a wet-nurse to the reorganized company. A bankruptcy court cannot obtain that power merely by inserting a provision reserving jurisdiction.'
In this circuit the decisions are not so numerous, but they are in the same vein. In Re Peyton Realty Co., 3 Cir., 1945, 148 F.2d 771, 773, District Judge Ganey, speaking for the Circuit Court of Appeals, said:
'This application is to change a status, to reopen a decree which by Section 207, Subsection h, (now section 628 of Title 11 U.S.C.A.) of the Bankruptcy Act, finality is given. It is just as important that there should be a place to end, as it is that there should be a place to begin litigation. There comes a time in all litigation when the order of the court is final, and we think legislative intent to this effect was given by this provision of the Act.'
The question was also passed upon in this circuit, and in this district, by Judge Forman in the case of In re Camden Rail & Harbor Terminal Corporation, D.C., 1940, 35 F.Supp. 862, 867. There an argument ensued between the directors of a reorganized company after the plan had been consummated, but the final decree had not been entered. The manager-director of the company brought a petition for relief alleging bad faith in ousting him as manager of the corporation. Judge Forman said:
'Thus there is generated a controversy between a majority, three of the elected directors of the corporation, and a minority of one of such directors. The reservation of the jurisdiction in this court to entertain such a controversy was never intended either by the Bankruptcy Law or by the orders of the court.'
So that we come to this question: How far may a court go in an ancillary proceeding after a final decree in a reorganization matter?
In Bakers Share Corporation v. London Terrace, Inc., supra (130 F.2d 159), Judge Hand, speaking for the Second Circuit Court of Appeals, said:
'We said that the phrase in subdivision h of § 77B, under and subject to the supervision and control of the judge, did not invest the judge with a general protectorate over corporation organized * * * for the purpose of carrying out plan. Our theory was that such a reservation gives him jurisdiction only to decide whether the parties to the plan carry out its provisions according to their true intent.'
In the case at bar, while the petition allegedly seeks instructions, it hopes to restrain a certain certificate holder from voting its stock or certificates against the wishes of the director trustees.
Also in Reese v. Beacon Hotel Corporation, 2 Cir., 1945, 149 F.2d 610, 611, it was said:
'We have repeatedly held that reservation of jurisdiction beyond what is requisite to effectuate a plan of reorganization is beyond the power of the reorganization court.'
Is it necessary therefor to take jurisdiction of the present controversy, if any exists, in order to protect the decree -- to insure the performance of the plan -- or to prevent violation thereof or departure therefrom? I think not.
The main argument advanced by petitioners is that the certificates expire next year and must be liquidated. Whether the certificate holders will demand liquidation at that time certainly cannot be passed upon now and can only be determined then, and by the certificate holders themselves. If it so happens then, the trustees-directors must meet that situation according to their best business judgment, bound by the trust agreement, signed by them and approved by this court.
I therefor conclude that this court is without jurisdiction to give the instructions prayed for in the petition, and the petition will be accordingly dismissed.
© 1992-2004 VersusLaw Inc.