Brief for the Respondent — Carpenter v. Wabash Railway Co.

Supreme Court brief1940

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No. 230

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IN THE ~

Supreme Court of the United States

tie " Octopr Tena, 1939

Prrer J. Canpenten,

2, i See Petitioner,

s ee.

Se Wapasu Raipway Campayy, ‘Frank C. Nicopemvs, Jr., and

~~ Norman -B. Pitcatry, Receivers of Wabash Railway

Company, THe Cuase National Bank oF THE CITY OF

New York, as.Trustee, Centra Hanover Bank AND

‘Trust Company, as Trustée, and .¢ J. Moss Tie Com: \

PANY, . *

x % ; . Respondenés.

Ox Writ or Certiorari To THE Unitep States Circurt Court

or APPEALS FOR THE Eight Circuit.

BRIEF FOR RESPONDENT THE CHASE

‘NATIONAL BANK OF THE CITY OF

NEW YORK “AS TRUSTEE.

ya ‘ARTHUR A. GAMMELL, . .

7 15 Broad Street,

' : “2 New York, N.-Y., |

cs, ; . Counsel for Respondent The Chase

. National Bank of the City of -

“> New York as Trustee.

: | CHARL ES NAGEL,

* ALLEN ©. ORRICK 255, :

ARTHUR B. SHEPLEY, Jr. of F

& 319 North Fourth Street,

‘ ‘At. Louis, Mo., ; :

Of Connsel. |

November 27, 1939. - . 4 . a sitog:

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INDEX:

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Opinions Below .------- PORE Paine mee FA eee ee

ke emcees,

Question Presented . ae naeiene ps topcaennanlctamaton 2

CNN 25a eyh pate mmo enenniawen oe

; Argument pilaicceae ee cateaiear pesceteceienenk woneqeeeen-o- _

"Conclusion Saas j-----p2---t----2----+7------- 6)

Appendix Cee Ok. Seem cena 9°

Crrations. :-

Cases: |

7 Matchiin r. Phoenix Land Inv. Co., 159 Minn. 132

. McDonald rv. Aetna Indemnity CQ. 91 ‘Conn, 359...

Penusy lvania Steel Co. a. New York City Ry. Co.,

229 Fed. 120 jaeeseopees PETE cai te Teneo ena te

ee v. Blair, 209 Iowa 1113 or

Statutes :

Act of August 11, -1929, Public, No. 386, 76th Con-

cccbduiceties: woman geen ennaneng —mmnnnnnlhy 4,6

_ Act ofeFebruary 13, aa 43 Stat. Na aa eae

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Texts:

Fletcher, Cyclopedia Corporations . (Perm. Ed.), Sec-

tion 7900 -

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IN°THE oe:

Supreme Court of the United States.

-Ocroser Tune, 1939

: * . No, 230

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. Peter J. CARPENTER, 7

® ° : Petitioner,

v..

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Wasasa Raitway Company, Frank,C. Nicopemus, Jr., and

: Norman B. Pitcairn, Receivers of Wabash’ Railway

Company, Tue Cuase NarionaL Bank OF THE Crry OF

New York, as. Trustee, Centra. Hanover Bank AND

Trust Company, as Trustee, and T. J. Moss Tir Com-

PANY,

or APPEALS FOR THE EigHtTH: Circuit.

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.¢

,-BRIEF FOR: RESPONDENT THE CHASE

NATIONAL BANK OF THE CITY (OF

NEW YORK AS TRUSTE

~ Peter J.C arpenter, the petitioner | ili seeks to in- .

_ Wtverein the pending equity receivership of the Wabash»

Railway Company. to assert priority of a judgment claim

the Railway Company.

This respondent The Chase National Bank of the City

of New York is the Trustee under the Wabash Railway

Th |

Respondents. -

Os Wait or CertTiorari To THE Unitep States Circuit Court

for personal injuries to the petitioner. as. an employee of »

3 : : owe o

C mets Htofunding and enical: Mortgage dated January.

1, 1925, one of the mortgages. in respect of which the peti-

tioner’is secking. to. assert priority. an

Opinions Below. aa a

The opinion of the District Court of the United States

for the EKastern Diyision of the astern District of Missouri:

is not reported (R. 78-83). |

The opinion of the United States Cireuit Court of Ap-

peals for the Eighth Cireuit (R. 113-123) is reported i in 103,

KF. 24996. ‘ ;

The petition of Carpenter, the petitioner wie a

rehearing was denied without written opinion (R. 137).

. Gurisdiction, =, «+ J)

i gel Sew Se .

The jurisdiction of this Court rests on Section 240(a}

of the Judicial Code, as amended by the Act of February .

_ 13, 1925, ¢. 229, 43 Stat: 936. n \

Question Presented. te oe

The question in this case is limited by the order grant:

“ing the br “i for certiorari to the question of the right of

the petitio®er tu.intervene in order to assert priority. |

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‘Section 77(n) of the Bankruptey Act, a@s amended:

August 11, 1939, is om forth in the sane, infra, p. 9.

F Argument.

. This respondent Seller es that the: decision of the Dis-

trict Court, in the Tight of the provisions of Section 77(n)

of the Bankruptey Act then in, effect, was clearly cofrect,

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‘and that the arguments in the petitioner’s brief before this.

‘Court seeking to show said decision to have been erroneons -- |

liave been completely discussed and answefed in the opin-

jon of the: District Court and in the opinion of the Circuit

Court, of Appealk f for the Kighth Circuit affirming said-<e-

cision; accordingly, this respondent wifl refrain from dis-

cussing these arguments. . . , |

By the amendment, of. August: 11, 1939, the provisions of

Section 77(n): were, in effect extended to apply to ‘equity |

rgcaiverships of, railroad corporations now or hereafter

et in any court of the United States “* * °° -

This respondent concedes that, in determining what jus-

tice now requires in this proceeding, this Ceurt may con-

sider’ the change in the statute which has supervened ‘since ’

the decision of the District Court. A consideration of -the

, amendment, however,. does not lead to. the conclusion, it is

submitted, that the decision of the District Court should be

reversed. .

- This respondent believes that, even in the light of the . os

provisions: of Section 77(n) now in effect, this Court may

not deride, as part of the question before- the Court in this .

case, whethér the claim of the petitioner, under the amend-

ment, is preferred. - . We

The time for filing claims in the. Wabash aoe Com-’

pany equity bow ebongs expired ‘more than- seven years

_ prior to the ndment of ‘August 11, 1939 (R. 24). -The

- question of exterfding the time for filing claims rests in the

-discretion of the receivership court, to be exercised in the

; light of all the relevant facts involved in the receivership ;

the question has not been presented to ‘the ‘receivership

court nor passed upon by it; since only the preceivership .

court is in posséssion of all the relevant facts, this respond-

ent believes that the-Supreme Court, as an appellate court

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in this certiorari proce: ding, | is not the. appropriate tri

bfinal to pass upon the question, but that the appropriate?

tribunal for the purpose ithe receivership court.

The question before. this Court is w hether the decision

of the District C ourt should ‘he reve ersed. A reversal would >

in effect be an adjudication extending the time for filing a

claim based upon the amendment of August 11, 1939. Such

an adjudication by this Court,.as,an aypellate court in. this

certiorari proceeding, would amount to an exercise of dis

eretion by a tribunal lacking thetssential information with-

out which the discretion ¢: innot he justly: ov wisely eéxer-

cised.

The <a ae provides that ‘‘claims for personal jnjurié: .

to emplovees of a railroad corporation * .* * shall be

prete

poration as operating expenses of such Tailroad.”’

The. statute, does not provide that the time for filing.

ane hy claims shall be extended. +

Suppose that on August 12, 1939, a railroad’ receiver-

ship had been almost terminated ; suppose ‘the sale of. the

assets to’ a new .corporation had been made; suppose the

reorganization. plan had Deen agreed upon by the parties

in’ mterest and approved by the court ; and, suppose the

court was about to corifirm the sale and the new securities

were about. to bg issued under the plan. The statute of

August 11, 1939, contains no kanguage, it iS submitted, .re-

quiring that the time ‘for filing: priority elaims for per:

sonal injuries to employees of the railread be extended .

and that the receivership. he continued and the sale stayed

and the reorganization de ferred until the filing and adjudi-

cation of stich claims. No Feason sus gests itself for bel ev-

ng that any such dhetvactive and chi otic effect | Was 1

te ‘nde d hy the statute.

ed and paid out of the assets of such railroad cor

a ea GaR AER

te ae

Concededly the statute does not provide that claims

barred by the statute of limitations shall nevertheless be

preferred and paid. The statute deals with the priority

to be accorded to certain claims, and does not deal with the

question Ww hether such claims may or may not in particular |

‘instances bes barred) by the statute of lim ifations or by other

~ppplicable limitations on the time for filing claims.

The. orderly process of administration of .a receivership

estate requires a reasonable determination: of the time and~

_mannér of filing and adjudicating claims. . Me 0 omega

By the order dated April 7 7, 1932, the time for filing

claims was limited to July 1, 1939 (R. 23-25). ai

_ The first question is w hether the time for filing priority

claims for personal injuries based on the statute as amended . 4

may now he extended. Vatil this question is answered, the.

question of the priority of the petitioner’s claim under the

ditute is not in issue. If the question as to extending the

time is, ultimately decided in the negative, therecwill he no

occasion at all. for paeslas on the particular priority

question. .

Only the District Court is in a position to deter mine

the question as to extending the time. .

Particularly in the case of a complex equity railroad

receivership like that of the Wabash ‘Railway Company,

the pea J can reasonably be made only in the light

of the ‘status of the receivership proceeding and the pros-

pects of reorganization. and the rights of the other parties

in interest ; only the receivership court possesses the essen-

Atal infermation as to these considerations.

That the receivership gourt alone is adequately in-

formed with respect to the complicated considerations in-

volved in the question whether the time for filing claims

_ should he extended, is illustrated by- the rule that-the dis-

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erdtion of the receivership court in the determination. of

that, question is a broad diséretion reviewable ‘only for :

abuse: Pennsylrania Steel Co. v. New York City Ry. Coz

— 229 Fed. 120 (C. C. A, 2nd Cire., "1915) ; McDonald v. Aetna °

Indemnity Co., 91 Conn. 399 (1917); Spooner v. Blair, 209

-lowa 1113 (1930) ; Matchan v. Phoenix Land Inv. Co., 139

~ (Perm. Ed.); Section 7900.

~ Accordingly, this respondent submits that, unless and

unti, the District Court upon proper application has

passed upon the question ‘as to extending the time for fil-

ing the petitioner’s claim under the statute, the question

eof the priority of the ‘claim is not properly before this

* Court. , |

The petition. in this case did not ask the District Court

to extend the. time to file. priority claims based upon. the

amendment of August 11, 1939.

It-may well be that the enactment of the amendment of

~ August 11, 1939, constitutes a reason why the petitioner

may properly ask the District Court to pass upon the ques-.

tion of the propriety of such an.extension of time, but

‘the petitioner as not asked the District Court to do so.

‘This certiorari proceeding does not have the effect of |

bringing this question: before the District C ourt; the rea-

‘sons aré set forth above why the District Court, and not

the Supreme Court as an appellate tribunal, is believed to.

be the appropriate court to pass upon the question. Ac-

cordingly, the record in this ¢értiorari proceeding shows

no reversible error. ;

| Conclusion.

Wherefore, this respondent respectfully submits. thet

the decision of the District Court of the United States for

7 @

he Eastern Division of the Eastern. Distri¢t of Missouri

hould be affirnied. :

ArtTHUR A. GAMMELL,

; -15 Broad Street,

, New York, N. Y.,

“Counsel. for Respondent The

hos | Chase National Bank of the *

P City of New York gs Trustee. «

“HARLES NAGEL,

tLLEN C. Orrick,

AXetHtr B. SHepiey, JR.,

319 North Fourth me,

St. Louis, Mo.,

Of Counsel.

Vovember 27, 1939. Jee Bre “

Agger.

_ The Act of Congress acumen August 11, 1939:

“£Public—No. 386—76th Congress]

[Chapter 689—1st Session]

ae [S. 2654] ;

AN ACT Pee,

“To amend’ stibsection (n), section 77, of the Bankruptcy

Act, as amended, concerning ‘payment of preferréd

claims.

‘Be it. enacted. by the Senate and House of Repre-

sentatives of the United States of America in Congress.

assembled, That the first sentence of section 77, sub- —

- section (rf), of the Bankruptey Act,.as amended, be

further arhendéd to read as follows:

‘**(n) In proceedings under this section, and in

equity’ receiverships of railroad corporations now or

hereafter pending in any court of the United Statesg -

* claims for personal injuries to employees of a railroad

corporation, claims of personal representatives of de-

. ceased employees of a railroad corporation, arising

- under State or Federal laws, and claims now or here-

after payable by. sureties upon supersedeas, appeal,

attachment, or garnishment bonds, executed by sure-

ties without security, for arid ia any action brought

against such rajlroad coifphration or trustees appointed

-pursuant to this section, sail be preferred and paid

out of the assets of such railroad corporation as oper-

ating expenses of sack failroad : :

“Approved, August 11, 1939.”’ _

Section, 77 (n) of the Bankruptcy Act [11 USCA Sec-

tion 205 (n) J, ‘prior 9 the ame ndme nt of August 11, 1939:

og “In proceedings under this section, claims for per-

sonal j injuries to employ ees of-a railroad corporation,

claims -of personal. representatives -oft;deceased em-.

. ployees of a railroad corporation, arising under State

or Federal laws, and claims on August 27, 1935 or

thereafter payable by sureties upor wperaienis ap

peal, ‘attachment, or garnishment bonds executed by

sureties without security for and in any action brought

against such-railroad corporation or’trustee appointed

- pursuant to this. section, shall be preferred against

and paid out of the assets of such railroad corporation

as operating expenses of such railroad. No judge or

— trustee pa under this title shall change the wages

- or working conditions of railroad employees except in

the manner prescribed in sections 151 to 163 of Title

45, as amended June 21, 1934, or as they may be here-

after amended. -No reorganization effected under this

title and no order of the court or Commission in con-

nection therewith shall relieve any carrier from the

obligation of. any final judgment of any Federal ot

State court rendered prior to January 1, 1929, against

such carrier or against one of its predecessors in title,

requiring the maintenance of offices, shops, and round-

houses at any place, where such judgment was ren-

dered on account of the making of a valid contract

“oF comseacts by ane carrier or one of its : predecessor

in title.”

CPY 4663

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