{ "id": 3191402, "name": "Benjamin G. Kilpatrick, Plaintiff, v. Walter O. Anthony et al., Appellees, Ethel Dess, Appellant. Robert C. Fenner et al., Cross Appellants. J. Kehres and Ethel Dess, Cross Appellees", "name_abbreviation": "Kilpatrick v. Anthony", "decision_date": "1938-05-11", "docket_number": "Gen. No. 39,825", "first_page": "457", "last_page": "465", "citations": [ { "type": "official", "cite": "295 Ill. App. 457" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "365 Ill. 409", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2583927 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill/365/0409-01" ] } ], "analysis": { "cardinality": 624, "char_count": 13460, "ocr_confidence": 0.526, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.09008903607893742 }, "sha256": "47ae261e2b2e919c206195fcf40df3843d9c58d5de6f5fefd995140c28a93f46", "simhash": "1:a5ce49867a0f906a", "word_count": 2248 }, "last_updated": "2023-07-14T15:31:14.233107+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Benjamin G. Kilpatrick, Plaintiff, v. Walter O. Anthony et al., Appellees, Ethel Dess, Appellant. Robert C. Fenner et al., Cross Appellants. J. Kehres and Ethel Dess, Cross Appellees." ], "opinions": [ { "text": "Mr. Justice Denis E. Sullivan\ndelivered the opinion of the court.\nEthel Dess, one of the interveners, brings this appeal from a decree entered in the circuit court confirming\u2019 the master\u2019s report of sale of certain real estate located in Chicago, Illinois, and approving proposed distributions of proceeds of sale, including a plan of reorganization.\nThe facts presented for our consideration are as follows :\nBenjamin Kilpatrick as successor trustee and plaintiff filed his bill on June 28, 1931, to foreclose the lien of the trust deed executed by Walter O. Anthony and Estelle Anthony, his wife, securing an indebtedness of $82,500. The property is known as the Prairie Avenue Apartments, 6817-21 South Prairie avenue, Chicago, Illinois.\nOn November 12, 1932, an amended and supplemental bill of foreclosure was filed and a decree of foreclosure was entered in this cause on August 28, 1935. Subsequently on March 31, 1937, the premises were sold by a master in chancery in accordance with the decree of foreclosure for the price of $59,900, and on April 13, 1937, leave having been given, J. Kehres and Ethel Dess filed their appearance and intervening petition setting forth that they were the owners of bonds in the sum of $2,200 as evidenced by certificates of deposit, and their objections to the master\u2019s report of sale and distribution.\nAfter said objections were filed the bondholders\u2019 committee filed its appearance and its intervening petition seeking to have its plan of reorganization approved, and to confirm \"the sale under the foreclosure decree, and also approve the plan. The case was heard by the chancellor upon the intervening petition of the committee, its plan, the report of sale, and the objections of the objecting defendants to the plan of reorganization and to the foreclosure sale. On June 19, 1937, the court overruled all objections, and approved the sale and plan, with slight modifications, but allowed J. Kehres, one of the objecting interveners, to withdraw his bonds, but Ethel Dess, the other dissenter, was not permitted to withdraw her bonds from the depository. Under the terms of the decree approving the report of sale and distribution, the sale price of $59,900 was confirmed but nondepositing bondholders were to receive only their proportionate share of $35,750, which is termed the \u201ctrue value price.\u201d\nThere is no issue as to the pleadings.\nAppellant\u2019s theory is that the court has jurisdiction over the bondholders\u2019 committee, the plan of reorganization, and the acts of the bondholders\u2019 committee in relation thereto, and since both dissenting bondholders made the necessary and proper tenders and gave the necessary notice to the proper parties required by the plan of reorganization, that equity will often relax rigid requirements of time and form and only require substantial compliance, and further contending that since the court did allow the withdrawal of one dissenter\u2019s (J. Kehres) bond, no evidence having been introduced or offered to substantiate the refusal of the withdrawal of the other dissenter\u2019s (Dess) bond, the court -should have ordered the withdrawal of the appellant\u2019s bond; that the deposit agreement is a unilateral contract which lacks mutuality, and whether or not the deposit agreement and plan of reorganization was void or voidable is of no importance, as the appellant rescinded the contract and it was the duty of the court to declare the contract void and direct the return of the bonds.\nFurther, appellant contends that the decree of June 19, 1937 approved the sale price of $59,900, but ordered distribution to nondepositing bondholders on the basis of the \u201ctrue market price,\u201d fixed at $35,750, thus establishing two separate prices, which the appellant further contends is contrary to law; that further, the reorganization committee did not comply with its duties and obligations as a fiduciary and that, therefore, the court should have refused to confirm the bid and should have ordered the withdrawal of the appellant\u2019s bonds. Appellant asks that the decree of June 19, 1937, be reversed and remanded.\nThe theory of the appellees and cross appellants is that the chancellor has no authority or discretion to alter or modify the contractual rights existent among the depositing bondholders inter sese and between snch depositing* bondholders and the committee; that the chancellor has the equitable discretion, in connection with the foreclosure of a mortgage or trust deed which secures interests not all held by the same person, to distinguish between the price bid at the foreclosure sale and the fair cash market value of the property; that the former figure to govern the rights as among the mortgage bondholders, taken as a class, and all other parties, and the latter figure to form the basis of distribution as among* the nondepositing mortgage bondholders.\nAppellees rely upon the following errors for reversal on the cross-appeal, namely, that the chancellor exceeded his authority when he altered the contract existent between cross appellant and its depositors by ordering the withdrawal of cross appellee\u2019s bonds and by reducing* the fees and expenses of cross appellant.\nIt appears from the evidence presented in this case that the property was bid in at the master\u2019s sale by John T. Pain, representing the bondholders\u2019 committee, for the sum of $59,900; that upon this master\u2019s report coming before the court it entered a decree confirming the master\u2019s report of sale and approving the distribution of the proceeds of sale and entered a deficiency decree and approved the plan of reorganization which provided, among other things, that the intervening petitioner Kehres be permitted to withdraw his bonds amounting* to $200 and become entitled to his so-called \u201cfull pro rata share\u201d of the full cash market value of the property; that the other intervening petitioner Ethel Dess, was not an original purchaser but acquired the certificate of deposit representing the bonds held by her on what the trial court called a speculative basis and she was not permitted to withdraw her bonds amounting* to $2,000 from the depository.\nWhen intervening petitioners filed their objections to the master\u2019s report they claimed that the price of $59,900 was too high. Said objection was apparently-sustained by the court for it announced that the distribution would be on the basis of the \u201cfair cash market value\u201d of the property and that it would be necessary to take proof to establish that basis. Thereafter the court permitted the intervener J. Kehres as heretofore stated to withdraw his bonds of $200 face value from the depository and from the protective committee. The court having granted J. Kehres request to withdraw his bonds, he does not complain in this court. We do not believe cross appellants\u2019 complaint of the court\u2019s action in this regard is justified. As to the $2,000 in bonds of Ethel Dess, the evidence in the record shows that there is some question as to whether or not she was the rightful owner or assignee of the certificate of deposit which was presented to the court as the basis of her claim. The court instructed counsel representing Ethel Dess to bring in further evidence to show who was the real owner of the bonds, but according to the record that was not done. We do not think the court erred in refusing to permit Ethel Dess to withdraw the bonds amounting to $2,000 face value.\nAs was said in the case of First Nat. Bank v. Bryn Mawr Beach Bldg. Corp., 365 Ill. 409, 426: \u201cThe court is concerned with the fairness of the bid as to those bondholders who have not adopted the plan. In this it must be borne in mind, however, that non-depositing bondholders are not to be aided in an effort to create a maneuvering* value for their bonds or give them a nuisance value by attempting to obstruct re-organization.\u201d\nIt is next contended that the bonds held by the receiver of the bank were of the approximate value of $19,000 which should be subordinate to the other bonds under the said mortgage for the reason claimed that the money in the bank of issue was used for the purpose of buying these bonds. We fail to find any evidence of such use. In addition thereto it is noted that one of the provisions of the trust deed which was merged in the decree of foreclosure of August 28,1935, provided:\n\u201cAll of the bonds herein described are equally in all things secured by the said Trust Deed, without any preference or priority whatsoever of the lien thereof in favor of any one or more of said bonds over any one or more of the others.\u201d\nThis finding was made in the original decree of foreclosure dated August 28, 1935, and no appeal having-been taken from that decree it is final and it is too late for the intervener to make complaint thereof at this time.\nAt the time the court approved the master\u2019s report and the plan of reorganization, it modified the fees in connection with such plan to read as follows:\nCommittee fee reduced from $1,568 to $750;\nShare of G-eneral Committee expense allowable to this issue reduced from $813.99 to $50;\nDepository fee of Reliance Bank and Trust Company reduced from $295.50 to $100; and\nFees of First National Bank of Chicago reduced from $591 to $200.\nComplaint is made on the cross-appeal here that the adjustments of the fees and costs contained in said plan of reorganization as adjusted by the court are in violation of the contract between the depository and the depositing bondholders. When a bondholders\u2019 committee applies to a court of equity for the approval of their plan of reorganization, they come into court seeking equity and must show that they have a plan that is fair and equitable to all parties concerned. Such bondholders \u2019 committee would be estopped to invoke a rule of law that the court has no power to change or adjust and supervise the costs and fees because in doing so the court would violate a contract made with the depositors by said committee for the amount of such fees. A court of equity must necessarily, and especially in cases of this kind, have wide discretionary powers in the matter of fees and costs, and to say that the court could have jurisdiction in a matter of this kind for one purpose and not for all purposes, would prevent the court from making the necessary equitable adjustments between the various parties and their interests and if such restriction were upheld, it might and would no doubt in many instances prevent the administration of complete justice between all the parties. The court necessarily has full power in supervising- the plan of reorganization and to do whatever in the exercise of reasonable discretion as may be necessary in its judgment in order that the plan of reorganization, as so corrected, may be fair to all parties in interest.\nAs the court said in First Nat. Bank v. Bryn Mawr Beach Bldg. Corp., 365 Ill. 409, at page 419: \u201cIt may be further observed that an attempt to carry out a bondholders\u2019 plan of re-organization without the approval and. supervision of a court of equity would be attended with so many dangers and uncertainties that few bondholders would be willing to enter the arrangement, though convinced that, properly supervised, the plan would retrieve for them the greatest possible percentage of their investment. Certainly, to secure such percentage to the mortgagee bondholders cannot be said to be outside the scope- of equity jurisdiction. \u2019 \u2019\nWe cannot say from the record before us that the court\u2019s adjustment and allowance of fees for appellee is inequitable or erroneous.\nComplaint is also made on the cross-appeal that the court erred in permitting Kehres to withdraw his bond. As Kehres did not appeal from the court\u2019s order and is not before this court at this time, so-called cross errors cannot be assigned as to him.\nObjection is also made to the approval of the bondholders\u2019 plan of reorganization in toto. We think paragraphs one and two of such plan of reorganization proposed and the court was advised that the representative of the bondholders\u2019 committee intended going before the master at the time of sale and bid the lowest price, etc. This recitation of their activities and purposes could well have been left out of said proposed plan as given to the court, as the proper time to ask the court\u2019s supervision of a plan is after the sale, at the time the court is asked to approve such master\u2019s sale, when it may consider the whole matter including the proposed plan of reorganization. Evidently the approval by the court of paragraphs one and two was not necessary, but was not harmful to intervener-appellant.\nFrom a review of the entire record and having in mind the necessarily wide discretion a court must have in adjusting the interests involved when considering plans of reorganization, we cannot say that the trial court did any substantial injustice to anyone which should be corrected. For that and other reasons herein expressed, the decree of the circuit court is hereby affirmed.\nDecree affirmed.\nHebel, P. J., and Hall, J., concur.", "type": "majority", "author": "Mr. Justice Denis E. Sullivan" } ], "attorneys": [ "Carl Pomerance, of Chicago, for appellant Ethel Dess.", "Kirkland, Fleming, Green, Martin & Ellis, of Chicago, for certain appellants.", "Carl Pomerance, of Chicago, for appellees J. Kehres and Ethel Dess." ], "corrections": "", "head_matter": "Benjamin G. Kilpatrick, Plaintiff, v. Walter O. Anthony et al., Appellees, Ethel Dess, Appellant. Robert C. Fenner et al., Cross Appellants. J. Kehres and Ethel Dess, Cross Appellees.\nGen. No. 39,825.\nOpinion filed May 11, 1938.\nCarl Pomerance, of Chicago, for appellant Ethel Dess.\nKirkland, Fleming, Green, Martin & Ellis, of Chicago, for certain appellants.\nCarl Pomerance, of Chicago, for appellees J. Kehres and Ethel Dess." }, "file_name": "0457-01", "first_page_order": 493, "last_page_order": 501 }