Reporter's Statement of the Case 94 C. Cls. attributable solely to specific assets, were carried on the receiver's books as operating expenses, and were charged to "Assets Held as Collateral to Bond Issues" and "General Assets" (unpledged), in proportion to the actual income from both classes. For example, when the receiver paid real estate taxes and insurance premiums, the amounts were charged to specific mortgage loans or parcels of land; but the salaries paid to bookkeepers and clerks, who performed ministerial duties in connection with taxes and insurance, were carried under general operating expenses. When the receiver foreclosed a mortgage and bid in the security, the court costs and the fees of the auctioneer and local attorney were charged to the asset account of that particular mortgage, and included later in the total investment in the real estate acquired at foreclosure sale; but the fees and salaries paid to the receiver's general counsel and office attorneys (whose work included among other general duties the supervision of all foreclosure proceedings) were charged to "salaries" in the receiver's accounts for operating expenses. Similarly, when repair work was done on real estate owned by the bank, the actual cost of labor and materials was charged to the asset account for that particular parcel of land; but no such allocation of expense was made with respect to the time spent by the receiver's field man, in inspecting the property, recommending the necessary repairs and supervising the repair work. The total expense of field inspection and supervision was reflected on the receiver's accounts under the operating expense item "Salaries," "Travel Expense," etc. 9. The receiver made full reports to the Federal Farm Loan Board of all his actions and proceedings. He made monthly statements of financial condition to the Board, showing the assets and liabilities of the bank, and the income and expense of the receivership during the month for which each report was rendered. 10. The receiver also made annual reports to the Board and interim reports covering periods of several months. Each such report contained an accurate statement of the financial condition, income and expenses of the receivership, and included an express statement to the effect that the re 44 Reporter's Statement of the Case ceiver's expenses for salaries, office expense (including rent, janitor service, etc.), traveling expense, reappraisal expense, and Farm Loan Board expense, were distributed between General Assets and Assets Held as Collateral to Bond Issues, in proportion to the actual income from both classes of assets. Upon receipt of such annual and interim reports the Farm Loan Board authorized their publication by the receiver. The receiver caused printed copies to be made of each such annual and interim report, together with the Board's authorization, and distributed the printed copies by mail to all known bondholders (the receiver's mailing list included the holders of more than 99 percent of the bonds); and to general creditors and stockholders of the bank. 11. On July 1, 1927, when the Bankers Joint Stock Land Bank was declared insolvent and placed in receivership, the total par value of outstanding bonds previously issued by it was $15,771,600, exclusive of interest. 12. On or about March 16, 1928, pursuant to an order of the Federal Farm Loan Board, the receiver of the bank gave due and public notice to all persons having claims against the bank, including all bondholders, that all claims, together with proof thereof, must be presented to and filed with the receiver. The notice directed that bondholders, in proving their claims, must deliver their bonds to the receiver. Before the close of the year 1929, proofs of claim were duly made by the holders of bonds in the principal amount of $15,554,500; and thereafter, and prior to February 15, 1933, additional proofs of claim were made by the holders of bonds in the principal amount of $193,100. The receiver issued certificates of proof of claim to all of such bondholders. All bonds which were deposited with proofs of claim remained in the custody of the receiver, subject to the orders of the Federal Farm Loan Board, until after February 15, 1933. The certificates issued by the receiver were transferable, and many of the certificates (approximately 95 percent of the total par value) were issued or transferred to a Bondholders' Protective Committee, as the depositary and authorized representative of numerous individual bondholders. Reporter's Statement of the Case 94 C. Cls. 13. From time to time, proposals were made by various persons to the bondholders, through the medium of the Bondholders Protective Committee, for reorganization of the business of the bank. Shortly prior to April 15, 1931, a group of businessmen, who were holders of substantial amounts of bonds of Bankers Joint Stock Land Bank, organized plaintiff Bankers Farm Mortgage Company, which was duly incorporated on April 15, 1931, under the laws of the State of Wisconsin, for the purpose of acquiring the outstanding bonds of the Bankers Joint Stock Land Bank of Milwaukee, Wisconsin, and acquiring and liquidating the assets of the bank, and carrying on any other business in connection therewith which the stockholders of the corporation might deem proper to enhance the value of its property. The corporation has confined its business solely to the acquisition of bonds of the bank and the acquisition and liquidation of its assets, and has been financed solely from liquidating dividends received on its bonds and from proceeds of the liquidation. 14. On May 11, 1931, plaintiff, Bankers Farm Mortgage Company, sent a circular letter to all known bondholders of Bankers Joint Stock Land Bank of Milwaukee, transmitting a prospectus "Plan of Reorganization and Procedure," together with a blank form for subscription to the capital stock of the corporation. 15. By the prospectus and accompanying letter, plaintiff offered to exchange one share of its non-par common stock (declared value $40 per share) for each $100 par value of the outstanding bonds of the bank. Subsequently, plaintiff made a supplemental offer to all bondholders, under date of October 15, 1931, offering, subject to adjustment because of receipt of intervening dividends, either (1) to exchange stock for bonds on the basis aforesaid; or (2) to purchase bonds for 40 percent of the par value thereof, which, added to liquidating dividends of 15 percent theretofore paid by the receiver, would equal 33 cents on the dollar. The offer, as originally made and as subsequently amended, provided that it should become operative only when and if plaintiff acquired, or had the right to acquire, either by exchange or 44 Reporter's Statement of the Case by purchase, 95 percent in principal amount of the outstanding bonds. 16. On November 4, 1931, plaintiff had acquired or had obtained the right to acquire more than 95 percent in principal amount of all outstanding bonds of the bank. Thereupon, plaintiff's previous offer to purchase the bonds, or to acquire them in exchange for stock, became operative as of November 5, 1931, and on November 18, 1931, the Bondholders' Protective Committee notified its depositors that the plan was operative and in effect as of November 5, 1931. Thereafter, plaintiff issued 45,262 shares of its stock to those bondholders who had elected to take the same in exchange for bonds, at the rate of one share of stock for each $100 principal amount of bonds, subject to adjustment because of receipt of intervening dividends; and plaintiff purchased the remainder of the bonds which it had obtained the right to acquire, by the payment of cash installments aggregating $40 for each $100 principal amount of bonds, subject to adjustments because of receipt of intervening dividends. The total amount of bonds so obtained by plaintiff, through exchange for stock and through purchase for cash was: Bonds, Par Value 11,021,000 Consideration 45,262 shares of stock $4,323,350.16 in cash (paid in installments). 17. On July 1, 1932, the receiver issued a notice, and caused it to be published in appropriate newspapers, of a public sale to be held on July 29, 1932, of all remaining assets of the bank, as of February 29, 1932, with the exception of cash and Government securities on hand. 18. On July 29, 1932, plaintiff, as sole bidder at the public sale, acquired the remaining assets of the bank, except cash and Government securities on hand, as of February 29, 1932, for the minimum price specified in the notice of sale, to wit: $2,401,000 plus interest thereon at 3 percent per annum from February 29, 1932 to July 29, 1932, which amount was paid as stated in finding 20. Title to the assets was transferred to plaintiff on August 6, 1932, and in accordance with the Reporter's Statement of the Case 94 C. Cls. provisions of the notice of sale hereinabove referred to in finding 17, all cash collected by the receiver subsequent to February 29, 1932, and up to August 5, 1932, was credited to plaintiff and all expense incurred or paid subsequent to February 29, 1932, and up to August 5, 1932, was charged to plaintiff. 19. From time to time after the bank was declared insolvent and placed in receivership on July 1, 1927, the Farm Loan Board declared and directed the receiver to distribute liquidating dividends to bondholders. The dividends were declared on the dates and in the amounts shown in the following table: *Includes Dividend No. 3 on claims filed after 12/5/31 and Dividend No. 6 on claims filed after 8/5/32. 20. On August 6, 1932, the Federal Farm Loan Board passed a resolution by which the receiver was authorized and directed at the time of making final settlement with the Bankers' Farm Mortgage Company to make distribution of the sum of $87,581.25 as a dividend to the holders of farm loan bonds of the Bankers Joint Stock Land Bank of Milwaukee and to general claimants against the bank. On the same date the Farm Loan Board passed another resolution authorizing and directing the receiver to make distribution of the sum of $2,343,431.25 as a dividend to the holders of Farm Loan Bonds of the Bankers Joint Stock Land Bank of Milwaukee. The amounts stated represented the proceeds of the sale of two parcels of assets described in the Notice of Sale, namely, Parcel A and Parcel B. The resolution further stated that the dividends applicable to Farm Loan |