Court Opinion

ID: 8777330
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:06:17.869787+00
Date Added: 2024-06-11T17:02:38.845775
License: Public Domain

NOYES, Circuit Judge.
The plaintiff, with other holders of the bonds of the Wabash Pittsburg Terminal Railway Company, deposited its bonds with the defendants as a bondholders’ committee under an agreement apparently looking toward the preparation by such committee of a plan of reorganization. The defendants, however, did not agree to prepare a plan of reorganization and assumed] no obligation whatsoever to the plaintiff, except, under certain conditions, to return its deposited bonds. The defendants also expressly reserved the right to terminate the agreement at their pleasure. The plaintiff has demanded the return of its bonds and has offered to pay its proportionate share of the expenses of the committee.
The right of possession is an incident of ownership. An owner may transfer this right upon such terms and for such time as he may see fit. An owner of bondis or other securities may deposit them with a committee and confer upon it the right of possession for a stipulated period or for the time necessary to accomplish a desired result. He may go further and agree in advance that his bonds shall be subjected to any plan of reorganization which the committee may adopt. But the converse of these propositions is equally true. An owner retains the right of possession unless he parts with it. If he transfers pos*898session he may retake it, unless he has expressly agreed to part with it for a stipulated period or unless an agreement to that effect can be inferred.
In the present case I am unable to find, upon any theory, any provision in the agreement in question requiring the depositors to leave their bonds with the committee for any stated! period or until the preparation of a plan of reorganization or until the termination of the agreement by the committee at its pleasure.
'Upon the theory suggested by the defendants, that the real purpose of the agreement was not the preparation of a plan of reorganization, but merely mutual protection, there is no provision either express or by necessary inference preventing a dissatisfied depositor from withdrawing his bonds whenever he so desires. Upon this theory the provision giving him the right to withdraw after the preparation of a plan of reorganization is immaterial, for no such plan might be contemplated. There is no provision expressly barring the right of withdrawal, and it cannot be inferred that this right is barred during the time necessary to accomplish a desired object, for there is no definite object to be accomplished. Certainly an agreement which one party may determine at his pleasure should not be strained to hold another party indefinitely. ,
Upon the other theory — which would seem to be the correct one— that the primary purpose of the agreement was the preparation of a reorganization plan, although the committee assumed no duty whatever to prepare one, the same conclusion must be reached. The provision that a depositor may withdraw his bonds after the publication of a plan of reorganization upon the payment of his share of the expenses is not necessarily inconsistent with his right to withdraw upon like condition before such publication. The question is not so much what he is authorized to do, but what he has agreed that he should not do. Furthermore, I am of the opinion, in view of the circumstances disclosed by the agreement, in view of the fact that the agreement was prepared by the committee, and of the further fact that the committee assumed no obligation and could terminate the agreement at its pleasure, that- the word “within” in the provision that a depositor might withdraw his bonds '“within sixty days” from the publication of the plan of reorganizatión should be given the meaning of the word “before.” Under these conditions it is quite within well-settled principles of construction to interpret the provision as authorizing the depositors to withdraw their bonds at any time before the expiration of 60 days from the publication of the.plan. An opposite construction would make the agreement altogether one-sided and might operate most unjustly. It would require a depositor to await the action of a committee with whose work he was dissatisfied, and from whose plan of -reorganization he expressed his intention in advance to dissent. It would seem to deprive him of the right to possess his own property merely to allow time to go by, for with the obligation to have his bonds ready for return upon the publication of the plan it is not shown that the committee would be substantially prejudiced by anticipating such return. And in this connection it should also be noted that this obligation to return *899the bonds operates as a distinct limitation upon the powers of the committee and! materially affects the broad and sweeping powers conferred by the agreement which might otherwise seem inconsistent with the right of a depositor to retake his bonds.
The interpretation placed upon the provision relating to the return of bonds after the publication of a reorganization plan is thought not to be inconsistent with the decision of the Court of Appeals of the state of New York in Industrial, etc., Co. v. Tod, 180 N. Y. 215, 73 N. E. 7, construing a similar provision. The cases are distinguishable by the fact that in that case the court held that the defendants had assumed the duty of preparing a plan of reorganization. If the committee- in this case had bound itself to prepare a plan it might well 1>e that the depositors would! be bound to give them time to prepare it.
No claim of fraud or bad faith on the part of any of the defendants is presented and the questions arising on this motion have been determined as the result of the interpretation placed upon the agreement as a whole and upon its particular provisions.
The plaintiff is not now asking for any mandatory order, hut is, in effect, asking for the preservation of the existing situation pending the litigation. I think that it is entitled to the preliminary injunction which it prays for, and it is so ordered.