Court Opinion

ID: 9641920
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:43:14.470388+00
Date Added: 2024-06-11T18:10:40.819045
License: Public Domain

L. HAND, Circuit Judge
(dissenting).
I cannot agree. Section 77B, Bankr. Act (11 USCA § 207) is an effort to allow an embarrassed corporation to continue its existence without dismemberment. The common law knew no way but to let the creditors sell the assets; bankruptcy was equally limited until in composition it devised a lame remedy, lame because when sufficient cash could not be raised, it was substantially unavailable. Courts continued rigid against preventing creditors from getting their money, even after large industrial plants became common; as to which the conventional remedies were totally inapplicable. The power to sell separable chattels, more or less fungible, or even land itself, presupposes a market, a concourse of buyers who will compete. There is no such concourse for such plants and sales are a mockery. After struggling for many years under the patent subterfuge of a sale to committees of creditors, Congress took this step and declared that when it was just, the creditors might be compelled to accept new interests in the property; or, if secured, might be held off temporarily, just as equity had always more or less held them off. The power to turn ■the new interests into cash may perhaps be taken as an equivalent; but at any rate the purpose is clear and I think we ought to effect it amply and without too scrupulous an adherence to the letter.
It seems to me a barren distinction, though indubitably true, that title does not pass upon a conditional sale; “title” is a formal word for a purely conceptual notion; I do not know what it means and I question whether anybody does, except per*329haps legal historians. The relations resulting from conditional sales are practically the same as those resulting from mortgages; I would treat them as the same when we are dealing with the reorganization of the debtor’s property. It is true that the two transactions have always been classed separately because of their form; the law is full of such divisions and often we ought not to disregard them, but we are dealing here with the word, “property,” used in a very wide phrase; the plan “may deal with all or any part of the property of the debtor,” (section 77B (b) (10) of the act, 11 USCA § 207 (b) (10). I do not see how anybody can deny that the buyer has a legally protected interest in chattels conditionally sold, and in this setting “property” should include all legally protected interests. The result of what we now decide will be to prevent the reorganization of many of the smaller companies who get their capital in this way. It is true that when Congress defined the proceedings which a farmer might enjoin pending efforts at conciliation, the foreclosure of conditional sales was grouped with chattel mortgages; (section 75 (o) (6) of the act, 11 USCA § 203 (o) (6); but, although section 77B does use the word, “mortgage” a few times, though never “chattel mortgage,” in the analogous provision (section 77B (c) (10), 11 USCA § 207 (c) (10), it speaks only of “liens,” surely the most comprehensive of words. I cannot find in this supposed contrast any evidence of a difference of intent.
1 am not saying that these sellers should be enjoined; we are not deciding that; but I do think that the court has power to enjoin them. If they can be protected, as probably they can, I can see no reason why they should be allowed to upset all efforts at rehabilitation.