This matter came before me on the return of an order to show cause why an offer of compromise and settlement should not be approved.
After the discharge of the receiver and the qualification of a new board of directors, the individual defendants submitted *Page 377 an offer of settlement and adjustment. By paragraph 47 of the final decree in this matter, the parties were given leave to apply for further orders and directions in connection with the enforcement, adjustment and satisfaction of the decree, jurisdiction being retained for that purpose. Pursuant thereto, the board of directors filed a verified petition which sets forth the facts and terms of the proposed settlement and prays for the instructions of this court.
Although copies of the petition, order and offer of settlement were mailed to all stockholders of record, pursuant to the provisions of the order to show cause, only a relatively small number of the stockholders have made their reactions known. A majority of those who replied, both in number and in interest, expressed their approval of the proposed settlement.
It appears from the records and affidavits that the efforts to satisfy the decree out of the property of the several defendants has not met with any measurable degree of success. To continue the attempt will require the prosecution of innumerable lawsuits with no certainty as to the final result. The final decree left unsettled the extent of certain claims made against the corporation by the several defendants. The determination of these claims will also lead to protracted litigation with no intimation as to the probable outcome. In the face of this situation, the parties have attempted a compromise.
The terms of the proposed settlement are fully set forth in the petition and need not be repeated here. The form and context of the settlement was agreed upon after considerable negotiation and deliberation and, like all compromises, represents the best adjustment which the parties believe possible under the existing circumstances.
In addition to the interest of the parties, there is also involved the best interest of our nation, now at war. The Chief Signal Officer of the United States Army was represented by Captain Short who urged the approval of a compromise. It appears that the military authorities view the present unsettled condition of the corporation as seriously interfering with the successful prosecution of the war effort *Page 378 and feel that an indefinite continuance of this state of affairs is most undesirable.
After carefully considering the proposed offer, I have reached the conclusion that under the circumstances it is proper and reasonable and in the best interest of the corporation. It will, therefore, be approved.