The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-06-13
law IS HELD GOOD
JUDGE OTIS PASSES UPON THE
POINT RAISED BY GERMANIA
DEPOSITORS,
WHO OPPOSE THE REOPENlNG
THE COURT HOLDS THE LAW TT
BE CONSTITUTIONAL AND
GOOD.
VESTED RIGHTS NOT INVOLVED.
The Main Application for ReOpeninG
Will Come Up for Argument
Saturday.

Judge Otis has denied the motion CT
the Directing creditors to dismiss the
application for the reorganization or
the Germania bank The motion to dis
miss was based on the contention that
the law Of 1897, under which it is pro-
posed to reorganiZe the bank, is UNI
constitutional, as interfering with vest
ed rights and impairing the obligation
of contracts
Judge Otis holds that the law is con-
stitutionaI and the plan of organization
a practicable one, and, therefore, de-
MES the motion to dismiss the appica-
ton. Judge Otis read the order from
the bench yesterday forenoon. After
reviewing the law Of 1897 providing for
reorganization, the order is as follows:
1t has been held competent for the legs-
lature TO provide for assignments and re-
! ceiverships whereby the entire assets and
! property of the insOlvent may be dis ributed
/ among those creditors fling releases to the
exclusion of all others. When an assign
ment is made the property passes to the as
| signee in trust for the benefit of such cred
Tors as may see fit to accept the provisions
thereof, and the same is admin stored by the
court through such assignees in accordance
with Law. 1t is competent for the legislature,
with respect to the ass igned property, 10 make
der reasonable conditions and restrictions,
and to compel such accept the benefits of
the assignment to abide by the provisions
made in that behalf. AS to assignments,
| then, made after this law took effect, and
| before righ.s of property have become vested,
! there is no reason why every provision Of the
! act wherever applicable, may not be given
full force and effect and be construed as an
extension Of insolvency laws In such
cases, dissenting creditors may be required
to abide by such plan as the court in the eX-
! ercise of a reasonable discretion, and within
! the provisions of the act, may see fit 10 ap-
prove, and to share equally and ratably, and
not otherwise with the consenting creditors,
! and be paid only in the manner and at the
| time they paid.
1t goes without saying that in any Gaze,
whether the assignment be prior or subsequent
to the passage of this law. where all creditors
| consent, the court may approve any plan Of
! reorganization within the law, and al cred
| itors will be bound by 1t. l hold, upon the
! authority Of Gilfllan the Union Canal COM
| pany, that all creditors not appearing to OBJ
! Ject at the hearing are to be classified as as
Senting creditors.
1t follows from what have said, that with
reference to TWO classes of cases. at least,
this act is not open to the objections urged
against it, but is both constitutional and sus-
ceptlble of practical application 10 such cases.
! Can it apply to prior assignments such as
! the one at bar? By its terms it is intended to
! apply to such case, and in constituting it's
| terms 1t is necessary to keep in mind that it
| is intended to cover the three classes of cases
! l have suggested, and it's provisions should
| be considered in the light of such intention.
! There is no reason why it may not apply to
! prior assignments provided only it does not
! impair vested rights. 1t is to be observed
that large discretion with reference to the
plan TO be adopted is vested in the court
and its approval is essential to its validity
i The court acts according to legal rules and
any provision of the plan within the province
| OF the act which may contravene any substan-
/ tial right must be rejected, although entirely
applicable and enforceable under conditions
unlike those here presented, such for in
! stance, as those to which | have before al
| luded. There pervadeS throughout the whole
act intention that vested rights and cor
| tract obligation shall be preserved, and
! fail to find in any Of its provisions any re-
| quirement upon the court to act otherwise
| As before suggested, there are special pro-
visions for the protection of dissenting cred
ltors, and there are cases as we have seen
when these provisions may be badly incor-
porated into the plan in the very language Of
the statute, and creditor could be heard
TO complain, but there is no limitation upon
the court in the manner and matter of the
Plan which 1t must APPROVE, save only that
! of reasonable discretion. Nothing prevents
| the insertion in such plan other of conditions
III r. quirt inert VIII CHI it may deem nec1s ary
and proper for their full protection under the
law. To ignore the vested rights of dissent
| ing creditors cannot be an excuse OF reason
| able discretion. and is clearly inhibited
| as if 1t were expressly writ.en into the law.
1t follows then that the act even as to
prior assignments is not unconstitutional and
within proper limitations is applicable to
| them the same as In other cases.
| 1t is not necessary at this stage of the pro-
| ceedipg to determine definitely what these
limitations are, what conditions may be i'm
posed or what provisions inserted to protect
dissenting creditors. Manifestly if the court
should adjudicate their claims and direct
| payment IN full, though as a condition pre-
cedent they would have reason to COM
plain. They would then cease to be creditors
and since all others are bound by the plan as
adopted, the suit against stockholders must
necessarily abate. l simply suggest such
course by way of illustration, and by no
means intend to hod that this is the only
| solution. If dissenting creditors are satisfied
| Of their claims they ask no more. They
| are entitled only to equal protection under
the law with other creditors, and when they
| have been 50 protected and have secured all
! that accrue to them from existing condi-
tionS, they must be satisfied. Whether an ad-
| judicat.on Of their interests and the value
| thereof under the direction OF the court may
| be made, some other scheme less than full
! payment be OWNED may be considered and de-
| termined later in the proceeding. AS at pres
ent advised the court holds that chapter SO
| is not unconstitutional, nor is it impracticabie
upon the face of the papers before the court
to apply the provisions thereof in insolvency
proceedings pending at and prior to the time
Of its passage.
! I have not overlooked the claims that chap
ter SO is repealed by chapter 1856. While it pre-
scribes certain conditions, other than those
/ in the general banking law, which will au-
thoriZe adjudication Of insolvency, one Of
! the main purposes of this chapter 156 is to
/. supplement and bear out, reorganization pro-
ceedings of the Kind now before
From what I have said it follows that the
| motions to dismiss must be and they are
| hereby denied.
l. At the close of the reading Of the
order, the court. after some argument
with the attorneys and suggestions
from them, fixed next Saturday when
the main application to reopen will
| he