One day in the blogosphere I noticed a legal scholar’s announcement that some old bankruptcy papers were available to someone who would do something with them. The offer was on behalf of the daughter of a couple, Malcolm S. Mason (1910-2011) and Irma S. Mason (1910-1985) of Washington and New York, the lawyers who had represented the Protective Committee for Stockholders in In re TMT Trailer Ferry, Inc. For three decades after her parents’ deaths, she had warehoused their case files in her garage; but she was moving and downsizing. I raised my hand, paid for the transportation, and received the papers.
The Masons were not bankruptcy lawyers. Both had studied law at Columbia and in the Great Depression served in minor federal-government positions—and then in the mid-1950s they had purchased shares of a new firm called TMT. When on July 3, 1957, creditors filed an involuntary Chapter X petition in the District Court in Miami, the court appointed a trustee for TMT. He soon proposed a plan to sell the company to the secured creditors with himself as president.
TMT’s business history is a story of entrepreneurship in a time of rapid technological change and postwar economic development. The man who devised this new type of business, organized a corporation, attracted capital and managerial talent, and led its initial success is himself a remarkable story. Eric Rath was a Jewish German who emigrated to Switzerland in 1933 to study international law. Unable to get a U.S. visa, Rath moved in 1936 to Colombia and somehow became a transportation adviser to its military. During World War II, he gathered intelligence for the U.S. about pro-Nazi Germans’ activities in Central America. Afterward he organized an air-transport firm that moved displaced Jews and materiel between Europe and Israel.
Moving then to the U.S., he became interested in “roll-on, roll-off” shipping (nicknamed “ro-ro”), an early form of containerized shipping taking its cue from the success of “piggy-back” transportation of highway trailers on railcars that began in the thirties (some referred to ro-ro as “fishy-back”). Rath was not the first to transport either containers or wheeled vehicles over water on vessels, but was a pioneer. He chartered a Delaware corporation to exploit the ro-ro method from Florida, and later New York, to Puerto Rico using surplus naval-landing vessels; and he began to sell its stock publicly.
Two business advantages accrued to TMT: the federal Jones Act, prohibiting foreign-flag vessels in the U.S. coastwise trade including Puerto Rico, and a favorable labor contract with seamen. By 1955, TMT enlarged its scope, as the business thesis showed success. However, after a war-surplus ocean-going vessel, converted by TMT to ro-ro, lost its engines in mid-Atlantic, the capital proved inadequate. On July 3, 1957, three unsecured creditors filed an involuntary petition under Chapter X of the Bankruptcy Act, ousting Rath from management and involvement with the business.
Perceiving from the Trustee’s plan that TMT’s business was indeed valuable, the Masons appeared in the case and obtained appointment of an equity committee that engaged them as counsel. Soon they had to associate a very fine appellate lawyer, Irwin Langbein (1907-1990) of West Palm Beach, because the district judge frowned on the stockholders’ participation and the Masons’ legal positions. The committee ultimately mounted sixteen appeals to the Fifth Circuit and three petitions for cert, the last of which resulted in the 1968 decision that is still cited today by bankruptcy lawyers seeking court approval of settlements, Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson.
The case ran for 22 years and eventfully resulted in a going-concern sale of the business to an established marine-transportation and logistics company for a price that paid all claims and provided a remarkable distribution to stockholders. Even so, the lawyers had to appeal the district judge’s meagre fee allowance, and the Fifth Circuit only slightly increased it—$100 thousand for the three lawyers’ two decades of work. So the case is, among other things, an instructive tale of dogged lawyering by attorneys who had to teach themselves, on the fly, the law of Chapter X.
“Lawyering” is “the work of a specially skilled, knowledgeable, or experienced person,” a lawyer, who “invokes and manipulates . . . the dispute-resolving . . . processes of the legal system for the purpose of solving a problem or causing a desired change in . . . the status quo for [the client],” as I have written.[1] Its essence is finding a way, ethically, to accomplish the client’s objective. Vividly illustrating the lawyering in TMT, the Masons’ 35 boxes contain all the pleadings, briefs, correspondence, drafts of other papers, file notes, and stock records. It is a complete archive that I am contributing to the National Bankruptcy Archive once my article is completed and published.
The point of my story today is to encourage all bankruptcy and restructuring practitioners to be alert to opportunities to save collections of bankruptcy lawyers’ papers for posterity. The papers could be those of lawyers such as the Masons who participated in significant cases or they could be your own files. There is, of course, a concern here, the lawyer’s obligation of confidentiality to her or his client. That is not a trivial concern but it can be addressed and overcome as discussed in Organization of American Historians’ 1994 white paper, "Historians and Access to the Files of Lawyers."[2] But first of all, the papers have to be preserved!
Insolvency is a nascent topic in American history[3], and it is important not only to obtain oral histories of practitioners in this field and also to find and save bankruptcy lawyers' papers and place them in archives to facilitate the work of historians in the future. It is my hope that when I finish my article about the lawyering in the TMT case, this will be shown clearly.
-Josiah M. Daniel, III
[1] Josiah M. Daniel, III, A Proposed Definition of the Term "Lawyering," https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2296240 (2009).
[2] See https://aslh.net/resources-for-doing-legal-history-legacy/historians-and-access-to-the-files-of-lawyers/.
[3] Josiah M. Daniel, III, What Can the Past Teach Today’s Bankruptcy Law Students, Lawyers, Judges, and Restructuring Professionals?: An Annotated Bibliography of Histories of Debt and Bankruptcy, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3954504 (2022).