Stapleton Nat. Bank v. Union Trust Co.

• Decision Date: 31 March 1923
• Docket Number: 509.
• Citation: 288 F. 380
• Parties: STAPLETON NAT. BANK et al. v. UNION TRUST CO.
• Court: U.S. District Court — Eastern District of Michigan

288 F. 380

STAPLETON NAT. BANK et al. v. UNION TRUST CO.

No. 509.

United States District Court, E.D. Michigan, Southern Division.

March 31, 1923

Goodenough Voorhies, Long & Ryan, of Detroit, Mich., for plaintiffs.

Campbell Bulkley & Ledyard, of Detroit, Mich., for defendant.

TUTTLE District Judge.

This is a motion by the defendant to dismiss the bill of complaint on the ground that one or more indispensable parties to the controversy involved in this suit are not, and cannot be brought, before the court as parties defendant. One of the parties so claimed to be indispensable is the Marquette Iron Company, hereinafter called the Iron Company.

The material allegations of the bill, which are set forth therein with much detail, are in substance as follows:

That plaintiffs, some of whom are citizens and residents of the state of New York and some of the state of New Jersey, are holders of certain so-called trust notes issued by the Marquette Iron Company (hereinbefore mentioned), a Delaware corporation, as part of a series of such notes issued in the principal amount of $3,000,000, in August, 1917, by said Iron Company, which at the same time, to secure the payment of said trust notes, executed and delivered a certain trust instrument to the Guardian Savings & Trust Company of Cleveland, Ohio, as trustee, whereby the said Iron Company pledged certain corporate stocks held by it on the terms and conditions of such trust instrument (copy of which is attached to and made a part of the bill); that shortly thereafter said Iron Company assigned to said trustee as further security certain rents and royalties due to said Iron Company under various leases; that in April, 1919, said Guardian Savings & Trust Company resigned and abandoned its office as such trustee; that in May, 1919, said Iron Company attempted and assumed to appoint the defendant, Union Trust Company, as trustee under said trust instrument, and said defendant consented to act, and ever since has acted, as such trustee; that said Iron Company, although doing business in Michigan, has never been legally authorized so to do, and that therefore the contract between it and defendant was invalid as to the plaintiffs; that in January, 1920, said Iron Company caused one of its subsidiary companies to convey to defendant an interest in certain land and shares of stock to further secure said note issue; that in November 1920, said Iron Company agreed to sell to a certain Minnesota corporation property covered by said trust instrument for $2,400,000, conditional on the release from said trust instrument of such property so covered thereby; that such release could not be given by defendant, because the procedure prescribed by such instrument as necessary in order to effect such a release had not been followed; that it was therefore arranged between said Iron Company and defendant that a release of the entire trust would be effected, in accordance with said trust instrument, by the deposit with defendant of a sum sufficient to redeem, at the price provided in said trust instrument, all of...