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IN RE PENN CENT. TRANSP. CO.

October 7, 1974

In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor. Petition of BANK OF NEW JERSEY


The opinion of the court was delivered by: FULLAM

 FULLAM, District Judge.

 The Bank of New Jersey, as Indenture Trustee under a mortgage of the New York Connecting Railroad Company, has petitioned this Court to restrain two individuals named Irving and Harold Domnitch from proceeding with certain litigation in the Supreme Court of the State of New York. The Trustees of the Penn Central support the position of the bank, and so does New York Connecting itself.

 In 1945, the mortgage of which the Bank of New Jersey is now the Indenture Trustee became a first lien upon all property of New York Connecting. In 1965, in consideration of the sum of $5,000, New York Connecting granted to Messrs. Domnitch an option, for the term of two years and four months, to purchase certain air rights.

 In 1969, New York Connecting leased all of its properties to Penn Central for a term of ten years. On June 21, 1970, Penn Central went into reorganization under ยง 77 of the Bankruptcy Act. On or about October 1, 1970, New York Connecting's mortgage became in default.

 On November 16, 1970, there was executed a document which purports to be a "rider" to the 1965 option agreement. Pertinent parts of this document are as follows:

 
"RIDER TO AGREEMENT MADE OCTOBER 8, 1965, BETWEEN THE NEW YORK CONNECTING RAILROAD COMPANY and IRVING DOMNITCH and HAROLD DOMNITCH which modifies the said agreement to the following extent:
 
"1. The seller is NEW YORK CONNECTING RAILROAD COMPANY AND GEORGE P. BAKER, RICHARD C. BOND, JERVIS LANGDON, JR. AND WILLARD WIRTZ, trustees of the property of PENN CENTRAL TRANSPORTATION COMPANY, debtor-lessee through C. NICHOLS, manager-real estate, and the purchaser is IRVING DOMNITCH.
 
"2. The purchaser, having exercised his option, the first section of paragraph number 1 is modified to read:
 
'Subject to approval of its Board of Directors, the trustees and the reorganization court, as required by law, the seller agrees to sell and the buyer agrees to purchase the following described property.'
 
"3. The description of the property to be sold and purchased herein is more particularly described as follows:
 
As being those three parcels of land as set forth and described in a survey made by Fred J. Powell, dated May 12, 1966, the said survey is initialed by the parties hereto, ...

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