Supp. Service v. United 52 getting along have a sad time in this 225. by cannot, world. We the use 68 symbol, Frank, ‘value,’ risky Angels (1942) If Men convert Were passim. risklessness, change Guiseppi Walling, into also 2 Canute See restless 608, Cir., out of 144 existence.” 155 A.L.R. Commissioner v. Mar shall, my dissenting opinion Duquesne Cir., 943, 946, 2 125 F.2d 141 A.L. R. 445. sioner, Warehouse See also Andrew's Co. v. Railroad Retirement v. Commis Board, 473, 479, Cir., Cir., 2 2 148 F.2d 135 F.2d 481-485.

[449] worse, by they from in the the treatment receive does result certitude” since * * * reorganization. computat mainte successful arithmetical “mere system depends profit nance of on fair our about the guess doubt such a No ion.”72 dealing cor inves of small railroad multitude great assets worth by disposition made tors. Cavalier of their claims frequently poration best can Commissioners, merely unjust, dangerous. is not Ac who it is men, like the C. I. C. “special cordingly, Commission, when the Such entrusted specialize in function. duties, equipped important experts,” dicharged better ists, such has are assisted way guessi suggests them in more than engage judges than most that, least, say ade prophesies, it acted without For administrative these ng.73 quate made, care, I “educated think the properly courts should inter when become unavoidably, last fere. They guesses.” are too, many as, de analysis, are “intuitive” previous appeal, On the we told this Com- these educated But cisions judges.74 mission had violated the statute reflection guesses from careful should stem surrendering judgment Re- to others. on the evidence.75 versed, it a report comes back us with manifesting regard no real for our criti- think, Congress, assign was wise to cism. position The Commission’s now specialists job valuing properties that we only must be satisfied it recites reorganization.76 of railroads in But the a formal abracadabra to which added assignment Cong reason was that sop a few words as a posi- to us.78 That anticipated specialists, ress these tion I satisfy think should not this court— ability, employ best their their not at all because I judges consider inher- they openly “trained intuition.”77 When ently Commissioners, better than for I cer- judgment, they abdicate their make a mock tainly Commissioners, do not,79 but because ery process. administrative And judges, like owe an obligation to do their then, they undesirably, do bring most job, prescribed statute, manner, in a process but, general disrepute, into which, practical limits, publicizes within too, they injury work a serious to the inter the rational performance. bases of their ested citizens. Railroad securities are not simply pieces paper; important grant 1 because of the “intuitive” factors bought the lives of those who factor, complete sometimes a articulation In respect them. reorganiza of railroad of the reasons for a breaking it decision— tions, I. may C. C. valuation decisions af up “legal into rules” and “facts” —is all but savings fect persons of thousands of impossible, since at times the “rules” and lives, whose children, and those their the “facts” interact.80 A decision some- may be drastically changed, for better or patterned times be a (a “ges- “whole” 51 son 940, 951; cock, Decisions, Corp., Cir., there cited. 542, 561, 72 Cir., L.Ed. Corp., Cir., See Milwaukee Cf. 73 Perkinsv. Endicott *35 204 128 F.2d Chicago Pound, 636; 63 2 Perkins v. Endicott Johnson Cir., S.Ct. 128 F.2d Perkins case, B. & Q. 208, 220, 221, 128 F.2d Harv.Law Rev. Theory 318 U.S. at page 747, v. Endicott John Ry. Johnson 220 note 46. 208, 220, Co. v. Bab and cases Judicial Corp., pages L.Ed. 221, 326, correct, Monograph ute of pp. Committee cases, Administrative Securities and on Cong., Co. played 78 Perkins ^[77] 132-133. Judicial v. Rutland R. 188 note 1st 128 F.2d Uses See New is as Sess., the S. E. review, v. Endicott Johnson which, important Exchange Commission, tho Doc. No. England and see Co., Cir., if the Commission is it was Attorney 220 note 46. inC. as was the Stat Coal & Coke suggestion said, Chapter Procedure, General’s Part 143 F.2d merely Corp., X *36 Chap. note, III. 131 and Mind Modern Montaigne said of oracular utteran- note. all, gives that “But above ces: concludes thus: Sixth “professionalism” perceived by their “expertise” or derelictions cannot be a called non-lawyer “just reviewing yet, as agencies, such court. hidden Their misconduct they con- gross judge’s then can in a be irremediable.88 perceive errors But when attempt ‘diagnosis,’— pretense effectively clusions, so an administrative a without misconduct, be want- physician’s may concealing reviewing a so a like that of — say possible logic judges think, That, can court ing in that should reverse them. I that cogency”; added is the case it lacks all here. * * * * * * cogency “the lack of To condone the conduct Commission’s judges however, fairly gross must be before give here is to aid and comfort to the ene- * *”87 * diagnosis In may reject process, mies the administrative sanc- case, an instance instant think we have tioning irresponsibility; administrative just “gross such a error.” process friends of that should be first adminis- judges, Doubtless some or denounce its trial abuses. If the courts de- judicially, acting pretend powerless remedy to clare themselves trative officers those abuses, so, judicial duty be doing doing their without in fact review will a become they may sufficiently astute sham.89 I neither believe Congress sifting, greatest play In, canvassing, examining them the obscure, ambiguous, room and curious gibber- matter, of tbe angularly doghole in fantastic * * * canting, scoundrels, ish nastie of their where from whence we shoot ** * nothing sense, popingay but shroud deliver vermiformal * * I, Essays, ehargeth But Defendant, all in a riddle Bk. that he botcher, 11. cheese-eater, Ch. he awas judicial opinion also trimmer See of Rab- of mans fleshembalmed, which * * * Pantagruel: heard, “Having seen, true, elais’ was not found as very calculated and dif- well considered Defendant was well discussed. The litigants, “the Court ference” between court therefore doth condemn and amerce regard porringers curds, saith to them that sud- him in three well quaking, shivering shining den and hoariness of together, cemented closed * * * bravely declining pearles flickmouse, payed like from to be unto private soltice, attempt by tbe estival said Defendant aboiit middle of August toyish May; surprisal but, part means the trifles in on the other having those, who unwell little Defendant shall be bound to furnish draught much, through hay stubble, stopping taken too him with caltrops throat, lewd demeanour and vexation of of his troubled and impulregafized, garbardines beetles, garbeled the diarodal climate inhabit with hypocritical Ape horseback, shuffingly, of an on before, and friends as with- bending Rabelais, out Crossebowe backwards. costs and for cause.” loc. *** just cause, truly cit., Plaintiife Bk. Ch. 13. stop Ockam, tbe Corp., with gallion, chinks Perkins Endicott Johnson good up 208, 221, woman blew 128 F.2d winde, having Since, with foot shod and one when a decision turns restoring credibility reimbursing witnesses, bare, other [a “his trial him, judge’s] ‘finding’ conscience, ‘facts,’ responsive low and stiffe in his pistaches many testimony, subjective inherently and wilde bladder-nuts eighteen Cowes, (i.e., actually what he there is of haire believes to be the embroiderer, scrutiny by others), and so as much facts is hidden from tbe disregard much for that. He is declared his likewise concealed of evidence is privileged always possibility. upper of the case from tbe An innocent danger Knapdardies, accept possibility, whereof into and must * ** thought too, recognize, had incurred he that such bidden miscon- Slacking top-saile, judge beyond and let- therefore duct trial lies its con- bullets, ting go Dissenting opinion btfulin the brazen trol.” in La Touraine by way Co., Cir., the Mariners wherewith protestation did Co. Coffee v. Lorraine Coffee paste-meat, great 115, 123, bake 157 F.2d pulse interquilted Freight with the dor- store United States v. Carolina mouse, Corp., whose hawks bells were made 315 U.S. Carriers 62 S. Hungary manner of after the L.Ed. or Ct. the Court lace, inquiry, Flanders and which bis brother said whether Panier, employed lying statutory Commission standards, law carried near guenles, or three chevrons bordered “is halted at the threshold heart, impossible droop- out of of the fact whilest was dean reason say ing those and crest-fallen too whether standards narrow *37 Supreme intended, interpret nor inten- imputing such Court decisions Congress.

tion to sum, arguendo, the Plan assuming,

In Colony mortgage

properly the Old treats lien,” action think the a “divisional Ga., Newnan, Lipford, of Wright Commission, of a because of the absence Ga., Atlanta, Dyer, Stonewall H. “arbi- be held explanation, rational appellant. be set trary capricious,” and should Atty., Cowart, U. S. John, P. James colleagues’ my ground, On that aside. Macon, Fort, Atty., both of Asst. U. S. H. correct, opinion I think otherwise Ga., appellee. should reverse and remand. LEE, McCORD, SIBLEY, Before Judges.

Circuit PER CURIAM. guilty of con- was found

Charlie West Revenue the Internal spiracy to violate manufacture, posses- relating to the Laws liquor. On sion, intoxicating and sale STATES. WEST v. UNITED the verdict is appeal contends that 11830. No. the court and that supported the evidence for a dir- his motion overruling erred Appeals, Fifth Circuit Circuit Court at close made ected verdict 2,May 1947. end government’s and renewed case of the trial. widespread

The evidence discloses Georgia. liquor operations in West illicit connected to be shown and others were operations and was found West with these vicinity made stills and at and in the liquor op property claims to used The fact West erations. of con on trial1 convicted defendants fatal incon constitute a spiracy does not States, Bryant sistency. United v. 120 F.2d 483. supports verdict.

The evidence judgment affirmed. Wyoming must know what a decision means before have been said has indeed become & Commission, Ct. cess.” right P. duty United R. long delay becomes Co., applied, Gas Co. obscure wrong.” States 324 U.S. 79 L.Ed. 294 U.S. ours should not then” v. I. See also Colorado- Chicago, M., C. C. perfunctory 499, Federal judicial say order, whether it induce the Court “review Power St. 55 S. “We pro us, P. seven an error. Bk. become so decision is on trial. because of ants conspiracy. about the defeated The indictment Bridlegoose escaped others, the outcome. Chapters long delayed, We fatigue, weary Two of the named defend arrest party ought theory 41 and persons unknown, charged will Rabelais, acquiesce were not litigation be indifferent if a parties proceed West loc. judicial placed cit., will ly as those of the Joint sions,’ mission findings the Old sible, still adhere to that proval mission dependent exerted respondence state Sixth approves Indeed Commission’s conclusions if it ‘shall such the district Report with an order fully must be to refrain from of value and course, may Colony assets. required reasons are not judgment “the make figures reversed compromise.” that the Commission reasons for provisions not in court’s its own as to which Report. section price. so that the Com- itself invalidate order We conclude concludes are the same independent its conclu- 77, Such cor- It is value pressure mere- pos- may ap- in- d, 5 and 6. wood Iowa Ry. al., 65 Iowa Co., Cir., 6 283, ard v. Co., Gelvin, 1917C, 983; 39a Moore,

[39] Kilburn A. C. Buser Co., 6 22 Lewiston, etc., State et cf. 20; Snyder & A. A. Fed.Cas. 178 N.Y. al.; 93 N.W. Chicago, Cir., Mfg. v. 151 F. 80, 82; Traveling Facts Walters Potts & 23 Fed.Cas. F. Novelty Tufting Co. 238 F. 740, 745; B. v. v. R. cf. v. 93, Am.St.Rep. Co. Norcross, Men’s Mutual Life & Co., (Taft, J.); Taylor Syracuse 97 Q. v. 101 Me. N.E. 136; Shep Sutcliffe v. Creager Ass’n, R. Machine Co. v. L.R.A. R. notes Hale Har- page Ins. Pa. 119 T. et belief, improb very held that also Rational courts have has been credibility.”48 “strong story requires said, subjected able to an enormous strain corroboration,”41 testimony, “inherently prob improbable” improbable Where the coincidences.49 adequately be disr are mathe explained, abilities coincidence matically high, “The circumstances of a case it is to be egarded.42 rejected.50 common, “utterly “against to make” such as evidence is true of statements same incredible, although experience at Particular there are confident observation.”51 support it,” contradictory ly testations said Lord this the case where court, A Judge fact L. statements been “The remarked Stowell.43 made.52 Hand, obliged eyes is not to close “and several in witness stories has told credulity assume a man volving sensible similar events tends fortuitous * ** ”44 Improbable can conflict his- evidence between create been testimony held insufficient to justify interference and normal experience.”53 with' Evidence, support improbabilities a man’s to evidence to rights.45 facts, human conduct contrary flatly proof must “The measure of strong.54 general knowledge experience required proposition common establish will not “eye necessarily vary degree proba law” accepted.46

assign 46-50. ter notes part, tion achieved if 76 However, cooperation courts to the advisory and 77 were amended so as to reduction of I. C. between the role similar C., in delay reorganiza substantial might and bet to that be Method ing, “added three words to a (1942) 186-188. 79 80 Wurzel, See tho (1917) Frank, volume, Methods of Juridical Think 390, If Men The Science of 396-399; conveyance.” Were In re J. Angels Legal 450 still, artificiality, perhaps can- “woosh-woosh.” better which, without some talt”) this: pertinent diffi- then be analyzed.81 This doctrine would nicely not be thus ceremonially credibility woosh “When I. the C. C. has culty when the greatest wooshed, involved; judicial scrutiny is barred.” problem but no witnesses is too, dispense, here. be C. would then desirable to credibility I. C. confronted the ritualistic present difficul- with for the the Commission’s Moreover, allowing while etc.,”83 formula, consideration, officers, mem- into ties, judges “Taking or government meaningless replacing act- patently when it with agencies, bers of administrative spelled perhaps be as words obligation to the same ing judicially, have words — noitaredisnoc, backward, e., For possible.82 (i. “Gnikat otni practically articulate foolish government etc.”).84 Then no one would be aspect of a democratic no in a figures believe enough to mysterious. be anything necessarily have Commission however, is sustained If deliberation, everyone would to do with but simi case, and, accordingly, behaves been figures well have might know cases, will larly then conduct in future omphalic or inspiration,85 product “valua mystery. Its so-called be indeed aleatory ornithomancy, haruspication, or matter, acceptable, be will then tions” devices, and that conclusions event, it would In that how contrived. might conjurations C. well I. C. “valuation” the word abandon desirable to mystagogues.86 connotes misleadingly that word —since that, moderately judges, judgment This court has said while rational some —and term, agencies, of mis when reviewing neutral devoid administrative substitute some or, modest, “aluation,” associations, so- such as must allow for leading Linahan, “Upon Cir., taking F.2d 653 further consideration and P. prior-lien into consideration note 16. claim 81 See, e.g., Koffka, Gestalt, principal estate, the uncer- 6 Enc. debtor’s Timberg, tainty 642; (1931) some com- of Soc. items Sciences Findings Fact, prising non-operating assets of Old Administrative 65; (1941) Malone, subject, L. Q. are the results of Wash. U. Contributory segregation studies, Era and Formative severance Negligence, (1946) probable segregated earnings Rev. Ill. L. future and advantages Psychology pend- Ogden, 179; settlement of Structural claims; ing considering Gestalt, general Psychology also the and The public interest; Rice, volume, Social we conclude and find that Methods in Science Knowledge paid prop- 109; Lynd, (1931) to be for What? erties, franchises, Chap. II; George, (1945) The Scientist and assets 128, 132, 133, 134, terms, (1938) 120, limi- and conditions and under the In Action Experience tations, Reichenbach, 334; forth in the modified set approved 100, 220, (1938) re- us our Prediction port 6, 1942, Forness, and order of October States United reports our 928, 942, modified corrected July objection February thoroughly orders of 8, sound It is not approved.” should be far to such articulations rule, analyze “wholes,” they attempt Had been the Commis- all For sion’s Sixth wo'uld concluded almost “rationalizations.” “Nopu analyses are, sense, thus: rehtruf logical noitaredisnoc dna “ra- roirp-neil serves, gnikat among Logic otni noitaredisnoc eht oth- tionalizations.” validity things, mialc etc.” to test conclu- er ' expedient spelling non-logical processes. thus As sions reached misleading Experience e.g., Reichenbach, avoid words backwards to See, reader, George, 4-7, 381, (as (1938) see Scientist In Ac- Prediction (1938) 109. between the “context of distinction the discovery” omphalos justifica

[85] As to the use “context of and the activities, see, e.g., Logic Harrison, Cohen, oracular tion”) ; A Preface 396-424; (2d Rhode, 116; Nagel, 1-3, 115, ed. 1927 (1944) Themis Cohen 1925) 97, 110, Psyche (transl. (2d 1936) Logic note Method Scientific ed. Joyce’s Gilbert, Ulysses 390; Frank, James 18-20, Law and The cf.