Appeal from the District Court of the United States for the Eastern District of New York.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
The Island Park Associates, Inc., a debtor, filed a petition in bankruptcy for reorganization under section 77B of the Bankruptcy Act (11 USCA § 207). The petition was approved and permanent trustees were appointed. The corporation owned or controlled five properties, one of which is involved in this appeal. That property consists of 1,751 lots, 245 of which are under contracts of sale for $301,783.66; the remainder are unsold. There was a blanket maratgage, on which the sum of $1,225,013 is due and unpaid. Originally it was for $1,975,000. There are arrears of taxes and interest, making a total sum now due of $1,767,200.88. Certificates of participation have been issued against this mortgage and are in the hands of approximately 570 persons. There have been various appraisals as to the value of this property, the debtor appraising the unsold lots at $3,600,000 and the lots under contract at $301,783.66. The Title Guarantee & Trust Company procured an appraisal of the 1,506 unsold lots at the sum of $2,599,100. The property is carried on the books of the debtor at $1,500,000; it is assessed at approximately that figure.
The debtor has the following interests in addition to the above properties:
(1) Atlantic Beach Club, located on the boardwalk at Atlantic Beach; it consists of 60 lots leased to the Atlantic Beach Management Corporation which operates the club. There is a first mortgage on the property of $425,000, which has been certificated and which certificates are now in the hands of holders thereof. The mortgage is in arrears of interest and taxes, and the lowest of three appraisals made in January 1935, fixed its value of $1,200,00.
(2) The Nautilus Beach Club, an eight-story semi-fire proof hotel, owned by the Casa Del Mar Club Holding Company, Inc. This is subject to a mortgage of $425,000, and all the stock is held by the debtor. The mortgage has also been certificated. The lowest of three appraisals on this property, made in January 1935, is $700,000.
(3) The Silver Point property, consisting of 60 acres of land partially improved with cabanas and bath houses, owned by the Atlantic Beach Development Corporation, 75 per cent. to 90 per cent. of the stock of which is owned by the debtor. There is a mortgage of $397,000. The lowest of three appraisals on this property made in January, 1935, is $1,500,000.
(4) The debtor also owns the capital stock of the Atlantic Beach Bridge Corporation, which owns and operates a toll bridge subject to a mortgage bond issue of $300,000 and a second mortgage of $200,000. The debtor claims an equity of $737,000 in this property.
The Title Guarantee & Trust Company is the trustee of the mortgage on the vacant lots. The mortgage was certificated and guaranteed by the Bond & Mortgage Guarantee Company, which is in the hands of liquidators for rehabilitation. The certificate holders, Gage et al., the Title Guarantee & Trust Company, and the State Superintendent of Insurance, are appealing from five orders made in these proceedings. They are:
(a) February 11, 1935, an order was entered which denied a motion of the certificate holders to vacate an order of December 18, 1934, which order approved the debtor's petition, appointed temporary trustees, and enjoined the commencement or continuation of suits against the debtor and the enforcement of any liens against the debtor's property, the denial being upon condition that the debtor or any other party propose and file a plan of reorganization within 30 days; and it also gave authority, after the expiration of 30 days, for any party to move for further time to propose and file such plan.
(b) March 14, 1935, an order was entered which denied motions of the Title Guarantee & Trust Company and the committee of certificate holders, to vacate the order of December 18, 1934, as amended by an order of January 16, 1935. The latter order amended the order of December 18, 1934, to the extent that it should not be deemed to restrain proceedings under the Schackno Act to the point of but not including the making of final judgment or decree.
(c) March 14, 1935, an order was entered appointing a special master for the purpose of hearing and reporting on a plan of reorganization proposed by the debtor and its subsidiaries, together with all changes therein, and on all plans of reorganization which might properly be proposed by parties in interest.
(d) March 14, 1935, an order was entered which denied the motion of the Title Guarantee & Trust Company to vacate the stay granted in the order of December 18, 1934, ...