A. C. James Co. v. Reconstruction Finance Corp.

In a proceeding by the Western Pacific Railroad Company, a railroad corporation (hereafter called the debtor), under § 77 of the Bankruptcy Act, 11 U.S.C.A. § 205 , the trustees petitioned the District Court for instructions as to whether or not they should pay, out of funds on hand, part of an indebtedness of $10,000,000 evidenced by their certificates issued pursuant to paragraph (3) of subsection (c) of § 77, all of which certificates were and are held by Reconstruction Finance Corporation. The petition was set down for hearing and notice thereof was given to the debtor and its creditors, one of whom was appellant, A. C. James Company. Appellant thereupon moved the court to direct the trustees to make a payment of at least $3,000,000, on the certificates and to report to the court any negotiations they had had with respect to refunding them. The court, after a hearing, entered an order denying appellant’s motion and directing the trustees to make no payment on, nor any further effort to refund, the certificates. From that order appellant has appealed.

No appeal has been taken by the trustees or by Reconstruction Finance Corporation. The trustees have not appeared in this…