Real Property

ARTICLE 4
USES AND TRUSTS
Section 119. Purchase by mortgage trustee.
120. Operation and sale by mortgage trustee.
120-a. Liquidation of mortgage by trustee.
121. Reorganization of property covered by trust mortgage.
122. Procedure of reorganization and expenses in connection
therewith.
122-a. Modification of trust mortgages given in prior
re-organizations.
123. Preserving existing rights.

S 119. Purchase by mortgage trustee. Any banking corporation,
including corporations organized under the banking law and also national
banking associations authorized to act as trustees within this state,
which shall act as trustee, depository or in other representative or
fiduciary capacity in respect to any mortgage upon real property within
this state or upon some interest therein or in respect to any indenture
relating to such real property against which bonds or certificates of
parts or of shares have been issued to the public, may acquire such real
property in any foreclosure action now or hereafter pending; and in lieu
of paying cash therefor, may make settlement for the purchase price by
crediting upon the bond, mortgage or other obligation held by it, the
net proceeds of sale after deducting therefrom the expenses of the sale
and the costs of the action and any other sums which such trustee is
authorized to deduct under the mortgage, deed of trust or indenture. The
officer making such foreclosure sale shall accept such settlement
without requiring the production of the bonds, notes, certificates of
sharing, certificates of participation, or other security evidencing the
pro rata interest of the holders thereof in the mortgage or indenture
being foreclosed; and, without such production, there shall be deemed
credited thereon the pro rata share of the net proceeds of sale
ascertained and established as aforesaid.

S 120. Operation and sale by mortgage trustee. Such banking
corporation, upon acquiring such property, shall hold, lease, rent,
operate and manage the same for the pro rata benefit of all parties
interested in said mortgage, deed of trust or indenture and may, but
shall not be required to, issue certificates of participation in said
property and the rents, issues and profits thereof to those parties
interested in said mortgage or indenture according to their respective
interests. At any time thereafter with the consent of the holders of
eighty-five per centum of the principal amount of the bonds or
certificates outstanding, or with the approval of the court after such
notice to the bondholders or certificate holders as the court by order
may direct, the court may make an order authorizing the trustee to sell
such property for such price and upon such terms as to credit or
otherwise or for such stocks, bonds or other securities as it deems best
for those beneficially interested in said mortgage, deed of trust or
indenture. The order directing the giving of notice to bondholders and
certificate holders of the application of the trustee to sell such
property shall provide for personal service of such notice not less than
thirty days before the return date thereof, upon not less than ten
specified bondholders or certificate holders and notice by mail to all
other bond or certificate holders whose addresses are known to the
trustee and publication of such notice once a week on a week day for
three successive weeks preceding the return date thereof in one
newspaper of general circulation published in the city or county where
said real property is located.

S 120-a. Liquidation of mortgage by trustee. Any banking corporation
or individual acting as trustee in respect to any mortgage upon real
property against which bonds shall have been issued to the public and
which mortgage shall have been given to such trustee by a corporation
organized under the provisions of section one hundred twenty-one hereof,
pursuant to a plan of reorganization approved by the court and which
became effective under section one hundred twenty-two hereof, or which
mortgage shall have been given pursuant to a plan of reorganization
heretofore or hereafter approved and confirmed under the bankruptcy acts
of the United States, or which mortgage shall have been given to such
trustee under a voluntary plan of reorganization by a corporation caused
to be organized by a bondholders` committee for the purpose of acquiring
the property secured by such mortgage at a sale under a judgment of
foreclosure and sale of a prior mortgage given to secure bonds
theretofore issued to the public, may, with the approval of the supreme
court in the county where all or part of the property affected by such
mortgage is situate, sell, assign, discharge or satisfy such mortgage
upon such consideration in cash as the court shall deem fair and
equitable to the bondholders and as the court by order shall direct.
Such order may be made upon the application of the trustee or the holder
of twenty-five per cent of the bonds or of the mortgagor or owners of
the property securing such mortgage. The court may approve a sale,
assignment, discharge or satisfaction at such price as may appear to the
court to be fair and in the best interests of the bondholders and not
less than the cash value of said mortgage if sold at a public sale,
unless duly acknowledged dissents thereto by holders of more than
one-third of the principal amount of the bonds then outstanding have
been filed. If the application for such sale shall be consented to by
the holders of two-thirds of the principal amount of the bonds
outstanding such consent shall constitute a presumption that it is fair
and in the best interests of the bondholders that said mortgage be
liquidated at the price fixed in such consent and the court may approve
a sale at such amount unless it shall appear to the court that such
amount is less than the cash value of said mortgage if sold at a public
sale. If the application shall not be made by the trustee then notice
shall be given to the trustee and in any event the order directing
notice to the bondholders of the application to liquidate such mortgage
shall provide for personal service of such notice not less than thirty
days before the return date thereof upon not less than ten specified
bondholders whose addresses are known to the applicant and notice by
mail to all of the bondholders whose addresses are known and the
publication of such notice once a week on a week day for three
successive weeks preceding the return date thereof in one newspaper of
general circulation published in the city or county where the real
property securing said mortgage is located. Except as herein otherwise
provided all proceedings hereunder and the rights of the parties hereto,
shall be governed by section one hundred twenty-two hereof; except that
if the order shall become effective it shall be without prejudice to the
right of any particular bondholder who has filed a duly acknowledged
dissent therefrom, within the time fixed in the order, to have the court
determine the cash value of the mortgage securing such bond if sold at a
public sale and providing for the payment or securing his ratable share
of such amount as a condition for declaring the order effective. If any
provision of this section or of section one hundred twenty-two hereof or
any clause, sentence, paragraph or any part of such section or the
application thereof to any person or circumstance shall be held
unconstitutional or invalid, such decision or judgment shall not affect
or impair the constitutionality or validity of the remainder thereof,
but shall be confined in its operation to the clause, sentence,
paragraph or part thereof directly involved in such decision or
judgment.

S 121. Reorganization of property covered by trust mortgage. Such
banking corporation, under the direction of the court in the foreclosure
action may, and if directed by the court shall, purchase or cause to be
purchased said real property, pursuant to a reorganization plan, and
cause to be formed a domestic business corporation, or a foreign
corporation providing such foreign corporation is authorized to do
business within this state, or utilize any other such corporation,
providing the corporation so formed or utilized shall have provided in
its certificate of incorporation the restriction set forth in section
one hundred eleven of decedent estate law, and shall thereupon grant and
release said property to such new corporation and its assigns forever,
or by assignment of its bid to such new corporation, or otherwise, cause
the referee`s deed in foreclosure to be executed and delivered directly
to such new corporation granting and releasing such property to it and
its assigns forever, in exchange for the stocks, bonds and other
securities of such new corporation except such of said securities as may
be reserved for the adjustment of liens and claims against said
property, or for other purposes as specified in the plan, including any
provision made in a plan approved by the court and thereafter becoming
effective as provided in section one hundred twenty-two for any
interest, junior or subordinate to the mortgage foreclosed; provided,
however, that such new corporation shall be authorized to raise money by
mortgage, pledge, borrowing, sale of securities or otherwise to the
extent which may be set forth in the plan of reorganization. The
trustee, upon receiving such securities and any cash available from the
new corporation, shall distribute the same and any other funds or
property constituting part of the trust estate, ratably amongst those
parties interested in such mortgage, deed of trust or indenture less
such trustee`s proper expenses and charges in connection therewith; and
thereupon the trustee upon the filing and approval of its accounts in
the foreclosure action and upon assigning to such new corporation any
deficiency judgment and any guarantees and insurance policies held by
the trustee and any claim for waste or otherwise in connection with the
mortgage estate, shall be discharged of any further obligation or
liability under such mortgage or indenture or otherwise. Nothing herein
contained shall affect or impair the liability of any guarantor or any
right or remedy existing in favor of any holders of bonds, notes,
certificates or other securities which are secured by or participate in
such mortgages, deeds of trust or indentures.

S 122. Procedure of reorganization and expenses in connection
therewith. The reorganization plan may be presented to the court with
the complaint for foreclosure, or thereafter by the trustee or by any
persons owning or representing twenty-five per centum of the principal
amount of the securities covered by such mortgage, deed of trust or
indenture at any time prior to the foreclosure sale. The plan shall
contain a statement of the minimum and maximum sums which the trustee
shall bid for the property, which sums may be varied by the court upon
its approval of the plan; and the trustee shall not incur any liability
by reason of its failure to bid more than said maximum sum. The trustee
shall not be liable for any action in executing the plan of
reorganization approved by the court except for its wilful misconduct,
fraud, bad faith or gross negligence. Hearings upon such reorganization
plan shall be at such time and place and upon such notice by
publication, mailing or otherwise, as the court shall fix in an order to
show cause why the plan should not be approved. The trustee and any
person beneficially interested in said mortgage, deed of trust or
indenture, and any person whose rights may be affected by such
reorganization, may appear upon the return day of the order to show
cause or at any adjournment thereof, and submit objections to and
modifications of the plan or an alternate plan, and the court shall hear
the parties by affidavit or summarily or otherwise, as in its discretion
it may direct, and thereupon finally determine the plan of
reorganization and fix the time and method for persons affected by such
reorganization to become parties thereto. Where neither the mortgage or
indenture, nor the statute relating to the particular class of
securities nor any other statute, authorizes the purchase of the
property on behalf of all the holders of bonds or certificates of parts
or shares, then if any holder, within twenty days after the approval of
the plan, shall file with the court a duly acknowledged dissent
therefrom, the court shall determine the cash value of the property as
if sold at a public sale and such dissenting holder shall be entitled to
be secured for his ratable share of such amount as a condition for
declaring the plan effective. In all other cases the reorganization plan
shall be deemed binding on all holders of bonds or certificates of
shares or parts unless within twenty days after the approval of the plan
one-third in principal sum of such holders shall file with the court
duly acknowledged dissents therefrom; in which event the plan may be
abandoned or may be further modified as the court shall direct, with the
same right of dissent as aforesaid as to any subsequently amended plan.
Notice of the court`s approval of the plan shall be given by
publication, mailing or otherwise as the court may in particular cases
or by general rule direct. Any person aggrieved by any determination
hereunder shall have such rights of appeal as are granted to a party to
a special proceeding. The expenses and compensation of the trustee and
of any committee or person who shall have submitted a plan of
reorganization or modifications thereof shall be fixed at such sum as
the court may deem reasonable and shall be chargeable as a lien upon the
property or collectible through their assumption by the new corporation
or in such other manner as the court may approve. All proceedings and
appeals in respect to the plan of reorganization shall be entitled to
preference over all other civil causes next in order to actions or
special proceedings in which the people of the state or any officer,
board or political subdivision thereof shall be a party.

S 122-a. Modification of trust mortgages given in prior
re-organizations. Any such banking corporation or any individual acting
as trustee in respect to any mortgage, deed of trust or indenture upon
real property, or any leasehold interest therein, against which bonds,
certificates, shares or any other evidence of interests therein (herein
called "debts") shall have been issued to the public, and which mortgage
shall have been given to such trustee by a corporation organized under
section one hundred twenty-one hereof, pursuant to a plan of
reorganization approved by the court and which became effective under
section one hundred twenty-two hereof, or which mortgage shall have been
given to or is held by such trustee pursuant to, or by reason of, a plan
of reorganization heretofore or hereafter approved and confirmed under
the bankruptcy acts of the United States or which mortgage shall have
been given to such trustee under a voluntary plan of reorganization by a
corporation caused to be organized by a bondholders` committee for the
purpose of acquiring the property secured by such mortgage, may, without
foreclosure of such mortgage, and whether or not a default exists
thereunder, present to the supreme court in the county where all or part
of the real property affected by such mortgage is situated, a plan for
the reorganization of such mortgage, deed of trust or indenture. The
plan of reorganization may provide for: (1) the extension of the
maturity of the mortgage, deed of trust or indenture and the debts
secured thereby; (2) the modification of the provisions for interest,
amortization or sinking funds; and (3) such other changes, modifications
or amendments as may be fair and feasible and for the best interests of
the security holders. Such plan may likewise be presented by holders or
representatives of twenty-five per centum in principal amount of such
securities. Such plan may cover one or more mortgages with respect to
said property. If no default shall exist in the payment of principal or
interest, such plan may be presented by the mortgagor or by the owner of
the property covered by such mortgage. Hearing upon such reorganization
plan shall be at such time and place and upon such notice by
publication, mailing or otherwise as the court shall fix in an order to
show cause why the plan should not be approved. No plan shall be
approved unless the court, after such hearing shall determine that it is
fair, feasible and for the best interests of the security holders. The
affirmative consent of the holders of two-thirds of the principal amount
of the outstanding securities shall constitute a presumption that the
plan is fair, feasible and for the best interests of the security
holders. All proceedings hereunder and the rights of the parties hereto,
including the hearing, the final order determining the plan of
reorganization embodying such modifications, the time and method for the
persons affected by such plan becoming parties thereto and the right of
appeal from any order, shall be governed by section one hundred
twenty-two hereof; except that if the reorganization shall become
effective it shall be without prejudice to the right of any particular
holder of such securities who has duly dissented therefrom to have the
court determine the cash value of such securities as he may have owned
on or before the date of the presentation of the plan of reorganization
pursuant to this section, and providing for the payment or securing his
ratable share of such amount as a condition for declaring the plan
effective. Upon the order becoming effective the plan shall be binding
upon all the security holders. If any provision of this section or of
section one hundred twenty-two hereof or any clause, sentence, paragraph
or any part of such section or the application thereof to any person or
circumstance shall be held unconstitutional or invalid, such decision or
judgment shall not affect or impair the constitutionality or validity of
the remainder thereof, but shall be confined in its operation to the
clause, sentence, paragraph or part thereof directly involved in such
decision or judgment.

S 123. Preserving existing rights. Nothing in this act shall be deemed
to prevent any bondholder or committee of bondholders from bidding at
the foreclosure sale and in case he or they should be a successful
bidder, from applying upon the purchase price the bonds held by him or
them at the amount distributable thereon and reorganizing the property
so purchased in any manner which was lawful prior to the enactment of
this act, nor to impair any previously existing right of a trustee so to
purchase and pay for the property, or to preclude any trustee which
shall have purchased such property from submitting to the court a plan
for its reorganization. The court may provide for the qualification of
bidders other than the trustee by requiring them to deposit with the
officer conducting the sale in advance of bidding up to ten per centum
of the amount of their bid in cash or in bonds taken at the principal
amount thereof. In any action now or hereafter pending for the
foreclosure of any such mortgage or indenture, the property shall, on
application of the trustee, be sold subject to the lien of any taxes,
assessments and water rates, any prior lien, or to any liens which may
thereafter be established, which are the subject of litigation pending
at the time of the sale, provided a brief statement thereof is contained
in the notice of sale.