UPSET PRICES IN CORPORATE REORGANIZATION 497 "In making this claina the plaintiff ignores, or subordinates to his own claim, both the private rights of his co-bondholders and public rights vested in trust in the state, while upon every true theory and exposition of his contract the rights of the public are superior to his private rights, and the rights and interests of his co-bondholders are, equally with his own to be protected by the law. The plaintiff's argu- ment treats this matter as one of strict legal private right of an indi- vidual creditor against or to private property of an individual debtor, instead of a claim of exceptional character upon property of peculiar nature, in which private rights of others and the right of the public exist, which must be regarded and protected. ... So, too, in relation to the other bondholders, it is manifest that each bondholder enters into contract relation with each and all of his co-bondholders. His right to appropriate the security in satisfaction of his bond in such law- ful manner as he may choose, is modified by the same existent right in every other holder. His absolute right of control is limited, not only by the express provisions of the bond and mortgage, but also, in great measure, by the peculiar nature and character of the security." It is to be noted that all of these cases involved railroad com- panies, and that the public interest in an expeditious and sound re- organization was a moving cause with the court in recognizing the right of the majority to control. Indeed the courts have gone far in dealing with private contract rights where public utilities are concerned. The familiar doctrine of Fosdick v. Schall^^ that the public interest requires the court to displace the prior lien of bond- holders and give a preference to unsecured creditors who hold claims for "the current debts of a railroad company contracted in the ordinary course of its business, ... to keep the railroad itself in condition to be used with reasonable safety for the trans- portation of persons and property" ^^ needs no elaboration. Again, ^ 99 U. S. 235, 249 (1878). It is interesting to note that the rather startling though soxind doctrine of Fosdick v. Schall, with its seeming denial of bond-holders' constitu- tional rights was established by Chief Justice Waite, who had so clear an insight into the realities of corporate reorganizations. In reaching the conclusion he did in Fos- dick V. Schall he laid stress upon the fact that the legal rights of bond-holders among themselves had to be modified as appears from the following language: "It rarely happens that a foreclosure is carried through to the end without some concessions by some parties from their strict legal rights, in order to secure advantages that could not otherwise be attained, and which it is supposed will operate for the general good of all who are interested. This results almost as a matter of necessity from the peculiar circumstances which surround such litigation." ^ Justice Harlan, in delivering the opinion of the court, in Southern Ry. Co. v. Carnegie Steel Co., 176 U. S. 257, 285 (1900).
