Petition — Consolidated Motor Inns v. Alias Enterprises, Ltd.

Supreme Court brief1978

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Text

7” Supreme. Court, U. S,

FILED

APR 5 1978

a ree ae ee nena JR., CLERK

IN THE

‘Supreme Court of the United States

OcToBEeR TERM, 1977

No. V7= 1418

CoNsoLIDATED Moror Inns, Petitioner,

Vv.

Auias ENTER: <ISES, INc., Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Rosert E. Hicks

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

Attorney for Consolidated Motor

Inns

Of Counsel:

CxHarLes E. CAMPBELL

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

Ropert A. BARTLETT

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

Pases of Braon S. Apams Putntine, Inc., Wasuinoron, D. C.

Page

GOMES BRD occ cikvibcnccccpedoccosessoncanedncs 1

SUNG 6 cc cdadccccccvecsececcecssssgnveeénbee 2

Gymnas PRATER os oc ccs cccscccpecvdedioeccdcdess 2

ConsTITUTIONAL aND Statutory Provisions Invonvep.. 3

CS | ov clic dicsdvewedsbeed bs cudecddccomadaes 3

Reasons For GRANTING THE WRIT ...........--eeeee0e: 8

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CITATIONS

Casks:

Alejuandrino v. Quézon, 271 U.S. 528, 70 L.Ed. 990, 41

Ss GE che cudeeekbi edd bien s6 <e0s Getaweeks 11

Altherton Mills v. Johnson, 259 U.S. 13, 16, 66 L.Ed.

8 Ff eR er ae 10

Berry v. Davis, 242 U.S. 468, 61 L.Ed. 441, 37 8.Ct. 321 11

Black v. Amen, 355 U.S. 600, 2 L.Ed. 2d 523, 78 8.Ct.530 13

Board of Public Utility Comrs. v. Compania General de

Tabacos de Filipinas, 249 U.S. 425, 63 L.Ed. 687, 39

PR eet eee 11

Bracken v. Securities € Exchange Com., 299 U.S. 504,

Oe Gey lt Ie PRR EU 60.0.6 t'nn-s 599% bogs 50s as 12

Brotherhood of Locomotive & E. v. Toledo, P. dé W. R.

Co., 332 U.S. 748, 92 L.Ed. 335, 68 8.Ct. 53 ........ 12

Brownlow vy. Schwartz, 261 U.S. 216, 218, 67 L.Ed. 620,

ER RI IER AT 10, 11

Connecticut State Board of Parole v. Bey, 404 U.S. 879,

30 L.Ed. 2d 159, 92 S.Ct. 196 ........-..ccceceee. 13

ii Citations Continued

Page

Ones | v. Prouty, 289 U.S. 704, 77 L.Ed. 1461, 53 S.Ct.

PUADUBEAS CULOSEEE CECE Oo soe eed eSeS eos eseees 12.

Daneiger Oil & Refining Co. v. Smith, 290 U.S. 599, 78

SO EE: BED oc viscoswcccecccecaccceces 12

DeSimone v. United States, 361 U.S. 125, 4 L.Ed. 2d 167,

ETN ca sek d pe ph eetenesbececs 13

Diffenderfer v. Central Baptist Church, 404 U.S. 412,

30 L.Ed. 2d 567, 92 S.Ct. 574 2.0... cece cee e eee 13

Duke Power Company v. Greenwood County, 299 U.S.

259, 267, 81 LEd. 178, 182, 57 S.Ct. 202 ....... ae 10, 11

First Union Trust é Sav. Bank v. Consumers Co.,

U.S. 585, 78 L.Ed. 517, 54 S.Ct. 61 ............... 12

Gallogly v. Larsen, 420 U.S. 904, 42 L.Ed. 2d S.Ct. 574. 13

Rontuned Clock Co. v. wehp’ 293 U.S. 529, 79 L.Ed.

Ne i Sek LL os esc cesbeesaceete 12

a wi ela 283 U.S. 781, 75 L.Ed. 1411, 51 S.

a ashe Stokes, 256 U.S. 359, 65 L.Ed. 990, 41 S.Ct. .

icp wah oct e Ghee habe wnsbebene &oceee 1

Hodge v. Tulsa County Elections Board, 335 U.S. 889,

DP Bim, Mes WP I BD occ ccc cc ccicccccceces 12

ae v. Bartley, — US. ——, 52 L.Ed. 184, 97

Leader v. Apex Hosiery Co., 302 U.S. 656, 82 L.Ed. 508,

ates ska ook say snesdventaesasas 12

Lebus v. Seafarers’ International Union, etc., 398 F.2d

ED oka a's cca cewechotsens one 7, 13, 14

Mahan v. Hume, 287 U.S. 575, 77 L.Ed. 505, 53 S.Ct. 293 12

Mechling Barge Lines v. United States, 368 U.S. 324,

7 L:Bd. 24 317, 82 S.Ct, 337 pedi shades e sab iinde 13

vomwvar Ward & Co. v. United States, 326 U.S. 690,

8 Parr 12

National Be Guild, eeicaage of Texas Chapter,

et al. v. = of Regents, 4 490 F.2d 97 (C.A. 5

EY TE i eh a nc cc utes ens 14

New Left E ye ject, et al. v. Board of Regents of

the University of Texas System, 472 F.2d 218 (C.A.

cD UMuUU Eee bs bnhdesabcacseesncbedoens 14, 15, 16

ors v. Glover, 161 U.S. 101,

103, 40 L.Ed. 632, 16 §.Ct. 508, modg 160 U.S.

170, 40 L.Ed. 382, 16 S.Ct. 321 ................5. 11

O’Ryan v. Mills covey Co., 292 U.S. 609, 78 L.Ed.

EPS ts fou bake cones decceceaanenné 12

Citations Continued iii

Page

Railroad Com. of Texas v. MacMillan, 287 U.S. 576, 77

et 8 4 5 2 RS Pe 12

Retail Food Clerks & Managers Union v. Union Pre-

mier Food Stores, 308 U.S. 526, 84 L.Ed. 445, 60

DE, THO occck ccvictdansuve cocdapevenaeeeeene 12

Riece Cozart v. Charles E. Wilson, 352 U.S. 884, 1 L.Ed.

GE We Gees BIE ko vn cc nneedceeenstieeenncnes 12

Securities d Exchange Com. v. Engineering Public Ser-

vice Co., 332 U.S. 788, 92 L.Ed. 370, 68 S.Ct. 96 . 12

Securities & Exchange Com. v. Long Island Lighting

Co., 325 U.S. 833, 89 L.Ed. 1961, $5 S.Ct. 1085. 12

Securities &@ Excha ~—e Com. v. Philadelphia Co., 337

U.S. 901, 93 L.Ed. 1715, 69 S.Ct. 1715 ............ 12

South Dakota v. McCay, 420 U.S. 904, 42 L.Ed. 2d 832,

OD Ti GED cvcsccccccncadesssn cess nkbieuuciae 13

Sprunt & Son v. United States, 281 U.S. 249, 74 L.Ed.

Oe, GD GG. Ba ins bss Aas s cat dedeseseer wee * 12

St. Pierce v. United States, 1943, 319 U.S. 41, 63 S.Ct.

F 3 GC Spee i om Pre iree 14

Troy State University v. Dickey, 5 Cir., 1968, 402 F.2d

515, DT 66 .cck¢h5bdesbihinnebes conneaidbehs 14

United States v. Alaska S.S. Co., 253 U.S. 113, 64 L.Ed.

OO no, cis av eoutweebeevabesaces 11

United States v. American Asiatic 9.8. Co., 242 U.S.

537. 61 L.Ed. 479, 37 S.0t. 233 .........eseceeeee 11

United States v. Anchor Coal Co., 279 U.S. 812, 73 L.Ed.

oe. Rg INARI EN ee iis ney 10, 11

United States v. H amburg-Americkanische Packet fahrt-

Action Gessellachaft, 239 U.S. 466, 475, 478, 60 L.

Ed. 387, 391, 392, 36 S.Ct. 212 ...........scceeee 10

United States v. ’ Munsingwear, Inc., 340 U.S. 36, 95 L.

es Se Ve HE I 5s Cac sncdenaskkee cases ves< 9, 14

United States ex rel. Norwegian Nitrogen Products Co.

v. United States Tariff Com., 274 U.S. 106, 71 L.Ed.

A CR is hn np odd ies onan she nek see 11, 12

United States v. West Gulf Maritime Ass’n., 5 Cir.,

Fl re mer errr tee 14

United States Servicemen’s Fund v. Killen Indepen-

dent School District, 5 Cir. 1974, 693 F.2d 489 .... 14

Van Lare v. Hurley, 421 U.S. 338, 44 L.Ed. 2d 208, 95

I a i dene een nks deta tesadds bbbakes 13

Weinstein v. Bradford, 423 U.S. 147, 46 L.Ed. 2d 350,

SNE Gh CeVeheccdetdeectuvdusiccetsiwscta 13

iv Citations Continued

Page

Woodring v. gt gga Short Route Bridge

Co., 302 U.S. 658, 82 L.Ed. 509, 58 S.Ct. 365...... 12

StaTuTEs aND REGULATIONS: |

Judicial Code:

Ser Es WEUOEED kn cds codccnbibhndurene Dances 2

Bankruptcy Act:

11 U.S.C. $§ 801 through 926 .................... 4

Be Pee SPIED 5.bc606ccccesncedcdkoseanas 4

BS DER SRe COONS sccéccicncccecedewcden 5

MISCELLANEOUS:

Federal Rules of Appellate Procedure:

PUUENEEE Ghs db S000 bee ks 603 bo ccmadocccbeboieue 5, 7

SR AER oc nnvbdeserendi cxcesdodudousaieleie 5

ee eee

IN THE

Supreme Court of the United States

OcToBER TERM, 1977

No.

CoNSOLIDATED Moror Inns, Petitioner,

Vv.

Auias ENTERPRISES, INC., Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Consolidated Motor Inns, Petitioner herein, prays

that a Writ of Certiorari issue to review the judgment

of the United States Court of Appeals for the Fifth

Circuit (hereinafter ‘‘the Court of Appeals’’) entered

in the above case on January 6, 1978 denying Peti-

tioner’s Motion to Vacate the Order of the United

States District Court for the Northern District of

Georgia (hereinafter ‘‘the District Court’’) entered

on February 20, 1976, after the Court of Appeals had

dismissed Petitioner’s appeal for mootness on Sep-

tember 1, 1977.

OPINIONS BELOW

The opinion of the Bankruptcy Court in the North-

ern District of Georgia, Atlanta Division (hereinafter

‘“‘the Bankruptcy Court’’) entered on October 15, 1975,

is not reported, either officially or unofficially, but a

true copy thereof is attached hereto as part of the

Appendix of this Petition (Pet. App. la-8a). The

opinion of the District Court entered on February 20,

1976, is not reported either officially or unofficially,

but a true copy thereof is attached hereto as part of

Petitioner’s Appendix (Pet. App. 9a-15a). The opin-

ion of the Court of Appeals entered on September 1,

1977, is not reported officially or unofficially, but a true

copy thereof is attached hereto as part of the Petition-

er’s Appendix (Pet. App. 16a). The opinion of the

Court of Appeals entered on January 6, 1978, is not

reported officially or unofticially, but a true copy there-

of is attached hereto as part of the Petitioner’s Ap-

pendix (Pet. App. 18a).

JURISDICTION

The judgment of Court of Appeals (Pet. App. 18a)

was entered on January 6, 1978. The jurisdiction of

this Court is invoked under 28 U.S.C. § 1254(1).

QUESTION PRESENTED

Whether the Court of Appeals erred in denying Pe-

titioner’s Motion to Vacate the Order of the District

Court entered on February 20, 1976, which Order Pe-

titioner had appealed from to the Court of Appeals,

when the Court of Appeals had previously granted the

Motion of Alias Enterprises, Inc., the Respondent here-

in, to be substituted as Appellee, and had additionally

granted the Motion of the Respondent/Appellee tu

Dismiss the appeal filed by Petitioner for mootness

after Petitioner had indicated in its response to the

Motion to Dismiss for Mootness filed by Respondent

that it would not object to the dismissal of the appeal

on the grounds of mootness if, and only if, simultane-

Se ee —

ously with said dismissal the Court of Appeals directed

the District Court to vacate its Order dated February

20, 1976.

CONSTITUTIONAL AND STATUTORY

' PROVISIONS INVOLVED

There are no constitutional or statutory provisions

directly involved in this controversy. Rather, as ex-

plained in more detail below in the Statement of the

Case and the Reasons For Granting the Writ, this

matter involves a failure of the Court of Appeals to

follow accepted procedures applicable when a case is

dismissed for mootness, which have been firmly estab-

lished by prior decisions of this Court as well as the

Court of Appeals and other Federal Courts.

STATEMENT OF THE CASE

On January 6, 1978, the Court of Appeals entered

its Order denying the Motion of Petitioner to Vacate

the Order of the District Court entered on February

20, 1976 (Pet. App. 18a), which had been appealed from

by Petitioner. This Motion was necessitated by the pre-

vious action of the Court of Appeals in granting the

Motion of Alias Enterprises, Inc., the Respondent, to

be substituted as Appellee in the case then pending

before the Court of Appeals, and in further granting

the Motion of the substituted Appellee/Respondent to

dismiss the appeal taken by Petitioner from the afore-

mentioned Order of the District Court on the grounds

that said appeal was moot. (Pet. App. 16a).

Briefly, the factual background surrounding this

matter is as follows:

On October 15, 1975, the Bankruptcy Court entered

an Order confirming a Plan of Arrangement which had

been proposed by your Petitioner in accordance with

the provisions of Chapter XII of the Bankruptcy Act

(11 U.S.C. §§ 801 through 926), and the Rules of Bank-

ruptey Procedure for Chapter XII (Pet. App. 1a-8a).

The jurisdiction of the Bankruptcy Court to enter such

Order was founded on the provisions of § 472 of the

Bankruptcy Act (11 U.S.C. § 872).

After the entry of this Order by the Bankru

Court, Brand Development rove een amare rae

‘““Brand’’), the original Appellee in this matter, and

BVA Credit Corporation (hereinafter ‘“BVA”’), an-

other creditor of the Debtor/Petitioner, filed Notices

of Appeal of the Bankruptcy Court’s Order to the

District Court. Prior to the filing of the notice of

appeal by Brand, the Bankruptcy Court had entered an

Order disallowing the claim of Brand for voting pur-

poses based upon the pendency of an Objection to Claim

filed by Debtor/Petitioner against Brand, together

with a Counterclaim filed in connection therewith by

Debtor/Petitioner against Brand.

Before the appeal proceeded, BVA withdrew its

Notice of Appeal.

Debtor/Petitioner had approximately 400 creditors

and no other creditors filed an appeal from the Order

of the Bankruptcy Court. In fact, no other creditors

of Debtor/Petitioner, other than BVA, refused pay-

ment of the consideration tendered under the provi-

sions of the Plan of Arrangement which had been con-

firmed by the Bankruptcy Court.

The appeal of Brand resulted in the entry of the

Opinion on February 20, 1976, by the District Court

which provided, in pertinent part, that the portions of

the Debtor’s Plan of Arrangement and Order of the

Bankruptcy Court confirming same which sought to

discharge the individual partners of the Debtor and

their wives from the liabilities of the partnership were

invalid and of no effect because of § 5(j) of the Bank-

ruptey Act. 11 U.S.C. § 23().

The Debtor/Petitioner appealed from the Order of

the District Court to the Court of Appeals, which ap-

peal was resisted by Brand, as Appellee.

While the appeal by Brand from the Order of the

Bankruptcy Court was pending, and continuing during

the time the appeal of Petitioner from the Order of the

District Court was pending, BVA sought to pursue

collection efforts against the partners of Petitioner and

their wives based upon purported guarantees by said

persons of debts owing by Petitioner to BVA.

While Petitioner’s appeal to the Court of Appeals

was pending, Brand transferred its claim against Pe-

titioner to Alias Enterprises, Inc., Respondent herein,

a wholly-owned subsidiary of a substantial creditor of

Brand, and unrelated to Petitioner, its partners or

their wives. (Pet. App. 19a-20a).

Then on July 14, 1977, the Bankruptcy Court en-

tered an Order approving a settlement between Alias

and Petitioner, which settlement provided that the

claims of Brand and Alias agai st Petitioner would

be withdrawn without any payment from Petitioner

and the Counterclaim which Petitioner had filed

against Brand would likewise be withdrawn without

payment to Petitioner. (Pet. App. 21a-22a).

Thereafter, pursuant to Rules 43 and 27 of the Fed-

eral Rules of Appellate Procedure, Alias Petitioned

the Court of Appeals to be substituted as Appellee for

Brand and further requested that the appeal filed by

Petitioner from the Order of the District Court de-

scribed above be dismissed for mootness. (Pet. App.

23a-24a).

Petitioner responded to the Motion of Alias indicat-

ing that it would not object to the substitution of Alias

as the Appellee in the case, and further indicating that

it would not object to the dismissal of its appeal on the

grounds of mootness, if, and only if, simultaneously

with said dismissal the Court of A ppeals directed the

District Court to vacate its Order dated February 20,

1976. (Pet. App. 25a).

In its brief in support of its response to the Motion

of Alias, Petitioner cited to the Court of Appeals the

provision of the Order of the District Court holding

that the discharges of the general partners and their

spouses and the injunction entered pursuant thereto

were invalid and of no effect. Furthermore, Petitioner

argued specifically in said brief that it would not be

proper for the Court of Appeals to simply dismiss the

appeal unless it also required the District Court to

vacate its Order, since the possibility would remain

that other creditors, who did not appeal the confirma-

tion of the Plan proposed by Petitioner, might take

advantage of the Order of the District Court holding

invalid a part of the Order of Confirmation, and with-

out the Petitioner having had its day in Court on the

correctness of the District Court Order, the appeal

filed by Petitioner might not be moot as to other

creditors who did not appeal the Order confirming

Petitioner’s Plan of Arrangement. (Pet. App. 26a-28a).

Thereafter, the Court of Appeals entered an Order,

granting the Motion of Alias to be substituted as a

party, and further granting the Motion of Alias to dis-

iti . (Pet. App. 16a)

ss the appeal filed by Petitioner. (

The Court of Appeals did not, however, as a part of

said Order, direct that the District Court vacate its

Order entered on February 20, 1976.

After receiving notice of the entry of this Order,

counsel for Petitioner inquired of the Office of the

Clerk of the Court of Appeals what the proper awd

dure would be for requesting that the Court of Sane”

vacate the Order of the District Court entered on He

ruary 20, 1976, and was advised that the proper og

cedure would be by the filing of a Motion ome

Rule 27 of the Federal Rules of Appellate Procedure

requesting such action.

iti ed such a Motion pointing out to the

Pi a goed that Petitioner had aaa >

quested that the Court of Appeals not dismiss “4 a

peal of Petitioner for mootness unless, as part 4 oo.

dismissal, it vacate the Order of the District Co

entered on February 20, 1976. (Pet. App. 29a-36a).

In its brief in support of said Motion, Petitioner

cited to the Court of % Er - £ Ppmghnge

ingwear, Inc., S. 36, Ct.

Liss os Coa in which this Court acknowledged its

established practice of reversing or vacating the judg-

ment below and remanding the case with a 5 bre

to dismiss when an appeal from a court in the F .

system had become moot. Petitioner also cited to the

Court of Appeals its decision in the case of be oe +

Seafarers’ International Umon, etc., 398 aw

(C.A. 5, 1968) in which the Court of Appeals in A

missing an appeal as moot, and ordering the decision e

the District Court vacated over the objection of “

Appellee, stated that it is the time honored invariable

practice in the Federal system where an appeal is dis-

missed by reason of mootness for the Appellate Court

to vacate the decision below and direct that it be dis-

missed for mootness so that it will spawn no legal con-

sequence }

— — or establish untested poveemans, (Pet. App.

The Court of Appeals denied the Motion of Peti-

tioner on January 6, 1978. (Pet. App. 18a).

Subsequent to the original decision of the Court of

Appeals granting the Motion of Respondent, Alias, to

dismiss the appeal of Petitioner on the grounds of

mootness, BVA has continued to press its claim against

the partners of the Petitioner and their wives, by dis-

missing its action in the Court in which it had been

stayed, and reinstituting same in the District Court, in

which Court the action is now pending.

Subsequent to the latest decision of the Court of A

peals entered on January 6, 1978, the ee tcl

Court, on February 14, 1978, entered an Order in ac-

cordance with the remand of the District Court con-

tained in the opinion entered on February 20, 1976

vacating those provisions contained in the original

Order of confirmation entered on October 15, 1975

which had been declared invalid by the District Court’s

opinion (Pet. App. 41a-44a). Petitioner has filed a

Notice of Appeal to said Order of the Bankru

Court (Pet. App. 45a). : a

REASONS FOR GRANTING THE WRIT

The action of the Court of A i

A. ' ppeals in denying Pe-

titioner’s Motion to Vacate the Order of the District

Court should be reviewed by this Court, because such

action by the Court of Appeals constitutes an extreme

departure from the proper procedure to be followed

in a case such as this, where an appeal has been dis-

missed for mootness. This procedure has been acknowl-

edged on many occasions by this Court as well as the

Court of Appeals. Furthermore, the action of the Court

of Appeals in refusing to vacate the judgment of the

District Court upon the dismissal of Petitioner’s ap-

peal for mootness has placed this Petitioner, as well as

all other persons who may be similarly situated in the

future, in the position of being faced with potentially

adverse legal consequences spawned by an Order of a

United States District Court which has become unre-

viewable, although appealed from in a proper manner.

In the case of United States v. Munsingwear, Inc.,

340 U.S. 36, 95 L.Ed. 36, 71 S.Ct. 104, this Court said:

‘The established practice of the Court in dealing

with a civil case from a court in the Federal sys-

tem which has become moot while on its way here

or pending our decision on the merits is to reverse

or vacate the judgment below and remand with a

direction to dismiss. That was said in Duke Power

Company v. Greenwood County, 299 U.S. 259, 267,

81 L.Ed. 178, 182, 57 S.C+. 202, to be ‘the duty of

the Appellate Court.’

... Our —— ry power over the judgments of

the lower Federal Courts is a broad one [cites

omitted] ... As already indicated it is commonly

utilized in precisely this situation to prevent a

judgment, unreviewable because of mootness, from

spawning any legal consequences.’’ See nited

tates v. Munsingwear, Inc., supra, at pp. 40 & 41.

In the case of Duke Power Company v. Greenwood

County, supra., which was on review with this Court as

a result of the granting of a Writ of Certiorari, this

Court in a Per Curiam opinion, commenting upon the

procedure followed by the lower courts, stated first,

at p. 261:

‘*This case presents irregularities in practice which

we think should not be overlooked.”

After a thorough discussion of the complicated pro-

cedural problems, this Court further commented, at

p. 267:

‘We thus have a situation in which both courts

below have failed to act in accordance with the

standards of proper procedure. Where it appears

upon appeal that the controversy has become en-

tirely moot, it is the duty of the Appellate Court to

set aside the decree below and remand the cause

with directions to dismiss.’’ See United States v.

Hamburg-Americkanische Packetfahrt-Action

Gessellschaft, 239 U.S. 466, 475, 478, 60 L.ed. 387,

391, 392, 36 S.Ct. 212; Altherton Mills v. Johnson,

259 U.S. 13, 16, 66 L.ed. 814, 816, 42 S.Ct. 422;

Brownlow v. Schwartz, 261 U.S. 216, 218, 67 L.ed.

620, 622, 43 S.Ct. 263; United States v. Anchor

Coal Co., 279 U.S. 812, 73 L.ed. 971, 49 S.Ct. 262.

In the case of Brownlow vy. Schwartz, supra., cited

in the case of Duke Power Company v. Greenwood

County, supra., this Court stated :

‘The case being moot, further proceedings upon

the merits can neither be had here nor in the court

of first instance. To dismiss the writ of error would

leave the judgment of the court of appeals requir-

ing the issuance of of [sic] the mandamus in force,

—at least apparently 80,—notwithstanding the

basis therefor disappeared. Our action must,

therefore, dispose of the case, not merely of the

appellate proceeding which brought it here. The

w established by this Court, under simi-

Imagenes ei and circumstances, is to reverse the

judgment below and remand the case with direc-

tion to dismiss the bill, complaint, or petition.

[cites omitted]... .

ing these precedents, the judgment below

‘aoaa an , with directions to the Court of

Appeals to remand the cause to the Supreme

Court, with instructions to dismiss the —e

without costs, because the controversy involved mer

become moot, and therefore is no longer a subj

appropriate for judicial action.’”’ Brownlow Vv.

Raaute, supra., at pp. 218 & 219.

This Court used very similar language in the case

of United States v. Anchor Coal Company, supra.,

which was also cited by this Court in the case of Duke

Power Company v. Greenwood County, supra.

In addition to these opinions, this Court has on

many other occasions, followed the same standard dis-

position in federal civil cases. See New Orleans om

Inspectors v. Glover, 161 U.S. 101, 103, 40 L.Ed. ~

633, 16 S.Ct. 508, modg 160 U.S. 170, 40 L.Ed. 382,

S.Ct. 321; Berry v. Davis, 242 U.S. 468, 61 L.Ed. 441,

37 S.Ct. 208; United States v. American Asvatic SS.

Co., 242 U.S. 537, 61 L.Ed. 479, 37 S.Ct. 233; Board of

Public Utility Comrs. v. Compania General de em

de Filipinas, 249 U.S. 425, 63 L.Ed. 687, 39 S.Ct. i

Commercial Cable Co. v. Burleson, 250 U.S. ale

L.Ed. 1030, 39 S.Ct. 512; United States v. Alaska S.

Co., 253 U.S. 113, 64 L.Ed. 808, 40 S.Ct. 448; ~ 4

muller v. Stokes, 256 U.S. 359, 65 L.Ed. 990, 41 «em

522; Alejandrino v. Quezon, 271 U.S. 528, 70 L.

1071, 46 S.Ct. 600; United States ex rel. Norwegian

Nitrogen Products Co. v. United States Tariff Com.,

274 U.S. 106, 71 L.Ed. 949, 47 S.Ct. 499; Sprunt & Son

v. United States, 281 U.S. 249, 74 L.Ed. 832, 50 S.Ct.

315; Hargis v. Bradford, 283 U.S. 781, 75 L.Ed. 1411,

d1 S.Ct. 342; Mahan v. Hume, 287 U.S. 575, 77 L.Ed.

905, 53 S.Ct. 223; Railroad Com. of Texas v. MacMil-

lan, 287 U.S. 576, 77 L.Ed. 505, 53 S.Ct. 223; Coyne v.

Prouty, 289 U.S. 704, 77 L.Ed. 1461, 53 S.Ct. 658;

First Union Trust & Sav. Bank v. Consumers Co., 290

U.S. 585 78 L.Ed. 517, 54 S.Ct. 61; Daneiger Oil &

Refining Co. v. Smith, 290 U.S. 599, 78 L.Ed. 526, 54

S.Ct. 209; O’Ryan v. Mills Novelty Co., 292 U.S. 609,

78 L.Ed. 1469, 54 S.Ct. 779; Hamond Clock Co. v.

Schiff, 293 U.S. 529, 79 L.Ed. 639, 55 S.Ct. 146; Bracken

v. Securities & Exchange Com. 299 U.S. 504, 81 L.Ed.

374, 57 S.Ct. 18; Leader v. Apex Hosiery Co., 302 U.S.

656, 82 L.Ed. 508, 58 S.Ct. 362; Woodring v. Clarks-

burg-Columbus Short Route Bridge Co., 302 U.S. 658,

82 L.Ed. 509, 58 S.Ct. 365; Retail Food Clerks & Man-

agers Union v. Union Premier Food Stores, 308 U.S.

526, 84 L.Ed. 445, 60 S.Ct. 376; Securities & Exchange

Com. v. Long Island Lighting Co., 325 U.S. 833, 89

L.Ed. 1961, 65 S.Ct. 1085; Montgomery Ward & Co.

v. United States, 326 U.S. 690, 90 L.Ed. 406, 66 S.Ct.

140; Brotherhood of Locomotives & E. v. Toleda, P. &

W. R. Co., 332 U.S. 748, 92 L.Ed. 335, 68 S.Ct. 53;

Securities & Exchange Com. v. Engineering Public

Service Co., 332 U.S. 788, 92 L.Ed. 370, 68 S.Ct. 96;

Hodge v. Tulsa County Elections Board, 335 U.S. 889,

93 L.Ed. 427, 69 S.Ct. 250; Securities and Exchange

Com. v. Philadelphia Co., 337 U.S. 901, 93 L.Ed. 1715,

69 S.Ct. 1715; City of Los Angeles v. Tighe E. Woods,

340 U.S. 908, 95 L.Ed. 657, 71 S.Ct. 294; Riece Cozart

v. Charles E. Wilson, 352 U.S. 884, 1 L.Ed. 2d 82, 77

. ~~ stl

Bitewayebes oe. ~ ~ « 2 -

S.Ct. 126; Black v. Amen, 355 U.S. 600, 2 L.Ed. 2d 523,

78 S.Ct. 530; Mechling Barge Lines v. United States,

368 U.S. 324, 7 L.Ed. 2d 317, 82 S.Ct. 337; Connecticut

State Board of Parole v. Bey, 404 U.S. 879, 30 L.Ed.

2d 159, 92 S.Ct. 196; Diffenderfer v. Central Baptist

Church, 404 U.S. 412, 30 L.Ed. 2d 567, 92 S.Ct. 574;

Gallogly v. Larsen, 420 U.S. 904, 42 L.Ed. 2d 831, 95

S.Ct. 819; South Dakota v. McCay, 420 U.S. 904, 42

L.Ed. 2d 832, 95 S.Ct. 819; Van Lare v. Hurley, 421

U.S. 338, 44 L.Ed. 2d 208, 95 S.Ct. 1741; Weinster v.

Bradford, 423 U.S. 147, 46 L.Ed. 2d 350, 96 S.Ct. 347;

Kremens v. Bartley, US. , 52 L.Ed. 184, 97

S.Ct. ; DeSimone v. United States, 361 U.S. 125, 4

L.Ed. 2d 167, 80 S.Ct. 253.

Furthermore, this standard disposition has been fol-

lowed by the various Circuit Courts of Appeals in nu-

merous instances too voluminous to also mention here-

in.

i Fifth

In particular, the Court of Appeals for the

Cireuit has acknowledged the validity of the procedure

prescribed by this Court of vacating the judgment be-

low upon dismissing an appeal for mootness on many

occasions..

i . Seafarers’ In-

For example, in the case of Lebus v

ternational Union, etc., 398 F.2d 283 (C.A. 5, 1968), the

Court of Appeals for the Fifth Circuit stated :

‘‘This is the time honored, a, practice in

Federal system. Where an ap is

o reason ff tastatin, the a te wen ty Fa

vacate the decision below and dir that it .

missed for mootness, so that it will spawn no lega

consequences.’’ See Lebus v. Seafarers Interna-

tional Union, etc., supra., at p. 283.

In a later case, in which neither party apparently

requested the Court of Appeals to do so, th

Appeals stated simply: , the Court of

‘*The case as posed is moot. The jud

District Court is therefore vaaaeal | ‘the po

remanded to dismiss as moot so the case will not

_— hey an consequences.’’ United

A ngwear, Inc., 1950, 340 U.S, 3

S.Ct. 104, 95 L.Ed. 36; St. Pieree v. United Stetes,

1943, 319 U.S. 41, 63 S.Ct. 910, 87 L.Ed. 1199; Troy

State University v. Dickey, 5 Cir., 1968, 402 F.2d

515, 516-517 ; New Left Educ. Project v. Board of

Regents, 5 Cir., 1973, 472 F2d 218, 221; Lebus

Regional Director v. Seafarers’ Int’l. Union 5

Cir. 1968, 398 F.2d 281, 283; United States v. West

Gulf Maritime Ass’n., 5 Cir., 1972, 460 F.2d 1231.

And see especially our very recent decision United

States Servicemen’s Fund v. Killen Independent

School District, 5 Cir., 1974, 693 F.2d 489.’’ See

r? — Fe ge et 4 niversity of Texas

. . Vv. Board o

(Ch. 5 1974), at p. 98. 1

The rationale behind these decisions of the C

Appeals is perhaps best explained in the case of Now

Left Edue. Project, et al. v. Board of Regents of the

University of Texas System, 472 F.2d 218 (C.A. 5

1973). In that case, J udge Bell wrote for the Court of

Appeals and said at pp. 220 & 221:

tions to dismiss the Complaint. [cites omi

_Cor ‘ omitted

. ++ This procedure is dictated by constitutional

considerations. The appeal is dismissed because

the appellate court has no power to decide moot

questions. The judgment is vacated and remanded

with instruction to dismiss because of the need to

pas the parties from the prejudice that may

ow from an unreviewed standing judgment which

has become unreviewable because of circumstances

beyond their control. This procedure also removes

any precedential effect which the judgment might

otherwise have.”’

Although making this analysis, Judge Bell went on

in the New Left case to decide that under the particu-

lar facts and circumstances of that case, although the

appeal should be dismissed as moot, the judgment of

the court below should be left standing. The factual

basis supporting his decision was that the mootness

of the appeal had resulted solely from the unilateral

action of the Appellant in repealing the rules which

the Appellees had contended to be unconstitutional,

thereby precluding the Appellees from continuing to

pursue their claim of unconstitutionality against the

Appellant. In the Court of Appeals, the Appellees vig-

orously protested the dismissal of the appeal for moot-

nes and/or the vacation of the Order of the District

Court below. Although Judge Bell felt constrained to

dismiss the appeal for mootness because of the uni-

lateral action of the Appellant in eliminating the re-

strictions against which the Appellees complained,

thereby eliminating the controversy, Judge Bell, never-

theless, felt that in such circumstances the Appellees

were entitled to have stand the judgment of the Dis-

trict Court below vindicating their constitutional

claims.

In this case, the facts are totally different. It was

the Appellee, not the Appellant, who moved the Court

of Appeals to dismiss the appeal for mootness. It was

the Appellant/Petitioner who advised the Court of

Appeals that it would not object to a dismissal for

mootness if, and only if, simultaneously with such dis-

missal the Court of Appeals vacated the decision of the

District Court below. In making such statement to the

Court of Appeals, Appellant/Petitioner advised the

Court of Appeals that it would only be appropriate

for the Court of Appeals to dismiss the appeal for

mootness if it also vacated the District Court Order

below. Otherwise, Appellant/Petitioner would be faced

with the situation (as has now occurred) of being un-

able to obtain review of an Order adverse to it, and

would be faced with potential adverse legal conse-

quences (as is now occurring) as a result of the con-

tinued existence of such Order. It should also be em-

phasized that the case before the lower courts in this

matter was one of first impression.

Clearly, the situation faced by Petitioner differs

substantially from that of the New Left case.

The Court of Appeals should either have allowed the

appeal to continue, thereby giving Petitioner the op-

portunity to test the validity of the Order of the Dis-

trict Court below, or, having dismissed Petitioner’s

appeal for mootness, the Court of Appeals should have

vacated the Order of the District Court below go as to

eliminate the potential for such Order to spawn ad-

verse legal consequences to Petitioner and others.

CONCLUSION

The question presented by this Petition for Writ of

Certiorari concerns an area of grave legal consequence

not only for Petitioner, but for all Appellants in the

Federal Court System seeking review of an adverse

decision of a Federal Court. The decision of the Dis-

trict Court which was appealed from by Petitioner was

eet Oe eae

clearly adverse to the interests of Petitioner, and as A

result of its alleged present vitality, it has a continuing

potential to spawn adverse legal consequences to Peti-

tioner. In addition to the direct consequences to Peti-

tioner, the ruling of the Court of Appeals could have

dire precedential consequences if allowed to stand.

By its ruling, the Court of Appeals has effectively

precluded Petitioner from having its appeal of the

Order of the District Court heard.

;, , "_

The handling of the present matter 1s a clear, su

stantial and prejudicial departure from accepted ap-

pellate procedure and it should be reviewed by this

Court.

WHEREFORE, Petitioner respectfully prays that a

Writ of Certiorari issue from this Court.

Respectfully submitted,

Rosert E. Hicks

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

Attorney for Consolidated Motor

Inns

Of Counsel:

HARLES E. CAMPBELL

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

BERT A. BARTLETT

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

APPENDIX

fr <8

APPENDIX

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

In THE MATTER OF:

ConsoLipaTeD Motor Inns, Debtor

In Proceepincs ror AN ARRANGEMENT Unper Cuapter XII

Case No: B75-296A

(Frizp Ocroser 15, 1975)

Confirmation of Arrangement

An application having been filed herein for the con-

firmation of Alternative A in the Arrangement proposed

by the above named Debtor on the 15the Day of August,

1975, to its creditors under Chapter XII of the Bank-

ruptcy Act, and the same having come on to be heard and

duly considered on the 9th Day of October, 1975, upon due

notice by mail to all creditors entitled thereto as required

by law and pursuant to the order of this Court, and the

Court being satisfied and finding based upon proceedings

had before it on said date and on evidence received in

other hearings in this matter that the Arrangement should

be confirmed and that same is consistent with Chapter

XII of the Bankruptcy Act,

And it appearing that said Alternaiive A proposal in

the Debtor’s Arrangement has been dul,’ accepted in ac-

cordance with the provisions of Chapter XII of the Bank-

ruptcy Act, and that the deposit required by the pro-

visions of said Chapter and by said Arrangement, amount-

ing to Two Hundred Thousand Dollars ($200,000.00) hav-

ing been made in an amount not less than Five Hundred

Thousand Dollars ($500,000.00), subject to the order of

the Court, in the First National Bank of Atlanta, a desig-

nated depository of this Court, in the Debtor’s Chapter

XII account and the Debtor having been authorized by

the Court to serve as disbursing agent to distribute the

funds required to be distributed under the Arrangement,

And, it appearing that the provisions of Chapter XII

have been complied with; and that said proposal is for the

best interest of creditors and is feasible and that the said

Debtor has not been guilty of any of the acts or failed to

perform any of the duties which would be a bar to the

discharge of a bankrupt; and that the said proposal and

its acceptance are in good faith, and have not been made

or procured by any means, promises or acts forbidden by

the Bankruptcy Act; and that all payments made or prom-

ised by the Debtor, by any person issuing securities or

acquiring property under the Arrangement, or by any

other person, for services and for costs and expenses in,

or in connection with, this proceeding, or in connection

with and incident to the Arrangement, have been fully

disclosed to the Court and are reasonable, or, if to be

fixed after confirmation of the Arrangement, will be sub-

ject to the approval of the Court; and it also appearing

that no reclamation proceedings have been filed which

should prevent confirmation of the Arrangement; it is

Orperep, that Alternative A of the said Arrangement,

hereto annexed and made a part hereof, be and the same

hereby is in all respects confirmed, and it is further

ORDERED, that the Debtor is hereby declared free and

discharged from all its debts and liabilities provided for

by the said Arrangement except as otherwise provided for

in the said Arrangement or in this Order, excluding such

debts as are not dischargeable under Section 17 of the

Bankruptcy Act, and the debts of the Debtor’s affiliated

business entities (Consolidated Motor Inns, a general part-

nership, Suwanee Properties, a general partnership, Con-

solidated Motors Inns, Inc. and Suwanee Management,

Inc.) having been assumed by the Debtor prior to the

as hale Ae CPE BRO GAIT p> , OR oF O46

PO GS 2 in whe

‘ng of the petition in this proreeding and the assets of

et entities ‘baie included as assets in this proceeding

because they came into the possession and operation of the

Debtor prior to the filing of the petition in this proceed-

ing, are also discharged subject only to the provisions of

this paragraph, and it is further

Orperep, that the Debtor shall comply with the pro-

visions of the Arrangement and with this Order and the

other orders of this Court relative thereto, and shall take

all action necessary to carry out the Arrangement, and

is is further

Orperep, that the- title to the Debtor’s property, real

and personal, which is to be transferred pursuant to the

provisions of the Arrangement shall be transferred in

accordance with said provisions, and said property 80

transferred shall be free and clear of all debts affected

by the Arrangement, except such debts as may otherwise

be provided for in the Arrangement or in this Order, or

in any other order directing or authorizing the transfer of

such properties, and it is further

Orperep, that the motel properties owned and operated

by the Debtor and located at Suwanee, Georgia, Nashville

and Lebanon, Tennessee, Zephyrhills and Port Richey,

Florida, and Montgomery and Tuscaloosa, Alabama, shall

be transferred to the Imperial Motels Corp. in accordance

with that certain contract of sale attached to the Debtor’s

Arrangement as Exhibit ‘‘A’’. Upon the payment by said

Imperial Motels, Corp. of the sales price set forth in said

contract of sale ($300,000.00) and, upon said transfer,

said Imperial Motels Corp. shall hold said motel proper-

ties free and clear of all liens and encumbrances except

for the first or second mortgages thereon and chattel

financing agreements thereon as respectively set forth on

Exhibit ‘‘H’’ to said contract of sale, a copy of which

is attached hereto, and Exhibit ‘‘I’’ to said contract of

sale, a copy of which is attached hereto, or on such other

terms and conditions as may be set forth in any additional

' —

ny et

fee io.

or separate understanding or agreement between said

Imperial Motels Corp. and the mortgagee or chattel credi-

tors of the Debtor, or any of them, or on the basis set

forth hereinafter, and it is further

OrpereD, that the terms and conditions of the trans-

fer of the Debtor’s motel property at Montgomery, Ala-

bama, in regard to the existing first mortgage against

said property held by First Pennsylvania Mortgage Trust

shall be as set forth in Paragraph 4(a)(1) of that certain

contract of sale which is Exhibit ‘‘A’’ to said Arrange-

ment, namely, the repayment terms for the loan now held

by First Pennsylvania Mortgage Trust and secured by a

first mortgage on said Montgomery motel property shall

be such that the principal and interest of said loan shall

be payable in monthly payments of Ten Percent (10%) per

annum based on Twenty-Five (25) year terms, except that

on the seventh anniversary of said loan as provided in

this confirmation the remaining unpaid principal and ac-

crued interest shall be due and payable in a “balloon”?

payment but, provided further, Imperial Motels Corp.

shall have the option to further extend the terms of said

loan beyond said seven year term for an additional five

years during which the unpaid principal shall be amortized

in quarterly payments of principal and interest at Ten

Percent (10%) per annum and said Imperial Motels

Corp. shall assume and be liable for payments on said

loan as herein provided, or, said Imperial Motels Corp.

shall assume and be liable to pay said loan on any other

and different terms to which said Imperial Motels Corp.

and First Pennsylvania M

it is further ortgage Trust may agree, and

Orpzrep, that the Debtor, Imperial M

the creditors of the Debtor and all other rs

execute and deliver, or join in the execution and delive

of whatever instruments may be vecessary to effect the

foregoing transfer of the Debtor’s motel properties and

Rely a AL et OL RE RPTL rE ok wr

Cama ata.

ee ee ee ee ee

to effect the transfer of any other of the Debtor’s prop-

erties which the Arrangement provides will be transfer-

red, and it is further

Orperep, that. all liens, except those mortgages, deeds

to secure debt and chattel liens described on Exhibits ‘‘H’’

and ‘‘I’’ to that certain contract of sale attached to the

Arrangement as Exhibit ‘‘A’’, copies of which are at-

tached hereto, against the Debtor’s motel properties be

and the same hereby are satisfied, cancelled and termi-

nated upon tender of payment to said creditors as pro-

vided in the Arrangement, and said creditors be, and they

hereby are, directed to execute any and all documents

necessary to reflect the satisfaction, cancellation and ter-

mination of said liens, and it is further

Orperep, that distribution be made in accordance with

said Arrangement to the creditors having scheduled or

allowed claims and that the discharge of the Debtor as to

the debt of any creditor is made subject to said distribu-

tion to said creditor in accordance with the provisions of

said Arrangement, and the Debtor shall act as disbursing

agent for said distributions and the balance of any deposit

required by this Court, if any, after all of said distribu-

tions have been made shall be withdrawn by check payable

to the Debtor, and it is further

Orperep, that all unpaid administrative expenses ap-

proved by this Court be paid within ten days after this

Order or in the event of fees or compensation which are

not fixed within said time, then within five days from the

date of such determination, and it is further

Orperep, that the Arrangement and its provisions shall

be binding upon the Debtor and all creditors of the

Debtor, whether or not they are affected by the Arrange-

ment, or have accepted it or have filed their claims, and

whether or not their claims have been scheduled or al-

lowed and are allowable, but the confirmation of the

tte

Arrangement and the discharge from this proceeding

shall not be deemed a satisfaction, termination, or nova-

tion as to the security interests held by any creditor in

any of the motel properties of the Debtor as set forth on

Exhibits ‘‘H’’ and ‘‘I’’ to the contract of sale which is

Exhibit ‘‘A’’ to the Arrangement, copies of which are

attached hereto and it is further

OrpeRED, that a copy of this confirmation may be filed

in the proper office of any county in which real property

of the Debtor being transferred under the Arrangement is

located as evidence of the satisfaction of any and all liens

and encumbrances against said property not specifically

preserved by the Arrangement and this confirmation order,

and it is further

OrpereD, that the objection of First Pennsylvania Mort-

gage Trust to the division of creditors into classes as set

forth in the Arrangement be, and the same hereby is,

denied and the Court finds that in the context of this

Chapter XII proceeding it is a reasonable division of

creditors to place all creditors holding mortgages against

the motel properties of the Debtor in one class regardless

of the particular motel property which constitutes security

for any one of said creditors and whether said creditors

hold construction of permanent loans from the Debtor

and this finding is made, in part, because of the presence

of a number of construction lenders in the mortgagee class

and because of the prolonged negotiations between the

Debtor, Imperial Motels Corp. and said creditors to reach,

in the case of each creditor, a reasonable basis upon which

obligations are being assumed by or the property is being

taken subject to said obligations by Imperial Motels Corp.

and it is further

Onperep, that all creditors affected by the terms of the

Arrangement be and they hereby are forever restrained

and enjoined from taking any further action or proceeding

in connection with their said claims, or proceeding to

Pea Tite

——

execute or enforce any judgment previously obtained,

except to enforce the consummation of the terms of the

Arrangement as confirmed herein, and it is further

Onperep, that, the discharge provided the Debtor by

the confirmation of the Arrangement and the conclusion

of this proceeding shall extend to the individual general

partners and their spouses in regard to any liability of

same from debts of the Debtor discharged by this pro-

ceeding and the confirmation of the Arrangement shall

act as a full discharge of said debts in regard to any

liabilities of said partners or spouses arising out of the

operation or business of the Debtor. Further, the accept-

ance, retention or endorsement of any check representing

payment under the Arrangement by any payee who is &

creditor affected by the Arrangement shall constitute a

full release and discharge of the Debtor, its individual

general partners and their spouses respectively from any

and all claims of whatsoever kind or nature against any

or all of them arising out of the business of the Debtor

but shall be without force or effect as to the liability of

any such creditor where such liability arises out of an

indebtedness incurred other t’ 1n in the operation or busi-

ness of the Debtor, and it is further

Orperep, that parties in interest may file objections to

the allowance of any claim heretofore scheduled or filed

but not allowed or disallowed, within thirty (30) days

from the date hereof, and such objections and all objec-

tions heretofore filed herein shall be brought on for hear-

ing within sixty (60) days from the date hereof, unless

previously noticed for hearing; and notice of such hearing

shall be given to the claimant at least five (5) days prior

to the date fixed therefor; upon failure to so file objec-

tions or to notice objections for hearing as herein pro-

vided, the objection to the claim affected thereby shall be

deemed waived and it is further

a ect

OrpereD, that sixty (60) days from the date said check

is mailed to the creditor entitled to same, or within such

further time as the Court may allow, the Debtor shall

stop payment of any such checks then unpaid, and shall

deposit by certified check the amount of such unpaid checks

with the Clerk of this Court together with a list of the

persons entitled thereto and the respective amounts due

such persons, and it is further

Onperep, that within seventy (70) days after the date

the last check has been mailed to a creditor in this pro-

ceeding entitled to receive same under the Arrangement

or within such further time as the Court may allow, the

Debtor shall file with this Court a verified report showing

compliance herewith, together with all cancelled vouchers

and supporting bank statements showing disbursement of

all funds deposited pursuant to the provisions of said

Chapter XII and the Arrangement herein, and it is further

OrpeRED, that this Court shall retain jurisdiction until

the provisions of the Arrangement have been performed.

oan Onperep at Atlanta, Georgia this 15 day of October,

/38/ W. H. Draxz, Jr.

W. Homer Drake, Bankruptcy Judge

ean

Be ee ee Tae

SUR sree

Caption OMITTED IN PRINTING)

(Firep Fesrvuary 20, 1976)

Order

The instant case is submitted to this Court on appeal

from an order of the Bankruptcy Court entered on Octo-

ber 15, 1975, confirming the Debtor’s Plan of Arrange-

ment and from the notice of confirmation of the Plan

and Discharge entered on October 21, 1975.

On January 23, 1975, Consolidated Motor Inns (the

Debtor-Appellee), a Georgia limited partnership, filed its

Chapter XII petition, 11 U.S.C. $801 e¢ seq., in this pro-

ceeding and, on that date, was continued in the possession

and operation of its properties as a Debtor-in-Possession.

The Debtor-Appellee filed its Plan of Arrangement on

August 15, 1975, and the hearing on confirmation was held

on October 9, 1975. At the hearing the Bankruptcy Court

found that the requisite majorities required for confirma-

tion of the Plan in each class of creditors had been ob-

tained and, after finding that the Plan was in the best

interest of creditors, the Plan of Arrangement was con-

firmed.

On March 3, 1975, the Appellant, Brand Development

Corp., who had served as the general contractor for the

construction of all but one of the Debtor-Appellee’s motel

properties, filed a claim in this proceeding. The Appellant

contended that it was a secured creditor as a result of cer-

tain materialmen’s liens arising out of work performed on

the motels owned by the Debtor-Appellee. The Debtor-

Appellee filed an objection to this claim, and on October

8, 1975, the Bankruptcy Court disallowed Appellant’s

claim in its entirety for voting purposes but without pre-

judice to Appellant’s right to share in distribution under

any Plan of Arrangement confirmed, if, upon a hearing

on the merits, Appellant could establish that it had a valid

claim in excess of any valid counterclaim of the Debtor-

Appellee.

i eee 8.

10a

The Plan of Arrangement as confirmed concludes with

the following language:

‘*Confirmation of this Plan shall act as a bar to any

claim it held or alleges to have held on January 23,

1975, against the partnership, the partners thereof or

their spouses, arising out of the business of the part-

nership.’’

The order of confirmation dated October 15, 1975, from

which this appeal is taken, provides in part as follows:

‘*OnpERED, that all creditors affected by the terms of

the Arrangement be and they hereby are forever re-

strained and enjoined from taking any further action

or proceeding in connection with their said claims, or

or proceeding to execute or enforce any judgment pre-

viously obtained, except to enforce the consummation

of the terms of the Arrangement as confirmed herein,

and it is further

Onpzrep, that the discharge provided the Debtor by

the confirmation of the Arrangement and the conclu-

sion of this proceeding shall extend to the individual

general partners and their spouses in regard to any

liability of same from debts of the Debtor discharged

by this proceeding and the confirmation of the Ar-

rangement shall act as a full discharge of said debts

in regard to any liabilities of said partners or spouses

arising out of the operation or business of the Debtor.

Further, the acceptance, retention or endorsement of

any check representing payment under the Arrange-

ment by any payee who is a creditor affected by the

Arrangement shall constitute a full release and dis-

charge of the Debtor, its individual general partners

and their spouses respectively from any and all claims

of whatsoever kind or nature against any or all of

them arising out of the business of the Debtor but

shall be without force or effect as to the liability of any

Ma PE DR 1 ES wn

individual general partner of the Debtor or his spouse

to any such creditor where such liability arises out of

an indebtedness incurred other than in the operation

or business of the Debtor, ....

lla

In accordance with the provisions of the Plan of Arrange-

ment, the sale of the Debtor-Appellee’s motel properties

was closed on November 25, 1975. In connection with the

sale the individual partners and their respective spouses

joined in the documents of conveyance as required by the

order of confirmation.

The instant appeal is the only appeal from the order

of confirmation being prosecuted by any creditor. The Ap-

pellant’s statement of record and issues on appeal outlined

four (4) issues. The Court apprehends that the controlling

issue in this case is the permissibility or authority of the

Bankruptcy Court to confirm a Plan of Arrangement and

include in that confirmation a discharge of the general

partners and their spouses when only the limited partner-

ship filed the Chapter XII petition and when only the assets

of the limited partnership were administered in the pro-

ceeding.

Resolution of the issue in this case centers on the appli-

cability of Section 5(j) of the Bankruptcy Act, 11 US.C.

§ 23(j), to proceeding under Chapter XII, 11 U.S.C. § 801

et seq. Section 5(j) of the Bankruptcy Act provides:

‘“The discharge of a partnership shall not discharge

the individual general partners thereof from the part-

nership debts. A general partner adjudged a bankrupt

either in a joint or separate proceeding may, pursuant

to the provisions of this title, obtain a discharge from

his partnership and individual debts.’

Under this section it is perfectly clear that the discharge

in ordinary bankruptcy of a partnership entity does not

affect the individual liability of the general partners. [1b-

‘i eR a,

tr ternene a

om -

12a

erty National Bank v. Bear, 276 U.S. 215, 222 :

the Matter of Jercyn Dress Shop, 379 F. Supp. me a.

N.Y. 1974), affirmed 516 F.2d 864 (2nd Cir. 1975); Young

v. Riddell, 283 F.2d 909 (9th Cir. 1960); Schram v. Wrubel,

38 F’. Supp. 357 (E.D. Mich. 1941) ; see generally 1 A Collier

on Bankruptcy ff 5.01, 5.15. Thus, the partnership trustee

cannot prevent the partnership creditors from obtaining

in person. m judgments against the individual partners on

unpaid partnership debts. See First National Bank of

Herkimer v. Poland Union, 109 F.2d 54 (2nd Cir. 1940),

cert. denied, 309 U.S. 682 (1940). However, it is the con-

tention of the Debtor-Appellee that this section is inappli-

cable to a Chapter XII proceeding.

: gs 402 of Chapter XII, 11 U.S.C. § 802, provides in

7 The provisions of chapters 1 to 7, inclusive, of this

title, shall, insofar as they are not inconsistent or in

conflict with the provisions of this chapter, apply to

proceedings under this chapter: ... .”’

The Debtor-Appellee contends that Section 5(j) of the

ie a > inconsistent with the provisions and

a a ,

aye ba pter XII, and, therefore, inapplicable in

The Debtor-Appellee argues that the inconsisten

Section 5(j) and Chapter XII lies in the inherent ool

between the objective of straight bankruptcy, i.e., liquida-

a and a Chapter XII proceeding, i.e., rehabilitation.

us, the Debtor-Appellee argues that the general part-

ners of a partnership would have no incentive to utilize

Chapter XII if their individual liability may not be dis-

charged unless the assets of the partners themselves are

made available for distribution. Further, the Debtor-Ap-

pellee argues that to allow the partnership to be discharged

and, yet, continue ths liability of the general partners for

te PROC siee Ja

13a

any deficiency, would hardly make sense in a statute trig-

gered by the voluntary act of the general partners.

The Court disagrees. As to the first point, the general

partners are just as likely to submit their assets to the

Bankruptcy Court in a Chapter XII proceeding as in any

other rehabilitative proceeding. The reason that they would

do so is simply because their liabilities exceed their assets

and they would very much like to be free of their debts

and start anew. And as the Debtor-Appellee points out, the

purpose of a Chapter XIT proceeding is rehabilitation and

there is at least some possibility in a Chapter XII pro-

ceeding that the general partners will be allowed to con-

tinue to operate their assets under a plan of arrangement

and make a success of what was a failing enterprise. In-

deed, the Alternative B Plan of Arrangement in the instant

ease would have allowed continuation by the general part-

ners. Thus, the incentive to utilize Chapter XII under

these circumstances is the same as for any of the other

rehabilitative sections of the Bankruptcy Act—the continu-

ation of an enterprise free of overburdening debts. The

alternative to such an arrangement under Chapter XII is,

of course, straight bankruptcy.

Next, the Debtor-Appellee argues that it would hardly

make sense for the partnership to be discharged in a

Chapter XII proceeding and leave the general partners

liable for the deficiency. The Court agrees that such an out-

come is not very sensible. However, the answer is not to

allow the general partners to be discharged but to allow

them to also file petitions under Chapter XII. While Bank-

ruptcy Rule 105 abolishes the provisions of Sections 5(a)

and (b) of the Bankruptcy Act, 11 U.S.C. § 23(a) and (b),

allowing a joint petition, Rule 117(b) permits joint admin-

istration under these circumstances. See generally 8 Collier

on Bankruptcy { 4.02[4-.] (Chapter XI). Thus, the Debtor-

Appellee’s proposed inconsistency is seen not to exist.

l4a

This Court is not the first court to be presented with this

issue. In Acme Tool, Inc. v. Flesher, 309 F.2d 636 (10th

Cir. 1962), a partnership filed a voluntary petition under

Chapter XII and an arrangement was confirmed. The in-

dividual partners were not parties to the Chapter XII

proceeding.

‘‘The complaint is that the quoted provision has the

effect of discharging the industrial general partners

from the partnership debts. Counsel for the Trustees

expressly disavows such effect and we agree that the

order in question does not eliminate the liability of

the general partners for partnership debts.

The Bankruptcy Act provides that the discharge of

a partnership does not discharge the individual gen-

eral partners from the partnership debts. This provi-

sion is not inconsistent or in conflict with Chapter 12

and applies to proceedings thereunder. Hence, the

confirmation of the arrangement and the discharge of

the partnership could not as a matter of law release

and discharge the individual partners, none of whom

were parties to the Chapter 12 proceedings.’’

309 F.2d at 636.

See also Ellis v. Ywmen, 324 F. Supp. 1314, 1319 (D. Hawaii

1971) (applying Section 5 to Chapter XII without discus-

sion). This Court is in complete agreement, and thus the

discharge of the limited partnership in this case did not

discharge the general partners and their spouses.

15a

Therefore, on the basis of the foregoing, the purported

discharges of the general partners and their spouses and

the injunction entered pursuant thereto are void and of

no effect. This case is remanded to the Bankruptcy Court

for disposition consistent with this opinion.

Ir Is So OnDERED.

This 20th day of February, 1976.

/s/ James C. Hit

James C. Hn

United States District Judge

16a

IN THE UNITED STATES COURT OF APPEALS

FOB THE FIFTH CIRCUIT

No. 76-2183

In the Matter of: Consotipatep Moror Inns, Bankrupt.

Conso.ipaTep Moror Inns, Appellant,

versus

Branp DeveLopment Corporation, Appellee.

(Firrzp Sepremser 1, 1977)

Appeal from the United States District Court for the

Northern District of Georgia

Before CotzmMan, Gopsotp and Tyor.at, Circuit Judges.

By Tue Court:

It Is Onperep that the motion of Alias Enterprises, Ine.

for substitution of party-appellee is Granrep.

Ir Is Funruer Onperep that appellee’s motion for dis-

missal of appeal on grounds of mootness is Grawrep.

17a

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

OFFICE OF THE CLERK

January 6, 1978

MemoranpuM TO CouNsEL oR Parties Listep BeLow:

No. 76-2183—In the Matter of: Consolidated Motor Inns,

Bankrupt: Consolidated Motor Inns vs. Alias

Enterprises, Inc.

(Dist. Ct. No. BK 75-296 A)

(Recerven January 9, 1978)

The following action has this day been taken in the above

case:

( ) Motion to proceed on the original record granted.

( ) Motion to proceed on the original record and type-

written brief granted.

( ) Motion to consolidate granted.

( ) Motion to supplement or correct record granted.

( ) Motion for leave to file supplemental brief granted.

(

) Motion for leave to file brief amicus curiae is

granted.

( ) Motion for leave to file brief in preliminary type-

written form is granted.

( ) Joint motion as to time for filing briefs granted.

(X ) Order enclosed has been entered.

Epwarp W. Wapswosts, Clerk

/s/ By Cuare F. Sacus

Deputy Clerk

18a

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 76-2183

In the Matter of: CowsoLmpaTep Motor Inns, Bankrupt.

Consotmatep Moror Inns, Appellant,

versus

Aus Enterprises, Inc., Appellee.

Appeal from the United States District Court for the

Northern District of Georgia

(Fitzp January 6, 1978)

Before Cotzman, Gopsotp and Tyortat, Circuit Judges.

By tHe Covrr:

Ir Is Onpenep that appellant’s motion to vacate the order

of the District Court for the Northern District of Georgia

entered February 20, 1976 is denied.

117

JPC

177

19a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHEEN DISTRICT OF GEORGIA

ATLANTA DIVISION

In THE MATTER OF:

ConsoLmpaTEeD Motor Inns, _ isd

Debtor, )

) In Proceepines

) For an ARRANGEMENT

) Unper Cuarrer XII

(Recervep Jury 14, 1977)

Notice of Assignment of Claim

Comzs Now Branp DeveLopment Corporation (‘‘ Branp’’)

and Avimus Enterprises Inc. (‘‘Atias’’), and shows the

Court as follows:

1. On March 3, 1975, Brand filed a proof of claim in

the above-styled proceedings, said proof of claim being in

the amount of $483,438 for work, materials and supplies

furnished to CMI in the construction of certain motels.

2. By Agreement dated March 3, 1977, Brand trans-

ferred to Alias, a Georgia corporation, all indebtedness of

the Debtor to Brand and all claims of Brand against the

Debtor, of every kind and description.

3. The consideration for said transfer to Alias was $1

paid by Alias to Brand and the agreement of Peachtree

Bank and Trust Company, a Georgia banking corporation,

to enforce certain indebtedness of Brand to it and secured

by said assets conveyed, only against said assets.

4. This statement is filed in accordance with Bank-

ruptcy Rule 12-30(e).

20a

Carr, WapswortH, Apney & Tass

Attorneys for Brand Development Corporation

/s/ By: Peter M. Wricut

Peter M. Wright, by express permission

Jones, Bro & Hows.

Attorneys for Alias Enterprises, Inc.

/s/ Peter M. Waricut

Peter M. Wright

Hurt Building

Atlanta, Georgia 30303

(404) 688-7993

Haas-Howell Building

75 Popular Street

Atlanta, Georgia 30303

(404) 522-2508

(CertiricaTe or Service Omitrep 1n PRintTina)

2la

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

BANKRUPTCY COURT

Crvm Action

Firz No. B75-296A

In Proceedings for an Arrangement Under Chapter XII

In Re: Consotipatep Motor Inns, Destror

ConsotipaTeD Motor Inns, Debtor in Possession, Plaintiff,

Branp DevELoPpMENT Corporation, Defendant.

(Recervep Jury 14, 1977)

Order

It having been moved that Consolidated Motor Inns,

Debtor in the above-styled proceeding and Alias Enter-

prises, Inc., assignee of Brand Development Corporation,

Creditor of the Debtor in Possession be allowed to enter

into a settlement of the proof of claim originally filed by

Brand Development Corporation against the Debtor in

Possession and the counterclaim subsequently filed by the

Debtor against Brand and

Notice having been given to interested parties of the

hearing for approval of this settlement and

This matter having come on before me as scheduled, and

Argument of special counsel for Debtor, and all other

interested parties having been heard on this matter, and

It appearing said settlement is in the best interest of the

Debior’s estate, it is hereby

OrpeRED that the Settlement Agreemnt entered between

ConsotipaTep Moror Inna, Debtor, and Atias ENTERPRISES,

22a

Inc., assignee of Brand Development Corporation, to mu-

tually dismiss their respective claims against each other

be and hereby is Approvep, and pursuant to that Agree-

ment is it further

Orperep that the claim of Brand Development Corpora-

tion filed in this proceeding against Conso.mpatep Motor

Inns, Debtor, on March 3, 1975 is hereby denied and dis-

missed with prejudice and the Counterclaim filed by Con-

soLipaTeD Motor Inns against Brand Development Cor-

poration is dismissed with prejudice, and it is further

OrpERED any and all liens filed by Brand Development

Corporation against the property of Consolidated Motor

Inns shall be, and hereby are Discuarcep, ExtincuisHEp

and RELEASED.

This 14th day of July, 1977.

/s/ Hue Rostyson, Jr.

Hues Rosrnson, Je.

Bankruptcy Judge

23a

IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 76-2183

Conso.LipaTep Motor Inns, Debtor

ConsotipaTep Motor Inns, Debtor-Appellant,

versus

Branp DeveLopment Corp., Creditor-Appellee

Motion of Alias Enterprises, Inc. for Substitution of Parties

And for Dismissal of Appeal on Grounds of Mooitness

Comes Now Alias Enterprises, Inc., a Georgia corpora-

tion, and files this motion in accordance with Rules 43 and

27 of the Federal Rules of Appellate Procedure, and shows

the court as follows:

1. Brand Development Corporation (‘‘Brand’’), ap-

pellee in the above-styled case, has assigned to Alias En-

terprises, Inc. (‘‘ Alias’’) all of its right, title and interest

in and to all claims of Brand against Consolidated Motor

Inns (‘‘Consolidated’’), appellant in the above-styled case,

and Alias and Brand have accordingly filed in The United

States District Court for the Northern District of Georgia,

Atlanta Division, a Notice of Assignment of Claim, a certi-

fied copy whereof is attached hereto as Exhibit A.

2. On July 14, 1977, the Honorable Hugh Robinson,

Jr., Bankruptcy Judge, United States District Court,

Northern District of Georgia, Atlanta Division, entered an

order dismissing all claims of Brand and Alias against

Consolidated in the bankruptcy proceedings from which

this appeal is taken. A certified copy of said order is at-

tached hereto as Exhibit B.

3. Brand and Alias have compromised and settled all

claims of Brand and Alias against all partners of Con-

solidated.

24a

4. In view of the foregoing, Alias respectfully re-

quests that the court enter an order (a) substituting Alias

for Brand in the above-styled appeal, and (b) dismissing

said appeal for grounds of mootness.

Auras ENTERPRISES, Inc

/s/ By Peren M. Waicut

Jones, Bird & Howell

Haas-Howell Building

75 Popular Street

Atlanta, Georgia 30303

(404) 522-2508

(CuntiricaTs or Szgvice OmitTep in Parntina)

25a

(Caption OmITTED In PRInTING)

Response of Appellant to Motion of Alias Enterprises, Inc. for

Substitution of Parties and for Dismissal of Appeal on Grounds

of Mootness

Comzs Now Consolidated Motor Inns, Debtor-Appellant

herein, and files this its response to the Motion of Alias

Enterprises, Inc. for substitution of parties and for dis-

missal of this appeal on grounds of mootness, and respect-

fully shows this Court as follows:

Appellant has no objection to the substitution of Alias

Enterprises, Inc. as Appellee in lieu of Brand Develop-

ment Corp.

Appellant has no objection to the dismissal of the Ap-

peal in this case on grounds of mootness if and only if

simultaneously with said dismissal this Court directs the

United States District Court for the Northern District of

Georgia to vacate its Order dated February 20, 1976.

Appellant attaches hereto its brief in support of this

response.

Hicks, Matoor & CaMPpBELL

/s/ By: Cuantzs E. Campseii

Charles E. Campbell

Attorneys for Consolidated Motor

Inns, Debtor-Appellant

Hicks, Maloof & Campbell

101 Marietta Tower

Suite 2401

Atlanta, Georgia 30303

(404) 588-1100

26a

(Caption OmitTED 1n Printine)

of Appellant in Response to Motion of Alias Enterprises,

for Substitution of Parties and for Dismissal of Appeal on

Grounds of Mootness )

Facts

Alias Enterprises, Inc. (hereinafter ‘‘ Alias’’) has filed a

Motion with this Court praying that (1) is be substituted

in lieu of Appellee, Brand Development Corp., in this mat-

ter, and that (2) this Appeal be dismissed on grounds of

mootness. The Motion is based upon an Order of the Bank-

ruptcy Court below dated July 14, 1977 approving the

assignment of its claim by Appellee to Alias and also ap-

proving the settlement of the claim of Alias and the coun-

terclaim of Appellant based upon a mutual dismissal with

prejudice.

As a result of the above Order, Alias contends that it is

the proper Appellee in this matter and that there is no

reason to consider the Appeal because the various claims

between Appellant and Alias have been settled.

Brief

Inc.

II.

ARGUMENT

Appellant thinks it proper that the Court approve the

substitution of Alias for the original Appellee, Brand De-

velopment Corp. This is based upon the approved assign-

ment of Appellee’s claim to Alias.

Likewise, Appellant has no objection to the dismissal of

this Appeal upon the condition that this Court simulta-

neously irect the United States District Court for the

Northern District of Georgia to vacate its Order dated

February 20, 1976 from which this Appeal was taken. That

Order provides in part as follows:

27a

‘‘Therefore, on the basis of the foregoing, the pur-

ported discharges of the general partners and their

spouses and the injunction entered pursuant thereto

are void and of no effect. This case is remanded to the

Bankruptcy ‘Court for disposition consistent with this

opinion.’’ Appendix p. 451.

Clearly, it would not be proper for this Court to simply

dismiss the Appeal unless it is also to require the District

Court to vacate its Order. If the Order is not to be vacated

with the possibility left open that other creditors who did

not appeal the confirmation of the Plan proposed by Ap-

pellant may take advantage of the Order of the District

Court holding invalid a part of the Order of confirmation,

Appellant would have the right to prosecute this Appeal

notwithstanding the settlement with Alias. On the other

hand, if this Court should be inclined to dismiss the Appeal

and at the same time order the United States District Court

for the Northern District of Georgia to vacate its Order of

February 20, 1976, the Appeal would truly be moot and

there would be no reason to continue it.

III.

ConcLusion

Appellant has no objection to the substitution of Alias

for the original Appellee. Appellant believes the proper

course for this Court to follow is to dismiss the Appeal

and direct the United States District Court for the North-

ern District of Georgia to vacate its Order of February

20, 1976. In the absence of direction by this Court to the

District Court to vacate said Order, Appellant opposes the

Motion to dismiss the Appeal for the reason that the Ap-

28a

peal would not be moot as to other creditors who did not

contest the Order confirming Appellant’s Plan.

Hicks, Matoor & Campse.

/s/ By: Cuartes E. Campsers.

Cuaries E. CamMPpBELL

Attorneys for Appellant

Hicks, Matoor & CampsBe.u

101 Marietta Tower, Suite 2401

Atlanta, Georgia 30303

(404) 588-1100

(Certrricate or Service Omirrep in Printinc)

29a

(Caption OmitTep tn PRINTING)

Motion of Consolidated Motor Inns for Vacation of the Order of

the District Court Appealed from by Consolidated Motor Inns

Comzes Now, Consotmpatep Motor Inns, Debtor and files

this Motion in accordance with Rule 27 of the Federal

Rules of Appellate Procedure, and shows the Court as

follows:

On or about July 22, 1977, Alias Enterprises, Inc., filed

its Motion with this Court for Substitution of Parties and

for Dismissal of Appeal on Grounds of Mootness. A true

copy of said Motion is attached hereto as Exhibit ‘‘A,’’

and incorporated herein by references.

On or about July 26, 1977, your Movant filed its response

to said Motion of Alias Enterprises, Inc., and indicated

therein that it had no objection to the Dismissal of its Ap-

peal on Grounds of Mootness if and only if simultaneously

with said Dismissal this Court directed the United States

District Court for the Northern District of Georgia to

vacate its Order dated February 20, 1976. Movant also

filed its Brief with this Court explaining the basis of its

position. A true copy of said response and Brief in Support

thereof is hereto an Exhibit ‘‘B’’ and incorporated herein

by reference.

On or about September 1, 1977, this Court entered an

Order granting the Motion of Alias for substitution of

Party-Appellee, and further granted Appellee’s Motion for

Dismissal of Appeal on Grounds of Mootness. This Court

did not, however, as part of its Order, take the action re-

quested of it by Appellant to vacate or cause to be vacated

the Order of the District Court from which Appellant had

filed its appeal with this Court.

30a

Although Movant believed that the meaning and effect

of its previous response to the Motion of Alias in this mat-

ter, if not the literal language thereof, constituted a Motion

to this Court to formally vacate the Order of the District

Court, or cause same to be vacated, the record shows that

it was not so treated by this Court; therefore, Movant does

hereby formally make such Motion to this Court, and on

the basis of the authorities cited in its Brief in Support of

this Motion, respectfully submits that the entry of an Order

by this Court vacating the Order of the District Court

dated February 20, 1976 would be necessary, proper, and

appropriate in the circumstances of this case.

Wuenerore, your Movant prays for an Order of this

Court vacating the Order of the United States District

Court for the Northern District of Georgia of February 20,

1976.

Respectfully submitted,

Hicks, Matoor & CAMPBELL

/s/ Rosert A. Bartiett

Rosert A. BaRtLett

Attorneys for Movant

3la

(Caption OmItTTED In PRINTING)

Motion of Alias Enterprises, Inc. for Substitution of Parties and

for Dismissal of Appeal on Grounds of Mootness

EXHIBIT “A”

Comes Now Alias Enterprises, Inc., a Georgia corpora-

tion, and files this motion in accordance with Rules 43 and

27 and the Federal Rules of Appellate Procedure, and

shows the court as follows:

1. Brand Development Corporation (‘‘Brand’’), ap-

pellee in the above-styled case, has assigned to Alias Enter-

prises, Inc. (‘‘Alias’’) all of its right, title and interest

in and to all claims of Brand against Consolidated Motor

Inns (‘‘Consolidated’’), appellant in the above-styled case,

and Alias and Brand have accordingly filed in The United

States District Court for the Northern District of Georgia,

Atlanta Division, a Notice of Assignment of Claim, a certi-

fied copy whereof is attached hereto as Exhibit A.

2. On July 14, 1977, the Honorable Hugh Robinson,

Jr., Bankruptcy Judge, United States District Court,

Northern District of Georgia, Atlanta Division, entered

an order dismissing all claims of Brand and Alias against

Consolidated in the bankruptcy proceedings from’ which

this appeal is taken. A certified copy of said order is at-

tached hereto as Exhibit B.

3. Brand and Alias have compromised and settled

all claims of Brand and Alias against all partners of Con-

solidated.

32a

4. In view of the foregoing, Alias respectfully requests

that the court enter an order (a) substituting Alias for

Brand in the above-styled appeal, and (b) dismissing said

appeal for grounds of mootness.

ALias teteetti Inc.

/s/ By Perer M. Waicut

Jones, Bird & Howell

Haas-Howell Building

75 Poplar Street

Atlanta, Georgia 30303

(404) 522-2508

(CzetrricaTe or SzRvice OMITTED In PRintiIna)

33a

(Caption Omittep 1n Printinc)

Response of Appellant to Motion of Alias Enterprises, Inc. for

Substitution of Parties and for Dismissal of Appeal on Grounds

of Mootness

EXHIBIT “B”

Comes Now Consolidated Motor Inns, Debtor-Appellant

herein, and files this its response to the Motion of Alias

Enterprises, Inc. for substitution of parties and for dis-

missal of this appeal on grounds of mootness, and respect-

fully shows this Court as follows:

Appellant has no objection to the substitution of Alias

Enterprises, Inc. as Appellee in lieu of Brand Develop-

ment Corp.

Appellant has no objection to the dismissal of the Ap-

peal in this case on grounds of mootness if and only if

simultaneously with said dismissal this Court directs the

United States District Court for the Northern District of

Georgia to vacate its Order dated February 20, 1976.

Appellant attaches hereto its brief in support of this

response.

Hicks, Matoor & CamMpBeL.

/s/ By: Cuantes E. CampsBeth

Charles E. Campbell

Attorneys for Consolidated Motor

Inns, Debtor-Appellant

Hicks, Maloof & Campbell

101 Marietta Tower

Suite 2401

Atlanta, Georgia 30303

(404) 588-1100

34a

(Caption OmItTED IN PRINTING)

of Appellant in Response to Motion of Alias Enterprises,

for Substitution of Parties and for Dismissal of Appeal on

Grounds of Mootness

Facts

Alias Enterprises, Inc. (hereinafter ‘‘ Alias’’) has filed a

Motion with this Court praying that (1) it be substituted in

lieu of Appellee, Brand Development Corp., in this matter,

and that (2) this Appeal be dismissed on grounds of moot-

ness. The Motion is based upon an Order of the Bankruptcy

Court below dated July 14, 1977 approving the assignment

of its claim by Appellee to Alias and also approving the

settlement of the claim of Alias and the counterclaim of

Appellant based upon a mutual dismissal with prejudice.

As a result of the above Order, Alias contends that it

is the proper Appellee in this matter and that there is n

reason to consider the Appeal because the various claims

between Appellant and Alias have been settled.

Briet

Inc.

IL.

ARGUMENT

Appellant thinks it proper that the Court approve the

substitution of Alias for the original Appellee, Brand

Development Corp. This is based upon the approved assign-

ment of Appellee’s claim to Alias.

Likewise, Appellant has no objection to the dismissal of

this Appeal upon the condition that this Court simultane-

ously direct the United States District Court for the

Northern District of Georgia to vacate its Order dated

February 20, 1976 from which this Appeal was taken. That

Order provides in part as follows:

‘*Therefore, on the basis of the foregoing, the pur-

ported discharges of the general partners and their

35a

spouses and the injunction entered pursuant thereto

are void and of no effect. This case is remanded to the

Bankruptcy Court for disposition consistent with this

opinion.’’ Appendix p. 451.

Clearly, it would not be proper for this Court to simply

dismiss the Appeal unless it is also to require the District

Court to vacate its Order. If the Order is not to be vacated

with the possibility left open that other creditors who did

not appeal the confirmation of the Plan proposed by Ap-

pellant may take advantage of the Order of the District

Court holding invalid a part of the Order of confirmation,

Appellant would have the right to prosecute this Appeal

notwithstanding the settlement with Alias. On the other

hand, if this Court should be inclined to dismiss the Ap-

peal and at the same time order the United States District

Court for the Northern District of Georgia to vacate its

Order of February 20, 1976, the Appeal would truly be

moot and there would no reason to continue it.

ITI.

Conclusion

Appellant has no objection to the substitution of Alias

for the original Appellee. Appellant believes the proper

course for this Court to follow is to dismiss the Appeal

and direct the United States District Court for the North-

ern District of Georgia to vacate its Order of February

20, 1976. In the absence of direction by this Court to the

District Court to vacate said Order, Appellant opposes the

Motion to dismiss the Appeal for the reason that the Ap-

36a

peal would not be moot as to other creditors who did not

contest the Order confirming Appellant’s Plan.

Hicks, Matoor & CampBeLL

/s/ By: Cuartes E. CampPBei

Charles E. Cumpbell

Attorneys for Appellant

Hicks, Matoor & CAMPBELL

101 Marietta Tower, Suite 2401

Atlanta, Georgia 30303

(404) 588-1100

(CzetiricaTe or SzRvick OmITTED In PRINTING)

37a

(Caption OmitTED IN PrintING)

Brief in Support of Motion to Vacate the Order of the District

Court Appealed from by Consolidated Motor Inns

I. Facts

On September 1, 1977, this Court entered its Order, in

response to a Motion filed by Alias Enterprises, Inc., sub-

stituting Alias for Brand Development Corporation, the

Party-Appellee in this case, and further granting the sub-

stituted Appellee’s Motion for Dismissal of the Appeal filed

by ConsoLmatep Motor Inns from the Order of the United

States District Court for the Northern District of Georgia

dated February 20, 1976, on the ground of Mootness.

ConsoLmpaTep Motor Inns, in its response to said Motion

of Alias, had indicated that it did not oppose the granting

of said Motion by this Court for Dismissal on the Grounds

of Mootness, if, and only if, as a part of said Dismissal this

Court directed the United States District Court for the

Northern District of Georgia to vacate its Order dated

February 20, 1976.

In support of said position, Consotipatep Moror Inns

argued in its Brief that it would not be proper for this

Court to simply dismiss the appeal unless its also required

the District Court to vacate its Order for the reason that

if the Order were not vacated the possibility would be left

open that other creditors of Consotmatep Moror Inns

who did not appeal the confirmation of the plan proposed

by it might take advantage of the Order of the District

Court holding invalid a part of the Order of confirmation,

and Conso.tipaTep Moror Inns would continue to have the

right to prosecute its appeal notwithstanding the settle-

ment with Alias in order to obtain a decision on the merits

by this Court of its challenge to the District Court’s Order.

Consotmatep Moros Inns further argued that if, on the

other hand, this Court were inclined to dismiss the appeal

38a

and at the same time vacate the Order of the United States

District Court for the Northern District of Georgia, the

appeal would then truly be moot, and there would be no

reason to continue it.

In its action on September 1, 1977, this Court dismissed

the appeal on the ground of mootness, but took no action

to vacate the Order of the District Court for the Northern

District of Georgia from which Conso.ipatep Motor Inns

had filed its appeal to this Court.

Although Consotmatep Motor Inns believed that its

response to the Motion of Alias would be treated as a Mo-

tion to vacate the Order of the United States District Court,

it appears from the record that it was not so treated, and

for that reason, ConsoLtmatep Motor Inns files this Motion

with the Court, which it submits should be granted for

the reasons stated below.

II. ARGUMENT

Appellant submits that this case is controlled by the long

line of cases from this Court, as well as other Courts, cited

by this Court in the case of National Lawyers Guild, Umi-

versity of Texas Chapter v. Board of Regents, 490 Fed.

2d 97 (CA 5, 1974), in which this Court, in a per curiam

opinion dismissing an appeal as moot said:

‘‘The case as posed is moot. The judgment of the

District Court is therefore vacated and the case re-

manded to dismiss as moot so the case will not spawn

any precedential consequences. [cites omited]’’ Na-

tional Lawyers Guild, supra, at p. 98.

The rationale behind this decision was perhaps best stated

by this Court in the prior case of Lebus v. Seafarers’ In-

ternational Union, etc., 398 Fed. 2d 281 (CA 5, 1968), in

which this Court, in dismissing an appeal as moot, and

OMAR SE 558 OTP BL RS OS

39a

ordering the decision of the District Court vacated over

the objection of the Appellee, stated as follows:

‘*This is the time honored, invariable practice in the

federal system. Where an appeal is dismissed by rea-

son of mootness, the Appellate Court is to vacate the

decision below and direct that it be dismissed for

mootness, so that it will spawn no legal consequences.”’

See Lebus, supra, at p. 283.

In making that comment, this Court quoted from the

United States Supreme Court case of United States v.

Munsingwear, Inc., 340 U.S. 36, 71S. Ct. 104, 95 L.Ep. 36

(1950) in which it was stated:

‘The established practice of the Court in dealing with

a civil case from a court in the federal system which

has become moot while on its way here or pending our

decision on the merits is to reverse or vacate the judg-

ment below and remand with a direction to dismiss.

That was said in Duke Power Co. v. Greenwood

County, 299 U.S. 259, 267, 57 S.Ct. 202, 205, 81 L.Ed.

178 [182], to be ‘the duty of the appellate court.

Our supervisory power * * *

is commonly utilized in precisely this situation to pre-

vent a judgment, wnreviewable because of mootness,

from spawning any legal consequences.’’ 340 U.S. 36,

39-41, 71 S.Ct. 104, 106-107, 95 L.Ed. 36, 41-42 (Em-

phasis added); [additional cites omitted].

Clearly, the rationale of these cases, and other cases

cited therein, is applicable to this case in which Movant

has previously urged this Court to vacate the Order of the

District Court if it chose to dismiss the appeal for moot-

ness at the instance of the Appellee, because to let the de-

cision of the District Court stand, without providing

Movant/Appellant with the opportunity to obtain a deci-

sion from this Court on the merits of its appeal would

40a

i i i Movant/

ve rise to potential adverse consequences to

p nel which might flow from having the Order of the

District Court from which Movant/Appellant had appealed

asserted by other creditors as having precedential value

and effect.

III. Conciusion

is Court has previously granted the Motion of the

Pe ® in whose favor the Order of the United States

District Court for the Northern District of Georgia dated

February 20, 1976 ran, to dismiss the appeal filed by

Movant/Appellant for mootness. As stated by this Court

on many occasions, when such a Motion is granted, espe-

cially at the instance of the party in whose benefit the

Order appealed from was entered, invariable practice in

the federal system requires that the Appellate Court va-

cate the decision below and direct that it be dismissed for

mootness so that it will spawn no legal consequences. For

this reason, Movant/Appellant respectfully submits that

this Court should enter its Order vacating the Order of

the United States District Court for the Northern District

of Georgia dated February 20, 1976 which was the subject

matter of the appeal dismissed by this Court for moot-

ness.

Respectfully submitted,

Hicks, Matoor & CaMPBELL

/s/ Rosert A. BaBtLetr

Attorneys for Movant/Appellant

(CegtiricaTs or SeRvicz OMITTED IN Prin TING)

4la

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

In Procgepines ror aN ARRANGEMENT UNDER

Cuaprer XII

Case No. B75-296A

In THE Matrer oF:

ConsouipaTep Moror Inns, Debtor

Filed February 14, 1978

Order

On appeal of the above styled matter to the District

Court specific provisions of the Confirmation of Arrange-

ment which discharged the individual general partners and

their spouses, were held to be void and of no effect. The

District remanded the case to the Bankruptcy Court. This

Order is to comply with the remand and modify the Con-

firmation of Arrangement consistent with the District

Court’s February 20, 1976 Order.

The Order of the District Court went to the issue whether

the Bankruptcy Court had the authority to discharge gen-

eral partners and their spouses when only the limited part-

nership had filed a Chapter XII petition and only the as-

sets of the limited partnership were administered in the

bankruptcy proceeding.

The District Court determined that 5(j) of the Bank-

ruptey Act, 11 U.S.C. 23(j) as applied by 402 of Chapter

XIT, 11 USC 802, was controlling as this section provides:

‘*The discharge of a partnership shall not discharge

the individual general partners thereof from the part-

nership debts. A general partner adjudicated a bank-

rupt either in a joint or separate proceeding may, pur-

suant to the provisions of this title, obtain a discharge

from his partnership and individual debts.’’

42a

The District Court determined that the discharge in

Bankruptcy of the partnership under Chapter XII of the

Bankruptcy Act did not effect the individual liability of

the general partners and their spouses, notwithstanding

the rehabilitative aspect of a Chapter XII proceeding.

Partnership creditors could not be prevented from obtain-

ing in personam judgments against against the individual

partners and their spouses on unpaid partnership debts.

The District Court determined for the individual part-

ners and their spouses to take advantage of Chapter XII

they must file petitions with the Bankruptcy Court and

undergo the joint administration of their respective estates

with the partnership estate.

The District Court determined that as none of the indi-

vieual general partners and their spouse had filed petitions

they were not parties to this Chapter XII proceeding, their

purported discharges and the injunctions entered against

their creditors were void and of no effect.

On the basis of the determinations and the remand con-

tained in the District Court’s Order of February 20, 1976

it is hereby:

Orperep, that the Bankruptcy Court has no jurisdiction

to discharge or enjoin the creditors of the non-petitioning

individual general partners or their spouses, further

Orperep, that the provisions of the Plan of Arrangement

and the Confirmation of Arrangement applying to the non-

petitioning individual general partners and their spouses

are striken, to wit:

‘‘Confirmation of this Plan shall act as a bar to any

creditor thereafter pursuing any claim it held or al-

leges to have held on January 23, 1975, against the

partnership, the partners thereof or their spouses,

arising out of the business of the partnership.’’

43a

‘‘OrpereD, that all creditors affected by the terms of

the Arrangement be and they hereby are forever re-

strained and enjoined from taking any further action

or proceeding in connection with their said claims, or

proceeding’ to execute or enforce any judgment pre-

viously obtained, except to enforce the consummation

of the terms of the Arrangement as fi i

and it is further ? ae

ORDERED, that the discharge provided the Debtor by

the confirmation [sic] of Arrangement and the con-

— esos proceeding shall extend to the individ-

general partners and their spouses in regard

any liability of same from debts of the Debtor ‘te

charged by this proceeding and that the confirmation

of the Arrangement shal act as a full discharge of the

debts in regard to any liabilities of said partners or

spouses arising out of the operation, or business of the

Debtor. Further, the acceptance, retention or endorse-

ment of any check representing payment under the

Arrangement by any payee who is a creditor affected

by the Arrangement shall constitute a full release and

discharge of the Debtor, its individual general part-

ners and their spouses respectively from any and all

claims of whatever so kind or nature against any or all

of them arising out of the business of the Debtor but

shall be without force or affect as to the liability of

any individual general partner of the Debtor or his

spouse to any such creditor where such liability arises

out of an indebtedness incurred other than in the oper-

ation or business of the Debtor, ....’’

Onvzrep, that all unnegotiated checks representing pay-

ment under the Arrangement be voided and reissued with

no restrictive endorsement, further

Onperep, that the reissued checks re i

x presenti ent

under the Arrangement be in the amount cathe aahaia by

the Order of Confirmation dated October 15, 1975 plus in-

44a

terest at seven (7) percent per annum from October 19,

1975, further

Orperep, that the Plan of Arrangement and Confirmation

of Arrangement be striken of all provisions enjoining the

creditors and discharging the individual partners and their

spouses, further

Oxvenzp, that all orders of this Court pertaining to the

non-petitioning individual general partners and their

spouses are declared void and of no effect.

Orperep, that the Debtor’s Plan of Arrangement, as mod-

ified above, is confirmed.

Daren at Atlanta, Georgia this 14 day of January, 1978.

/s/ Huexu Rosinson

Huex Rosinson

Bankruptcy Judge

45a

(Caption Omirrep in Paintrne)

Notice of Appeal to District Court from Order of

Bankruptcy Judge

Comes now Consolidated Motor Inns, debtor, and appeals

to the District Court the Order of the Bankruptcy Court

filed on February 14, 1978 in this matter.

Although the debtor does not believe this to be an ad-

versary proceeding or contested matter, a creditor which

has expressed interest in the matters contained in the

Order of the Bankruptcy Court is B.V.A. Credit Corpora-

tion, whose counsel of record has been served with a copy

of this Notice of Appeal.

Hick, Matoor & Campset.

/s/ By: Cartes E. Campseii

Charles E. Campbell

Attorneys for Consolidated Motor Inns,

Debtor and Appellant

Hicks, Matoor & CampBELi

Suite 3401, 101 Marietta Tower

Atlanta, Georgia 30303

(404) 588-1100

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.