CAPLIN v. MARINE MIDLAND GRACE TRUST CO.

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Argument of Charles H. Miller

Chief Justice Warren E. Burger: We will hear arguments next in number 70-220, Caplin against the Marine Midland Grace Trust Company of New York.

Mr. Miller, you may proceed whenever you are ready.

Mr. Charles H. Miller: Mr. Chief Justice and may it please the Court.

Mr. David Ferber, the Solicitor of the Securities and Exchange Commission and I have divided our time so that I will take the first 30 minutes and Mr. Ferber, 15 minutes with respect to the argument.

Mr. Ferber is similarly arguing for a reversal of the order of the Court of Appeals for the Second Circuit.

This case is before this Court on the writ of certiorari to the United States Court of Appeals for the Second Circuit.

The case involves the standing of a bankruptcy reorganization trustee, a Chapter X Trustee to prosecutor a claim in the reorganization proceedings.

I will discuss that claim as I spell out for the Court the facts with respect to those matters.

The courts below dismissed the trustees’ complaint and dismissed the other claims sought to be prosecuted by the trustee by a way of counter claim on the ground that the trustee had no standing to bring the claims which are in question here.

The petitioner in this matter is Mortimer M. Caplin.

Mr. Caplin was named in May of 1965 by the United States District Court, for the Southern District of New York as the reorganization trustee under Chapter X of Webb & Knapp, Inc.

At one time before its troubles, which led Webb & Knapp into the reorganization court, that that company was one of the largest real estate companies in the United States.

The defendant in this case is the Marine Midland Grace Trust Company of New York.

Marine Midland was the trustee under a trust indenture with respect to an issue of 5% debentures of the debtor.

There are still approximately $4,200,000.00 of these debentures outstanding.

In the trust indenture, a copy of which has been lodged with this Court, there were certain covenants, which were made by the debtor for the benefit of the debenture holders.

The single most important covenant for the purposes of this case was a covenant that the debtor would not incur any indebtedness or purchase any real property, unless its tangible assets were twice its liabilities.

That is the Section 3.6 of the Trust Indenture and that provision, which we call the Asset to Liability Ratio Provision, is at the heart of this case.

There were certifications required by the debtor to Marine Midland, the indenture trustee, year after year to the effect that the debtor was not in default in connection with these debentures.

Now, the Marine Midland requested appraisals with respect to the value of the real property here, because the principal assets of this corporation was real estate and from year-to-year, starting in or about 1957 at least, the debtor’s offices furnished the Marine Midland appraisals as to their opinion as to the value of the real property.

This was all for purposes of this Asset to Liability Ratio and ensuring that the debtor would not purchase more real property or incur more indebtedness unless the asset to liability ratio were indeed two to one as the covenant provided.

Now, these certificates and these appraisals, were accepted year after year by Marine Midland without any question being raised at all.

After Mr. Caplin was named as Reorganization Trustee, he commenced his statutory investigation of the debtors’ affairs under Chapter X of Chandler Act and he found that the appraisals and that the certificates, submitted annually by the debtors directors and offices, were in fact false and fraudulent on their face and that Marine Midland knew or should have known that this appraisals were inflated.

He further found that Marine Midland willfully disregarded these appraisals and these certificates and was grossly negligent in failing to recognize how false they were.

In fact, the trustee and reorganization, Mr. Caplin found at no time during the period between 1957 and 1965 had the required two to one tangible asset to liability ratio have been maintained.

We have in the petitioner's main brief at page four, an indication of one example of the kind of appraisals about which we are talking.

There are certain parcel of real property in Bronx County in New York.

That real property with a net book value of $2,800,000.00 had been appraised by the debtors offices at $15,000,000.00 in 1957, $27.5 million in 1958, one year later in 1959 at more than double that amount, $64 million and the same in 1960.

And by 1963, the same parcel without any significant improvements on it have been appraised by the debtors offices at -- 80% of it had been appraised at $91 million so that the whole parcel had to be appraised at more than a $100 million.

This is just one example of the kind of appraisals that were involved.

Now, as a result of his investigation, the reorganization trustee determined that it was the gross negligence or willful misconduct, not simple negligence but gross or willful misconduct, by Marine Midland, which had permitted the debtor to continue this course of activity or buying more real estate and entering in the transactions involving tens of millions of dollars and incurring more indebtedness and that this led inexorably to the reorganization court where Webb & Knapp found itself in 1965.

Indeed, it was charged by the reorganization trustee, Mr. Caplin in that complaint which was in question here and which we are seeking to have reinstated that it was the bank's failure to enforce this two to one asset to liability ration and his failure by having received and accepted without question these appraisals and these certificates which were clearly false on their face, which caused a net worth of this company to be reduced from $25 million in December 1958 to a negative net worth, a deficit figure of $38.5 million at the time that the reorganization proceeding commenced.

Justice William H. Rehnquist: Mr. Miller, is that your contention of the obligation in the indenture ran to the benefit of the debtor here?

Mr. Charles H. Miller: No, we are saying that it ran for the benefit of the debenture holders, if the Court please, and this action is sought to be maintained by the reorganization trustee on behalf of the debenture holders.

That is the question before this Court.

Justice Byron R. White: So the estate can pay the claims of debenture holders.

Mr. Charles H. Miller: That is correct and we say --

Justice Byron R. White: The state was insolvent, was it not?

Mr. Charles H. Miller: The state was insolvent.

Justice Byron R. White: So the only remaining people in the interest with creditors, secured or insecure?

Mr. Charles H. Miller: In fact, as things have turned out, the only remaining people of interest were general creditors after secured creditors (Voice Overlap)

Justice Byron R. White: Yes, and so, once the plan provides for secured creditors, then the unsecured creditors is left including debenture holders?

Mr. Charles H. Miller: Unsecured creditors and debenture holders who are classed as general preference.

Justice Byron R. White: Yes.

Mr. Charles H. Miller: Yes sir.

Now, the reorganization trustee Mr. Caplin, petitioned in the district court, in the reorganization court for the right to start a plainary action against Marine Midland for the benefit of debenture holders and the court granted permission for Mr. Caplin to do so and then on the motion of Marine Midland, the court dismissed the complaint on the ground that under Second Circuit (Inaudible) Clarke against Chase National Bank in 1943 decision in the Second Circuit, the reorganization trustee had no standing and was not the real party of interest and had no standing to prosecutor a personal claim on behalf of debenture holders.

The district court held that it was bound by the Clarke decision, that the property involved was acclaimed personal to the debenture holders and did not involve property of the estate and it also held that it would not affect a plan of reorganization.

Under Clarke, the reorganization trustee has the authority and has standing to sue on behalf of debenture holders if either property of the debtor is involved or the matter would affect the plan of reorganization.

The district held that it would not.

We then went to the Second Circuit Court of Appeals.

There was an argument held before three judges.

Two of the three judges would have overruled the Clarke decision and held that the trustee had standing.

The reorganization trustee had standing, but the Second Circuit in accordance with its time honored rule, then submitted the matter en banc to the full Second Circuit without further argument on the briefs already submitted and held with five to two that there was no standing on behalf of the reorganization trustee.

The Second Circuit in an opinion by Judge Friendly, held that the reorganization trustee had no standing, that Clarke was the proper rule and that there was no reason for this action to be brought by the reorganization trustee.

There was a vigorous dissent by Judges Ervin Kaufman and Paul Hays to the effect that there was no reason for the Clarke rule and the somewhat artificial distinctions with respect to the property that were involved in that rule.

And that the action should have been permitted to be brought that the reorganization trustee is indeed the proper party to bring the action, he is authorized on the statute to do so and he should have been permitted to do so.

Now, we have set forth in our briefs, four principle reasons why we -- for the reorganization trustee assert that there is standing for the reorganization trustee to prosecute this action against Marine Midland on behalf of the debenture holders.

The first reason is that the congressional scheme for reorganization, which is evidenced by two significant statutory amendments in the late 1930s, just two significant statutory enactments; the Chandler Act, which sets up Chapter X and the Trust Indenture Act specifically provide for a reorganization process in which the reorganization trustee is the focal point and is taking the interests not just of the debtors, not just of the general creditors, but of the investors, stockholders, debt investors, any kind of investors and he is the focal point for all of this.

He investigates and he tries to find out what happened that led the debtor into the reorganization court.

He is then the proper party under the statute to prosecute any claims, which may exist against third parties or against anybody else because without his intersession, it is quite likely that in many instances at least the debenture holders will not prosecute their individual claims because many of them may in certain instances have small face amounts of debentures and they will not undergo the expense of prosecuting their own claims.

We say that in addition to that, secondly, there is specific statutory authority under the bankruptcy laws, under Chapter X for a reorganization trustee to sue a venture trustee and the kind of claim involved here.

And we point to Section 587 of Title 11, which we set forth at our grief at Page 14, which specifically holds that an equity receiver that a reorganization trustee has all the powers of an equity receiver.

Now, when equity receiver, under this Court’s decision in the McCandless case in 1935, an opinion by Mr. Justice Cardozo held that an equity receiver could sue third parties to -- in affect return funds or have funds restored to the estate on behalf of investors.

Justice William H. Rehnquist: Mr. Miller, would you concede that an ordinary trustee and bankruptcy would not have standing to bring an action such as you are seeking to bring here?

Justice Byron R. White: Yes sir.

We are focusing Mr. Justice Rehnquist only on the power of the Chapter X reorganization trustees.

Now, we say third that as a practical matter, the reorganization trustee is the best person to bring this action.

He is the best person because he has under the authority, indeed under his duty, make a total investigation of all of the facts and circumstances leading to the debtors demise.

He is the person before the reorganization court.

He has found these facts.

In many instances, he has to prosecute a claim against others, directors and officers of the debtor, which involved the same facts and the same circumstances and this action has not brought either or it may not be bringable at all or it will involve redundancy of fact finding as Judge Kaufman held below.

Finally, we say that the holding of the court below in which a kind of hyper-technical property distinction or property holding has been super imposed on the reorganization laws, is just plain wrong.

There is no need for that decision under Clarke.

There is a decision in the Third Circuit, Solar Electric under which this action -- this type of action was in effect, permitted to be brought as a counter claim by the trustee to the proof of claim and the accounting filed by the indenture trustee.

We tried in this case to do it on the all three methods that is a plainary action, a counter claim to a proof of claim filed by the indenture trustee and also we sought to have the indenture trustee file an accounting so that we could then counter claim and all three of our rights to do so, were denied by the court’s below.

We are allowed, however, under the ruling of all the courts below to setup as an affirmative defense to the indenture trustees’ proof of claim.

This affirmative defense that the indenture trustee was guilty of gross negligence or willful misconduct.

So we have to find the same facts and why we can't bring it affirmatively is one of the questions that this here before this Court.

Now, there are two arguments, which are raised by Marine Midland in this case, which I would like to address my attention to it very briefly.

In the first argument, Marine Midland tells the court about three individual cases which have been brought on behalf of debenture holders; two in the state court in New York and one in the Federal Court in New York and he says in effect, “You see, the debenture holders were represented in this case and there is not need for this case.

What the trustee is attempting to do is to preempt the debenture holders.”

Now, the facts are, as we set out in our reply brief, that each of these actions was commenced after the trustee, the reorganization trustee, filed the petition seeking leave to bring this action, after he has had ascertained all the facts and after Marine Midland had indeed interposed an objection.

In fact, nothing has happened in any of those actions because they are also are sitting there, waiting for the result of this Court and this action because Marine has moved to dismiss them on the grounds that there is no class action as a matter of right under New York Law for debenture holders -- holding of the appellate division of the first department in New York, which appears to still be the law although the question is now on appeal.

Justice Potter Stewart: But in the Federal Court wouldn't Rule of 23 govern it that it was a class action?

Mr. Charles H. Miller: Yes, I think Rule of 23 would govern Mr. Justice Stewart, but I think that the question is not as Marine Midland has attempted to frame it whether the trustee is preempting the individual rights of debenture holders.

There has been no such claim here by the trustee or as I understand it by the Securities and Exchange Commission, and the argument I was addressing myself to was the one of exclusivity or preemption.

We are not saying that if the debenture holder wants to bring his own action, he may not do so.

The matters may then be consolidated before the District Court of they may not be.

What I am talking about and what this case is about is the pure issue of standing, whether the reorganization trustee can bring the case.

Justice William H. Rehnquist: Would the only basis of federal jurisdiction in an individual debenture holders action be of diversity?

Would that be the only way he could get in to Federal Court?

Mr. Charles H. Miller: Yes, I believe it would.

No, I will withdraw that Mr. Justice Rehnquist.

There is a foot note --

Justice Potter Stewart: Trust Indenture Act of 1939, couldn’t he?

Mr. Charles H. Miller: Trust Indenture Act of 1939, Section 315, which Judge Friendly in the Second Circuit alluded to in a foot note in his opinion saying, “Yes, there is a private right of action under 315.”

Now, what we are saying however is that, as a practical matter and as a matter of the statutory purpose, there was a feeling in Congress that debenture holders would not have the wherewithal or the ability to bring this kind of action and the reorganization trustee is the proper party to do it.

Now, one other argument that has been raised by Marine Midland to which I would like to address myself is, the Marine Midland argument, that you go down the statute at Chapter X and you read it line by line by line and nowhere do you see any specific authority for a reorganization trustee to sue an indenture trustee on behalf of behalf of debenture holders.

Now, Marine Midland would have this Court look at a reorganization trustee and I think that this Mr. Justice Rehnquist is in part answer to your question.

Not as a -- Marine Midland would have us look at a reorganization trustee as a liquidator of assets.

Somebody who goes out and looks at the statute as also checklist and goes out and gets whatever property is involved there and brings whatever suits are specifically set forth there.

That is not, we say what a reorganization trustee is all about and I think that Judge Irving Kaufman in the Court of Appeals for the Second Circuit said it better than I am able to say it.

He said that the process of reorganizing and I am reading now from the dissent in the Court of Appeals at Pages 99A to 100A of the Appendix in this case.

The process of reorganizing is not performed merely by a nice, sharp, precise, mathematical apportionment of a debtor’s estate according to fixed formulas.

Rather, the objective is carried out through a process of negotiation and some give and take in an attempt to adjust equitably and with sensitivity to nuances of the individual case, the rights of competing interested parties.

And then Judge Kaufman pointed to the language, which was a little more thrust as it usually was of Judge Learned Hand in the Second Circuit in his quite vigorous dissent in the Clarke case with which we are in whole hearted agreement.

Judge Learned Hand said, “The reorganization court has jurisdiction because it has an obligation to “adjust” the mutual rights of the debtors' creditors as between themselves.”

Now, we think that the efforts of Marine Midland to super impose this state law property concept over what Congress has enacted as the policy in reorganization.

It should be the policy in reorganization is one, which this Court should not countenance.

We say further that if you are looking to the statute for a specific statutory authority that a reorganization trustee has all of the powers of a receiver in equity.

Justice William H. Rehnquist: Mr. Miller.

Mr. Charles H. Miller: Yes sir.

Justice William H. Rehnquist: You referred to us earlier in your argument, in your brief to 11 U.S.C. 587, which in turn as I understand refers to Section 44 of the Bankruptcy Act.

In Section 44, the Bankruptcy Act provides for the appointment of a trustee in an ordinary bankruptcy proceeding and as I read 587, it says, the trustee under this Act shall have the same powers as a trustee under the Bankruptcy Act.

Now, if a trustee under the Bankruptcy Act could not bring this action, don’t you have to go to some other statutory authority to show that your reorganization trustee can do it?

Mr. Charles H. Miller: Well, what we are saying Mr. Justice Rehnquist is that, the second injunctive portion of that section 587.

Justice Potter Stewart: Where is this in the documents before us?

Mr. Charles H. Miller: This is at Page 35 of our main brief at Appendix A.

Justice Potter Stewart: Thank you.

Mr. Charles H. Miller: That is the language that reads, “and if authorized by the judge, shall have and may exercise such additional rights and powers as a receiver in equity would have if appointed by a court of the United States for the property of the debtor and we say that a receiver in equity under the McCandless Case, could have brought this action and we can too, because we have the same powers as a receiver.

Justice Byron R. White: But that is the brief basis that talks about the powers over the property of the debtor and I take it you don't think you should have to prove that this promise of Marine Midland was the property of the debtor?

Mr. Charles H. Miller: No, I believe that the property concept Mr. Justice White does not have a place here.

I think that in --

Justice Byron R. White: But that is what the statute says though, isn’t it?

Mr. Charles H. Miller: Well, before the statute was enacted, this Court in the McCandless Case gave a receiver the power -- an equity receiver the power to go after assets from a third party which have not been property of the debtor, but in fact, was diminution of the value of the debtor caused by wrong doing on the part of insiders, in effect the equivalent of a insider wrong doing.

And I say that the property concept is not a concept which should control in this Court and not should the concept of whether or not there happens to be a class action that was brought here.

We are not talking about this case alone before this Court.

We are talking about the general powers and the general authority and the general standing of a reorganization trustee.

We know there are limits upon that.

The limits upon that are, that the matter must have a significant relationship to the reorganization proceeding and I think it clearly does here.

Thank you.

Chief Justice Warren E. Burger: Thank you Mr. Miller.

Mr. Ferber.

Argument of David Ferber

Mr. David Ferber: Mr. Chief Justice, may it please the Court.

Chapter X of the Bankruptcy Act is one of the series of securities laws passed during and right after the great depression to protect the investing public.

The commission study that led to it and to the Trust Indenture Act showed that in earlier reorganizations, generally in equity receiverships, the investors' interests were often sacrificed to the interests of the insiders throughout and after the reorganization, it was the insiders who were usually in control and stayed in control.

And the persons who may have been responsible for the difficulties that we have encountered were rarely if ever sued.

And the SEC concluded its study with the recommendation to curb “the exploitation of investors, which has occurred either at the hands of the indenture trustee itself or at the hands of the reorganization and management groups with the knowledge, consent or acquiesce of the complacent and inactive trustee -- indenture trustee.

And as this Court has pointed out with respect to others of the securities laws, we submit the Chapter X too should be construed in the language of this Court not technically and restrictively, but rather flexibly to effectuate its remedial purpose.

Now, what was the remedial purpose of Chapter X?

Essentially, it was to provide the means for corporate rehabilitation that would ensure that investors' losses would be kept to a minimum and that the insiders, if responsible, would be prosecuted and investors would be treated fairly and this interested trustee, the court’s own officer was basic to the statutory design.

The House Report pointed out that his functions “in the larger cases” are difficult to over emphasize.

Under Section 167 of the act, he is to conduct an investigation to determine whether going concerned values can be preserved by a reorganization, to determine what causes the difficulties and whether new management should be required and what causes of action are available to the estate.

Now, the respondent's brief makes quite a bit of this that its causes of actions available to the estate in Section 167.

I would like to point out that this is not as clear a word as the respondent suggests.

It doesn’t say, what causes of action are available to the debtor, which is defined in the Act, but uses the fairly vague word to the estate and we suggest that this word can encompass the investors who are interested in the debtor.

The legislative history makes clear that a Chapter X debtor was to be viewed not just as a corporate entity, but as a collection of the interest of security holders.

In the sense that Chapter X trustee represents all of this security holders even when various classes of them may have somewhat conflicting interests when he works out a reorganization plan that is to be fair to all.

Obviously, what may be -- what “one group” might consider fair to it and other group might consider as less than fear to it because there is only so much normally to go around.

When he brings an action on behalf of the estate, meaning strictly the debtor, it may help one class to the possible expense of the other.

One of the landmark cases is a Committee against Kent in the Central States Reorganization where the Chapter X trustee wanted to determine that while there was a cause of action against some of the promoters, he felt the statute of limitations had run, and therefore, recommended that an action would not be brought.

On appeal it was determined that an action should be brought despite the fact that the senior creditors opposed it because as they said, you are going to use some of what would otherwise go to worst to gamble for the benefit of juniors.

But the Court of Appeals for the Fourth Circuit in the Committee against Kent has said that, “this is the basic duty of the Chapter X trustee where it is a comparatively small amount of money as against what might be recovered to collect these assets and determine that the lawsuit should be brought.

Similarly, as was made clear to this Court a couple of years ago in the TMT case, Protective Committee against Anderson, there were settlements involved of large claims and these settlements were of such a nature that in effect they were wiping out the junior class whereas in this Court reversed apparently because of that I believe that there had not been an ample determination on the fairness of these settlements, which if settled at the substantial prices the debtor was allowing them would have pretty much wiped out stockholders.

Now, there are various safeguards in Chapter X for all of the investors.

Creditors and stockholders are entitled to be heard at every stage of the proceeding.

They could have come in.

I don’t know whether they did or not in this case, when the trustee asked leave to sue.

But certainly, there was no reason why any creditor, any debenture holder who felt that the trustee should not be suing on his behalf could not have come in and raised that question.

They are represented by committees in many cases and also in many cases by the indenture trustee.

Chapter X court has very specific powers only the security holders’ representatives.

It may enforce an accounting under a trust indenture or with respect to security holder’s committee.

It allows compensation for services performed during the proceeding by indenture trustees and by committees.

To us, it seems that it makes a great deal of sense to have the Chapter X trustee, who has investigated and found out the facts indicating that the indenture trustee might be liable.

And who would use those facts as a defense against the indenture trustees' claim for services, against the debtor for him to bring the proceeding on behalf of the debenture holders.

Justice Byron R. White: Well, if the trustee were allowed to sue and recover the full face amount of the debentures from Midland and assume that for the moment of that entire recovery would go to debenture holders.

Would other creditors can get more than they would get now?

Mr. David Ferber: Well, Judge Friendly states that Marine Midland would then be subrogated --

Justice Byron R. White: If they were not subrogated, obviously they would get more?

Mr. David Ferber: Without question, but if there were subrogation, presumably it would not directly benefit the other creditors, but there might be the indirect consequences of working out an overall reorganization that was mentioned.

Justice Byron R. White: Now, let us go back a step.

Why is it that a recovery against Marine Midland would necessarily go to the debenture holders exclusively?

Mr. David Ferber: Well, I think that basically, the contract was between the indenture trustee while the debtor was a part of the contract, but it was for the benefit of the debenture holders.

The covenants that Marine Midland is alleged to have violated were for the benefit of the people who were buying the debentures.(Voice Overlap)

Justice Byron R. White: For their benefit.

Mr. David Ferber: I think without question that that was the purpose of them.

Now when you get to and I am not suggesting that anyone else would have a claim against Marine Midland, but from the standpoint of subrogation, which is an equitable remedy, I can see where there could be circumstances perhaps where other people might say, “we relied upon Marine Midland not to let this assets get out of two to one ratio” and therefore, it is not fair that they be share with us in what is left in a matter of subrogation.

I am not urging that, I am saying there is a question.

Justice Byron R. White: This case is submitted on the assumption that any recovery against the Marine Midland would go exclusively to debenture holders?

Mr. David Ferber: Yes.

Justice William H. Rehnquist: Mr. David Ferber, in the McCandless case which you as well as the petitioner rely on, there it actually had been a depletion of the assets of the debtors as a result of the conduct sued on there, hasn’t there?

Mr. David Ferber: Well, if you look at in a very broad sense perhaps as I understand the facts in that case, the promoters sold property to the debtor at a great deal less, I mean, at a great deal more than it was probably worth, they had it what appears to be a phony assessment and the promoters received these bonds, which they in turn sold to the public that the money coming to the bonds, I do not believe directly ever went to the debtor.

So I think while Judge Cardozo loosely spoke of it as property of the debtor, as a practical matter, it was the profits of these promoters in the sale of bonds that they had taken for their sale of property to the debtor.

Now, I am maybe over simplifying, but I read it again last night, the facts are not easy, but this is the way I believe what is really involved.

The promoters would have urged, it was their property, not property of the debtor and there of course, the court did holds that the creditors, that the receiver could sue on behalf of the creditors and in that connection Justice White, I think that in the statutory language your read a bit ago, I believe they were only identifying the person.

In other words, I do not think the language of the property of the debtor was intended in any way to be restrictive and this is the way I read it and I think it is a very logical way to read it.

I mean, this is what the trustee was identified as, receiver was identified as.

Justice Potter Stewart: In addition to the Clarke Case in the Second Circuit, there is the Manhattan Company against Kelby a couple of years later, decided unanimously with Judge Gerald Frank writing the opinion.

Mr. David Ferber: Yes.

Justice Potter Stewart: That too is against you, isn’t it?

Mr. David Ferber: No, I believe that case was -- well, there may have been some language that made it clear that in that case, they felt they were collecting the REITs, but as I recall, that case did not turned down any action on the part of the indenture trustee.

I maybe wrong, but that is my recollection while even Learned Hand in the later cases, I mean, to persuade his brethren perhaps, always attempted to find a REITs even though he had said in the earlier case it was not necessary but I --

Justice Potter Stewart: You could carry today, prudence past that there was a Reece.

Mr. David Ferber: In the Prudence Case (Voice Overlap)

Justice Potter Stewart: And those were bonds, they were not debentures.

Mr. David Ferber: That’s right.

Justice Potter Stewart: That’s the difference.

In bonds there is property pledged and you are secured and in debentures, all you have is covenants.

That’s the difference between the two.

Mr. David Ferber: But as a practical matter, in the Solar Case for example, among certain of the property that got away as it were was when the Chicago Plant of Solar had been sold and the indenture trustee took the money and then put it into the debtors' general account and let the debtor get rid of it.

Now, getting back this money was seems to me no difference in essence, then the funds, the assets that got away here because the indenture trustees had not enforced its covenant.

Justice William H. Rehnquist: Well, did any assets got away here?

I mean, isn’t your claim against the indenture trustee just that he did not recognize the fraudulent representations of the debtor when they were made.

Mr. David Ferber: Well, the claim is made in the complaint that by reason of this, the debtors assets ultimately were dissipated and that this is what forced the debtor into receivership.

Justice William H. Rehnquist: But the debtors assets were dissipated by the debtor.

Mr. David Ferber: Just as in the Solar case, Your Honor, the debtors assets were dissipated by the debtor when the Marine Midland, the same defendant by the way, let the debtor have -- use of it.

Chief Justice Warren E. Burger: Thank you Mr. Ferber.

Mr. David Ferber: Thank you.

Chief Justice Warren E. Burger: Mr. Dickey.

Argument of John W. Dickey

Mr. John W. Dickey: Mr. Chief Justice and may it please the Court.

I would like to clear away at the outset, one or two questions that I think are left open by what has gone before.

First, it is said that Mr. Caplin found about Marine Midland’s performance that it had been grossly negligent, willfully guilty of misconduct.

What was being said, simply is, that Mr. Caplin is alleging that in the complaint.

Nothing has been proved, no evidence has been taken, no discovery has been commenced, there has been no answer in this case.

We are here purely and simply on the question of whether the trustee has standing to allege the claims that are set forth in his complaint here.

There is no claim made on behalf of the estate.

Nothing recovered admittedly by the commission, admittedly by the petitioner, admittedly will accrue to the benefit of the estate of Webb & Knapp.

There is no claim made here under the Trust Indenture Act.

It is not mentioned in the complaint and there is no reliance upon and jurisdiction is not invoked on that basis.

This is purely and simply a damage suit alleging negligence against Marine Midland under state law concepts of negligence, claiming that we should have recognized the falsity of certificates dually filed with us, pursuant to the provision of the indenture and relied on them as we were entitled to do under the terms of the indenture which in turn was a qualified indenture under the Trust Indenture Act.

Justice Potter Stewart: I understand that it is conceded at least here that the trust indenture qualified under the -- this trust indenture qualified under the 1938 Act --

Mr. John W. Dickey: Yes, Your Honor, that is correct.

Justice Potter Stewart: -- and that's your point, but you are further saying that the bond holders themselves could not rely on the trust Indenture Act for federal jurisdiction?

Mr. John W. Dickey: I am not saying -- No, Your Honor.

I am not saying that.

Indeed, the fact to the matter is that Louis action portions of the complaint of which are set forth in the Appendix to our brief is an action which not only is based on or purports to be based on the Trust Indenture Act.

That is an issue that is presently before the district court in the Southern District of New York on a motion by that plaintiff in behalf of his class of debenture holders to assert a claim under the Trust Indenture Act by amending his complaint to include such a claim.

Thus far, several jurisdiction has been invoked by that plaintiff and by that class of debenture holders, which includes all past and present holders and purchasers a broader class that we are talking about here.

A jurisdiction of federal court there is invoked under the Securities and Exchange Act of 1934, alleging violations of 10 (b) (5).

Justice Potter Stewart: Alright, I thought someone in the course of Judge Friendly’s opinion in this case, he suggested by way of perhaps a casual victim that debenture holders could rely on the 1939 Act.

Mr. John W. Dickey: He does suggest, Your Honor, in a footnote in his opinion, he states that under Section 315 of the Trust Indenture Act, it conceivably, maybe that a claim will lie in behalf of the debenture holders, that is at page 9, I beg your pardon.

Justice Potter Stewart: (Voice Overlap) claims were decided.

Mr. John W. Dickey: That is correct, Your Honor.

That is at page 92 of the joint appendix, Your Honor.

Justice Potter Stewart: Alright, thank you.

Mr. John W. Dickey: Now, there is one other point before looking at the statute, which in the end is the text upon which I suggest this case must be decided.

It has been said that the answer to one of the questions was, that the creditors might get more if there were a recovery here, if the doctrine of subrogation were not applicable.

Now, Judge Friendly expounds the doctrine of subrogation and we think he is correct in his analysis and we have set forth additional support for that basis, for that position in our brief.

But the actual fact in this case is that the question is all together moot.

Nobody is going to benefit other than the debenture holders in this particular case because as this case stands, a plan of reorganization has already been proposed, has been approved by the SEC, has been submitted to Judge McClain in the Southern District of New York and in that plan of reorganization, there is provision for the debenture holders to share equally as part of the same class with the general unsecured creditors, share and share alike.

And the Securities and Exchange Commission in their comments upon the plan of reorganization which was submitted to them for their consideration, had only minor modifications to suggest and here is the modification that in the interest of full disclosure to all the interested parties in this reorganization proceedings.

The plan of reorganization should make absolutely clear that unlike the other claims and causes of action which the trustee is reserving and may prosecute here after, any fund that may be recovered by the trustee in the Caplin and Marine Midland litigation will inure solely to the benefit of the debenture holders.

That is conceded, that is the end of it so far as any further benefit, we suggest to the estate of the debtor or to anyone who may have any share or any claim in it.

Justice Byron R. White: Well, let us assume that they pay off to the debenture holders and unsecured creditors ten cents on the dollar and the claim against Midland produces 100% or are you suggesting that no more could be recovered from Midland than 90%?

Mr. John W. Dickey: That is what I am suggesting, Your Honor.

Justice Byron R. White: Unless and that would be true only if your are right on the subrogation?

Mr. John W. Dickey: No, it would not be true only if we are right on the subrogation point, Your Honor.

The fact to the matter is that, I suggest damages cannot be measured in behalf of the debenture holders.

Their claim against Marine Midland cannot be measured in the limits of it established until they have received a distribution within the plan of reorganization.

This has been suggested.

This is not brand new.

Augustus Hand in the majority opinion in Clarke and Chase, which is the basic case, points this out and it is followed by the Second Circuit in this case.

Justice Byron R. White: I suppose it depends on where you start, if the cause of action -- even though it might in your debenture holders, the cause of action is viewed as the cause of action of the estate for being deprived of the ability to pay its debts.

It may come out in a different way.

Mr. John W. Dickey: But, Your Honor, there is no claim asserted to that end in this complaint.

I suggest there could not be for that matter.

Now, let us look at the statute.

Chief Justice Warren E. Burger: If there were such a claim, would they be limited to the amount of the debentures necessarily?

Mr. John W. Dickey: Your Honor, I think we would not be here if a claim had been asserted in behalf of Webb & Knapp, claiming that Marine Midland was in, and by its alleged derelictions was in a causal relationship with the insolvency of Webb & Knapp.

We would not be here on a standing point at least.

We might very well be here eventually on the question of whether any such cause of action will lie, whether there was any duty owed by Marine Midland, the indenture trustee to the debtor, which deceived it along with the debenture holders.

I think we would be here with the Court's permission on that point, but not on the state, no, Your Honor.

Now, the statute if the Court please because that is the basis of the trustees power --

Justice Byron R. White: But are you suggesting that in the plan of reorganization if -- let us assume for the moment that before the plan became final, a hundred percent -- hundred cents on a dollar have been recovered from Marine Midland.

Mr. John W. Dickey: I do not think it could have been recovered from Marine Midland because there would be no measure of damage (Voice Overlap)

Justice Byron R. White: You think the plan that the reorganization Court would have no power to say that the debenture holders must -- if as long as they could, recover a hundred cents in the dollar from Marine Midland so that other creditors would --

Mr. John W. Dickey: I think that that is absolutely correct, Your Honor.

Now, the fact to the matter is, this are unsecured debentures.

The debenture holders bought this looking to the creditor Webb & Knapp.

There is no security, no mortgages, no any (Voice Overlap) That is what it is, Your Honor, it's a debenture and therefore (Voice Overlap)

Justice Potter Stewart: (Voice Overlap) unsecured debentures, secured against by convents?

Mr. John W. Dickey: And they looked to the creditor Webb & Knapp and the value, any value that these debentures may have is a value measured by the ability of Webb & Knapp to pay them off when the time comes to pay them off.

Now, let us assume measure Your Honor, let us suppose that in the reorganization, we are lucky and it is determined that the distribution is not going to be ten cents on the dollar as Mr. Justice White hypothesizes, but a 100% on the dollar.

Let us suppose there is enough recovered to take care of all of the general unsecured creditors including the debenture holders.

No damages have been sustained by the debenture holders.

No claim would lie against Marine Midland, not withstanding a proved claim if a debenture were proved that there had been dereliction of --

Justice Potter Stewart: Now, here, there has been a plan, hasn’t there?

Mr. John W. Dickey: That is correct, Your Honor.

It has not been approved by the court yet, but it is before the court so (Voice Overlap)

Justice Potter Stewart: Before the court and it provides for what, four cents on a dollar?

Mr. John W. Dickey: That is correct, Your Honor.

Thus I suggest that the measure of damages that can be asserted against Marine Midland is 96 cents on the dollar.

Now, the statute (Voice Overlap)

Justice Potter Stewart: Now, whether or not Marine Midland would be subrogated is not an issue on this case?

Mr. John W. Dickey: Not an issue, I suggest.

I think it is a secondary point.

I think it can be mandated and it is correct but we do not rely on it.

We rely on the measure of damages point.

Now, if Your Honor please, the court please --

Justice Byron R. White: Is that the approach of the court below?

Mr. John W. Dickey: I beg your pardon Your Honor.

Justice Byron R. White: Is that the rationale of the court below?

Mr. John W. Dickey: Your Honor, it is. Both points are made; the subrogation point that Judge Friendly goes on to say.

Justice Byron R. White: Now, that is not your point.

Mr. John W. Dickey: That is correct.

The subrogation point is made there and in addition, Judge Friendly goes on and says, even more importantly, we do not see the answer to the statement made by Judge Augustus Hand in Clarke against Chase in which he made the argument that I have just made to the Court.

We think if the Court please that the fundamental and disposity fact here is that there is no power granted under the Chandler Act of the kind claimed here by the Chapter X trustee.

There is no provision in the Chandler Act.

We suggest upon which any implication can be fairly based that the Congress intended any such power.

The trustees, the creature of the statute, the statute is meticulously drawn, meticulously drawn with respect to the rights and the powers and the duties and specifically, with respect to the powers and duties of a Chapter X trustee in enforcing and prosecuting causes of action.

Under the statute, the trustee succeeds to the title of the debtor's estate and by Section 70 of the Bankruptcy Act, having taken title of the debtor to “property of the debtor,” the Section goes on to define in fine detail what property means and specifically to define in fine detail, what property means in the context of causes of action to which the trustee falls there and to which he takes title.

In Section 70 of the Bankruptcy Act, this is how it's defined with respect to causes of action.

He takes title the rights of action “which prior to the filing of the petition the debtor could by any means have transferred or which might have been levied upon and sold under judicial process against him or otherwise sees impounded or sequestered” and in the following sub paragraph, “Rights of action arising upon contracts used or the unlawful taking or detention off or injury to the debtors property,” everything is focused on property.

And Section 167, empowers the trustee to investigate the acts and the conduct and the property, and the liabilities and the financial condition of “debtor” in the desirability of continuing the business.

And any other matter relevant to the reorganization proceeding or to the formulation of a plan and then he is empowered to report that, directed indeed to report that to the judge.

And with respect to causes of action, he is directed to report to the judge any facts ascertained by him, pertaining the causes of action available to the estate.

Now, these provisions are clear and an ambiguous.

Justice Byron R. White: As soon as an appraiser that appraises some property for the debtor and -- negligently or for some other reason, some strange reason, intentionally inflates the value unknown to the debtor and the debtor is permitted or was issued twice as many debentures they would have if the right value had been assigned to it.

I suppose there would be a cause of action by the debtor against the appraising.

Mr. John W. Dickey: Only if damage could be shown to a accrue against the debtors.

Justice Byron R. White: We have issued too many debentures and now we are broke?

Mr. John W. Dickey: I think there would be a cause of action.

There would be a cause of action in behalf of the estate and for the recovery of damages, which would accrue to the benefit of the estate, and therefore, be available to be shared amongst debenture holders, general unsecured creditors and everybody else, the stockholders indeed.

Justice William H. Rehnquist: They are no more broke after they issue too many debentures than they were before they issue, were they?

Mr. John W. Dickey: It would be a damage suit, Your Honor.

They would have to show some kind of damage.

I do not think the measure of damages would be the amount of the debentures that they had issued, no.

Justice William H. Rehnquist: Well, would that be any wrong to the issuer at all?

Mr. John W. Dickey: I think Your Honor is right.

I think it would not be --

Justice Byron R. White: (Voice Overlap) to debenture?

Mr. John W. Dickey: I beg your pardon.

Justice Byron R. White: It gets money, it got money for the debentures?

Mr. John W. Dickey: It really did not get money for the debenture holders.

The debenture holders simply are left holding debentures, but you are unsupported by property.

Justice Byron R. White: The debtor is the creditor?

Mr. John W. Dickey: Right, Your Honor.

Justice Potter Stewart: In my brother White's hypothetical case you could show a situation where the debtor was right, if they got a negligent appraisal and then made some sort of a corporate decision based, clearly based on that appraisal --

Mr. John W. Dickey: Yes Your Honor.

Justice Potter Stewart: -- that caused some damages.

If they can prove that, there would be a cause of action by the corporation, and therefore, by trustee under Chapter X?

Mr. John W. Dickey: Correct, Your Honor.

Justice Potter Stewart: The amount of proven damages?

Mr. John W. Dickey: I think that is right.

Justice Potter Stewart: And the showing of --

Mr. John W. Dickey: And the proceeds of that action would be available to the state, would accrue to the estate.

That is a cause of action which in the terms of the statue could be transferred, could be levied upon, etcetera.

Much reliance is placed here upon legislative history or I should say purported legislative history, that I suggest to the Court that in the first place, the statute is clear and there is no occasion to look to it and in the second place on its face, the legislative history, which is cited in the briefs for the petitioner and for the Commission here shows that all of the talk about the intention of the Congress to effect protection of public investors and to bring about the appointment of an independent trustee for the purpose of the protection of public investors, everything that went in to the eventual recommendations, which led to the Chandler Act, they are all pointed toward the participation of the independent trustee within the reorganization proceedings.

Not at any point is there any testimony by any witness, nothing in any report of either House or Congress or any Committee, nothing in any of the sources, which pass for legislative history here in which there is any suggestion that anyone even urged the power, which is sought here today.

I pass that at that point.

I think in summary the Chandler Act was intended to provide protection for public investors and to that end the Act created the office of the independent trustee and the trustee’s function is to protect them within the context and within the parameters of the proceedings.

He is obliged to collect the property of the debtor to preserve it.

If possible, to attempt to rehabilitate the corporation, in this case, that has been determined to be impossible and the plan of reorganization here is nothing more than a plan for orderly liquidation on a relatively moderate scale.

Justice Byron R. White: If the trustee’s alleged conduct here resolved in the release of maturity or guarantor of the debentures, could the trustee sue?

Mr. John W. Dickey: I think in those circumstances, if it were a guarantee of a third party, Judge Learned Hand in one of the Prudence Bond cases reached the conclusion that that was property he approached it on the basis and analyzing it as a property of the debtor (Voice Overlap)

Justice Byron R. White: Particularly, all it is as a promise -- a promise to pay the debenture?

Mr. John W. Dickey: But it is a promise of a third party, Your Honor, which if drawn upon and used to pay the debentures, to that extent, enlarges the estate of the debtor and that is precisely the distinction he drew in the Prudence Bond (Voice Overlap)

Justice Byron R. White: (Voice Overlap) estate of the debtor is just -- just about --

Mr. John W. Dickey: It avoids a drain, if you will Your Honor.

Justice Byron R. White: It permits the debentures to be paid.

Mr. John W. Dickey: It permits the debentures to get paid.

Justice Byron R. White: And if the guarantor -- he would not be guaranteeing anymore than what is left after assets of the estate are depleted?

Mr. John W. Dickey: Well, if Your Honor please, no.

The distinction drawn in that case and I suggest the proper distinction is this, that the two issues before the court as to standing in that case were the right or standing of the trustee to state a claim against the indenture trustee for letting a third party's guarantee go and in that case, it was determined that there was standing because had that security in affect not been released, then the debentures would have been paid from that and there would have been no claim by the debenture holders against the debtor’s estate.

In context --

Justice Byron R. White: At least that was the theory of that case?

Mr. John W. Dickey: At least, that was the theory of that case.

Justice William H. Rehnquist: So the debtors still would be correspondingly enlarged or at least prevented from being drained?

Mr. John W. Dickey: It had been enlarged or at least prevented from being drained Mr. Justice.

On the other hand, in the other side of that case where the question was standing to sue because of the release by the indenture trustee, not of the third party's guarantee, but of the guarantee of the debtor itself, a distinction was drawn and it was found that there would be no effect on the debtor’s estate and therefore standing would not lie within the terms of the Chandler Act.

Now, Your Honor, I will not go through the Second Circuit cases.

They have been discussed, they are fully briefed, they have to be read.

I would like to move on to what I think is the real vice that is inherent in the position that's advanced here by the petitioner and by the Commission.

Because they are not asking this Court simply to imply that the Chandler Act should be interpreted in such a way as to permit a modest extension of power on the part of the trustee to assert this single claim against Marine Midland in this particular case.

What they are asking the Court to do because they cannot risk on that simple point is, to imply numerous decisions or conclusions as to numerous questions involving other statutes and other rules in the class action and securities law field.

That is to say that to sustain their position, this Court or possibly the district court, maybe we have an agenda for years of litigation before us here if this position is sustained, either this Court or the district courts and in the Courts of Appeal and then we may be back here, we are going to have to make decisions of necessity of this kind.

They are going to have to imply the answer to the question whether or not the power claimed by the trustee is exclusive or not exclusive.

I understand they do not claim that it is not exclusive.

They claim that it is preferred that the trustee have this power.

They also say that as a practical matter if they have granted this power, they will in fact sweep the field clean because other debenture holder suing in their private capacity would not be inclined to risk the money and the time for what may in the end prove to be a futile action if the trustee’s action in fact is permitted to be preferred and go forward.

If the conclusion is that the power is not exclusive and if the conclusion is, that it is presumptively to be preferred that the trustee prosecute this action, then I ask what rule are we looking to, from what do we imply to this kind a conclusion, what rule or statute is involved here?

And if the trustee’s power is implied not to be exclusive and not even to be presumably and presumptively preferred, but is just run a parallel with private actions brought by class claimants, private debenture holders suing in their own behalf, then where thus that leave us with respect to Rule 23 in the federal courts?

Where does it leave us with respect to the confusion that would be caused in delicate state federal relations with respect to parallel class action provisions under state law?

Think of the questions that have to be answered once we get into that area.

Who is to go forward first?

How are we going to determine the priorities between the competing suitors, the private litigants on one hand, which we have two in this case and the trustee on the other hand.

There is mechanics for making that decision under Rule 23 and in the southern district of New York, there is practice of staying a federal action in favor of a state action often to let it run its course and see how it will come out.

But these are things that are worked out and have been over the past 30 years of class action litigation under the securities laws and otherwise and under Rule 23, which suddenly are going to be thrown in the chaos when the trustee steps into the water and lends his weight here to this kind of a claim.

What do we do about collateral estoppel?

What happens?

Is it a race to judgment amongst these people and the first one gets there, binds the others?

If the debenture holders get the judgment first, does that bind the trustee and is the trustee’s action out in contrast or does the trustee’s action take precedence?

Is the trustee’s action subject to Rule 23?

There is a suggestion in the brief that there is no reason to suppose that rules similar to Rule 23 will not be invoked here to govern this action, but which parts of that rule?

I mean, in the first place, rule of 23 cannot apply to the trustee.

He does not meet the first condition preceding.

He is not a member of the class and to apply Rule 23 to him, this Court would have to decide that the framers of Rule 23 of this Court in affect had intended that it read not that a member of the class may sue representatively, but a member of the class preempts us and a Chapter X trustee of this so pleases may assert such an action.

Justice Potter Stewart: What will you do about the collateral estoppel with respect as among individual bond -- debenture holders who do not bring class actions?

Mr. John W. Dickey: Well, as to an individual debenture holders they would not be collaterally estopped, I suggest Your Honor, under the operation of Rule 23 because of the opt out provisions of Rule 23.

Justice Potter Stewart: Just as among, let us say there is an individual plaintiff who does not purport to bring a class action?

Mr. John W. Dickey: We have such in this case.

Justice Potter Stewart: And if he loses, there is no collateral estoppel --

Mr. John W. Dickey: No, there is no.

Justice Potter Stewart: -- in any other area?

Mr. John W. Dickey: No collateral estoppel on that case, but here we have a trustee who purports to sue in behalf of the whole class or a very large part of it at least, his action is not as broad as the other two (Voice Overlap)

Justice Potter Stewart: According to argument he is suing as kind of an ombudsman as in charge of the whole, all the contraries of interests in the corporate reorganization?

Mr. John W. Dickey: That is right and I suggest Your Honor that his action is redundant, that it is unnecessary.

That in this case he is looking to an impoverish estate of finance a litigation which need not be brought because the debenture holders are in both the state court and the federal court asserting their claims vigorously.

Discovery has been had in one of those cases.

The case is farther along than this one and the only reason it is not farther is that the district court knowing of the grant of certiorari in this case has stayed the Louis federal action to see what conclusions are reached here.

And I suggest Your Honor in conclusion, if the Court please in conclusion that we are opening Pandora’s Box once we cross the initial bridge of accepting the argument that is made here and the claim of standing because we have no answers to give to all the complex of questions, which then faces procedurally with respect to collateral estoppel with respect to res judicata, with respect to priorities of claim, with respect to delicate relations between the state governments and the federal governments and their respective rules.

Thank you Your Honor.

Chief Justice Warren E. Burger: Thank you Mr. Dickey.

You have about four minutes left Mr. Miller.

Rebuttal of Charles H. Miller

Mr. Charles H. Miller: Thank you Mr. Chief Justice and may it please the Court.

I suggest that the parade of horribles that Marine Midland has suggested that would be unleashed if the trustee were given standing in this case, it just does not exist and it does not exist for one reason and it is a reason that we assert as one of the significant reasons why the trustee should have standing in this case.

Everything in the reorganization is under the supervision, and the umbrella and the aegis of a reorganization court.

It is under the aegis of a reorganization court, which has the Securities and Exchange Commission before it at every step in the proceeding.

Before any action can be started the reorganization court gives permission to the starting of the action.

Before any action can be settled, the reorganization court determines whether the settlement is fair and equitable and the reorganization court, which makes that determination, does it on the basis of a long standing knowledge of all the facts or circumstances of the debtor's estates, of the debenture holders, of all the various packages of creditor's rights which are involved here.

Justice William H. Rehnquist: You are not suggesting that the individual or that the indenture has to sue in the reorganization court, are you (Voice Overlap)

Mr. Charles H. Miller: No, I am not.

Now, in addition to that --

Justice Byron R. White: What if in case the individual securities holders could have sued the indenture trustee?

Mr. Charles H. Miller: If what, Mr. Justice White?

I am sorry.

Justice Byron R. White: In the one Prudence case that held the trustee could sue on for release of maturity --

Mr. Charles H. Miller: Yes, that was --

Justice Byron R. White: The individual holders could have sued too, isn't it?

Mr. Charles H. Miller: Yes, I believe that they could have.

What you have in that case in furtherance of your question to Mr. Dickey, and further answer to it I think was nothing more than a chosen action and I think you have the same thing in this case.

Perhaps a different kind of chosen action but no different.

Justice Potter Stewart: And belonging to somebody else, that is the problem.

Mr. Charles H. Miller: Well, no.

It belongs to the debenture holders and I think, if I may Mr. Justice Stewart, that is not the problem, that is what this case is all about.

The focus in this case has come to be directed towards the estate and what is happening with the estate.

We are talking now about the debenture holders and the debenture holders alone and whether they are entitled to this relief and we are seeking, the reorganization trustee is seeking to sue on behalf of the debenture holders.

In the Solar case and in the Clarke case and in Prudence Bonds, all of this cases, which are the only ones, which have decided this question for the most part, there was a recovery to the debenture holders on certain of the claims allowed.

Either way there was a trust REITs involved or a certain property involved.

There was no question there about standing or affect on the estate or subrogation or whether there would be any of these other matters in the prayer to harbals (ph) which have been asserted before you.

Thank you.

Chief Justice Warren E. Burger: Thank you Mr. Miller.

Thank you gentlemen.

The case is submitted.