# Petition — Consolidated Motor Inns v. Alias Enterprises, Ltd. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0713%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1978 - **Citation:** 436 U.S. 935 ## 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: 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 8 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 9 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 10 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 11 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., 12 274 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 - 13 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. 14 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 15 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 16 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 17 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 , OR oF O46 PO GS 2 in whe 3a ‘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 tt fee io. 4a 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 5a 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 6a 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 —— Ta 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 ee a ect 8a 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 9a 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. z 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 ee 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. 4 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, v. 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: 1, Appellant has no objection to the substitution of Alias Enterprises, Inc. as Appellee in lieu of Brand Develop- ment Corp. 2. 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. 3. 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 ) I 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: 1, 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. 2. 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. 3. 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 4 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: 1. Appellant has no objection to the substitution of Alias Enterprises, Inc. as Appellee in lieu of Brand Develop- ment Corp. 2. 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. 3. 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 I. 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0713%3A1. Public record. Not legal advice.