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Faitoute Iron & Steel Co. v. City of Asbury Park

Decided: September 19, 1941.

FAITOUTE IRON & STEEL COMPANY, A CORPORATION, AND MOSES W. FAITOUTE, APPELLANTS,
v.
CITY OF ASBURY PARK, A MUNICIPAL CORPORATION, RESPONDENT



On appeal from the Supreme Court.

For the appellant, Arthur T. Vanderbilt, John A. Ackerman and G. Dixon Speakman.

For the respondent, Ward Kremer.

Bodine

The opinion of the court was delivered by

BODINE, J. The appeal is from an order striking the complaint. It contained four counts. The corporation and the individual plaintiffs are both residents of this state and are the owners of certain bonds issued by the defendant municipality which are in default and have not been paid as agreed. The city moved to strike the complaint, in that the city had in operation an approved refunding plan and the payment of the bonds in suit was controlled thereby

pursuant to N.J.S.A. 52:27-1, et seq., and N.J.S.A. 52:27-34, et seq., and lastly that permission of the New Jersey Supreme Court, a statutory requisite, to the institution of the present proceeding had not been obtained.

It appears that on March 7th, 1935, the City of Asbury Park was placed under the control of the Municipal Finance Commission pursuant to the provisions of N.J.S.A. 52:27-1, et seq. The city was, at that time, in default in the payment of interest on its bonded indebtedness. On February 1st, 1936, a plan for the refunding of its bonded debt was filed in the Supreme Court pursuant to the terms and provisions of N.J.S.A. 52:27-34, et seq., and the court took jurisdiction of the proceedings. The plan provided for the refunding of $10,750,000 of outstanding bonds and included among the bonds to be refunded were the bonds mentioned in the complaint. The plan, as amended, was approved by an order dated July 21st, 1937. The order provided that the plan, before becoming effective, should be approved by creditors representing eighty-five per centum in amount of the indebtedness affected and approval to be evidenced in writing, in accordance with the terms and provisions of the statute in such case made and provided (N.J.S.A. 52:27-36).

On September 28th, 1937, the Municipal Finance Commission of this state, by resolution, approved the amended plan, providing the requisite number of creditors should consent thereto in accordance with the statute.

On April 29th, 1938, creditors representing in excess of eighty-five per centum in amount of the indebtedness affected consented to the plan, so that an order was then entered in the court approving the refunding plan and approving the adjustment or composition therein contained in accordance with the statute (N.J.S.A. 52:27-36).

The refunding plan was put into operation June 15th, 1938, and the bondholders, who had consented in writing to the terms and provisions of the refunding plan, exchanged their outstanding bonds for new bonds issued to them in accordance with the terms of the plan.

The plan seems to have been fair and in all respects ...


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