Court Opinion

ID: 5181993
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:43:25.102247+00
Date Added: 2024-06-11T08:26:36.218995
License: Public Domain

Goodrich, P. J. (dissenting):
I cannot concur in the opinion of Mr. Justice Bartlett, and on the following grounds:
Starting with the proposition laid down by him, that the transactions connected with the reorganization were a fraud on the plaintiff (Cole v. Millerton Iron CVo., 133 N. Y. 164), it is possible (except for resort to an action to set aside the transfer) that the proceedings will result, as it was intended they should, in destroying the value of the plaintiff’s bonds, unless the judgment of the Appellate Term of the first department is affirmed. A court is never swift to search for reason to reverse a judgment or apply the hardest rules of law, where this will result in manifest injustice. The opinion of Mr. Justice Bartlett proceeds on the -theory that the bill of sale is the final transaction between the parties, and the only instrument to be resorted to to enable us to decide whether the defendant has assumed and agreed to pay the outstanding bonds held by the plaintiff, and that this bill of sale by its express terms excepts “ the mortgage bonds ” of the old corporation from the assumption of liability by the defendant corporation.
*34It is not entirely clear to my mind that we are bound to hold that the mortgage bonds of the exception are those of the second mortgage, which secured the bonds of the plaintiff. It appears that there was a first mortgage with bonds ; that proceedings had been taken to foreclose both mortgages, and, while it appears affirmatively that a judgment had been entered in the action to foreclose the second mortgage, under which the premises covered by both mortgages had been sold and bought in by Mr. Untermyer, in the interest of the reorganization committee, it does not appear that the. foreclosure action on the first mortgage had proceeded to judgment.
I find corroboration of this in the fact that the agreement of reorganization shows that there were, at that time, other “ existing mortgages ” of the old company, and authorized the committee to procure their extension. A similar reference is made in the report of the reorganization committee, which recites that Untermyer had purchased the property for $20,000 “over and above the prior incumbrances.” These provisions seem to me to explain and define the words of the bill of sale, “excepting the mortgage bonds” of the old company, and to show that the bill of sale is not inconsistent with, and was not intended to abrogate, the agreement to assume payment of all the debts of the old company.
Most of the holders of the bonds of the second mortgage had assented to the plan of reorganization, deposited their bonds with the committee, and united in the proceedings for foreclosure. Even conceding that the bonds of the assenting holders have merged in the judgment, which is not clear, it is certain that the rights of the plaintiff as a non-assenting holder were not affected by the foreclosure, and that his bonds were still outstanding when the bill of sale was delivered.
If the bill of sale were not in evidence there is other evidence sufficient to justify a holding that the defendant' had assumed and agreed to pay the plaintiff’s bonds. The reorganization committee made its report to a meeting of the board of directors of the defendant on December twenty-seventh. This report was also affirmed at a subsequent meeting. The report stated that Mr. Untermyer had not acquired certain assets of the old corporation by the foreclosure, and that the committee had procured a bill of sale of these assets to the defendant, to the end that the defendant was to “ be vested *35with all the property * * * of the D. G. Yuengling, Jr., Brewing Company and assume all its debts and obligations so that the former company (the defendant) shall in all respects stand in the place of and be the successor to, and as far as may be, the same corporate body as the last-mentioned company. The said bill of sale will be delivered only upon the assumption by the new company of all said debts and obligations.” The committee orally stated the same fact, i. e., that the defendant was to assume all the debts of the old corporation in addition to those specified in the agreement of reorganization.
This report was entered in full on the minutes, and the directors adopted a resolution, “ Mesol/oed, that this company assume all the debts, obligations and liabilities of every kind and description of the D. G. Yuengling, Jr., Brewing Company, in addition to the bonds and other obligations mentioned in the agreement of reorganization, and thereby provided to be assumed by this company, and that in return for and as a consideration of the assumption of said debts, obligations and liabilities, this company accept from said D. G. Yuengling, Jr., Brewing Company the bill of sale * * * the intent hereof being * * * to assume all the obligations and debts of that company so that this company shall in all respects stand in the "place, and be the successor, of and so far as may be, the same corporate body as the said D. G. Yuengling, Jr., Brewing Co.”
Turning now to the bill of sale, we find that it was given “ in consideration of the sum of one dollar, lawful money of the United States, and other good and valuable consideration.” What was such “ other good and valuable consideration ? ” I think it is clear that it was the assumption by the defendant of the debts of the old corporation, among which was the debt to the plaintiff. The reports of the committee, both written and oral, the resolution and bill of sale, all declare that the purpose of the transaction was to make the new corporation the same corporate body as the old, so far as might be, and to make it succeed to the old corporation; and that the new corporation was to stand in all respects in the place of the old.
Can it be contended that if this was a suit against the old corporation the action could not be maintained ; or that if it had in hand the assets, which by the plan of reorganization were transferred to *36the defendant, the plaintiff with his judgment could not reach the assets thus transferred in violation of his rights 1
We are also at liberty to resort to the surrounding and contemporaneous circumstances. In the recent case of Davenport v. Morrissey (14 App. Div. 586) Mr. Justice Cullen, writing the opinion of the court, cited as ground for the decision a part of the following language of the Court of Appeals in Schoonmaker v. Hoyt (148 N. Y. 425): “ If the words employed convey a definite meaning, and there is no contradiction or ambiguity in the different parts of the same instrument, then the apparent meaning of the instrument must be regarded as the one intended. * * * In construing a written instrument it may be read in the light of surrounding circumstances in order to more perfectly understand the intention of the parties, and when it is thus discovered it should control.”
I believe that the three instruments, report, resolutions and bill of sale, are contemporaneous writings, part of one plan and to be construed together, and that they form an agreement to assume the payment of the plaintiff’s bonds, within the principle laid down in Lawrence v. Fox (20 N. Y. 268).
As if this were not enough, the new mortgage of the defendant recites the report, resolution and bill of sale, and repeats the very language, referring to the intent of the old company and the defendant in the transaction as above set forth.
It is not impossible, moreover, that the committee and the directors were aware of the indefensible character of their attempt to defeat the claim of the old and non-assenting bondholders, and were preparing a shield against expected attack, under which they might assert in defense of any action brought by these bondholders the provision that the new corporation had assumed the payment of the the plaintiff’s claim, and I am fortified in this belief by the conclusion expressed in the learned opinion of the Appellate Term, “ In our view it is clear that the defendant intended to bind itself for the payment of the indebtedness upon these outstanding bonds, such being the condition upon which a transfer of the assets in question was finally made. The final resolution is unmistakable in its terms, and from the proceedings leading up to that resolution we find the explanation of the inconsistency appearing in the form of the bill of sale.”
The opinion of Mr. J ustice Bartlett refers to the case of Cole v. *37Millerton Iron Co. (supra) as authority that the transfer was a fraud upon the creditors of the old corporation, but says that this is not a suit to set aside the transfer. I cannot see that this distinction of remedies is a bar. The plaintiff, with the judgment of the Appellate Term and execution thereon, can reach the assets of the defendant, and the same result with much greater circumlocution could be accomplished by the action referred to. The transfer was unlawful, and the defendant should not be permitted to set up any part of its illegal actions to defeat the equities of the plaintiff.
The judgment of the Appellate Term should be affirmed, with costs.
Judgment of Appellate Term reversed and judgment of the General Term of City Court of New York affirmed, with costs to defendant. Leave granted to plaintiff to appeal to the Court of Appeals, if he so elects.
J