The opinion of the court was delivered by: Juergens, District Judge.
On March 27, 1961, Randolph-Wells Building Corporation
(hereinafter referred to as "Randolph-Wells") filed its amended
petition asking that bankruptcy proceedings No. 7464 be reopened
for the purpose of limiting the time within which bonds of the
City State Safe Deposit Company may be exchanged for securities
of Randolph-Wells (hereinafter referred to as "1935 Bonds").
Randolph-Wells is the corporate successor to City State Safe
Deposit Company, an Illinois corporation (hereinafter referred to
as "City State").
City State on February 1, 1927, issued its First Mortgage 6 Per
Cent Twenty Year Sinking Fund Gold Bonds (hereinafter referred to
as "1927 Bonds") in the aggregate principal amount of $2,359,500.
On June 19, 1930, the holders of the 1927 bonds entered into a
bondholders' protective agreement whereby such holders were to
deposit their bonds with the Chicago Trust Company, as
depositary, and to receive certificates of deposit in exchange
for their bonds. This action followed default on the 1927 bonds,
which occurred prior to June 19, 1930.
On February 6, 1935, a proceeding, entitled "In The Matter of
City State Safe Deposit Company, No. 7034", to reorganize City
State under the provisions of Section 77B of the Bankruptcy Act,
11 U.S.C.A. § 207, was filed in this Court. Pursuant to a plan of
reorganization approved on July 8, 1935, in proceeding No. 7034,
Randolph-Wells was organized as the corporate successor of City
On November 14, 1935, an order in proceeding No. 7034 was
entered which provided, inter alia, that the new corporation,
Randolph-Wells, upon receiving the conveyance of the debtor's
property from the trustees be authorized and directed:
To execute its new mortgage bonds, issuable to the holders of
the 1927 bonds in the amount of $2,359,500, to the Trust Company
of Chicago for distribution to the holders of the old first
mortgage bonds of City State; and in order to secure the bonds,
to execute, accept and deliver to the Trust Company of Chicago as
trustee, its new indenture of mortgage. That the Trust Company of
Chicago, a corporation, be authorized upon receipt of delivery of
the 1935 bonds to authenticate the same and to distribute the
bonds and voting trust certificates deposited with the Trust
Company by the trustees to the holders of the 1927 bonds in the
(a) New bonds of the corporation to be distributed in the same
principal amount as the principal amount of the old first
mortgage bonds presented by such holders.
(b) Voting trust certificates evidencing common stock of the
new corporation to be distributed in proportion of one share of
such stock for each $100 principal amount of the old first
mortgage bonds (1927 bonds) presented by the holders; such
distribution to be made to the holders upon presentation and
surrender by the holders of the debtor's old first mortgage bonds
(1927 bonds) accompanied by all unpaid interest coupons
appertaining thereto, or upon presentation of certificates of
deposit evidencing the deposit of the bonds and coupons under the
terms of the Bondholders' Protective Agreement dated July 19,
1930, for the deposit of the bonds.
In accordance with the provisions of the 1935 indenture,
Randolph-Wells directed the Trust Company of Chicago on or about
November 26, 1935, to authenticate and deliver 1935 bonds in
exchange for the surrender of 1927 bonds or certificates of
A final decree in proceeding No. 7034 was entered on April 20,
1936. There was no provision made in the No. 7034 proceeding
limiting the time within which the holders of the 1927 bonds or
certificates of deposit would be entitled to exchange their 1927
bonds or certificates for 1935 bonds and voting trust
certificates or shares of stock.
By July 9, 1937, Randolph-Wells was in default on the 1935
bonds and commenced this proceeding (Bankruptcy No. 7464) under
Section 77B of the Bankruptcy Act.
On May 2, 1939, this Court entered an order approving the plan
of reorganization pursuant to which the 1935 bonds were
subordinated to a new first mortgage and converted the 1935 bonds
from fixed interest bearing bonds to cumulative income bonds.
Paragraphs I(a) and (b) of the order, approving the documents
and directing steps in consummation of the plan as ...