Court Opinion

ID: 9643409
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:28:23.280128+00
Date Added: 2024-06-11T12:25:32.872721
License: Public Domain

MAJOR, Circuit Judge
(dissenting in part).
I dissent from that portion of the opinion which reverses the order appealed from insofar as it pertains to the Morrison Hotel Corporation because, in my judgment, the corporation was without power to enter into the contract with Carroll without the approval of the District Court, which had by its decree confirming the Modified Plan of Reorganization retained jurisdiction.
In my opinion, this is purely a question of law, to be determined from the provisions of the decree. It appears to me that the majority has decided as a matter of law that the corporation had the authority to enter into the contract with Carroll without the approval of the court and then inconsistently treats the question as factual and leaves it open for proof in the court below. Otherwise, the statements that the defendants “do not indicate any particular in which the court has previously *409interested itself in connection with the management” and “whatever may appear on trial as to the duty of Hotel’s directors and managers to submit such contracts to the court for a formal stamp of approval is beside the point,” are meaningless. I doubt if oral testimony may properly be considered by a court in determining what was intended by the terms of a decree. Especially is that so when the language of the decree is free from doubt, as I think it is in the instant situation.
The record may present a serious question as to whether the court had the authority to approve a plan of reorganization which retained jurisdiction of the debtor and its property without a limitation as to time. There is no occasion, however, to discuss this point inasmuch as it is unnoticed by the majority.
That the court intended to and did retain absolute control over management of the property, as well as the activities of the corporate officers appointed by it, is clearly disclosed. Not only did the court, as pointed out by the majority, “expressly [reserve] jurisdiction * * * to supervise the operations of said property by said new corporation * * but it specifically made the trustees appointed by it “subject to further order and direction of this court, so that pending the final consummation of the Modified Plan of Reorganization this Court shall at all times have jurisdiction of all property and assets of the new corporation, and control and direction of all its acts and doings.” True, as the opinion suggests, there were certain matters specifically mentioned which required court approval, but that such special matters were not intended .to limit the general language is dispelled by an introductory clause to such special matters, which provides “that the court hereby expressly reserves full jurisdiction of this cause for all purposes and without limiting the generality of the foregoing, the court hereby expressly reserves jurisdiction.” (Then follow the special matters.)
If the language employed does not require approval by the court of the instant contract, it is difficult to conceive of language by which such a result could be accomplished. In considering the provisions of the Plan of Reorganization as approved by the court, it should be kept in mind that the creditors and stockholders agreed to it as approved and that they had a right to rely upon its plain provisions and not what this or some other court might think should have been provided. It was their reliance, no doubt, upon the plan as written which induced the assent of the necessary number as a prerequisite to its submission and approval by the court.
In my view, it is wholly immaterial “that Carroll was not a party to the Moir Hotel Company reorganization proceeding and had no knowledge or notice of it.” I would suppose that the status of property determined in a reorganization proceeding as well as the authority conferred upon those in whose possession the property is placed would be binding upon strangers. If such is not the case, the decree of a court fixing such rights would be little more than a useless gesture.
For the reason stated, I would affirm the dismissal of the action as to the Morrison Hotel Corporation. I agree that a cause of action has been stated as to the individual defendants and therefore approve the reversal of the order as to .them.