BAILEY V. PROCTOR 160 F.2d 78 (1st Cir. 1947) CASE BRIEF

BAILEY V. PROCTOR

160 F.2d 78 (1st Cir. 1947)

NATURE OF THE CASE: Shareholders (appellants) sought review of the judgment that the United States district court entered in favor of receivers and others (appellees), ordering the liquidation of an investment trust and denying the shareholders' initiatives to resuscitate it.

FACTS: In an earlier case the trustees and officers were found guilty of 'gross abuse of trust' within the meaning of Section 36 of the Investment Company Act of 1940, 15 U.S.C.A. 80a-35, and were enjoined from acting or serving in the capacity of trustees or officers. A receiver was 'appointed with power to reorganize the capital structure of the Trust or liquidate the Trust and distribute the assets'. Appellants, who were subsequently permitted to intervene in the receivership proceedings below, now appeal from an order of the district court (1) denying their prayers for an order directing the calling of a special meeting of the shareholders of the Trust and the termination of the receivership, (2) disapproving four plans or reorganization of the Aldred Investment Trust, and (3) directing the receivers to proceed to liquidate the Trust. Appellants urged that the court lacked jurisdiction to order liquidation since the Trust was now solvent and rid of the corrupt management which had necessitated the appointment of receivers, or that, if the court had jurisdiction and power so to order, it had improperly exercised such power. The appellants likewise protest the refusal of the court to order a shareholders' meeting and the rejection by the court of the plans of reorganization without a submittal of them to the security holders.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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