Foland v. Gould 221 N.Y. 533

Russell Foland, Suing on Behalf of Himself and Other Holders of Third Mortgage Bonds of the International and Great Northern Railroad Company, Appellant, v. George J. Gould, Respondent, Impleaded with Others.

(Argued May 9, 1917;

decided May 25, 1917.)

Foland v. Gould, 163 App. Div. 947, affirmed.

Appeal from a judgment, entered November 20, 1914, upon an order of the Appellate Division of the Supreme Court in the first judicial department, which affirmed an interlocutory judgment of Special Term sustaining a demurrer to the complaint and granting defendants’ motion for judgment on the pleadings. The complaint sets out in substance that in 1908 defendants were directors of a corporation and plaintiff was the holder of certain of its third mortgage bonds; that default occurred in the payment of interest on said bonds; and on application of the trustee under the mortgage securing the same a receiver was appointed in the Federal courts February 28,1908. Because of default in payment of coupons of the second mortgage bonds the receivership was extended to that issue April 24, 1908. It was further alleged that two years later a protective committee was formed at the instance of defendants which called for a deposit of the third mortgage bonds, and that about five-sixths of the issue was thus deposited. Plaintiff, however, did not deposit his securities. In May, 1911, pursuant to the deposit agreement, a plan of reorganization was proposed and accepted and June first of that year was fixed as the last day when bondholders who had not deposited might so deposit and join in the benefits of the plan. Subsequently the road was sold under a decree of foreclosure and bid in by the bondholders, the committee tendering its securities in part payment of the purchase price. To the complaint was annexed and made a part thereof this plan, from which it appears that a discrimination was to *534be exercised in the distribution of the new securities against those who, like the plaintiff, had failed to originally deposit their securities with the reorganization committee.’ This complaint was directed solely against the three defendants as individuals, plaintiff’s counsel defining the action as one “brought against persons occupying a fiduciary or trust relation to property whereby they may be compelled to account for such property, and is brought to compel them to account. ”

Carlisle Norwood and George S. Daniels for appellant.

Robert B. Knowles for respondent.