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LEWIS v. ATLAS CORP.

November 28, 1945

LEWIS
v.
ATLAS CORPORATION et al.



The opinion of the court was delivered by: FAKE

After answers filed, counsel for defendants moved for judgment on the record with affidavits filed under Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c. Counsel for the plaintiff moved to strike certain defenses filed by defendant Ogden Corporation and also for summary judgment against said defendant. This opens the entire record and all allegations well and sufficiently pleaded are accepted as true.

It appears that the record here need not be extensively recited because it is accurately stated in Re Utilities Power & Light Corporation, 7 Cir., 125 F.2d 343, and only so much thereof as is necessary for the conclusion reached here will be recited.

The record discloses that plaintiff Lewis entered into a contract in writing on December 18, 1939, with one Adams, trustee for the Utilities Power & Light Corporation in reorganization, wherein Lewis agreed to buy and Adams agreed to sell certain securities for the sum of $ 1,600,000. It was mutually agreed that if certain approvals and exemptions by the Court and the Securities and Exchange Commission were not obtained within ninety days from date, the contract of sale would be extended and continued in force until terminated by ten days written notice given by either side. The approval of the Court above mentioned was obtained on December 27, 1939, and in due course applications were made by Adams and Lewis to the Securities and Exchange Commission for its approval.

 Thereafter the contract was amended in writing on March 12, 1940, providing 'that if the Securities and Exchange Commission shall enter no order granting said approvals or exemptions on or before July 12, 1940 this contract may be terminated by either party' on 10 days written notice.

 On April 6, 1940, the Ogden Corporation took over the assets of the Utilities Power & Light Corporation and thereby were substituted in the place of Adams, trustee, subject to the obligations of the trustee Adams under the contract, as appears by reference to the order confirming the plan of reorganization.

 On July 5, 1940, the contract was further amended in writing between Lewis and the Ogden Corporation providing that if the Court had not approved the title of the securities, and the Securities and Exchange Commission had not approved the sale as aforesaid on or before August 12, 1940, then in that event, 'this contract shall cease and determine.'

 It should be noted that as of July 5, 1940, both parties to the agreement had come to the conclusion that before a marketable title to the securities could pass, not only the approval of the Commission remained necessary but also that a further proceeding to quiet title in the reorganization court was advisable, and on July 10, 1940, a suit to that end was instituted in the Illinois District Court.

 On August 9, 1940, the contract was finally amended in writing and signed by the parties as follows:

 'If on or before August 19, 1940 this contract, as amended is not approved by the Securities and Exchange Commission, or the United States District Court for the Northern District of Illinois, Eastern Division, shall not find that the title of Ogden Corporation in and to the securities and indebtedness above mentioned is free from all liens, claims and equities on the part of all persons other than the said Frank J. Lewis, and that Ogden Corporation is entitled to receive and have the full amount of the principal and interest thereof, free from any setoff, lien, claim or defense, or any person whatsoever, this contract shall cease and determine and each of the parties shall be released and discharged from all further liability thereon, and the earnest money deposited in escrow shall be refunded to the Escrowee to me.' (Lewis)

 Thus it appears that the contract would terminate by its terms on August 19, 1940, unless the conditions were met on or before that date.

 On August 16, 1940, a hearing took place before the Securities and Exchange Commission in furtherance of approval by that Commission. It developed at the hearing that the Commission had not concluded its investigation and the complaint bearing on that point reads as follows:

 "Mr. Baldy (Counsel for the Commission): Mr. Examiner, as appears from Release No. 2206 and as appears from your remarks at the opening of the hearing today, the Commission has ruled that the line of inquiry represented by Adams' Exhibit 9 (Exhibit 'G') is proper to the extent indicated in the release. I may say that we have some men in the field looking into the facts and I would like to defer, for the time being, resuming that line of inquiry. I accordingly suggest that -- particularly in view of the fact that there do not appear to be present today any witnesses prepared to testify along that -- this hearing be continued subject to call.

 "The Examiner: Is there any objection to Commission Counsel's request that the hearing be continued, subject to call?'

 '(Counsel for defendant Ogden Corporation, counsel for Atlas Corporation and counsel for plaintiff thereupon conferred together and agreed to an ...


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