(concurring in part and dissenting in part).
The case should be reversed and remanded but not for the reasons stated in the main opinion.
The Special Master and the Court below found as a fact that the plan of composition of debts had not been completed when ninety-odd per cent of the bondholders had accepted refunding bonds. I concur.
The fact that the city, through one Ex-celsen, made a number of special settlements with creditors, some of which held special rights or equities, renders this case difficult. Some of these were judgment creditors who had secured peremptory writs of mandamus requiring ear-marked tax levies for their payment, and on a number of such judgments partial payments had been made.
The plan of the city to make adjustments with funds not devoted to debt service (generally referred to as “free funds”) was known and agreed to by the consenting creditors, and became, and was, an integral part of the plan of composition, whereby the city could, and did, prevent the raising of its tax millage to the point of vanishing returns. The creditors who accepted the refunding bonds are not here complaining of the special settlements or the use of the “free funds” in making special settlements. They doubtless recognized that it was for their best interest and the best interest of the city that the judgments and special levies should be eliminated and that judgments and excessive special levies should be prevented in the future. They doubtless realized that if special further Court-ordered and enforced levies were made the rate of taxation would be so high as to prevent property owners from paying their taxes and thereby lessen the ability of the city to keep-up ;its debt service payments, or to accumulate a sinking fund, or to realize anything out of the Tax Participation Fund. They are not before the Court, asserting discrimination, but they are interested in seeing the city placed in sound financial position and able to carry out the agreement which they and the city voluntarily entered into.
Believing that the special settlements idea was a material part of the uncompleted plan, I conclude that it could not be dropped from the plan when the city decided to take advantage of Chapter IX of the Bankruptcy Act, 11 U.S.C.A. § 401 et seq., and the procedure under Sec. 83(j) thereof.
If the making of special settlements from “free funds” was a part of the plan before bankruptcy it must still be a part of the plan and the city must, therefore, tender to creditors now as favorable an adjustment as it made to any other creditor, of the same class, in any of its special settlements. In short, if it made a more favorable settlement under the Excelsen plan with bondholder A who held no judgments, writs, special levies, rights, or equities, than the settlement now offered to Wright, the plan before the Court would be unfair to Wright. He, being in the same class as A, would be entitled to the same treatment as was accorded to bondholder A.
Sec. 403, sub. b, 11 U.S.C.A., provides that “The judge shall classify the creditors .according to the nature of their respective claims and interests: Provided, however, That the holders of all claims, regardless of the manner in which they are evidenced, which are payable without preference out of funds derived from the same source or sources shall be of one class.”
The “nature of the claim” of a judgment creditor who has procured a levy to be made, and who has had dedicated and appropriated to his benefit such a special, earmarked levy, and who has received partial payments from such ear-marked levy, is not of the same nature as that of a non-judgment bondholder; and where the judgment creditor is paid off out of “free funds” derived from the sale of city assets he is not paid from “funds derived from the same source” as a bondholder whose claims are payable only from sinking funds derived from general debt service levies and the Tax Participation Fund.
*197Furthermore, for claims to be in the same class they must be “payable without preference”. Under the “first come, first serve” rule in Florida the vigilant creditor who first successfully resorts to mandamus thereby obtains a preference and a priority in available funds. So the judgment creditors, by virtue of their mandamusly-procured ear-marked levies, occupied a preferred status over nonjudgment creditors without special levies, and the two classes of claims are not “payable without preference”.
I conclude that although such judgment creditors did not have vested liens, nor vested rights that bankruptcy could not affect, nevertheless, as between them and bondholders who had taken no such steps it appears that: (a) the nature of their claims was different; (b) the source of payment was not the same; (c) they had a preferential right of payment out of the special, ear-marked levies; and (d) they were within the scope of the purpose for which the “free fund” was set up in the plan. From this it seems to follow that such judgment creditors, and those similarly situated, should have been separately classified and dealt with.
Doubtless all other nonassenting creditors could be placed in one other class, where the nature of their claims, their lack of preferential right to payment, and their common source of payment, would be identical, and wherein all in such class should receive the same treatment as accorded any other similar creditor in the settlement of his claims out of the “free funds”. Thus Wright would be entitled to receive for his securities as favorable a price as was paid to any other creditor in his class, provided he can be paid out of free funds or out of the sale of assets now held by the city which were acquired by the expenditure of “free funds”.
The Court need not concern itself now over special settlements voluntarily accepted by a creditor before the filing of the petition even if a few of such settlements were not as advantageous to the creditor as other settlements made with creditors of the same class, and particularly where such accepting creditor is not complaining.
If the plan was completed in 1937 the Court would be without jurisdiction, otherwise the plan might yet be amended. It seems important, therefore, that the Court should carefully examine, or re-examine, its findings that the plan was fully completed rather than partially completed.
The following considerations seem to sustain the conclusion that the plan was not a fully completed one, or an abandoned one, in 1937, or at any time prior tp the filing of the petition herein:
1. Only ninety-odd percent of the bonds were refunded in 1937 and the refunding plan would seem not to have been completed.
2. Negotiations by the city, through Ex-celsen and others, continued without cessation to the date of the filing of the petition. (Negotiations between the city and Mr. Wright were in progress up to the very time of the filing of the petition in bankruptcy.)
3. The idea of using the “free funds” for the making of special settlements was a part of the plan, known and agreed to by the consenting creditors, and was designed for the purpose of trying to complete the plan, of which the special settlements were a part.
4. The Special Master, after a full hearing of all the facts, found that the plan was not completed prior to the filing of the petition.
5. The District Judge found that it was not a completed plan, and the evidence overwhelmingly supports the findings of the Master and the District Judge to this effect.
6. Counsel for Mr. Wright in at least a dozen places in his brief 4 refers to the voluntary plan as a “partially completed plan” or a “partially executed plan”, and I fail to find any earnest contention on the part of counsel that the voluntary plan was a completed one.
I recognize that if the premise of the majority that the voluntary plan was completed before bankruptcy was correct. its conclusion would necessarily follow, but since the premise is supported by neither the law nor the facts the conclusion must fall.
If the plan was not completed before bankruptcy, but only partially so, then the lower Court had jurisdiction by virtue of the consents of the bondholders who accepted the refunding plan, particularly when the record wholly fails to show that any of the voting and consenting creditors *198received preferential treatment through special settlements. I agree that the plan would be unfair to the nonconsenting creditors if other creditors, in the same class, were given more advantageous treatment by special settlements, or otherwise, than is afforded them by the plan under consideration. But if this is the case, the privilege of amendment of the plan should be allowed.
The case should be reversed and remanded with directions to allow amendments so as to: (a) include as an integral part of the whole plan the plan of special settlements; (b) reclassify the creditors in accordance with the views above set out; and (c) afford to the nonconsenting creditors the opportunity to accept a settlement as favorable as the most liberal special settlement heretofore made to any other creditor of the same class.
Rehearing denied; WALLER, C. J., dissenting.Pages 2, 8, 13,14,15,17,18, 21, 22, 24, 32, and 33, brief of counsel for appellant Wright.