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pronounceable name secured from the records of the savings department of the bank. How is this business to be secured ?

Personality Plus Having definitely established the personality of your trust department, what is the next factor in our reckoning? None other than the personality of your prospect. Remember his personality is just as truly established, just as vital a thing, and against it must our campaign be launched. He is the one to be convinced.

A winning personality on one side cannot but impress a vigorous, opposing personality, but all personalities are not strong. They are just as varied as are the men and women who make up your list of prospects and no two can be won by the same argument. One of the most successful lawyers of his day, of whom it was said that he never had been known to lose a jury case, was asked the secret of his method. He replied that he had no secrets in his work, that he merely sized · up the men whom it was his problem to convince and argued the case from their standpoint. “Most men,” he said, "plead a case to convince themselves. I try to convince the jury."

You know a dozen reasons why John Jones should make his will now and designate your Trust Department as his executor. Why doesn't he? That is the crux of the whole matter. Put yourself in his place and try to imagine the line of argument he uses to his own conscience. Resolve your personality and his into a common denominator and work from that basis.

A big business concern hired an ex-college professor to write a series of publicity and follow-up letters, but the results obtained were far from satisfactory ; in fact, the whole movement was practically a dead loss. One of the executives of the company overheard a remark of the foreman of a small department on the subject which was, to say the least, illuminating and which did definite things to his viewpoint. The workman said "That ‘prof' may understand his own letters, but I'll bet nobody else does" and from that time on, this concern in launching advertising campaigns endeavored to convince prospective customers and not themselves.

It isn't what you think which gets the business, it is what you can make the other man believe.

Persistent Personality One of the hardest problems to decide is whether "fighting along the same line" indefinitely is the best policy to pursue in all

cases, or whether persistency and hard labor will put your personality across eventually. One can only trust to his judgment of individual human nature and that, of course, is far from infallible.

I remember a pertinent case; my first call upon a wealthy widow, one of the bank's occasional customers, and right here, I would like to say a word about these “occasional" customers.

This class of people come to the bank only when it is absolutely necessary. They use only the one service which they cannot possibly do without. In many cases, they are totally ignorant of the many collateral services at their command. In others, they are indifferent to banking conveniences of which they have never felt the need. Among such are the most promising prospects of the Trust Department and the awakening of an awareness of the need for adequate banking facilities is profitable to a degree in all departments.

To resume, my personality failed lamentably in convincing the lady of her need of our Trust Department. In fact, her personality registered a distinct negative reaction to each and every argument advanced. I gave it up for the time, but continued to send her every piece of literature put out by the bank. In a few months I called again but the atmosphere had thawed to no perceptible degree and I had the conviction that further effort was useless. However, on the face of it, the prospect was good and I decided to try out the persistence theory; make a test cast of it if necessary. The bank still continued to shower her with literature and after a year, I made another call. Temperature still around zero. I had a distinct sense of absolute failure, but my fighting blood was up and I still persisted. No fourth call, however, but letters, pamphlets, all the results of an intensive advertising campaign being waged by the bank at that time.

It took two years to get it across, but one day I received a call from Mrs. S. and her capitulation was complete. It was most funny the way she gave herself over to the bank absolutely. Everything she har was turned over to us to care for, and invest. This trust has proved one of the high lights of my present work, but never yet have I da red ask her if persistency won and I don't know now whether I would pursue the same course again or whether this method would bring results in another similar instance.

NEW LANDMARK IN

CORPORATE MORTGAGE FORECLOSURE DECREES AND REORGANIZATIONS

"FAIR OFFER” TO UNSECURED CREDITORS EFFECT OF RECENT MISSOURI PACIFIC-IRON MOUNTAIN DECISION

EDWIN S. S. SUNDERLAND of the New York Bar

B

ANKERS and trust company officers and Van Valkenburgh, District Judge. Cir

who have to do with the reorganiza cuit Judge Lewis delivered the opinion of

tion of insolvent corporations and the the court. foreclosure of corporate trust mortgages, as In unanimously affirming the orders made well as lawyers who specialize in such work, by the late Circuit Judge William C. Hook, have devoted much thought and energy since sitting for such purpose as a District Judge, 1913 to the consideration of the so-called confirming the sales of The Missouri Pacific Boyd Case and the ways and means of meet Railway Company and the St. Louis, Iron ing the principles declared both in the deci Mountain and Southern Railway Company, sion and in the dictum of that case. Το the Circuit Court said: those who have been concerned with the

"The acceptance of the plan by holders of problem of working out machinery for the

mortgage bonds in excess of $60,000,000 supurpose of determining what is a "fair

perior in right to the claims of general credoffer" to unsecured creditors or in fact to itors and the surrender of those bonds for stockholders, whether common or preferred, convertible five per cent. preferred stock, under a plan of reorganization, the decision

par for par, is a powerful refutation of the of the United States Circuit Court of Ap contention that general creditors were not peals for the Eighth Circuit filed March 29,

fairly and equitably treated. The court gave 1922, in the cases of P, R. Walsh Tie and

full and careful consideration to the reorTimber Company, et al., appellants, against ganization plan and appellants' objections, The Vissouri Pacific Railway Company, et and in approving the former and overruling al, appellees, and Robert Abeles, et al., ap the latter said: "The general creditor has pellants, against St. Louis Iron Mountain and

been treated very, very fairly, indeed.'Southern Railway Company, et al., appeliees,

The Circuit Court held that will be of interest, particularly the conclu

"In making the orders appealed from, apsion of the court, which is as follows:

proving the plan and agreement of reorgani* The purpose of the reorganization plan

zation and overruling appellants' objections, toes to preserve the assets of the old com

the trial court did not err." panies for those who were entitled to share in them, to rehabilitate them and to put Requirements in Final Decree of Foreclosure them on a financial basis that would enable The first conspicuous endeavor to devise the new company to continue the operation machinery which would establish the fairof the railroads; and we also think the offer ness of the offer to unsecured creditors made made in the plan to general creditors was under the Reorganization Plan was the all they were equitably entitled to receive. writing into the final decree of foreclosure -Northern Pacific Ry. Co. vs. Boyd (228 and sale of the St. Louis & San Francisco U. 8. 482.); St. Louis & San Francisco Ry. Railroad Company by Circuit Judge SanCo. vs. McElvain, 253 Fed. 123; Guaranty born-one of the judges concurring in the Trust Co. 08. Missouri Pacific Ry. Co. (238 Missouri Pacific-Iron Mountain decision, Fed. 812)."

which decree was entered in 1916, only three These cases were found by the court to years after the decision in the Boyd case present the same questions. They were ar of the following requirements: gued and briefed as one and were disposed "Upon confirmation of the sale and upon of together by the Appellate Court consist payment by any purchaser * * * of the puring of Sanborn and Lewis, Circuit Judges, chase price, the special master mak

ing the sale shall erecute a deed or deeds or other proper instrument's conveying, assigning and transferring to such purchaser or his assigns, the property sold to such purchaser * * * The aforesaid deed or deeds or other instruments of conveyance or assignment or transfer shall run and be delivered to such purchaser, or at his election, to his assigns, and upon the production thereof, * * * the grantee or grantees therein named shall be let into possession of the property, * * * and shall after such delivery of pos8e88ion hold, po88088 and enjoy the property 80 conveyed and transferred, and every part and' parcel thereof, free from the trust and lien imposed thereon by the refunding mortgage and free from any trust and lien imposed thereon by the general lien mortgage and free from all claims, rights, interest or equity of redemption of, in or to the same by or of the defendant railroad company, its successors and assigns, and by or of the creditors and stockholders of the defendant railroad company, and by or of all persons claiming by, under or through the defendant railroad company, its creditors or its stockholders; provided, however, that no sale hereunder of any property shall be confirmed to any purchaser who shall purchase said property on behalf of, or for the benefit of, any corporation organized, or to be organized, for the purpose or with the intention that it shall bccome the owner of said property, or any part thereof, or any beneficial interest therein, through any sale under this decree, pursuant to any scheme, plan or agreement whereby any stockholder or stockholders of the defendant railroad company shall receive any stock, bonds or other beneficial interest in such corporation on account of their stock in the defendant railroad company, although he or they may pay some other consideration in addition therefor, unless and until there shall have been made under or pursuant to or in connection with such scheme, plan or agreement, to creditors.of the defendant railroad company, who have presented their claims in accordance with the orders of this court in this cause, or in any constituent cause, and who have claims subordinate in lien and inferior in equity to the refunding mortgage or to the general lien mortgage, a fair and timely offer of cash or a fair and timely offer of participation in such corporation through stocks, bonds or otherwise; and this court reserves jurisdiction to determine whether such an offer to such creditors has been made under or pursuant to or in connection with any such scheme, plan or agree

ment, and jurisdiction to modify this decree in case it determines that no such offer has been made. The special master shall accept no bid. from any one who shall not, prior to any offer by the special master for sale under this decree, file with the special master a statement whether he proposes to bid on behalf of any such corporation; and if so, also file a complete statement of any such scheme, or a copy of such plan or agreement, and a statement of any offers which have been made to such creditors of the defendant railroad company under or pursuant to or in connection with such scheme, plan or agreement."-(Article Eighteenth of the Final Decree of Foreclosure and Sale entered March 13, 1916, in the Consolidated Cause in Equity No. 4174 in the United States District Court for the Eastern Division of the Eastern District of Missouri, Eighth Judicial Circuit, in the cause of North American Company vs. St. Louis & San Francisco Railroad Company.)

Upon the sale having been had under this decree and subject to the above-mentioned requirements, Judge Sanborn required notice of the hearing upon the motion for confirmation of the sale to be given by publication and by mail to all creditors, inasmuch as notice had been filed that the bid made for the property was made by individuals who proposed to assign their bid to a corporation to be formed under a plan of reorganization, which provided for the giving to stockholders of bonds and stocks, the stock not exceeding the par value of the old stock held, upon payment in cast of an amount equal to the principal of the bonds received. Unsecured creditors were to receive under the plan one-half of the amount of their claim in preferred stock and onehalf in common stock.

Effect of Fair Offers Upon the hearing of the motion for confirmation the court found that a fair and timely offer had been made and confirmed the sale over the objection of certain unseçured creditors who thereafter commenced suits based upon the theory of the Boyd case in State courts against St Louis-San Francisco Railway Company, the corporation formed under the plan. The object of these suits was to enforce the claims of the unsecured creditors against the property which had been transferred to the new corporation. It was hoped by the unsecured creditors who commenced these suits that it might be held, as was held in the Boyd case, that the foreclosure sale was invalid because

it was made in pursuance of a plan of re obtaining of the foreclosure decree. Article organization between bondholders and stock XXI of the Mop decree provides as follows: holders of the railroad company, under which stockholders retained their interest

A copy of the plan and agreement of by receiving shares in the new company. It

reorganization as modified July 25, 1916, of is to be noted, however, that the plan of re

The Missouri Pacific Railway Company and organization in the Boyd case made no pro

St. Louis, Iron Mountain and Southern Railvision for the payment of the unsecured

way Company, has been filed with the clerk creditors.

of this court. Reference is made thereto for It is also to be noted that the opinion of

its provisions affecting persons or corporathe majority of the Supreme Court, which

tions interested in the defendant railicay by a vote of five to four affirmed the judg

company and its property. This court will ment making Boyd's claims a lien upon the

hear complaints as to the fairness or equiproperty of the old company in the hands of

tableness of the offers to creditors of the dethe new company, proceeds upon the theory

fendant railway company made in or. purthat while the bondholders might have law

suant to said plan, from the following per- , fully bought in the property covered by the

80n8 or corporations: (1) Those who have mortgage and kept it for themselves to the

heretofore, according to the orders of this esclusion of both the unsecured debt and

court, filed with George 0. Hitchcock, the the stockholders, the moment they provided

special master appointed herein, their claims for participation in the new company by the

or demands against the defendant railway stockholders, even at the price of paying a

company; (2) those who have heretofore heavy assessment, the obligation arose to

asserted such claims and demands by action make provision for the unsecured debt which

in any court of competent jurisdiction; (3) would recognize its priority to the interest

those who have heretofore filed intervening of the stockholders.

petitions in this consolidated cause or in any The new St. Louis-San Francisco Railway

constituent cause; and (4) those who,' havCompany, which had been organized under

ing a lien upon any of the property of the the plan of reorganization made application

defendant railway company, by intervening to Judge Sanborn to have the continuance

petitions filed herein, with leave of court, of the suits brought by the unsecured cred

before the day hereinafter set for the hear-, itors in the State courts enjoined. Judge

ing on such complaints, assert a liability of Sanborn granted this application and issued

said company for the debt secured by such injunctions, both against creditors whose

lien, and this court reserves jurisdiction to claims has been proved and creditors who

determine whether said offers as to which had not come into the receivership proceed

complaints are so made are fair and equiing at all.-(St. Louis-San Francisco Rail

table, and in the event that a sale of any way Company vs. McElvain, 253 Fed. 123–

property hereunder is made to any purchaser D. C. 1918).

who shall purchase said property on behalf

of, or for the benefit of any corporation orProvisions of the Decrees

ganized or to be organized for the purpose The Missouri Pacific-Iron Mountain de or with the intention that it shall become cree, entered by the late William C. Hook, the ouner of said property, or any : part United States Circuit Judge, on the 21st day thereof, or of any beneficial interest therein, of December, 1916, in the consolidated cause, pursuant to said plan, to modify this decree No. 4540, of Guaranty Trust Company of in case it determines that no such offer has Neto York and Benjamin F. Eduards, as been made. Such complaints will be heard Trustees vs. Missouri Pacific Railway Com by this court in the United States District pany, and a similar decree entered in the Court Room in the city of St. Louis, Mo., on consolidated cause against the St. Louis, March 6, 1917, commencing attico o'clock Iron Mountain and Southern Railway Com p.m., unless hereafter othericise ordered. All pany, contained requirements which in many persons or corporations who make no comways were improvements upon the require plaint at the time and place aforesaid shall ments written into the Frisco decree by be barred from doing 80 thereafter. The Judge Sanborn. It was from orders confirm clerk of this court shall cause notice of such ing the sales made under these decrees that hearing to be published, once in each week, the above-mentioned appeals were taken. It for four successive weeks, in six newspapers is particularly to be noted that the Mop de of general circulation, one regularly printed, cree was unlike the Frisco decree in that it published and issued in each of the cities required that the reorganization plan should of St. Louis, Mo.; Kansas City, Mo.; Omaha, be filed with the court in advance of the Neb.; Atchison, Kan.; Pueblo, Colo.; and

New York, N. Y. Said notice of such hearing shall refer to this deoree. The last publication of such notice shall be before the date set for said hearing and said clerk shalt require proofs of such publication to be furnished, which proofs shall be filed in this cause.".

them. Stockholders who did not make the $50 cash payment obtained no bonds or stocks of the new company nor any interest of any kind in the new company. All of the Iron Mountain Company stock was held by the Missouri Pacific Company with the exception of $45,135 principal amount which was outstanding in the hands of the public. Such of this stock as was deposited under the plan received preferred stock of the new company share for share.

Financial Adjustments Under the plan $128,458,620 of the outstanding funded debt of the Missouri PacificIron Mountain Companies was left undisturbed, and $27,043,000 thereof was paid off in cash, At the time of the receiverships the total funded debt of the Missouri Pacific and Iron Mountain Companies outstanding in the hands of the public was $278,670,620; the Iron Mountain was the endorser of $1, 741,000 Texas and Pacific Railway Notes, and $82,839,585 par value stock of Missouri Pacific Company, and $45,135 par value stock of Iron Mountain Company were outstanding in the hands of the public. The total amount of the outstanding securities of the two companies was the sum of $363,296,340. The balance, or $123,169,000 of the funded debt was replaced to the extent of $46,923,150 by First and Refunding Mortgage Five Per Cent. Bonds of Missouri Pacific Railroad Company, the new company organized under the plan, and the remainder by about $3,000,000 General Mortgage Bonds and by about $76,750,000 Convertible Five Per Cent. Cumulative Preferred Stock of the new company.

The plan provided for raising $41,419,792 in cash, of which $27,043,000 was to be applied to pay outstanding secured obligations and the balanee of which or $14,376,792 was to be applied to provide for adjustments and payments of interest in respect of bonds and other obligations deposited under the plan, additional working capital, new equipment and immediate improvements, reorganization expenses, compensations, services of engineering, accounting and other experts, taxes and fees on authorization and issue of new securities and other corporate and reorganization expenditures and requirements. In order to realize the $41,419,792 cash required as above stated, the plan of reorganization provided that the stockholders of the old Missouri Pacific upon paying $50 for each share of stock of $100 par válue held by them would obtain General Mortgage Four Per Cent. Bonds of the new company equal in face amount to the amounts of their subscriptions, and a share of common stock of the new company for each share of old Missouri Pacific stock held by

Offer to Unsecured Creditors It was realized by the reorganization managers by reason of the decisions in the so-called “trust fund theory" cases (Wood v8. Drummer; Railroad Company vs. Howard; Wabash vs. Ham) and particularly the Monon case (Louisville Trust Company v8. Louisville, etc., Railway Company, 1899 174 U. S. 674) and the Boyd (Northern Pacific Railway Company vs. Boyd, 228 U. S. 482) case that, if the stockholders of the old company were offered any stock interest in the new company a question might arise unless the unsecured creditors of the old company were offered as good or better treatment than such stockholders, and the reorganization managers wishing to have the unsecured creditors as well as all holders of securities of th company treated fairly, and not desiring that they should have any ground for complaint, provided in the plan that the unsecured creditors of both the Missouri Pacific and Iron Mountain Companies should receive five per cent. convertible preferred stock of the new company in a par value amount equal to the full amount of their claims when such claims had been established in the consolidated cause without any payment being made by said unsecured creditors.

This offer of 100 percent. in preferred stock was accepted by the holders of $29,806,000 First and Refunding Mortgage Five Per Cent. Gold Bonds and the holders of $37,255,000 Forty Year Gold Loan Bonds. The court did not by its decision endeavor to require unsecured creditors to accept the provision made for them under the plan. The decree was in the usual form of final decrees of foreclosure and sale entered in consolidated causes made up of constituent mortgage foreclosure causes and creditors' causes, and provided for distribution among the various classes of creditors, secured and unsecured, of the proceeds of the sale of the assets, covered by the mortgages and those free from the mortgages respectively to the secured creditors and to the unsecured creditors.

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