Full opinion text
FULLAM, District Judge. INTRODUCTION The Trustees seek authorization to sell certain major real estate holdings of the Debtor located in the Park Avenue area of the City of New York, for prices totalling $59,549,000. Conditional or absolute objections to some or all of the proposed sales have been interposed by several interested parties, on a variety of legal and factual grounds. The following issues, directly or indirectly related to the proposed sales, are presented for decision: Issues applicable generally: 1. Would the proposed sales, as a matter of business judgment, be in the best interests of the Debtor’s estate and its reorganization? (a) Should the sales be approved on the assumption that the Trustees cannot or will not disaffirm existing leases? 2. Does § 77(o) of the Bankruptcy Act empower the Court to approve the proposed sales, or must approval await the adoption of a reorganization plan? 3. May the proposed sales be carried out without the consent of the New Haven Trustee? 4. Are the trustees entitled to use the income from the properties for operating expenses, or must the income be sequestered, either (a) by reason of the rights of the New Haven trustee? or (b) by reason of the rights of certain indenture trustees? Issues applicable to properties leased from the New York and Harlem Railroad Company (“Harlem”) 5. Is the Harlem lease valid and subsisting? 6. May the Trustees affirm the Harlem lease, or may the Harlem now terminate it instead? (a) If the Trustees affirm the lease, does this require present payment of the (accelerated) principal of the bonds secured by the Harlem mortgages? (b) If the Trustees affirm the lease, must they now pay dividends on the Debtor’s Harlem stock pledged as collateral for the R&I mortgage ? 7. May the Trustees carry out the proposed sales without the consent of the Harlem? 8. May the Trustees carry out the proposed sales without the consent of the indenture trustees of the Harlem mortgages ? For the reasons hereinafter expressed, I have concluded that the proposed sales may lawfully be consummated at this time, that whether they should or should ,not be authorized is primarily a matter of business judgment, and that certain of the sales should be approved, while others should not. Because of the magnitude of the transactions and the complexity of the issues involved, it is necessary to set forth the facts in some detail. FINDINGS OF FACT 1. The Debtor’s estate includes various real estate holdings in the Borough of Manhattan, in the City of New York, commonly known as the Park Avenue Properties (the “Properties”). 2. In general, the Debtor has constructed rail facilities below the street level of these properties. The use of the subsurface rights for the Debtor’s rail operations has not detrimentally affected the value or usefulness of the surface and air rights for commercial development. 3. The Properties have been developed during this century for office or hotel use. 4. The Debtor’s interests in the Properties are of two kinds: fee interests originally acquired by the Debtor’s corporate predecessors; and leasehold rights under a 401-year lease executed in 1873 by the New York and Harlem Railroad Company (the “Harlem”) in favor of the New York Central and Hudson River Railroad Company. Certain of the Properties were developed on parcels in which the Debtor has combined fee and leasehold rights. 5. The Trustees own the fee interest in the following Properties either directly or through a wholly-owned subsidiary: 51 East 42nd Street Biltmore Hotel Yale Club 52 Vanderbilt Avenue Commodore Hotel Lexington — 43rd Street Driveway Graybar Building 280 Park Avenue — West Building (Bankers Trust Building) 466 Lexington Avenue 245 Park Avenue (American Brands Building) 299 Park Avenue (Westvaco Building) Barclay Hotel Waldorf Astoria Hotel 280 Park Avenue — East Building (Bankers Trust Building) approximately 75% of the fee interest 230 Park Avenue — tenant in common 6. The Harlem owns the fee interest in the following, subject to the Trustees’ leasehold interest pursuant to the Harlem lease: Air rights over Grand Central Station Pan Am Building Roosevelt Hotel 383-84 Madison Avenue 250 Park Avenue 270 Park Avenue (Union Carbide Building) 280 Park Avenue — East Building (Bankers Trust Building) approximately 25% of the fee interest 230 Park Avenue — one of the tenants in common 320 Park Avenue (ITT Building) 350 Park Avenue (Manufacturers Hanover Trust Company Building) 277 Park Avenue (Chemical Bank Building) 7. In the majority of cases the Debt- or’s estate is the lessor under long-term ground leases, the improvements having been constructed by the ground lessee or other entity. 8. The annual cash flow to the Debt- or from the Properties is subject to fluctuations occasioned by the participation provisions or similar arrangements found in many of the ground leases. The actual rental payment received by the Debtor from the Properties exclusive of tax payments made directly to the City of New York under the respective leases or pursuant to orders of this Court is approximately $20 million to $22 million per annum. Capital improvements to the hotels cost the Debtor between $2 million and $3.5 million per annum, and the Debtor’s annual tax liabilities on the Properties, over and above taxes paid directly by the lessees total approximately $6.5 million per annum. 9. Assuming continued deferral of taxes, the annual cash flow from the Properties is in the area of $16 to $17 million. If taxes were to be paid on a current basis, the cash flow would be about $10 to $11 million per year. 10. The Trustees’ fee interests and leasehold rights in the Properties are subject to three mortgages known as the Hudson River Mortgages: a. The New York Central & Hudson River Railroad Company 3(4% mortgage dated June 1, 1897; b. The New York Central and Hudson River Railroad Company Consolidated Mortgage dated June 20,1913; c. The New York Central and Hudson River Railroad Company Refunding and Improvement Mortgage dated October 1, 1913 (“R & I Mortgage”). 11. Security for the Hudson River Mortgages consists in part of approximately 2,000 route miles and 4,000 track miles of the Central’s operating property east of Buffalo. The R & I Mortgage is also secured by a lien of various rankings on an additional 1,700 route miles and 3,500 track miles as well as a lien on the Debtor’s leasehold rights under six lease agreements covering 2,300 route miles and 4,200 track miles. 12. Definitive segregation studies are not available to determine the losses incurred by various segments of the Debtor’s system. It is estimated that the losses on the line constituting the security for the Hudson River Mortgages is equal to or greater than the annual cash flow from Park Avenue Properties. 13. The Harlem’s reversionary fee interest in the Properties is subject to two mortgages: a. The New York and Harlem Railroad Company 3(4% Gold Bond Mortgage dated June 1, 1897; b. The New York and Harlem Railroad Company 4% Mortgage dated July 1, 1943 (the Second Harlem Mortgage). 14. In May of 1971, the Trustees decided to solicit bids for the Properties in order to determine whether any or all of the Properties could be sold for prices consistent with fair market value. On June 21, 1971, the Trustees authorized the issuance of an invitation to the public to submit bids, not later than October 15, 1971, for the purchase of any one or more of the Properties. 15. The Trustees were not bound to accept any bids. Evaluations of the bids and decisions to accept or reject the bids were made by the Trustees upon recommendations of in-house personnel, and two retained consultants, Mr. John Guest of the Trustees’ financial consultants, Kuhn, Loeb & Company, and the Trustees’ real estate consultants, Jackson-Cross Company. 16. The recommendations to the Trustees by Jackson-Cross Company were formulated without reference to the fact that the Debtor was in reorganization under § 77. 17. Jackson-Cross Company’s appraisals of each property were not adjusted to reflect the fact that all of the Properties were subject to bid at one time. The market value of each property was determined separately according to accepted appraisal practices, to wit: that the market value of income-producing real estate is based on the “income stream” generated by the parcel and the application of an appropriate discount factor or multiple. 18. The selection of a discount factor for each building was in accord with sound appraisal techniques and fully reflected the status of the real estate market for the kinds of properties involved. 19. In addition to the appraisals described in findings 17 and 18, Jackson-Cross Company applied similar techniques in arriving at alternate market values predicated on the assumption that the Trustees could now disaffirm the ground leases and renegotiate the terms thereof at present market rates. These alternate values are higher than the basic appraisals because of the long term nature of present lease agreements and the fact that they were, executed, in most cases, many years ago when different market rates prevailed. 20. The Trustees have executed agreements of sale of their interest in six of the Properties subject to the approval of this Court, and have petitioned for approval of those agreements. Under the agreements, all subsurface rights and related surface rights necessary for rail operations have been reserved by the Trustees. 21. Pursuant to the agreements, the Trustees propose to sell the following property interests: a. A fee interest in property, approximately 9,105 square feet in area, situate at 52 Vanderbilt Avenue, southwest corner of 45th Street and Vanderbilt Avenue, and the 20-story office building thereon known as the Vanderbilt Concourse Building (52 Vanderbilt Avenue). The property is presently leased to 51st St. Realty Corporation, an indirect wholly-owned subsidiary of Debtor, as assignee, under a lease which is tergiinable by either party at the end of any month on ten days’ notice; the property is subleased to numerous subtenants. b. A leasehold interest in property, approximately 15,062 square feet in area, situate at 350 Park Avenue, between 51st and 52nd Streets, which includes thereon a portion of a 30-story office building known as Manufacturers Hanover Trust Company Building (350 Park Avenue). The property is presently leased to Manufacturers Hanover Trust Company, as successor tenant, for a term expiring December 31, 1990 (subject to two 21-year renewals). c. A combination fee and leasehold interest in property, approximately 24,970 square feet in area, situate at 280 Park Avenue, between 48th and 49th Streets, which includes thereon a 30-sto-ry office building known as Bankers Trust Building — East Building (280 Park Avenue-East). 280 Park Avenue-East is presently leased to Rose Associates for a term expiring November 30, 2006 (subject to a 21-year renewal) and subleased by Rose Associates to Bankers Trust Company. d. A fee interest in property, approximately 12,000 square feet in area, situate at 280 Park Avenue, 124' 4" West of Park Avenue, between 48th and 49th Streets, which includes thereon a 16-story office building known as the Bankers Trust Company — Middle Building (280 Park Avenue-West). 280 Park Avenue-West is presently leased to Sigmund Sommer for a term expiring January 1, 2018 (subject to a 25-year renewal), and subleased by Sommer to Bankers Trust Company. e. A combination fee and leasehold interest in property, approximately 69,154 square feet in area, situate at 230 Park Avenue, between 45th and 46th Streets and Vanderbilt Avenue and the northerly extension of Depew Place, and the 34-story office building thereon known as the New York General Building (230 Park Avenue). 230 Park Avenue is presently leased to New York Bank for Savings, as successor tenant, for a term expiring October 14, 1983 (subject to a 25-year renewal). f. A fee interest in property, approximately 81, 337 square feet in area, situate at 245 Park Avenue, between 46th and 47th Streets, and Lexington and Park Avenues, which includes thereon a 47-story building known as the American Brands Building (245 Park Avenue). 245 Park Avenue is presently leased to Uris 245 Park Corporation for a term expiring May 14, 2002 (subject to two 30-year renewals). 22. In addition to the mortgage liens set out in Findings 10 and 13, the six properties are also subject to various judgment and tax liens. 23. The bids accepted by the Trustees for the six properties were the highest bids submitted in each case. 24. The following tables provide a comparison of the appraised value of the properties and the accepted bids. Table I — Present Lease Agreements in Effect % of ConsideraAccepted Appraised Net Consid- tion to appr'd Property Bidder Income Value eration value_ 52 Vander- Van Corner 366,000 ' 4,250,000 4,128,000 97.1% bilt Corp. 280 Park Bankers 80,000 1,200,000 1,211,000 100.9% West_ Trust_ 245 Park Corporate 1,234,000 16,200,000 14,994,000 92.6% Property _Investors_ 350 Park Manufac- 165,000 2,300,000 3,351,000 145% _turers Hanover_ 280 Park Rose Asso- 262,000 4,100,000 5,251,000 128.1% East elates 230 Park Corporate 2,303,000 * 30,600,000 30,614,000 102% Property Investors 4,410,000 58,650,000 59,549,000 101% Total Table II — Appraisal Values Adjusted for Disaffirmance % of Consideration Alternate Appraisal Net Consid- to Alternate Ap_Value_ eration praisal Values , Property Not applicable, Debtor owns fee & Improvements under immediately terminable lease to subsidiary_ 52 Vanderbilt 280 Park 1,420,000 1,211,000 85.3% West_ 245 Park 26,400,000 14,994,000 56.8% 350 Park 5,270,000 3,351,000 63.3% 280 Park 8,700,000 5,251,000 60.4% East 230 Park 35,000,000 30,614,000 87.5% Total 76,790,000 55,421,000 72% 25. The sale agreements for 52 Vanderbilt and 230 Park Avenue contain provisions allowing the Trustees either te continue to supply electricity, steam and hot water to these properties, or to pay to the purchasers the cost of renovations necessary to allow the purchasers to secure these utility services from other sources. The estimated price of renovations is $2,000,000. 26. The net income from the six Properties, $4,410,000, is 7.41% of the total consideration of $59,549,000. Specifically, the net income as a percentage of the proposed prices for each property is as follows: Subject Property Income after property taxes & depreciation Percentage of income to proposed consideration 52 Vandebilt Avenue $366,000 8.86% 350 Park Avenue 165.000 4.93% 280 Park Avenue — West 80,000 6.61% 280 Park Avenue — East 262.000 4.99% 230 Park Avenue 2.303.000 7.52% 245 Park Avenue 1.234.000 8.23% Total $4,410,000 7.41% Using the income stated without depreciation, $4,800,000, the net income as percentage of the consideration is 8.2%. 27. As part of the federal loan guarantee transaction pursuant to the Emergency Rail Service Act of 1970, Secretary Volpe of the Department of Transportation and the Trustees executed an “Agreement on Terms and Conditions.” Paragraph 8 of exhibit A to the Agreement, provides: “The Trustees shall, within 30 days from the date of execution of the Guarantee Agreement, submit to the Secretary a plan for the sale of non-transportation assets of the company and its corporate subsidiaries (including, but not limited to, security holdings).” 28. Absent the responsibility imposed by the Department of Transportation, the Trustees would have solicited bids for the Properties and accepted the six bids set out in Finding 21 for the following reasons: a. The bids, viewed in light of the appraisals, represent fair market prices; b. It is preferable in the Trustees’ judgment to have liquid assets or short-term investments rather than the real estate interests they hold in the six properties; c. If the sale proceeds were made available for capital projects on the railroad operating property, the rate of return would, according to projections of Debtor’s operating management, be equivalent to 20%; d. In the event the reorganization did not prove “successful” and as a consequence draw downs of the proceeds were not sought or authorized, the funds would be available for use determined by the Court; and e. There is some risk that the market value of the six properties might decline in the future. 29. Mr. Guest, the Trustees’ outside financial consultant, expressed concern that the failure to accept the more favorable bids might cause the real estate industry to be skeptical of future solicitations by the Trustees and thereby depress the market or markets for later offerings. 30. The 1972-1973 road capital budgets are not premised on the availability of the proceeds of the proposed sales. This does not mean that there are not further necessary or desirable capital projects, but merely that the capital budgets were drawn up under certain constraints dictated by the lack of available cash. 31. The Trustees have no specific program for use of these funds at the present time. 32. In general, the administration of the Properties requires minimal management effort, and does not impede management of rail operations. The hotel properties may involve additional considerations not raised by the present petitions. 33. In order to realize $4,888,000 (the present income from the six properties) in income from the proceeds, an investment return of 8.27% per annum would be necessary. Allowance for depreciation on 52 Vanderbilt and 230 Park Avenue would result in a stated income of $4,410,000 from the six properties, and the necessary investment return on the total sale price would be 7.2% 34. The actual return on the proceeds of sale would be controlled in part by the Trustees’ objectives, liquidity and risk avoidance, and in part by the rights of the bondholders secured by the six properties being sold, since their mortgage lien attaches to the proceeds of sale, at least until the time that a draw down were to be authorized. 35. The most likely investment opportunity available under the guidelines mentioned in Finding 34 would be short-term obligations guaranteed by the Full Faith and Credit of the United States. 36. The exact return that could be realized from the proceeds of sale is, of course, a function of the money market now and in the future. A return of 5.-5% (approximately $3.3 million) or 6% (approximately $3.6 million) is a realistic estimate for intermediate term investments. If the term were less than nine months, realistic rates would be in a range of 5% (approximately $3 million), 4.5% (approximately $2.7 million), or 4.25% (approximately $2.5 million). 37. Without allowance for fluctuations in the income from the six properties attributable to participation provisions, the annual cash loss on 5y¿ and 6% investments computed on the after-tax income is in the range of $1,588,000 to $1,288,000, and computed on the after-tax and depreciation allowance income is in the range of $1,110,000 to $810,000. 38. 280 Park Avenue West and East, 245 Park Avenue and 350 Park Avenue are under long-term ground leases to responsible lessees secured by the improvements constructed by the lessee. The 230 Park Avenue lease is of ground and improvements. Moreover, these five buildings are located in one of the most desirable areas of New York City. Because of the above characteristics, the market values of the Trustees’ interests in these properties are less likely to be affected by economic cycles and fluctuations than a fee interest ownership right where the owner operates and leases the premises to many lessees for predominately short terms. Similarly, although the market values of these properties are related to prevailing rates in the money market, the value of the five properties is less “volatile” than the money market. 39. To the date of the hearings, the Trustees had incurred costs in the amount of $301,404.96 in the public offering of the Properties, exclusive of legal fees and expenses. 40. The Debtor is, by succession, the lessee under a lease executed in 1873 for the term of 401 years between the New York Central & Hudson River Railroad Company (hereinafter the “Central”) and the New York and Harlem Railroad Company (“Harlem”). This lease had been supplemented and amended by agreements dated May 15, 1882 (Supplemental Contract), October 5, 1898 (Second Supplemental Contract), and July 1, 1943 (Third Supplemental Contract). 41. At the time of the lease the Harlem had outstanding bond issues secured by mortgages on the Harlem properties. 42. The original lease covered substantially all of the Harlem’s railroad property, associated personal property, and contractual rights, but excluded the Harlem’s so-called street railroad in New York City, and real property south of 42nd Street in that City. The principal line subject to the lease consisted of 132 miles of operating property extending from 42nd Street in New York City to Chatham Four Corners above New York City. 43. The lease was a vehicle chosen to cause the Harlem to “be controlled, managed and operated” by the Central. 44. The rental provisions required payment to the Harlem of $4 per share outstanding, or an 8% return per annum on the par value of the Harlem stock. Certain tax liabilities of the Harlem were also assumed by the Central. 45. The Central also agreed to pay interest on the mortgage obligations of the Harlem then outstanding, and to pay the principal of all mortgages except the Consolidated Mortgage which was to mature in 1900. As to the latter, the Central agreed to pay the principal if the Harlem did not do so. In the event the Central did pay the principal of the Consolidated Mortgage, the Harlem agreed that at the request of the Central the Harlem would issue bonds in like amount. The agreement also required the Harlem to issue new bonds when and if any refunding issue matured and was paid by the Central. 46. The Central was granted a power of sale over the properties subject to the lease which were not necessary for railroad operations, subject to an accounting for the proceeds at termination of the lease in due course or in the event of termination for default, with a set off for real property acquired by the Central from its own funds for operation of the Harlem lines. An equivalent provision covering personal property required that at termination the Central “deliver to. [the Harlem] personal property of similar kind and equal in value.” 47. In 1882, the parties executed a Supplemental Contract which provided that neither the directors nor shareholders of the lessee or lessor could effectuate any change in the first or second articles of the original lease, and that the rental reserved by the original lease was to be paid during the entire term. 48. On June 1, 1897, the Harlem 3^2% Gold Mortgage was executed securing a bond issue not to exceed $12 million maturing in the year 2000. The Gold Bond issue was for the purpose of refunding the Harlem’s 7% Consolidated Mortgage, which was to mature on May 1, 1900. 49. The description clause of the Gold Bond Mortgage subjected to the mortgage lien the Harlem’s interests in the railroad property as well as the Harlem’s rights under the original 1873 lease to the Central. 50. The Habendum Clause provided: “To have and to hold, the premises, railroads, properties, real or personal, rights, franchises, estates and appurtenances hereby conveyed and assigned, or intended to be conbeyed, or assigned, unto the Trustee, its successors and assigns forever: “Subject, however, to the rights of The New York, New Haven and Hartford Railroad Company, in respect of any of the said property, under a certain agreement bearing date March 17, 1848, and a tripartite agreement bearing date November 1, 1872; and also to the rights of The New York Central and Hudson River Railroad Company in respect of any of the said property under the said tripartite agreement bearing date November 1, 1872, and under the lease above mentioned, bearing date April 1, 1873.” [Emphasis added] 51. Article Six of the Gold Bond Mortgage contained release of lien provisions. Sections 1 and 2 of the Article provided in part as follows: “Sec. 1. Upon the written request of the Railroad Company, approved by resolution of its Board of Directors or Executive Committee, the Trustee, from time to time, while the Railroad Company is in possession of the mortgaged premises, but subject to the conditions and limitations in this Section prescribed, and not otherwise, shall release from the lien and operation of this indenture any part of the mortgaged premises then subject thereto; provided, (1) that no part of the lines of track or of the rights of way shall be released, unless the same shall no longer be of use in the operation of any of the mortgaged lines of railway, and no part of such lines of track or rights of way shall be so released if thereby the continuity of the lines of railway of the Railroad Company shall be broken; and (2) that no part of the mortgaged railways or other property shall be released hereunder, unless at the time of such release it shall no longer be necessary or expedient to retain the same for the operation, maintenance, or use, of such lines of railway, or for use in the business of the Railroad Company.” “See. 2. The Railroad Company, while in possession of the mortgaged premises, shall also have full power, in its discretion, from time to time, to dispose of any portion of the machinery, equipment and implements, at any time held, subject to the lien hereof, which may have become unfit for such use, replacing the same by new machinery, equipment or implements, which shall become subject to this indenture.” [Emphasis added] 52. There are $2,430,000 in Harlem Gold Bonds outstanding and an additional $5,959,000 in principal amount of said bonds which are held by the mortgage trustee in the sinking fund. Bonds in the sinking fund are entitled to interest payments. 53. A dispute and litigation arose between the Central and the Harlem over who would benefit from the 50% reduction in interest costs ($420,000 per annum) occasioned by the 3 Vi % Gold Bond rate versus the 7% rate on the consolidated bonds which were refunded by the Gold Bond issue. 54. The Second Supplementary Contract was executed on October 5, 1898, in settlement of the litigation instituted by the Central, pursuant to which: a. The Central litigation was terminated ; b. The rental payment per share was increased by $1 per annum, thereby raising the return at the par value of each share to 10%; c. Central agreed to tender the funds to pay the Consolidated Mortgage at maturity, and in turn the Harlem agreed to issue to the Central bonds under the Gold Bond mortgage equal to Central payments; d. The original lease obligation to pay the Harlem’s funded debt was modified to reflect an unconditional obligation on the part of the Central to pay the Consolidated mortgage and any refunding mortgage or mortgages. 55. By 1943, the Central owned 23,119 shares of the Harlem’s 26,879 outstanding preferred and 114,321 of the 173,121 outstanding common. 56. In 1943, a dispute and ensuing litigation arose concerning the Central’s obligations under the original lease to pay income and excess profit taxes of the Harlem. The Central contended that any such payments made on behalf of the Harlem were to be subtracted pro rata from the $5 per annum dividend rental. In 1942, said payments on behalf of the Harlem were $330,630. 57. The Third Supplemental Contract to the original lease as theretofore amended was executed as a means of amicably settling this dispute. Under the Third Supplemental Contract: a. The Central terminated its litigation; b. The Harlem agreed to issue $7,800,000 in principal amount of Second Mortgage Bonds to be purchased by the Central; c. $2,500,000 of the purchase price of the bonds were to be turned over by the Harlem to the mortgage trustee of the Harlem Gold Bond Mortgage to be used as a sinking fund to retire but not cancel Harlem Gold Bonds. The mortgage trustee was to receive interest on the retired bonds; d. The remaining $5,300,000 in purchase price was waived by the Harlem in consideration of the Central’s release of all claims for past due tax payments, cancellation of certain Harlem debts to the Central, and the costs incurred by the Central in the bond issue and associated formalities; e. The $7,800,000 in principal amount of Harlem bonds acquired by the Central were to be used for an exchange offer to the non-Central shareholders of the Harlem on a basis of $125 principal amount of 4% bonds for each share of Central stock; f. 4% on $125 returned $5 per annum to the holder, the equivalent of the return to the stock under the rental provision of the lease as modified; g. The Second Mortgage was specified as constituting, for the purpose of the lease as modified, a refunding of the Harlem Gold Bond Mortgage, and, hence, the Harlem Gold Bond Mortgage could not be refunded again; h. Central agreed to pay the interest and principal of the Second Mortgage bonds; and i. The lease was modified to require payment of the $5 per annum per share only to non-Central shareholders of the Harlem. The Central’s Harlem stock had been pledged as security for the Central’s Refunding and Improvement Mortgage of 1913. The lease provided that suspension of rental payments to the Central as shareholder would not apply if the R&I mortgage trustee was not required under the mortgage to turn over stock dividends on pledged stock to the Central. 58. The recital section of the Harlem Second Mortgage noted the Central’s leasehold interest under the original lease, and the granting clauses included the following: “The leasehold right, title and interest of the Company [the Harlem] as lessor in and under the lease herein-above mentioned.” 59. The Habendum Clause provided in part: “Subject, However, ... to the rights of the New York Central Railroad Company in respect of any of said property under the Lease above mentioned as amended . . . . ” 60. Article Six of the Second Mortgage pertains to l’elease of property sub-' ject to said mortgage lien at the request of the Harlem upon certain terms and conditions. 61. The Central and Harlem submitted in support of their petition under section 20(a) and section 5(2) of the Interstate Commerce Act, the Third Supplemental Contract and Second Mortgage along with summaries of the terms of said contract and mortgage. 62. From 1897 through 1953, 64 releases from the Gold Bond Mortgage and 23 releases from the Second Mortgage were executed by the mortgage trustee of these mortgages pursuant to requests from the Harlem, but transmitted by the Central to the mortgage trustee. 63. For the most part, complementary certifications of application of the proceeds to capital improvements (“A’s and B’s”) on the Harlem property were submitted to the mortgage trustee by the Harlem at a later date. 64. Proceeds from sales that were consummated from 1938 through 1942 were transmitted to the mortgage trustee pending certification of “A’s and B’s” or acquisition of other property. 65. Some time about 1942 the Hudson River mortgage trustee requested that the proceeds be held in escrow: the Harlem mortgage trustee consented. 66. Since 1953, the Central has apparently contended that proceeds of sales of Harlem leasehold properties were not subject to the lien of the Harlem mortgages. 67. On July 1, 1970, a $2.50 semi-annual rental dividend came due, and on January 1, 1971, a second semi-annual dividend came due. 68. In the early months of 1971, the Trustees became aware of the fact that revenues from Harlem leasehold properties substantially exceeded rental payments. 69. On March 12, 1971, the Trustees of the Debtor authorized payment of both rental payments mentioned in Finding 67. Subsequent rental dividend payments have been made by the Trustees. The Harlem lease is the only domestic lease on which the Trustees have authorized payment of rentals. 70. Real estate taxes payable annually by the Debtor on Harlem properties (not including taxes payable by tenants pursuant to the leases or orders of this Court) are approximately $1,700,000. Tax liabilities in this sum have been accruing and remain unpaid since the filing of the Debtor’s reorganization petition. 71. Annual interest on the Harlem Gold Bonds amounts to $293,615 on $2,430,000 in bonds held by the public and $5,959,000 in bonds held by the mortgage trustee in the sinking fund. Annual interest on the Harlem Second Bonds of $470,000 in Series A and $7,350,000 in Series B (exclusive of the Debtor’s $780,000 holding of the bonds) amounts to $281,600. The Trustees have made interest payments on the Harlem bonds since the filing of the present petition. 72. Allowing approximately $50,000 for the Harlem’s corporate expenses, the annual rental payments (dividend to public shareholders, interest, real estate taxes, and corporate expenses) total approximately $2,325,000. 73. Annual rental from Harlem leasehold properties excluding direct real estate tax payments by lessees of the Debtor total approximately $9,000,000. Net income is $9,000,000 less $2,325,000 or $6,675,000. 74. The estimated market value of all property rights in the Harlem properties is $105,000,000. 75. Relying on the Harlem’s unpaid real estate taxes and consequent tax liens as defaults the Gold Bond Mortgage trustee has notified the Harlem that the bonds have been accelerated, and that the principal is now due and in default. 76. Counsel for the Trustees have apparently withdrawn their original contention that acceleration was not authorized under the mortgage in cases of unpaid real estate taxes or tax liens. 77. The trustee of the Second Harlem Mortgage has also declared a default and given notice of acceleration of the principal. 78. The Trustees’ Harlem stock is pledged as partial security for the Central’s Refunding and Improvement Mortgage. 79. Under Article Nine, Section Two, the R&I mortgage trustee is authorized upon default in interest payments or appointment of a receiver to withhold dividend payments payable to stock held as collateral for the mortgage and apply it pursuant to the mortgage. 80. The Trustees have not paid any rentals of $5 per annum on shares owned by the Trustees but pledged under the R&I indenture. 81. The annual rental dividends on the pledged stock (all but 161 shares of the Debtor’s total holdings) is about $950,000 per annum. 82. As part of the New Haven Inclusion, one of the New Haven Estate assets which the Penn Central was required to pay for was a claim to one-half the excess income of the Grand Central Terminal Properties operations. 83. The record does not reveal specifically which of the properties mentioned in Findings 5 and 6 comprise the Grand Central Terminal Properties. (See Judge VonVoorhis’ report at page 5969 of the New Haven record.) 84. The Fourth Supplemental Report of the Interstate Commerce Commission, 334 ICC 25, 39 (1968), determined the New Haven’s share of the excess income to be $2,275,000, and capitalized this amount to the value of $28,887,000. This capitalized value was added to the original Commission valuation of all New Haven assets of $123 million in arriving at a total valuation of $145,-600,000. Securities and other consideration valued by the Commission at $145,600,000 were paid to the New Haven estate by the Debtor. 85. The $28,887,000 valuation of the “excess income” right was accepted by the New Haven Reorganization Court, In re New York, N.H. & H.R.R. Co., 304 F.Supp. 793, 304 F.Supp. 1136 (D.Conn. 1969), and affirmed by the Supreme Court. New Haven Inclusion Cases, 399 U.S. 392, 90 S.Ct. 2054, 26 L.Ed.2d 691 (1970). 86. The $29 million increase in the total value of the New Haven assets over and above the $145,000,000 price set by the Commission’s Fourth Supplemental Report and affirmed by the Supreme Court was not related to valuation of the New Haven’s “excess income” right. The $29,000,000 increment in price has not been paid. 87. The New Haven transferred substantially all its assets to the Penn Central on December 31, 1968, by instruments stkting that the assets were being conveyed free and clear of liens. 88. Part of the $145,600,000 consideration to the New Haven, pursuant to the findings of the Commission, was in the form of $34 million in principal amount of Penn Central divisional first mortgage bonds. Since the Debtor filed its § 77 petition, no interest has been paid on these bonds. 89. In 1971, the New Haven Estate’s income (from cash and investments of $15,347,178) was $776,881. It incurred operating expenses of $794,327, over and above the interest charges ($651,250 on its $12,500,000 in outstanding Trustees’ certificates). Percentage payments to certain tort claimants are included in these expenses. The New Haven trustee projects a loss of approximately $708,750 in 1972, in addition to interest on Trustees’ certificates; however, consummation of the transactions covered by Order Nos. 867 and 868 (comprehensive settlement of various claims in conjunction with sale of land and facilities in Massachusetts by the Penn Central Trustees) would make substantial amounts of cash available to the New Haven trustee. DISCUSSION I. Issues Relating to the Properties Leased from the Harlem The fee title to a large part of the properties (those listed in Finding 6 above) is owned by the Harlem, but leased to the Debtor under a 401-year lease, in which the Debtor has the power of sale. The continuing efficacy of .that lease therefore assumes major importance in the present controversy. In a separate plenary suit (Civil- Action No. 71-2592), Fidelity Bank, acting on behalf of minority shareholders of Harlem, asserts that the lease is void ab initio and should be rescinded. These assertions are dealt with in a separate memorandum opinion filed concurrently herewith, setting forth my conclusion that the lease is not subject to rescission. In this proceeding, the Trustees have petitioned for leave to affirm the Harlem lease. Fidelity Bank, derivatively on behalf of minority shareholders, opposes affirmance by the Trustees, and has filed a cross-petition to terminate the Harlem lease. Morgan Guaranty, as indenture trustee of certain Harlem mortgages, contends that if the lease is to be affirmed, the Trustees must pay the (accelerated) principal of the outstanding bonds. Morgan Guaranty, as indenture trustee under the Debtor’s R&I mortgage, further contends that, if the Harlem lease is to be affirmed, the rental payable by the Trustees must be sufficient to pay specified dividends on Harlem stock, including Harlem stock owned by the Debtor and pledged to Morgan Guaranty as further security under the R&I mortgage. The long-term lease is a common device employed in the railroad industry to achieve the operating advantages of a merger while avoiding the legal and practical difficulties a formal merger would entail, and also to achieve long-term financing of acquisitions and improvements. In general, all or most of the lessor’s railroad — both real and personal property — is leased for a term greatly in excess of its useful life, at a rental which is sufficient to amortize the lessor’s outstanding debt, pay dividends on the lessor’s stock, pay the lessor’s taxes, and pay the lessor’s corporate expenses. Usually, in addition to the security represented by the lessee’s obligation to pay rent, the lessee guarantees payment of the lessor’s bonds, both principal and interest, as they mature. And, in many cases, the lessee either already owns, or later acquires, a controlling stock interest in the lessor. At the risk of some oversimplification, it can be said that the value and soundness of railroad investments depends principally upon revenues produced by rail operations, rather than upon inherent asset value; and that profitability of operations over a particular rail line depends upon length of haul, density of traffic, and minimization of costs through avoidance of redundancy. Thus, the typical railroad lease made economic sense from the standpoint of both lessor and lessee interests. The importance of leased lines to the Debtor’s rail system cannot be overemphasized. Approximately 52% of the entire system is operated under 44 leases from 41 domestic and Canadian lessors; annual rentals under these leases aggregate some $60 million. (The interrelationship of these leases and the complexities of the practical problems involved in dealing with them in this reorganization are partially reviewed in Document No. 696 herein.) When as in this case, the lessee railroad enters into reorganization under § 77, the legal consequences are as follows: The lease is, as to the balance of the term, an executory contract. The trustees are not bound by it unless and until they affirmatively adopt it. Group of Institutional Investors v. Chicago, Milwaukee, St. Paul & Pacific R.R. Co., 318 U.S. 523, 63 S.Ct. 727, 87 L.Ed. 959 (1943); Palmer v. Webster & Atlas Natl. Bank of Boston, 312 U.S. 156, 61 S.Ct. 542, 85 L.Ed. 642 (1941); Palmer v. Palmer, 104 F.2d 161 (2d Cir.), cert. denied, 308 U.S. 590, 60 S.Ct. 120, 84 L.Ed. 494 (1939). Adoption of a railroad lease during reorganization does not preclude ultimate rejection of the lease in a plan of reorganization. § 77(b); Palmer v. Webster & Atlas Natl. Bank of Boston, supra. Affirmance or rejection “relates back” to the date of filing of the reorganization petition. Palmer v. Palmer, supra. The lessor interests cannot be held in abeyance indefinitely; the Trustees must make their election within a “reasonable time.” Philadelphia Co. v. Dipple, 312 U.S. 168, 61 S.Ct. 538, 85 L.Ed. 651 (1941); Palmer v. Palmer, supra. Section 77(c)(6) of the Bankruptcy Act sets forth the procedure for insuring the continuation of service over leased lines in the event the lease is rejected by the Trustees. The Trustees must continue operations unless and until abandonment is authorized by the ICC. Such operations are conducted for the account of the lessor; depending upon the profitability or unprofitability of such operations, the Trustees either will be obligated to pay the lessor a fair and reasonable compensation for use and occupancy, or will be entitled to assert a lien against the leased property for deficits incurred. Thus, it becomes necessary, for accounting purposes, to hypothesize separate operation of the leased line. An accurate assessment of the legal propriety of the Trustees’ present efforts to affirm the Harlem lease will be aided by a brief recapitulation of the salient facts: the Debtor owns most of the Harlem stock, but it is pledged as collateral security under the Debtor’s R&I mortgage. The rentals under the Harlem lease are calculated principally on the basis of $5 per share of the Harlem stock outstanding, exclusive of stock owned by the Debtor. However, under the pledge agreement, in the event of default, dividends on the pledged stock are payable to the indenture trustee. Thus, the rental which the Trustees would be required to bring up-to-date and continue to pay in the future, in the event of affirmance, will vary greatly depending upon whether the indenture trustee may now enforce its claim for dividends. The Harlem lease makes the Debtor responsible for the principal and interest on certain bonds issued by the Harlem, and requires the Debtor to pay certain taxes; failure to pay these taxes constitutes an event of default under the Harlem bond issue. The Debtor has been paying the interest on the Harlem bonds, but has not paid all of the taxes, and Harlem’s indenture trustees have asserted a default, and have accelerated the entire principal balance of the bonds. Thus, the cost to the Debtor’s estate if the Harlem lease is affirmed will vary greatly depending upon whether these creditors must be permitted to exercise the rights mentioned. The rail operations conducted over lines leased from the Harlem produce a net deficit. However, by reason of the development of air rights, the non-rail aspects of the properties covered by the Harlem lease produce a substantial net profit to the Debtor’s estate. A. Petition for Affirmance; Motion to Terminate the Lease On this phase of the case, the principal issue is whether the Trustees have acted within a “reasonable time” in seeking to affirm the lease. Fidelity contends that they have not, and that, by operation of law, the lease is now terminated. The properties covered by the Harlem lease produce a net annual return to the Debtor’s estate at the rate of approximately $6,675,000, over and above what may be termed the “normal” rental payments under the lease (i. e., $5 per share per year to the minority stockholders of Harlem, interest on the Harlem bonds, Harlem’s corporate expenses, and real estate taxes.) It is clear, therefore, that the best interests of the Debtor’s estate would be served if the lease were to be affirmed. While the picture would be somewhat altered if the Trustees were required to pay the dividend-rental on the Debtor’s pledged Harlem stock, or the principal of the Harlem bonds, or both, even on that basis, the long-range benefits of the lease to the estate cannot be doubted. While acknowledging that the Trustees were entitled to a reasonable period of time in which to study the situation and decide whether or not to adopt the lease, Fidelity espouses a definition of the term “reasonable time” which would have as its outermost limit the date when the Trustees were in possession of the facts supporting a judgment that the lease is a profitable one. That point was reached, Fidelity contends, at least as early as February of 1971, some seven or eight months after bankruptcy. Fidelity relies principally upon the language of Mr. Justice Roberts in Philadelphia Company v. Dipple, supra, a case which involved a corporate reorganization under § 77B, the pre-Chandler Act corporate reorganization statute: “Notwithstanding the fact that § 77B gives no specific authority to trustees in reorganization to reject burdensome leases or contracts, it is well settled that they have that right and are accorded a reasonable time within which to exercise it. If, in the opinion of the officers of the underlying companies [i. e., the lessors], a reasonable time has expired those companies are not without redress. They may declare a forfeiture of the leases and abrogate the agreements for nonperformance on the part of the trustees, or they may apply to the District Court to compel an election by the trustees, to affirm or disaffirm. In the meantime, if the situation were such as to permit a proper calculation of the amount due for use and occupation, it would be proper for the court to order the trustees to pay a reasonable sum to be treated as a payment for use and occupation in the event that the leases and agreements are disaffirmed or, on account of rent, in the event they are affirmed.” 312 U.S. at 174, 61 S.Ct. at 541. Assuming the applicability of this language to railroad reorganizations, it does not follow that Fidelity’s present contentions are sound. In the first place, the quoted language cannot reasonably be read as holding that the determination of what is a reasonable period of time for the Trustees to make their decision is within the sole province of the lessor’s officers. Rather, the Court was merely pointing out various steps which might be taken by the lessor in order to bring the matter to a head and obtain a determination of the issue. Fixing the duration of a “reasonable” period must necessarily occur on a case-by-case basis; the more complicated and difficult the problems involved, the greater the period of time which must be afforded the Trustees for a careful evaluation. A particular lease or contract cannot be treated in isolation. Upon assuming office, the Trustees were faced not only with the task of familiarizing themselves with the Debt- or’s far-flung operations, and urgent financial difficulties posing an immediate threat to continued rail service, but also with the necessity of reviewing more than 165,000 executory contracts, including 44 complicated railroad leases. For years, the leased lines had been treated as if they were owned by the Debtor, so far as revenues and expenses were concerned ; segregation studies take time to prepare; moreover, the impact of affirmance or disaffirmance upon various ancillary rights and obligations of the Debtor’s estate required careful study. It is true that in the case of the Harlem lease, the relative advantages and disadvantages could be determined without reference to rail operations. Nevertheless, it is fair to assume that the process of sorting out the legal and practical consequences of affirmance or disaffirmance took time. And, rather promptly after obtaining the underlying financial data, the Trustees resumed payment of all of their obligations under the lease except for the payment of real estate taxes. I have concluded that the Trustees did act within a reasonable time in electing to affirm the Harlem lease. Moreover, the holding of the Court in Philadelphia Company v. Dipple, supra, and the language employed by Mr. Justice Roberts in his opinion, supports the view that resumption of payments under a lease has the effect of rendering the question of immediate affirmance or disaffirmance somewhat less crucial than it might otherwise be. As a practical matter, so far as Fidelity and the Harlem bondholders are concerned, it makes little difference whether the Trustees now formally affirm the lease, or whether they merely continue to make payments to the bondholders ahd the minority shareholders pursuant to the lease; after all, even formal affirmance of the lease could be rescinded in the reorganization plan. True, an interim decision to disaffirm the lease would not be subject to reconsideration in the reorganization plan. But the petitioners can scarcely be heard to argue that the Trustees should long ago have come to the conclusion that the lease should be disaffirmed. A final, and, in my opinion, conclusive reason for rejecting Fidelity’s contentions that the Trustees’ attempt to affirm the lease comes too late lies in the fact that the Trustees acted within the time period prescribed by this Court’s orders relating to the affirmance or disaffirmance of leases and executory contracts. Order No. 1 herein provided a six-month period for such determinations, but this period was later extended by Orders Nos. 96, 190, 419, 462, 475, 555, and 853. In my judgment, the Trustees, and all parties in interest, had a right to rely upon these orders in determining their course of action, unless and until the time period prescribed therein were modified, either by this Court upon reconsideration, or by an appellate court. Fidelity cites General Finance Corp. v. New York State Railways, 54 F.2d 1008 (2d Cir. 1932), for the proposition that such extensions do not insulate the Trustees from the consequences of ° unreasonable delay, or serve as final determinations of what is a reasonable period of time for affirmance or disaffirmance. The actual holding of that case was that the extensions granted by the reorganization court were reasonable, and that the receivers’ decision to disaffirm, which was made within the period allotted, was valid. The question of whether the Trustees and other creditors could reasonably rely on the district court’s extension orders was neither involved nor discussed in the opinion. Moreover, the case involved a decision by the receivers to dis-affirm, a step which ordinarily involves a much more drastic interference with the rights and expectations of the lessor than a decision to affirm. In my opinion, a lessor or other contracting party who feels that a reorganization court has unduly extended the time for affirmance or disaffirmance should either appeal from the extension order, or apply to the reorganization court for a reduction of the time limit. In either case, the application of equitable principles would undoubtedly require that the Trustees be afforded at least some brief time in which to act in the knowledge that they could no longer rely upon the previous extension order. Any other approach would render reorganization proceedings totally chaotic, and would be likely to produce unconscionable windfalls for lurking lessors. For all of these reasons, Fidelity’s motion to terminate the lease will be denied, and the Trustees will be authorized to affirm the Harlem lease. B. Affirmance Conditions 1. Payment of the Accelerated Principal of the Harlem Mortgage Bonds Under the Harlem lease as amended, the Debtor is required to pay at maturity the principal of the bonds issued under the Harlem Gold Bond Mortgage and Second Mortgage. The present amount of these bonds outstanding is approximately $10 million. Morgan Guaranty Trust Company, the indenture trustee, has accelerated the principal of the bonds under both mortgages (Findings Nos. 75 and 77), solely by reason of the fact that the Trustees’ portion- of the real estate taxes have not been paid since reorganization. Interest on the bonds has been paid currently by the Trustees; the Harlem is the only domestic leased line whose bondholders are receiving their interest payments. The issue presented is whether, upon affirmance of the Harlem lease, the Trustees must now pay off these bonds, or whether the claim for payment of the accelerated principal is one which should be dealt with in the plan of reorganization. I am satisfied that the latter is the correct choice. The general rule, of course, is that trustees in reorganization must either affirm a contract in its entirety, or reject it in its entirety. In re Italian Cook Oil Corp., 190 F.2d 994 (3d Cir. 1951); Johnson v. Kurn, 95 F.2d 629 (8th Cir.1938). Thus, the Trustees could not be permitted to affirm the Harlem lease while avoiding the obligation, imposed by the lease, to pay the principal of the Harlem bonds at maturity. And it has been held that a reorganization court may not enjoin acceleration of bonds in default. Guaranty Trust Co. of N.Y. v. Henwood, 86 F.2d 347 (8th Cir.1936), aff’d, 307 U.S. 247, 59 S.Ct. 847, 83 L.Ed. 1266 (1939). But all that this means is that technical acceleration for default may not be enjoined. The case did not involve questions of payment, or of ultimate treatment of the claim in the reorganization plan. Indeed, in the Guaranty Trust case, the holding that the right to accelerate was a substantive right which could not be abrogated in bankruptcy was based upon the fact that there the due date of payment was crucial in connection with certain choice-of-currency options; immediate payment was not required. As noted above, § 77(b) provides that the plan of reorganization may reject leases and other executory contracts notwithstanding earlier affirmance by the Trustees. Thus, the statute plainly contemplates that, in considering the final adoption of a plan of reorganization, the Trustees, the ICC, the Court, and the interested parties are to have a fresh opportunity at that time to reevaluate the lease in question, and determine whether its benefits and burdens should be permanently accepted. The statutory purpose would be frustrated if, as a condition of the initial affirmance, the Trustees were required actually to pay the accelerated principal amount of the lessor’s bonded indebtedness. The lessor’s system includes some 44 leased lines. It is fair to assume that virtually all of these leases make the Debtor responsible for the lessor’s bonds, and that the related indentures provide for acceleration upon default. If the present contentions of Morgan Guaranty were accepted, the Trustees could not affirm any of these leases, since they obviously lack the cash to pay off the lessors’ bonds. While this might not have much immediate effect upon the Debtor’s rail operations, the long-range implications of any such result would be intolerable. Moreover, the provision of § 77(b) (4), that a reorganization plan may provide for the cure or waiver of defaults, would be largely meaningless, if it were held that all defaults must be rectified at the time of initial affirmance. And the accepted doctrine that affirmance or disaffirmance “relates back” to the filing of the reorganization petition, Palmer v. Palmer, supra; In re Central of Georgia Ry. Co., 47 F.Supp. 786 (S.D.Ga.1942); and see Meek, Railroad Leases in Reorganization: II, 49 Yale L.J. 1401, 1409-10 (1940), provides further reason for rejecting Morgan Guaranty’s argument. In my opinion, the leading case of Continental Illinois Nat’l. Bank & Trust Co. v. Chicago, Rock Island & Pacific Ry. Co., 294 U.S. 648, 55 S.Ct. 595, 79 L.Ed. 110 (1935), squarely justifies holding that, while the Trustees in affirmining the Harlem lease must acknowledge all of the obligations imposed by the lease, enforcement of a remedy for immediate payment of accelerated bond principal may, and in this case should, be deferred. 2. Payment of Dividends on the Debt- or’s Harlem Stock, Pledged with the Trustee of the R&I Mortgage The R&I Mortgage constitutes a lien on most of the real estate formerly owned by the New York Central, now owned by the Debtor. In addition, the R&I indenture trustee holds the Debtor’s Harlem stock as collateral security (Finding No. 78). Under the terms of the R&I indenture, in the event of default the indenture trustee is entitled to receive dividends on the pledged stock and apply them to the mortgage debt. Under the Third Supplemental Contract to the Harlem lease, the Debtor is excused from paying that portion of the rental representing $5 per share per year on stock owned by the Debtor, only if the R&I indenture trustee is not entitled to receive the dividends under the mortgage. The annual dividends on the pledged stock would amount to about $950,000. Morgan Guaranty, as indenture trustee of the R&I mortgage, contends that, as a condition of affirmance of the Harlem lease, the Trustees must either pay all arrearages and continue to pay currently the dividends on the pledged stock, or acknowledge that Morgan’s claim to these dividends ranks as an administration claim. It should be noted at the outset that the resolution of this phase of the controversy will not affect the lessor. Under any view of the matter, the ultimate issue is whether dividends on pledged stock should be paid over to the pledgee, or retained by the pledgor to meet operating expenses. Thus, even if it were to be held that, for purposes of formal compliance with the rental requirements of the lease, the Trustees should pay rental calculated on the basis of paying dividends on all of the Harlem stock, the issue would still remain whether the Harlem should pay these dividends to the Trustees/pledgors, or to Morgan Guaranty /pledgee. Whatever rights Morgan has to receive the dividends arise under the R&I indenture and the pledge agreement; its claims are against the Debtor, not the Harlem. It is clear that a reorganization court may properly order that dividends on pledged securities be paid to the Debtor’s estate and expended for operating purposes. R.F.C. v. Kaplan, 185 F.2d 791 (1st Cir.1951); 6A Collier on Bankruptcy, § 14.03 [1] (14th ed.) and cases cited therein. Morgan’s argument is virtually identical to the argument rejected by the Third Circuit in In re Philadelphia & Reading Coal & Iron Co., 117 F.2d 976 (3d Cir.1941). In that case,. Judge Maris concluded that there is no justification for treating income from pledged stock any differently than income from real property subject to a mortgage lien, Central Hanover Bank & Trust Co. v. Philadelphia & Reading Coal & Iron Co., 99 F.2d 642 (3d Cir. 1938); and that it was appropriate for a reorganization court to suspend a pledgee’s contractual right to