Guaranty Trust Co. v. Metropolitan St. Ry. Co.

EACOMBE, Circuit Judge. This is an application, by the committee representing both series of bonds and also the joint committee which has undertaken reorganization, to adjourn the sale until after their plan of reorganization can be presented] to the Public Service Commission and by it considered. It appears that such plan can be so submitted by July 11th. The petition states quite accurately that the railway system can only be Operated by a corporation, and that any new corporation which might be organized to take it over would have to secure the approval of the Public Service Commission to the issue of its securities. A sale of the property, therefore, would not by itself relieve receivers of the burden of operating it. Some one, of course, must keep the cars moving, and there is no one else who can lawfully do so- until a qualified corporation appears to undertake the task. It makes no difference to the receivers or to the court whether the time required for the consideration of the plan by the Commission is consumed before or after sale. No doubt the “elements and factors entering into a consideration of the matter are exceedingly numerous andi com 638 plex”; but it must be remembered that for over two years the Public Service Commission has been gathering voluminous statistics from the records of the old company and from those of the receivers. Consideration of the proposed plan may not take so many months as petitioners anticipate. September 27th would seem an appropriate date to which the sale may be adjourned. The receivership will then be three years oldl This application particularly commends itself to the court, because of the statement it contains as to provision for personal injury claims against the New York City Railway Company. From the very inception of the receivership the situation of this group of creditors has been a matter of much concern. It is well settled under the authorities that they are not preferred creditors. 165 Fed. 457. Moreover, they are not creditors at all of the Metropolitan Street Railway Company, which owned the property, but only of the impecunious lessee which operated the road. These mortgage creditors of the Metropolitan are under no legal obligation to give them any interest in the property covered by the mortgage. That they are willing to treat them as if they were not only creditors of the Metropolitan, but also as if they were creditors holding a first mortgage on its property, is most commendable. It shows an appreciation of fairness and equity which speaks well for the plan, whatever it be, which they are about to submit.