adopted, and the exceptions to that finding are sustained.
The special master has recommended that the reasonable payment which the court should allow to the Union Traction Company is the sum of $3,500,000. He bases this recommendation upon the contention of the Union Traction Company (which he approves and adopts) that title to the extensions and enlargements vested in that company at the time of the installation of the extensions and enlargements, and remains in the company today. He says:
"If this contention cannot be maintained, then the proof offered by the Company in support of its claim for use and occupation, cannot be the basis for any allotment; for its proof of the use and occupation value, is applicable to this condition only. * * *
"The question of ownership of the renewals, replacements and extensions, installed upon 'all other lines' since 1902 by P.R.T., at its own expense, though under the provisions of the lease, is a vital one. If all this property belongs to Union, it will be entitled to an allowance for use and occupation. If all of it does not belong, its case is not complete, for its proof of use and occupation value, is based only on a complete ownership."
As we have already said, we hold that the Union Traction Company and its allied underliers have not present ownership, except as to so much of the property demised in 1902 as remains extant today.
By the terms of the 1902 lease, the P.R.T. unqualifiedly covenanted to pay a rental which, for some time back, has amounted to over $7,000,000 annually, upon which they have now paid approximately $226,000,000, but upon which there remains in arrears and unpaid today an amount approximating $13,000,000.
Our Circuit Court of Appeals has ruled that the existing status between the contending parties is that of debtor and creditor. In consideration of that status, this court, bearing in mind that there are no other creditors, has, during the 77B proceedings before us, allowed payment of $600,000 and $700,000, or a total of $1,300,000, to be made to the Union Traction Company on behalf of itself and its allied underliers.
We do not feel authorized to sanction any further payments at the present time on the basis recommended.
Obviously, there are outstanding equities between these contending parties, which, as they deeply affect the interests of their respective stockholders as well as the public, should receive well-considered attention and adjustments at an early day.
We take the case before us as we find it. From the careful analysis which we have made of the 1902 lease (which, it is admitted, forms the basis of the claim for further payments requested at this time), we find no such present ownership in the one contending party, as would authorize us, summarily and in advance of the reorganization program now in this court, to make the payment requested.
The situation is one peculiarly calling for reconciliation and readjustment in the plan of reorganization. Good faith, within the meaning of the statute, requires the prompt submission of a plan. The court wishes to impress this most emphatically on the parties. No question of city ownership or city acquisition is to be used to delay the proceedings. That is a matter for the city and the other parties to the case to negotiate in the future if they desire. Oportunity was given for negotiation along this line some months ago. This was given at the request of all the parties to the case. Those negotiations have been brought to naught, notwithstanding the good intentions of the parties, and that phase of the question must not in future delay or retard the orderly procedure of reorganization under 77B in this court. We have above referred to existing equities between the parties. It appears from the record that the equities of the underliers would approximate $60,000,000 and that the equities of the P.R.T. would approximate $42,000,000. The city of Philadelphia has appropriated many millions for its city-built high-speed lines. Let these facts, together with the admitted arrearages of rent in the approximate sum of $13,000,000, be taken into serious consideration in the formation of any plan that may be forthcoming. To the wise and fair and equitable provisions of that plan we now commit the petition which is before us.
Meantime, the recommendation of the learned special master for the present payment of $3,500,000 to the petitioner is not approved and adopted, the exceptions filed thereto are sustained, and the prayer of the petitioner filed March 5, 1936 is denied.
Counsel may present an appropriate order.
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