The opinion of the court was delivered by: FORMAN
On and before March 4, 1933, the plaintiff was engaged in the business of lending money upon bonds and mortgages and selling such bonds and mortgages with the principal thereof and interest thereon guaranteed as to payment. These sales were made in three ways as follows:
1. Whole mortgages were assigned with a guaranty accompanying the assignment.
2. Certificates of participating interest in single mortgages were sold guaranteed as to payment of principal and interest.
3. Certificates of interest in groups of mortgages were sold guaranteed as to payment of principal and interest.
In addition thereto, certain companies were merged into the plaintiff which thereupon became obligor upon such companies' outstanding issues, which were bonds of those companies secured by deposits of bonds and mortgages.
On March 6, 1933, the President of the United States proclaimed a bank holiday, and thereafter by executive order extended the proclamation to apply to corporations engaged in the business in which plaintiff was then engaged. The effect of the proclamation of the executive order was to suspend the plaintiff's business activities.
On March 10, 1933, the President issued an executive order authorizing the appropriate authority in each state to permit certain institutions including plaintiff to perform their usual banking functions under such regulations as might be prescribed by such authority. Pursuant thereto and on March 16, 1933, the legislature of the State of New Jersey enacted Chapter 71, page 133, of the Laws of 1933, entitled "An Act concerning guaranteed mortgages and interests in or obligations secured by mortgages issued or guaranteed by any insurance company, mortgage guaranty company, bank, trust company or other company of this State, and conferring powers upon the Commissioner of Banking and Insurance with respect thereto, and upon such companies."
On March 21, 1933, the Commissioner of Banking and Insurance of the State of New Jersey promulgated "General Order No. 1, Affecting the Business of Mortgage Guarantee Companies", which governed the operation of such companies, including the plaintiff, and Section 8 thereof reads as follows: "As soon as practicable and not later than June 1, 1933, each such company shall submit to the Commissioner such methods as it has adopted, or proposes to adopt, in the interest of the holders of its guaranteed mortgages and interests in mortgages, for the purpose of meeting the conditions resulting from the present emergency, so that the Commissioner may take such steps as in his judgment are advisable to conserve the assets of such companies and secure ratable and equitable application thereof, and provide proper safeguards for the security of those having claims thereon."
Pursuant to this Order the plaintiff on January 10, 1934, proposed a plan for its further operation, which plan was approved by order of the Commissioner of Banking and Insurance dated May 27, 1935, and became effective on July 1, 1935.
Obligations of the plaintiff on July 1, 1935, the date when the Plan became effective, were of the following types and in the following amounts:
(1) Group Certificates in the amount of $14,531,014.27 guaranteed as to payment of principal and interest.
(2) Obligations in the form of Group Certificates of the Home Title Guaranty Company, a company merged into the plaintiff, in the amount of $46,200.
(3) Obligations of the City Mortgage Guaranty Company, a company merged into the plaintiff in the form of Group ...