Evening star., 1934-09-24


O representative of the Bondholders'
Committee for S2,800,000, the pur-
chaser agreeing to assume the 4,000,-
900 of underlying mortgages.
Sale Later Ratified.
The sale was subsequently ratified
by the lower court over the objections
of the non-depositing bondholders,
who represented approximately per
cent Of the outstanding bonds.
In ratifying the sale, the lower
court said in part:
The court regrets that the price
received does not bear a better rela-
ton to the assessed value and market
value, as testified to by various wit
neSses. But nothing in the evidence
gives hope for a better price if the
bid is rejected and the property again
offered for sale"
From this order of ratification. the
appeal was taken
The principal contention of the ap-
pellantS was that the New York bank
ing houses had acted fraudulently in
the reorganization, that they domi-
mated the protective committee and
that the decree of sale was not CAL
culated to secure the best possible bid
for the properties.
The majority of the Appellate Court,
in approving the sale for the time be-
fng. said in part:
Our conclusion based upon the
very unsatisfactory record before us
Is that the charges of fraud made
against the New York bankers rela-
tive to the inception and organiza-
tion of Wardman Real Estate Proper
ties, Inc, as a corporation and the
issuance and sale of sll,000,000 Of
mortgage bonds secured upon the real
estate held by the corporation seem to
be probably correct.
Held Not Fraudulent.
But, on the other hand, when it
became apparent that the properties
owned by the corporation were in
sufficient to pay the interest upon the
bonds or the principal thereof, 1t was
not fraudulent or illegal for the hold
ers of the mortgage bonds to enter
into a plan of cooperation whereby
they might convert their bonds into
the ownership of the mortgaged prop
erty. The proceedings held in pur-
suance of this, so far as the record
discloses, were open and unobjection-
able"
Declaring that it found no errors in
the ruling of the lower court, the
Court of Appeals then began consid-
Grafton of the dissenting bondholders'
complaint that their interests, COM
pared with those of the depositing
bondholders, were prejudiced by the
low price bid for the properties. To
satisfy this complaint the appellate
court issued a partial and condi-
tional mandate" giving the dissenting
bondholders 80 days in which to
accept, if they so desire. an equal pro-
portionate interest IN the property
with the same rights as though they
had joined the Protective Committee
before the date of sale. 1t was stipu-
lated this arrangement was to be
carried out without any penalty or
extra charge.
If the appellants accept this pro-
vision, the appellees, if they should
refuse to accept it, are given so days
In which to file notice Of such action.
The lower court is then requested
and directed to this court statement
of the proceedings, if any be had, in
order that we may make final and
conclusive decision upon the present
appeal, to be followed by final man
date to the lower court"
Dissenting Opinion.
The dissenting opinion, written by
Justice Groner, with the concurrence
Of Justice HitZ, said in part:
II think the order confirming the
sale of the properties involved in this
litigation was enormously entered and
that the court below should have
ordered a new sale and on materially
different terms.
Leaving entirely out of conSidera-
ton the facts tending to show fraud
In relation to the original issue and
sale of the bonds and assuming the
foreclosure suit to have been in all
respects regular, I think it perfectly
clear the decree of sale imposed con-
ditions which inevitably intended to
throttle bidding and depreciate the
value of the properties to be sold"
Justice Groner then expressed the
opinion that better price might have
been obtained if the properties had
been sold separately instead of in a
group. He also objected to a provi-
sion in the decree requiring the pay
ment Of all cash by the purchaser.