164 F.2d 466 | 2d Cir. | 1947
The trustees in reorganization of the New York, New Haven and Hartford Railroad Company, appeal from an order dismissing a petition in which they asked leave to pay off loans made by the Reconstruction Finance 'Corporation — which we shall call the “R.F.C.” — to the railroad with interest at four per cent, instead of at five per cent at which the road had borrowed the money. When the reorganization proceeding was begun on October 23, 1935, the road had already borrowed of the “R.F.C.” more than $7,000,000 upon notes bearing interest at five per cent, for which it had put up as collateral an assorted group of securities of the “New Haven System.” From November 1, 1933, until shortly after the proceeding began, the “R.F.C.” had accepted four per cent instead of five, but it thereafter demanded five per cent as stipulated. The trustees in reorganization tried unsuccessfully a number of times to induce it to go back to the lower rate, and finally on December 21, 1938, Jesse Jones, Esq., chairman of the “R.F.C.” wrote them the letter which wTe quote in the margin.
We addressed ourselves first to a point which appears only in the trustees’ reply brief on this appeal in answer to an argument in the “R.F.C.’s” brief that the law of New York does not recognize the doctrine of “promissory estoppel,” on which the trustees rely. They invoke an amendment to § 33, subd. 2 of the New York Personal Property Law, Consol. Laws, c. 41, made in 1936, under which “an agreement * * * to discharge in whole or in part, any contract * * * shall not be invalid because of the absence of consideration,” if it is in writing and signed by the party. They argue that since the notes were made in New York and were payable there, the validity of the promise to discharge a part of the interest must be judged by the law of that state, and that Mr. Jones’s letter satisfied the conditions prescribed in the section, although the promise was not made in New York. We refuse to decide this question, for, although it is true that we may affirm a judgment upon grounds not urged in the lower court, we may not reverse one upon such a ground.
Coming then to the questions open to us, we start with the finding — for we deem it one— that “the failure of the Trustees to refinance the R.F.C. loan may more reasonably be attributed to the shape of the plan and to their reluctance to introduce an additional complication into cumbersome proceedings than to the inducement of Mr. Jones’ promise.” Certainly there was enough support for this in the evidence to prevent our holding that it was “clearly erroneous.” We need not decide whether any alternative refinancing would have been possible; but we do de
Nor is their second ground any stronger: i.e. that the letter was a unilateral offer in consideration of their bestirring them-SL'lves “to speed up the payment” of the notes, which they accepted by repeatedly asking and getting leave of the court to sell the collateral, by virtue of which they made “various sums (aggregating nearly two million dollars) available.” The letter admits of no such interpretation, even though the condition was also a consideration; it did not ask for efforts by the trustees; it required that the loans should be “fully paid.” It is impossible to torture those words into an effort to do the best one could, when one could.
Order affirmed.
“RECONSTRUCTION FINANCE CORPORATION WASHINGTON
Jesse H. Jones Chairman of the Board
December 21, 193S.
Dear Sirs:
Referring to your letter of November 10, beg to advise that if, in the reorganization of the New York, New Haven and Hartford Railroad Company, the claims of this Corporation have been fully paid, this Corporation will accept 4 per cent from the date of the bankruptcy in full settlement of the interest, regaidiess of the rate named in the face of the note.
Should the road not be able to arrange private financing on reasonable terms, we will be glad to discuss with it a loan to the reorganized company for this purpose and to effect a reorganization.
Yours very truly,
Jesse H. Jones,
Chairman.”
Virtue v. Creamery Package Co., 227 U.S. 8, 38, 33 S.Ct. 202, 57 L.Ed. 393; Becker Co. v. Cummings, 296 U.S. 74, 80, 56 S.Ct. 15, 80 L.Ed. 54; General Utilities Co. v. Helvering, 296 U.S. 200, 206, 56 S.Ct. 185, 80 L.Ed. 154; Helvering v. Tex-Penn Co., 300 U.S. 481; 498, 57 S.Ct. 569, 81 L.Ed. 755; Hormel v. Helvering, 312 U.S. 552, 556, 61 S.Ct. 719, 85 L.Ed. 1087; Libbey-Owens-Ford Glass Co. v. Sylvania Industrial Corp., 2 Cir., 154 F.2d 814, 816.