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IN RE ADOLF GOBEL

October 15, 1935

In re ADOLF GOBEL, Inc.


The opinion of the court was delivered by: BYERS

BYERS, District Judge.

This is a motion by the debtor corporation for an injunction against General American Tank Car Corporation, which for brevity will be called Tank Car, to restrain it from proceeding in the state courts of Illinois in an action therein begun by it on October 4, 1935.

The debtor owns practically the entire issue of common stock of Jacob E. Decker Sons, to be called Decker, an Iowa corporation engaged in packing, slaughtering and processing animals for food consumption.

 That stock is pledged to secure an issue of the debtor's corporate notes, as to which default was made May 1, 1935.

 The debtor, as a step in its proposed reorganization, has negotiated a sale of the physical assets and properties of Decker, at a price which is expected to provide about 80% of the amount unpaid upon the said notes.

 After hearings in open court which occupied two half-days, the contract was approved, by order dated October 2, 1935.

 The following day, Tank Car, a West Virginia corporation having its principal office in Chicago, applied to the court for a modification of the order, so as to incorporate therein a provision segregating a sufficient portion of the proceeds of the said sale, in a trust fund, to secure the payment of its claim for damages said to arise from the abandonment of a requirement contract between it and Decker, for the latter's use of tank and refrigerator cars; the said abandonment is contemplated as a result of carrying the said contract into effect.

 The application for the hearing was made informally late in the afternoon of October 2nd, and was granted for the following day, upon the undertaking of the attorneys representing Tank Car to give notice to all attorneys who had been heard in connection with the application to approve the contract.

 The hearing was held in court, and stenographic minutes were taken, which constitute the record.

 Tank Car sought leave to intervene in this proceeding, and that was granted.

 The motion to amend the order was denied, in part because of the then statement of intention to submit the controversy between Tank Car and Decker respecting the said claim, for adjudication by this court, and in this proceeding.

 Upon the following day, and in time to prevent the closing of the said contract in Chicago, the said action was begun in the state courts of Illinois by attachment. The closing was adjourned until October 18th, and this motion was made on October 10th, and adjourned until the 11th.

 The essential inquiry is whether jurisdiction pertains to the court (a) over the Tank Car and (b) over the subject matter of the attachment.

 As to the former, the petition filed October 3rd, for the relief described, was without reservation, and the representations and arguments of counsel in behalf of the petition were compatible only with a general submission to the court, in this proceeding, or the rights ...


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