Lincoln-Alliance Bank & Trust Co. v. Dye

Second Circuit

Lincoln-Alliance Bank & Trust Co. v. Dye

115 F.2d 234, 1940 U.S. App. LEXIS 2851

CourtCourt of Appeals for the Second Circuit

DecidedNovember 4, 1940

Docket118

StatusPublished

Cited by8 cases

This text of 115 F.2d 234 (Lincoln-Alliance Bank & Trust Co. v. Dye) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Lincoln-Alliance Bank & Trust Co. v. Dye, 115 F.2d 234, 1940 U.S. App. LEXIS 2851 (2d Cir. 1940).

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Opinion

PER CURIAM.

The order now on appeal is an aftermath of that which was before us in Lincoln-Alliance Bank & Trust Company v. Dye, 2 Cir., 108 F.2d 38. At that time we said that it lay in the discretion of the judge whether to allow the mortgagee to foreclose when the proceeding was only three weeks old. That, we thought, was scarcely long enough to determine that no “plan of reorganization” was possible. However, we concluded by saying: “we do not suggest that, in the absence of some very radically different change in the prospects, it would be justifiable to hold off the mortgagee any longer.” That was on December 11, 1939, and the mortgagee moved again on February 5, 1940. The judge concluded that, due to the war, the value of the ship had much increased since the last motion, so that she was then worth $220,000; and that, as the sum of the principal and interest of the mortgage was about $200,000, there was an equity to be saved, which justified holding off the mortgagee still longer. Moreover, the trustee alleged that he had an offer in writing of $257,000, on which the proposed buyer had made a substantial deposit.

We left open in Re Murel Holding Corporation, 2 Cir., 75 F.2d 941, whether under § 77B, sub. b(5) of the Bankruptcy Act, 11 U.S.C.A. § 207, sub. b(5), which has now become § 216(7), 11 U.S. C.A. § 616(7), the general creditors of the debtor might force a senior lienor into a “plan of reorganization” without his consent, although the four possibilities left to the debtor in such a case are in fact scarcely more than ways, either of paying off the lien, or of not affecting the substance of the lienor’s rights. We shall again assume, arguendo, that there may be a “plan of reorganization” into which the mortgagee can be forced in invitum, but it must certainly contain more than holding him off at the mortgagor’s convenience. Chapter X, 11 U.S.C.A. § 501 et seq., was not intended merely to give mortgagors a moratorium upon foreclosure. When the order now on appeal was made, the proceeding was fourteen months old, and the debtor had not put forward any plan; indeed it does not now even intimate that there ever will be any beyond selling the vessel. Such a showing does not justify further delay; moreover, we can see no reason why the mortgagee should not be allowed to foreclose in due course, if so advised, and not be confined to a sale in the bankruptcy court.

Order reversed; leave granted to foreclose.

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PER CURIAM.

The order now on appeal is an aftermath of that which was before us in Lincoln-Alliance Bank & Trust Company v. Dye, 2 Cir., 108 F.2d 38. At that time we said that it lay in the discretion of the judge whether to allow the mortgagee to foreclose when the proceeding was only three weeks old. That, we thought, was scarcely long enough to determine that no “plan of reorganization” was possible. However, we concluded by saying: “we do not suggest that, in the absence of some very radically different change in the prospects, it would be justifiable to hold off the mortgagee any longer.” That was on December 11, 1939, and the mortgagee moved again on February 5, 1940. The judge concluded that, due to the war, the value of the ship had much increased since the last motion, so that she was then worth $220,000; and that, as the sum of the principal and interest of the mortgage was about $200,000, there was an equity to be saved, which justified holding off the mortgagee still longer. Moreover, the trustee alleged that he had an offer in writing of $257,000, on which the proposed buyer had made a substantial deposit.

We left open in Re Murel Holding Corporation, 2 Cir., 75 F.2d 941, whether under § 77B, sub. b(5) of the Bankruptcy Act, 11 U.S.C.A. § 207, sub. b(5), which has now become § 216(7), 11 U.S. C.A. § 616(7), the general creditors of the debtor might force a senior lienor into a “plan of reorganization” without his consent, although the four possibilities left to the debtor in such a case are in fact scarcely more than ways, either of paying off the lien, or of not affecting the substance of the lienor’s rights. We shall again assume, arguendo, that there may be a “plan of reorganization” into which the mortgagee can be forced in invitum, but it must certainly contain more than holding him off at the mortgagor’s convenience. Chapter X, 11 U.S.C.A. § 501 et seq., was not intended merely to give mortgagors a moratorium upon foreclosure. When the order now on appeal was made, the proceeding was fourteen months old, and the debtor had not put forward any plan; indeed it does not now even intimate that there ever will be any beyond selling the vessel. Such a showing does not justify further delay; moreover, we can see no reason why the mortgagee should not be allowed to foreclose in due course, if so advised, and not be confined to a sale in the bankruptcy court.

Order reversed; leave granted to foreclose.

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115 F.2d 234, 1940 U.S. App. LEXIS 2851, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lincoln-alliance-bank-trust-co-v-dye-ca2-1940.

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