Court Opinion

ID: 8794309
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:03:27.672313+00
Date Added: 2024-06-11T17:03:32.161433
License: Public Domain

LACOMBE, Circuit Judge.
When the special master’s report came up for confirmation, the items of damage were separately discussed. In one group there were included deterioration of track, etc., on the lines owned by the Metropolitan or held by it under leases which had not been terminated by receivers and the lines returned to lessors. In another group there were included the like deteriorations on the lines such as Second Avenue and Central Park, which had been thrown off from the system during receivership. Apparently these were separately presented and discussed, because the Court of Appeals had held that the leases of those lines had been assigned to the New York City Company, and had sustained claims of those lessor roads for deterioration against the estates of both defendant companies.
By reason of this circumstance the' court’s attention was given exclusively to a consideration of the respective obligations of the companies" arising merely under assignment of the several leases. The conclusion was that the Metropolitan could prove against the City Company only such sum as it might itself actually pay to each lessor company for deterioration. As neither estate is solvent, the result would be that the Metropolitan could prove only the amount of the dividend each lessor company obtained from its estate, but that dividend, being proved against an insolvent’s estate, would be itself scaled down and become, in cash recoverable, only a part of the cash the Metropolitan will have to pay out.
This seems inequitable, and attention has now been called to the clauses in the Metropolitan-City lease under which claims for deterioration of the owned lines were liquidated. These claims were overlooked by this court when the claims arising on these segregated leased lines were being considered. They were broad enough to cover leased lines as well as owned lines, and would justify the liquidation of Metropolitan claims against City Company for deterioration equal to the full amount of such deterioration. This result, however, would be inequitable, because the dividend which the Metropolitan estate will pay to its general creditors will be less than the dividend which the City Company *963will pay to its general creditors. In consequence, the Metropolitan estate would receive from the City estate more than it will pay out to the lessor claimants.
It is now suggested that an equitable disposition of the matter will be to decree that the Metropolitan estate shall be paid from the City estate the precise sum in cash which the former may have to pay to these lessor claimants. There seems to be no serious objection to such disposition of these claims, and the decretal order may be so framed as to provide for it.