American Trust Co. v. Holtsinger

• Decision Date: 24 January 1917
• Citation: 226 Mass. 30,114 N.E. 956
• Parties: AMERICAN TRUST CO. v. HOLTSINGER et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

226 Mass. 30

114 N.E. 956

AMERICAN TRUST CO.

v.HOLTSINGER et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 24, 1917.

Report from Superior Court, Suffolk County; Chas. F. Jenney, Judge.

Suit by the American Trust Company against Eugene Holtsinger and others. On report from superior court. Demurrer of defendants overruled.

Weld A. Rollins, of Boston, for plaintiff.

Frank L. Simpson, of Boston, for defendants.

PIERCE, J.

The several certificates of deposit issued by the First Savings & Trust Company of Tampa to the depositors of bonds, deposited in pursuance of an agreement and plan for the reorganization of the Wauchula Manufacturing & Timber Company, provided that ‘upon said reorganization being completed’ the depositor ‘or its assigns shall be entitled to the securities issued according to, and in pursuance of, said plan, upon return of this certificate duly indorsed by the holder thereof or its assignee.’ Under the plan:

‘The committee is hereby vested, under the terms of this agreement, as trustee of an express trust, with the legal title to all the bonds * * * which may be deposited under this agreement, and the depositors thereof hereby assign and transfer the same to the committee.’ ‘Said reorganization committee will cause * * * issues of bonds of said new corporation to be disposed of as follows: (a) To the holders of the present outstanding first mortgage bonds of the Wauchula Manufacturing & Timber Company * * * a like amount of said first mortgage bonds of said new corporation to be formed.’

The plan does not contemplate the return of the deposited bonds or mark any period of time for the duration of the reorganization committee or the termination of the trust.

On deposit of the bonds and the transfer of the legal title thereto to the reorganization committee as trustee, the holder and depositor acquired in exchange a negotiable certificate of deposit, one of the incidents of which was a right to compel performance in equity of the requirements of the terms of the certificate.

One of these terms was the delivery at the appropriate time to the certificate holders of certain securities of the reorganized company. Montgomery v. McDermott, 103 Fed. 801, 806, 43 C. C. A. 348.

It is plain that it was the intention that these certificates of deposit, when pledged as collateral security for the defendants' promissory note, should create an equitable pledge of the owner's right in equity to compel the performance of the obligation arising out of the certificate. And it is equally plain that the pledge was not restricted to the legal interest of the pledgor in the certificates as chattels. Pierce v. Boston Five Cents Savs. Bank, 129 Mass. 425, 37 Am. Rep. 371;Taft v. Bowker, 132 Mass. 277. The situs of this right is with the pledgee because the performance of the obligation is conditional on the surrender of the certificates of deposit, and because the presence of the certificates gave value to the right.

The facts of ...