The opinion
WARD, Circuit Judge
(dissenting). When a court is selling the whole property of a corporation under a decree of foreclosure, with a view to distributing the proceeds of sale among the parties entitled, it may properly look into the fairness of any plan of reorganization under which the property has been purchased or is proposed to be purchased. In other words, the court will affirm the sale if the terms of the reorganization agreement are fair, and will refuse to do so if they are not. Such decisions are relied on to support the order of the District Court. Western Union Telegraph Co. v. United States & Mexican Trust Co., 221 Fed. 545 , 137 C. C. A. 113 ; Fearon v. Trust Co., 238 Fed. 83 , 151 C. C. A. 159 ; Guaranty Trust Co. v. Missouri & Pacific Railway Co. (D. C.) 238 Fed. 812 .
The present case is entirely different. There 'is no intention, and never has been any intention, that the receivers shall sell the property and distribute the proceeds. On the contrary, from the beginning the corporation has been treated as solvent. Temporary receivers were appointed to protect it by continuing its business and paying its current liabilities, until suits upon certain unjust claims which had impaired its credit and threatened to destroy it should be defeated. The holding of the annual meeting for the election of directors will not in any way affect or interfere with this purpose. The title, possession, and control of the company’s property in the hands of the receivers will continue, whatever may be the result of such an election. The District Court will manage the company’s business, control its assets, and protect them from interference until the purpose of the receivership is accomplished and its property returned to the corporation.
Judge Mayer expressly stated in his order that he “refrained from passing upon the merits of the proposed readjustment plan.” He, seems to have assumed the present right of the preferred stockholders to vote-nine votes for each share as provided in the charter, and to have been moved by the feeling that they should not exercise this right because-it was likely that the receivers would'soon be able to terminate it by paying up all arrears of dividends on the preferred stock. But the event has happened which gives the preferred stockholders this right, and they should not be deprived of it until it has been judicially determined that they are not entitled to exercise it. The receivers have no interest whatever in a dispute between two classes of stockholders-as to their respective rights under the charter.
*465 Not can I see how the election of directors would affect the adoption of the readjustment plan in any way. It is not proposed to carry it out by a sale under a decree of foreclosure, no such decree being con - templated. It can only be accomplished by a dissolution of the corporation without judicial proceedings under sections 9 and 10 of article 2 of the Stock Corporation Law (Consol. Laws, c. 59), which require that a majority of the whole board of directors shall first adopt a resolution that a dissolution is advisable, and shall then call a meeting of the stockholders to consider the subject, not less than 30 nor more than 60 days after the resolution; notice to be given by advertisement or by mail or personal service on each stockholder. If two-thirds in amount of the outstanding stock consent, the corporation shall file the consent in the office of the secretary of state. Then the corporate assets shall be sold to pay its debts, and with the consent of two-thirds in amount of the stockholders any remaining assets may be transferred to a new corporation; but the sale shall not be valid against any objecting stockholder who is not paid the value of his stock as appraised under an order of the Supreme Court of the state of New York. It is not suggested that these steps were proposed to be taken, or could be taken, at the annual meeting to elect directors; ' and, if they could be and were to be taken in accordance with the law, then the readjustment plan would be legally adopted, and no court could disturb it as being unfair.
This court sustains the order of the District Court because it thinks that the proposed readjustment plan, which is capable of being legally adopted, is unfair. I think this is inconsistent with our decision in Davidson v. American Blower Co., 243 Fed. 167 , 156 C. C. A. 33 .