In re N.J. Title Guarantee & Trust Co.

• Decision Date: 15 July 1940
• Docket Number: 129/18.
• Citation: 17 A.2d 303
• Parties: In re NEW JERSEY TITLE GUARANTEE & TRUST CO. PRASHKER et al. v. NEW JERSEY TITLE GUARANTEE & TRUST CO. et al.
• Court: New Jersey Court of Chancery

17 A.2d 303

In re NEW JERSEY TITLE GUARANTEE & TRUST CO.PRASHKER et al.

v. NEW JERSEY TITLE GUARANTEE & TRUST CO. et al.

124/165.

129/18.

Court of Chancery of New Jersey.

July 15, 1940.

Proceeding in the matter of the New Jersey Title Guarantee & Trust Company, in liquidation, involving a controversy between Samuel Prashker and others against the New Jersey Title Guarantee & Trust Company and others, wherein a petition was filed for instructions.

Instructions given.

Thomas F. Meaney, of Jersey City, for petitioner.

William J. Baker, George Beach, E. Edward Burr, Carey & Lane, Collins & Corbin, Cruse, Becker & Longstreet, William Allen Cudlipp, Benjamin J. Darling, and Fred W. Dieffenbach, all of Jersey City, Gaede & Gaede, of Hoboken, J. Stanley Griffin, Hendrickson, Greenberg & Jacobs, L. Edward Herrmann, Hershenstein, O'Brien & Tartalsky, Insley, Decker & Cross, James J. Kearney, James J. Langan, I. Charles Lifland, and McDermott, Enright & Carpenter, all of Jersey City, George I. Marcus, of Hackensack, Milberg & Milberg, of Jersey City, George P. Moser, of Union City, David A. Nimmo, Stephen Piga, William S. Rurode, and Edward V. Ryan, all of Jersey City, Fred Saperstein, of Union City, and Schumann & Schumann, Maurice R. Seiden, Samuel S. Stern, George G. Tennant, Marshall Van Winkle, Atwood C. Wolf, and R. J. Wortendyke, all of Jersey City, for certificate holders.

Burnett & Trelease, of Newark, for certain depositors.

Milberg & Milberg, of Jersey City (Samuel Nashel, of West New York, and Henry Milberg, of Jersey City, of counsel), for complainants.

Thomas F. Meaney, of Jersey City, for defendants.

KAYS, Vice Chancellor.

I filed a memorandum in the first above entitled matter dated March 25, 1940, 17 A.2d 296, relative to the first question submitted to the court for instructions which question was contained in paragraph 8-A-1 of the petition. In the said memorandum I concluded that evidence should be submitted relative to the issuing of the certificates in question in order to determine whether the certificates were primary obligations of the New Jersey Title Guarantee and Trust Company or secondary obligations of that bank.

That same question also came before me in the second above entitled matter which was heard by Vice Chancellor Fielder and re-referred to me. The proofs and briefs in said second above stated cause came before me on a stipulation of counsel without a rehearing. I am, therefore, dealing in this opinion solely with the question of the nature of the obligations above referred to. The proofs in the two matters were practically the same.

It appears from the evidence that the certificates in question were issued pursuant to a resolution adopted by the executive committee of the bank on April 30, 1924. This resolution, after providing for the form and tenor of the certificates, established a fund or special deposit called a "mortgage pool". The bank increased the number of individual bonds and mortgages in the pool from time to time and made substitutions of certain mortgages by withdrawing some and depositing others. Certificates were sold to customers and to each certificate was affixed an approximate amount of United States revenue stamps as provided by the federal law. After the certificates matured, the holders were paid the amount due thereon from the general assets of the bank and not exclusively from the proceeds of the bonds and mortgages which formed the "mortgage pool". As the principal amount of the certificates outstanding was reduced by such payments, mortgages varying in amounts were withdrawn from the "mortgage pool" and placed or set up as general assets of the bank. The statements of the condition of the bank required to be published in the local newspapers contained statements relative to the aggregate amount due on...