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In re Prudence Co.

CIRCUIT COURT OF APPEALS, SECOND CIRCUIT


November 1, 1937

IN RE PRUDENCE CO., INC.; IN RE CHASE NAT. BANK OF NEW YORK CITY

Appeal from the District Court of the United States for the Eastern District of New York.

Author: Manton

Before MANTON and CHASE, Circuit Judges, and COXE, District Judge.

MANTON, Circuit Judge.

The trust agreement under which the appellant is trustee secures bonds of the Prudence-Bonds Corporation called the Fourteenth Series, for $4,658,500, now outstanding by deposits of collateral. The debtor is the guarantor of the bonds under this trust agreement, and pursuant to the terms of the guaranty it was given the agency to manage and service the collateral. The debtor was not a party to the trust agreement, nor was it the owner of any of the collateral pledged by the Prudence-Bonds Corporation thereunder. The rights of the debtor to manage and service the collateral was terminated by appellant January 15, 1935, in accordance with the provisions of the trust agreement because of a default in payment of principal and interest, and a demand was made that the servicing be turned over to appellant.

The order appealed from denied the appellant's application to turn over to it as trustee the sums of $25,106.38 and $860.60 held by the appellees and claimed by them to be applicable to the debtor's claim for management and servicing the collateral pledged under the trust agreement.

For the reasons stated in Re Prudence Company, Inc., Debtor (Brooklyn Trust Company v. Prudence Co.) (C.C.A.) 92 F.2d 419, decided this day, the order prayed for should have been granted.

Order reversed.

19371101

© 1998 VersusLaw Inc.



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