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August 12, 1974

Ralph COX, Jr., Defendant. WALTER E. HELLER & COMPANY, INC., Plaintiff, v. OCEAN AIR TRADEWAYS, a partnership, Defendant

Bauman, District Judge.

The opinion of the court was delivered by: BAUMAN


BAUMAN, District Judge.

 Plaintiff, Walter E. Heller & Company, Inc., (hereinafter "Heller") seeks an injunction against the further prosecution or institution of proceedings against it, its officers and affiliates by defendants Ralph Cox, Jr. (hereinafter "Cox") and Ocean Air Tradeways (hereinafter "OAT"), insofar as those proceedings relate to matters arising from a 1962 loan transaction between plaintiff and United States Overseas Airlines, Inc., (hereinafter "USOA") and Heller's subsequent collection efforts. For the reasons which follow, this motion is granted.


 A hearing was held on April 2, 1974 at which both sides were afforded an opportunity to call witnesses and present evidence. Plaintiff chose to rest on its affidavits, consisting of well over one-hundred pages and the more than seventy annexed exhibits. *fn1" Defendants have submitted virtually nothing of any significance in opposition. *fn2" No live testimony was presented by any of the parties.

 Although Judge Friendly has repeatedly warned of the undesirability of issuing injunctions solely on the basis of affidavits, see Semmes Motors, Inc. v. Ford Motor Company, 429 F.2d 1197, 1204 (2d Cir. 1970); SEC v. Great American Industries, 407 F.2d 453, 455 (2d Cir. 1968, in banc.), cert. denied, 395 U.S. 920, 89 S. Ct. 1770, 23 L. Ed. 2d 237; SEC v. Frank, 388 F.2d 486, 490-492 (2d Cir. 1968), where, as here, the affidavits are overwhelming and uncontroverted "the taking of evidence would serve little purpose." SEC v. Frank, supra at 490; Murray v. Kunzig, 149 U.S.App.D.C. 256, 462 F.2d 871, 883 (1972). Although actually encouraged by the court to do so, defendants made no serious attempt to rebut Heller's affidavits. *fn3" Accordingly, I am required to take as true the statements of fact contained in the Heller affidavits. Williams v. San Francisco Unified School District, 340 F. Supp. 438, 442 (N.D.Cal.1972); Corning Glass Works v. Lady Cornella, Inc., 305 F. Supp. 1229, 1231 (E.D.Mich.1969); Western Air Lines v. Flight Engineers Internat'l Ass'n., 194 F. Supp. 908 (S.D.Cal.1961).


 Substantial portions of the factual background of the instant litigation are set out in my previous opinion, Walter E. Heller & Co. v. Cox, 343 F. Supp. 519 (S.D.N.Y.1972), aff'd 486 F.2d 1398 (2d Cir. 1973); cert. denied 414 U.S. 827, 94 S. Ct. 46, 38 L. Ed. 2d 61 (1973). A familiarity with that decision is assumed and an effort has been made to avoid unnecessary repetition in setting out the following findings of fact.

 On November 23, 1962, plaintiff entered into a written loan agreement with USOA and various affiliated companies and persons, including Air Power Overhaul Inc. (hereinafter "APO"), Ocean Air Tradeways, Inc. (hereinafter "OAT, Inc.), Canamex Corporation, and defendants Cox and OAT. The loan agreement provided that plaintiff would lend $1,700,000 to USOA repayable with interest by USOA in 24 successive monthly installments. *fn4" Simultaneously Cox, OAT, OAT, Inc., APO and Canamex executed and delivered separate written guarantees of the USOA indebtedness. Heller also received and additional guarantee from an independent third party, Twentieth Century Aircraft Co. (hereinafter "Twentieth Century"), of which Mr. Stanley Weiss, who has moved to intervene in the instant action, was the principal partner. Finally, Heller received various collateral for the loan and guarantee obligations from USOA and its affiliates.

 USOA defaulted on its obligations from the very outset. The first installment of the loan was only partially paid, and thereafter not one installment was paid in its proper amount or when due. Nonetheless, Heller refrained from declaring a default until July, 1965 at which time it accelerated the entire amount outstanding and began pursuit of collection by, among other things, the sale of collateral. From that point on, Heller became enbroiled in one litigation after another, faced time and again "with the most frivolous challenges, harassments and dilatory maneuverings imaginable designed to frustrate and prevent Heller from recovering the monies owed to it." *fn5" To date there have been at least 15 separate major litigations and proceedings in 10 different courts throughout the country. Because of their relevance to Heller's request for a "bill of peace" a brief description of each follows: *fn6"

1. California Superior Court *fn7" -- These actions were instituted by two creditors of USOA. Plaintiffs had levied writs of attachment and execution on a USOA plane that was part of the collateral pledged to Heller. Heller, having previously declared the default against USOA, intervened to protect its collateral.
DISPOSITION: In each case the court recognized the validity of Heller's lien and its superiority to any interest of the creditor-plaintiffs. *fn8"
2. California Superior Court *fn9" -- In February, 1966 Heller prepared to proceed with a sale of certain real estate, machinery and equipment which OAT, Inc. and APO had pledged as collateral. On the date of the scheduled sale Heller was served with an order to show cause temporarily restraining the sale based on an application of OAT, Inc. and APO, made through Mr. Cox. *fn10" Cox also filed a complaint seeking a permanent injunction and money damages.
DISPOSITION: Following a hearing the court lifted the TRO, permitting Heller to proceed with the sale. Cox thereupon abandoned the action.
3. U.S. District Court, Northern District of California *fn11" -- On March 18, 1966 just as Heller was about to proceed with its sale it was notified that Mr. Cox *fn12" had filed petitions on behalf of OAT, Inc. and APO pursuant to Chapter XI of the Federal Bankruptcy Act. Simultaneously OAT, Inc. and APO petitioned the court for a temporary restraining of the sale of the assets involved in litigation #2.
DISPOSITION: Based on assurances by Mr. Cox's counsel that negotiations were proceeding for a private sale of the collateral a 30 day restraint of Heller's intended public sale was ordered. Having subsequently determined that no private buyer was forthcoming, the court lifted the restraint and ordered the public sale to proceed.
4. New Jersey Superior Court *fn13" -- Following the sale in California a substantial deficiency remained on the USOA indebtedness. Accordingly, Heller scheduled the sale of additional collateral located in New Jersey and owned by USOA and other guarantors. Cox and USOA thereupon filed an action seeking to enjoin the sale. The action was commenced by an order to show cause and the issuance of a TRO.
DISPOSITION: Based on representations by Mr. Cox's counsel that USOA was expecting a substantial refinancing the TRO was continued following the hearing. When the refinancing failed to materialize the stay was lifted permitting Heller to proceed. *fn14"
5. U.S. District Court, District of New Jersey *fn15" -- In September, 1966, before the New Jersey collateral had been sold, Cox, acting as President of USOA filed a petition, pursuant to Chapter XI of the Federal Bankruptcy Act, and obtained a stay of the further sale of any collateral. Heller promptly petitioned the court for leave to sell certain assets of the bankrupt. USOA, at the instigation and direction of Cox, challenged plaintiff's right to conduct the sales and opened a full-scale attack on the validity of the indebtedness alleging a myriad of alleged improprieties by Heller. Every relevant transaction and every item of indebtedness then outstanding was subjected to scrutiny and challenge.
DISPOSITION: The referee held that Heller's claim was valid and shortly thereafter an order was granted, permitting the sale of the New Jersey collateral to continue. *fn16"
6. U.S. District Court, District of New Jersey *fn17" -- In April, 1967, Cox, acting for USOA filed a petition, pursuant to Chapter X of the Federal Bankruptcy Code. Simultaneously the court was asked to stay the scheduled sale of the same New Jersey assets which Cox had unsuccessfully sought to stay in the Chapter XI proceeding.
DISPOSITION: The Chapter X petition and the requested stay were both denied.
7. U.S. Court of Appeals, Third Circuit -- Cox appealed the denial of the Chapter X petition and for the fourth time sought a stay of the sale of the New Jersey assets.
DISPOSITION: The application for the stay was denied in all respects. The appeal from the denial of the Chapter X petition was thereafter never pursued.
8. California Superior Court *fn18" -- This action was brought in May, 1967 by the trustee in bankruptcy of OAT, Inc. and APO alleging that Heller had received "usurious" interest by reason of its sale of the California collateral. Later, the claims were expanded to assert fraudulent inducement of the loan and improper sale of collateral.
DISPOSITION: This action was dismissed upon Heller's motion for summary judgment and the notice of appeal was not timely filed.
9. New Jersey, Cape May County Court *fn19" -- This was a suit by C & J Aircraft Leasing Co. against USOA concerning the ownership of four airplanes. Heller intervened in the action in July, 1967 to assert its lien against any planes found to be owned by USOA.
DISPOSITION: This case was settled. It was agreed that the aircraft would be sold and Heller would have ...

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