Page:Harvard Law Review Volume 32.djvu/534

498 498 HARVARD LAW REVIEW the courts have held that the public interest involved in a railroad was such that the holders of conflicting hens arising from separate mortgages would not be allowed to tear the property apart so as to have separate sales of the constituent parts as they were strictly entitled to do.^^ This consideration of the public interest likewise demands a facile and direct method of reorganization by majority control. The public is concerned in not having a utility hobbled by a long receivership, and starved because of indiscriminate litigation between the owners, while a tremendous load of re- ceiver's certificates accumulates, destroying, in substance, the bond- holders' priorities; such conditions, obviously prevent the utility from giving efficient service. As Judge Hook said recently: "Moreover, the public, though not a party to the record, has an in- terest in every railroad reorganization, accomplished by foreclosiu-e, of which the court should take notice." ^^ And if majority control should be observed in the reorganization of public utilities, because it is facile and time-saving, and avoids the wasting of property, it should be adopted for the same reasons in the case of the reorganization of private corporations. The in- terests of bondholders in private corporations — indeed of investors in corporate securities generally — would be furthered by a cer- tain and trustworthy procedure of corporate reorganization; such an improvement in the law would enhance the value of their securities. To be sure, the court should not draw a plan of reorganization for the parties; nor should it force bondholders to accept a plan which has not already been approved by a large majority. It should limit its activity primarily to protecting the majority in their right to control, and in ascertaining whether or not a proposed plan is fair to all concerned, and, in case of public utilities, to the public as well as to the majority and to the minority. Public in- terest, powerful though it is, cannot induce a court of equity to carry out a reorganization and consolidation itself by the issuance of receiver's certificates although such a plan would greatly benefit ^ Farmers' Loan & Trust Co. v. Cape Fear Ry. Co., 82 Fed. 344, 347 (1897), and on appeal to the Circuit Court of Appeals for the Fourth Circuit, 87 Fed. 392, 400 (1898). Chicago D. & V. Ry. Co. v. Loewenthal, 93 111. 433, 450 (1879); Gibert v. Washington City etc. Ry. Co., 33 Gratt. (Va.) 586, 609 (1880). " Central Trust Co. v. Missouri K. & T. Ry. Co., 246 Fed. 154, 156 (1917).