Court Opinion

ID: 6869312
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:58:50.996073+00
Date Added: 2024-06-11T16:05:22.634790
License: Public Domain

DENMAN, Circuit Judge
(dissenting).
The decision of the court is a commonsense and practical solution of this particular problem. In usual lay parlance it is an “equitable” solution. If the doctrine of de minimis were applicable I would concur, but here we are sitting as a court of equity dealing with legal rights. The decision substitutes a new contract for that of the bondholder though neither party has pleaded for reformation and the bondholder is not seeking a new contract giving him a lien essentially different from that of the trust indenture securing his bond.
If we have the power, whether discretionary or obligatory, to create a new contract between the debtor and a bondholder holding a very small percentage of the bonds, we would have such power if 24 per cent, of the bondholders were dis-sentient.
I do not believe Congress intended to or could confer on a court of equity the power to take from any bondholder the rights created by the securing trust indenture — say, that right at the sale to bid the bonds to their face value or the right to have provided insurance on the mortgaged properties or the right to interest and interest penalties, or the right to have the trustee take the burden of foreclosure proceedings, providing counsel and performing other administrative acts which practically all the bondholding public expect will be performed by the trustee. A Californian buying bonds of an automotive concern of Michigan knows his security may have to be foreclosed by his trustee, but he does not contemplate he is buying a personal lawsuit in which he is to be a plaintiff on a strange new contract created by the court for the fraction which his bonds bear to the whole issue. I do not believe he does and hence dissent.