277 Mass. 209 | Mass. | 1931
1. This is an appeal by a creditor of the defendant from a decree entered on August 28, 1931, whereby the receivers of the defendant were authorized and directed to sell its entire business and assets to named purchasers upon specified terms. The business and assets consisted of a large and long established department store conducted at the corners of Tremont, Beacon and Somerset streets in Boston. Upon petition of the plaintiffs as creditors of the defendant, receivers were appointed in December, 1930, to take possession of all the property and business of the defendant and to conduct its business. In May, 1931, petition was filed by one of the creditors of the defendant setting out that the business of the defendant had been conducted by the receivers at a loss, and praying that the receivers be directed to sell all the assets of the defendant. After divers intermediate proceedings,
2. The receivers were directed to advertise for bids for the purchase of the business and assets of the defendant as a going concern. Three sealed bids were received and were opened by the judge on August 17, 1931. In order to enable all parties interested to study the bids, adjournment was made for three days and hearings were held on August 20, 21 and 25,1931. The acceptance of one bid was not urged. The acceptance of the Greenberg bid, so called, was urged by some, and of the Bird bid, so called, by others. The receivers opposed the acceptance of any of the bids upon the ground that they believed all the bids were inadequate and that, if allowed to conduct the business for a few years, they could ultimately provide for the payment of creditors in full. Before deciding which bid, if any, should be accepted, the trial judge heard all parties who desired to be heard, including the receivers, parties favoring the acceptance of one or the other bid, certain creditors opposed to the acceptance of either bid, and the chairman of a creditors’ committee who stated that its members were divided in. opinion as to the bid to be accepted. At the suggestion of the judge, both bids were amended or modified in writing and were presented at the hearing on August 25. On that date the preparation of a decree for the acceptance of the Bird bid as modified was directed by the judge. Further hearings as to the form of the decree were held on August 27 and August 28, and on the latter date the final decree of sale was entered. The Greenberg bid having expired by its own limitation on August 27, Greenberg asked for and procured the return
The appellant was dissatisfied with the report of material facts and filed a motion for modification of the report setting forth at considerable length facts which, as it alleged, ought to have been included in the report and other facts which ought to be deleted from the report. This motion was supported by affidavits as to facts, but was denied after hearings and the creditor appealed. The appeal from that denial presents no question of law. When a judge reports the material facts found by him, either voluntarily or in response to seasonable request under G. L. c. 214, § 23, he does not make a report of the evidence but recites certain facts which he considered as material and which in his opinion formed the basis of his decision. It is not a new or additional proceeding after the termination of the case by final decree, but is in the nature of an extension of the record in the form of a statement of facts in the mind of the judge when his decision was made, which, when included in the record, puts the case in proper form for hearing on the appeal. Worcester v. Lakeside Manuf. Co. 174 Mass. 299, 300. Berman v. Coakley, 257 Mass. 159, 161. Martell v. Moffatt, 276 Mass. 174, 177. The judge knows best what facts were material to his decision and he cannot be compelled to include in such report facts which in his own mind were given no weight in reaching a determination as to the rights of the parties. There is nothing wrong in suggesting to the trial judge a change in such report in appropriate instances. But such suggestions are addressed to his sound judicial discretion and cannot form the foundation of review of his action by
If the parties had desired to secure review in this court of the facts found or decision rendered by the trial judge because plainly wrong on the evidence before him, appropriate steps should have been taken in conformity to the rule, the statute and established practice to have had the evidence reported. This rule of practice applies equally to cases heard on oral or written evidence, or on statements made by counsel and received as basis for judicial action. Romanausky v. Skutulas, 258 Mass. 190. Columbian Insecticide Co. of Boston v. Driscoll, 271 Mass. 74, 77. Commonwealth v. Suffolk Trust Co. 161 Mass. 550, 551. Cook v. Mosher, 243 Mass. 149, 152. Dwyer v. Dwyer, 239 Mass. 188. Having failed to follow that clear course, the parties must accept the report of material facts as finally made by the trial judge. There is no short cut to avoid this, and no other way to deal with an equity suit on appeal. Sullivan v. Roche, 257 Mass. 166, 168-169. It follows from these settled principles that challenge of the correctness of facts set forth in the report by the appellant is ineffectual at this stage except so far as they appear on the face of the report to be mutually inconsistent or plainly wrong or incompatible with the pleadings or other documents set forth in the record.
3. The first contention urged by the appellant is that on the face of the respective bids the Greenberg bid, rejected by the court, is far superior to the Bird bid, ordered accepted by the decree of sale. The main difference between these two bids consists in these facts: the accepted bid would make available to the receivers approximately $378,000, and would give to the receivers releases from claims of the owners of the real estate occupied by the defendant for unpaid rent and for restoration of the buildings to their condition as separate pieces of property, amounting as estimated to about $410,-000; and the receivers would also be discharged of a claim of about $100,000 by The Sperry and Hutchinson Company
The landlords present further claims arising from the fact that, prior to the receivership by agreements with the tenant, the buildings on the leased premises were remodeled into one structure for use by the tenant as a single department store under a unified management, and without regard to an alleyway owned by one of the lessors over which the other lessors had some rights of passage. Owing to the construction on the two properties of buildings which, if not occupied as one, lacked several side walls, both leases in force when the receivers were appointed contained provisions compelling the tenant to restore at or before the expiration of the respective terms, the walls and other structures necessary to leave each landlord with a complete, separate building. Estimates were presented to the trial judge showing that the total cost to the tenant of making these restorations and reconstructions in accordance with the requirements of the leases would be approximately $278,000. The validity of these claims was strongly urged in behalf of the landlords, but stoutly contested by others in interest. The trial judge states that he heard all counsel who desired to be heard on that question.
The facts found by the trial judge concerning the claim of The Sperry and Hutchinson Company are that it was based on a promissory note for $100,000 given for a loan to the defendant, which was secured by the entire issue of fifteen thousand common shares and by six hundred twenty-four of the preferred shares of the Houghton & Dutton Building Trust representing the equity in the larger part of the building occupied by the defendant. The Bird bid required the delivery to the purchasers free and clear of liens of all these shares, while the Greenberg bid in its final form was not based on such requirement. The Sperry and
The appellant supports its contention that the rejected bid on its face is far superior to the one accepted by numerous calculations and analyses of the debts and assets of the defendant. It is not necessary in detail to recite or to refute the relevancy of these arguments founded upon figures. The ordering of a sale of property in the hands of a receiver and the price and terms of such a transfer rest mainly in sound judicial discretion. Unless a decree of that nature is based upon material error of law, it will not commonly be set aside save in instances where there has been abuse of discretion. The chief object of a receivership is to conserve the property of a debtor for the benefit of the creditors and other persons interested, and to bring judicial custody to an end at the earliest moment consistent with the welfare of those concerned. In the main, the largest practicable results for the creditors ought to be achieved. The course most likely to bring to pass such results not infrequently depends upon the exercise of practical wisdom and business sagacity rather than upon arithmetical computations and the niceties of disputatious argument. No mean factor in the administration of a receivership is to end incidental litigation as soon-as is consistent with fair dealing and reasonable expedition
It is manifest that, if every doubt could with the assurance of certainty. be resolved in advance against the disputed claims already described against the defendant, the rejected bid would yield a larger return to the business in the hands of the receivers. It is equally manifest that all such doubts cannot thus be resolved. The record as a whole appears to support the conclusion of the trial judge that the claims of the lessors might be supported on strong reasoning. Those claims afforded grounds for litigation fruitful in protracted delays and uncertainty of outcome, with accompanying inevitable expense. The extent of these delays and the probable result of the litigation and its necessary expense cannot be foretold. It is contended by the lessors that the probability of their claims is established by William Filene’s Sons Co. v. Weed, 245 U. S. 597; Pennsylvania Steel Co. v. New York City Railway, 198 Fed. Rep, 721, 740-742; Gehr v. Mont Alto Iron Co. 174 Penn. St. 430, and similar cases. The appellant contends that such claims cannot be established as to the items arising since the appointment of the receivers upon the authority of cases like Old Colony Trust Co. v. Medfield & Medway Street Railway, 215 Mass. 156, 162; Shaw v. United Shoe Machinery Co. 220 Mass. 486; Davis v. Mazzuchelli, 238 Mass. 550, 556, and Meltzer v. Cohen, 260 Mass. 466. It is not necessary to enter into a discussion of those contentions, or to make any intimation as to their relative validity. They were not before the trial judge for final decision.
The value of the lien held by The Sperry and Hutchinson Company on the shares of the Houghton & Dutton Building Trust, and the extent of its equitable claim to payment in full out of the general assets of the defendant, in preference to other unsecured creditors, do not seem on the surface to stand on too firm ground. No argument has been addressed
The essential contention of the appellant is that it was an abuse of discretion on the part of the trial judge not to settle these controversies before accepting the Bird bid, or to prefer that bid above the Greenberg bid without such adjudication. The question before the trial judge was not the proof of claims. The question was primarily whether the active receivership should be ended by sale of the business and assets of the defendant. That question was decided in the affirmative when the decree was entered calling for bids. That decree has not been assailed. It was then a practical question before the court after the bids were ready for consideration. The receivership had been conducted at a loss. The judge thought it ought to be ended. The maker of the Greenberg bid had not made any arrangement with the lessors to continue in occupation of the real estate. The makers of the Bird bid had an executed lease to themselves of that real estate delivered in escrow conditional upon being the successful bidders.
4. The appellant contends that the claims of the lessors and of The Sperry and Hutchinson Company are without foundation and are asserted as part of a “collusive effort” or a “conspiracy” to give The Sperry and Hutchinson Company a preference and to continue the operation of the business of the defendant in hands acceptable to the lessors and to the receivers. That contention has perhaps been sufficiently answered by what has already been said. Dealing with it directly, that contention has no support in the record. The words “collusive effort” and “conspiracy” import moral obliquity. According to their natural meaning, they signify an attempt to perpetrate a fraud. Such conduct is not to be presumed. It cannot rest upon surmise or conjecture. It must be proved by direct evidence or by justifiable inference from established circumstances. There is nothing sinister in the conduct, either of The Sperry and Hutchinson Company or of the lessors, disclosed in the findings of the judge. His conclusion already quoted upon both these matters is explicit in favor of good faith, and further that these claims are supported “by many forceful considerations.” The edge of these findings is not dulled by the fact, if it be a fact, (not appearing on the record but asserted as part of the motion of the appellant for modification of the report already described) that an officer of The Sperry and Hutchinson Company was a participant in
5. Certain specific objections to the decree of sale not already discussed remain to be considered. Unequivocal assertions by the trial judge that everybody who desired was given a full hearing are not to be met by affidavits to
Attack is made on the clause in the decree of sale to the effect,(1) that the sale should not be completed by delivery of possession, control and operation of the business until, either the time for taking appeal had expired or the decree should be finally affirmed after appeal, and (2) that in the meantime the receivers should continue in possession, operation and control of the business for account of the purchasers if the sale went through; otherwise, for their own account. This was a proper provision in the decree of sale. It safeguards the rights of the defendant and its creditors if the decree should.be reversed. It is fair to the purchasers if the decree be affirmed. Its tendency is not to make the sale optional with the purchasers up to the time of final disposi-, tian of the decree of sale.
The contention that the decree of sale does not conform to the bid as modified is without merit.
6. A decree was entered on August 28, 1931, (prior to the entry of the decree directing sale of the .assets) on joint petition by the lessors of both parcels of real estate, granting to the respective lessors permission to enter upon their respective premises to terminate their respective leases for any default existing in the performance of the terms and conditions of the leases and to repossess themselves of their premises, and permitting the receivers to occupy the premises as if there had been no reentry until the further order of the court. From this decree the same creditor appealed. No evidence is reported touching the hearing on this petition. No facts were found respecting it. The only question presented on such an appeal is whether as matter of law the decree could have been entered on the pleadings. It is too, plain for discussion that the record discloses no ground for disturbing that decree. Brogna v. Commissioner of Banks, 248 Mass. 241, 243. Levinson v. Connors, 269 Mass. 209, 210. If and so far as any matter touching this decree is open upon the report of material facts, it is included in what has been already said. No error is shown in this particular.
7. Several appeals from other decrees are included in the.
8. The appellant, on October 15, 1931, filed a motion requesting the inclusion in the record of “Suggestion A” and “Suggestion B,” which were statements by counsel that numerous creditors with claims aggregating a considerable amount approved its appeal and desired that it be sustained. There is no such practice in equity as was here attempted. Appeal from the denial of this motion presents no question
The case has been considered as if the Greenberg bid were still available. Statement to that effect was made at the bar. That assumption has been made in favor of the appellant. There is nothing on the record to support that assumption. However that may be, and whether it is still open or not, every contention put forward in behalf of the appellant has been considered. Further discussion is not required. Decree of sale and all other decrees and orders appealed from and disclosed on the record are affirmed.
Ordered accordingly.