Pennsylvania Steel Co. v. New York City Ry. Co.

180 F. 514 | U.S. Circuit Court for the District of Southern New York | 1910

RACOMBE, Circuit Judge.

Notice of hearing has been given and representatives of various interests have appeared. The facts are fully set forth in the petition and its several schedules which were filed June 29, 1910. The situation of the judgment and the suit is specifically treated of in the opinion of counsel filed therewith. Irrespective of the other considerations referred to, the cash offer of $5,500,000 is a large one. The total amount of receiver’s claims, including interest, is $8,615,555.24, but to recover that sum it would be necessary for him to prevail on substantially every one of the questions in controversy between himself and the various defendants. Defeat on two or three points only might result in producing after some years a smaller sum of money than is now offered. What these controversies are may be seen by reference to the opinion of counsel. In the one case it is apparent that the question raised would have to be taken to the Supreme Court in view of its decision in Old Dominion Copper Co. v. Lewisohn, 210 U. S. 206, 28 Sup. Ct. 634, 52 L. Ed. 1025. Whether that court would take the broad view contended for by the receiver and which is essential to his success no '.one can foretell. Irrespective of the other serious questions referred to in the papers presented, it is to be remembered that the suit against the Metropolitan Securities Company impleaded with certain directors of the New York City Railway Company is one for a diversion of capital of the last-named company to the treasury of the former. Whether or not under these circumstances interest could be recovered against any one other than the corporation defendant which received the diverted capital is problematical. That corporation is already bankrupt. ' The item of interest on this claim alone amounts to $1,200,000. In the other suit, called the stockholder’s suit, the various defenses are set forth in the opinion of counsel, and it is manifest that there are difficulties in the way of recovery which indicate a protracted litigation with no cer-i tainty as to the ultimate result. Moreover, if such litigation were entirely successful in all respects, the result would be a large judgment against another corporation concerned with traction in this city, and as the .experience of this receivership has indicated, it sometimes happens that when a particularly large judgment is obtained against such a corporation it turns out to be insolvent.

'■ In view'of all these circumstances, it seems" wise for the receiver to accept the offer, and he is instructed to do so. Even if the court entertained any doubt as to the wisdom of such á course, the same instructions would be giVen in'view'of the substantially unanimous expression of approval by the representatives of the creditors and of all other interests, who have appeared. ' The- receivers and their counsel are to be congratulated on the great success which has attended their untiring efforts to secure something-out of'the choses in action which the initiation of the receivership placed in their hands.