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Morgan Stanley (P) purchased $15,518,000 principal amount of Debentures from Archer (D) for $1,252.50 per $1000 face amount on May 5, 1983, $500,000 principal amount at $1,200 per $1,000 on May 31, 1983. The next day, D announced that it was calling for the redemption of the 16% Sinking Fund Debentures, effective August 1, 1983. The direct source of the funds for this payment was common stock offerings in January and June 1983. Prior to the redemption, they were trading in excess of the $1,139.50 call price. D gave no prior warning of any kind that it intended to exercise its redemption rights. Nor did it express any opinion over its ability to call the debentures when it was borrowing money at 16.08%. P contends that the redemption is barred by the express terms and that consummation of the plan would violate 15 U.S.C. section 77aaa and common law contract principles. P contends that the redemption is being funded indirectly with proceeds of borrowing in violation of the Debentures and Indenture agreement. The fact that D raised sufficient funds to redeem the debentures entirely through the issuance of common stock is according to Ps an irrelevant juggling of funds used to circumvent provisions in the debenture. D's position is not so strict in that it would only bar redemption when the direct or indirect source of funds is a debt instrument issued at a rate lower than that it is paying on the outstanding debentures. P moved for summary judgment on contract claims. D also moved for summary judgment.

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