The opinion of the court was delivered by: GIBSON
1. The court, as part of its findings of fact, approved the stipulation of facts filed as of November 8, 1946, by the Disinterested Trustee and in Indenture Trustee.
It further finds as follows:
2. During the period from 1906 to September 1929, James Il Buchanan, President of the debtor company, was also an officer or director of the Pittsburgh Trust Company, and, upon the merger of the Pittsburgh Trust Company and the Peoples Saving and Trust Company into the Peoples-Pittsburgh Trust Company, became a director thereof and continued in such office until his death in January, 1931.
3. During the period from 1906 to 1927 Mr. Buchanan, while standing in a fiduciary relationship to the debtor company's bondholders, caused misleading reports of the results of the operations of the debtor to be issued and published. Such reports concealed the fact that, although dividends in excess of $ 900,000 were paid to the debtor company's stockholders, there were no earnings available for payment of such dividends by reason of failure of the debtor to make charges for depreciation and obsolescence and for repairs against operating income.
4. In January, 1931, none of the officers of the Peoples-Pittsburgh Trust Company owned stock of the debtor company.
5. The payments of interest before 1938 out of the general funds of the company on the $ 200,000 mortgage were made without pressure from the mortgagee, and were made because the president of the debtor wished to preserve the equity in the First Ward property for the bondholders.
6. The minutes of the bondholders' committee show that the members gave constant and faithful consideration to the right of the bondholders and used their best judgment in protecting those rights.
7. The indenture trustee and its officers had no notice of the accounting methods of the debtor in 1931.
8. The reports of the independent accountants, which are attached to the minutes of the stockholders' meetings, merely comment on the failure to take depreciation and do not urge the company to take depreciation.
9. The stockholders knew that no depreciation was taken until 1931 and made no objection thereto.
I. The indenture trustee was not guilty of any negligence or default in the performance of its ...