Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.



December 29, 1950

BIRKINS et al.

The opinion of the court was delivered by: FORMAN

Plaintiffs, George Birkins and Daniel Ohl, citizens of the State of New York, filed a complaint against Seaboard Service, a New Jersey corporation, alleging a controversy between each of the plaintiffs and the defendant exceeding the sum of $ 3,000 exclusive of interests and costs and reciting three causes of action as follows:

In the first cause of action plaintiff Birkins alleges that he is the owner and holder of general mortgage bonds of the defendant in the aggregate principal sum of $ 12,080, each payable to bearer, and secured by a mortgage on real property, pursuant to an Indenture of Mortgage and Deed of Trust executed and delivered February 1, 1935 to certain named trustees; that in and by the said bonds the defendant promised to pay on September 1, 1949 to the bearer of each of said bonds, or if registered, to the registered owner thereof, the principal amount of said bonds; that at their maturity the defendant refused to deposit funds with the trustees for the payment thereof and notified the holders thereof that it would not pay the bonds which had become due and payable.

 In the second cause of action plaintiff Ohl charges similar allegations except that he claims to be the owner of $ 13,080 of said general mortgage bonds.

 In the third cause of action both plaintiffs join in the assertion that there was annexed to these bonds in addition to coupons providing for fixed interest at the rate of 4 per cent per annum income interest coupons payable at the rate of two and one-half per cent per annum from September 1, 1938, which income interest was to be paid only if the same should be earned in the fiscal year in which it accrued or in any subsequent year and was payable out of net income to be determined in the manner provided in the Indenture Mortgage and Deed of Trust. They then allege that in every year beginning September 1, 1938 and up to and including the fiscal year beginning September 1, 1948 the defendant either had sufficient net income to pay in full or in part the income interest of 2 1/2 per cent or if, in any fiscal year the net income was not sufficient to pay the same, the excess of net income of subsequent fiscal years was sufficient to pay and discharge in full the income interest unpaid for prior fiscal years. It is further alleged that the defendant through its Board of Directors fraudulently circumvented the payment of these coupons to the plaintiffs and other holders thereof by specified acts set forth in the complaint; and that by reason thereof there was due and owing to the plaintiff Birkins on said coupons the sum of $ 3,252.28 with interest and to plaintiff Ohl the sum of $ 3,522.08 with interest.

 The defendant moved to dismiss the complaint against both plaintiffs on the grounds that they were not the real parties in interest; that the court had no jurisdiction of the claims of the plaintiffs to collect the principal of the bonds in view of the provisions of the New Jersey statute which provides that where a bond and mortgage have been given for the same debt, all proceedings to collect the debt shall be first, a foreclosure of the mortgage, and, second, an action on the bond for any deficiency, N.J.R.S. 2:65-2, N.J.S.A.; and that the matter in the controversy between each of the plaintiffs and the defendant does not exceed the sum of $ 3,000 exclusive of interests and costs. The defendant rested on the complaint, depositions of the plaintiffs and exhibits referred to in said depositions.

 At the same time plaintiffs moved for judgment against the defendant under several of the Federal Rules of Civil Procedure, 28 U.S.C.A., including Rule 56(a) for summary judgment. In addition, there were other motions in connection with projected depositions. Hearing on all of these was deferred pending the determination of defendant's motion to dismiss the complaint.

 The plaintiff George Birkins consented to a dismissal of the complaint against him after hearing on defendant's motion. This dissolved the first cause of action and left Daniel Ohl as the sole plaintiff, supporting the second cause of action and his part in the third cause of action.

 An evaluation of the grounds urged by defendant in support of its motion to dismiss suggests the following considerations. While the complaint states that the plaintiff Ohl generally was the owner and holder of bonds as aforesaid, it was brought out at the argument that he was an employee of the Security Adjustment Corporation and that he had personally obtained possession of the bonds alleged to be held by him from the owners thereof for the purpose of retaining counsel, instituting suit and delivering to the owners of the bonds the proceeds of any judgment which might be obtained less costs of the litigation.

 A grave question arises as to whether the status of Ohl was as an attorney in fact for the purpose of collecting under the bonds or as an assignee for such purpose. If he establishes himself in the latter status he must be regarded as a real party in interest, as defined in Rule 17(a) of the Federal Rules of Civil Procedure, and properly the plaintiff in this action, Rosenblum v. Dingfelder, 2 Cir., 111 F.2d 406, 407; while if it is established that he is an attorney in fact he is not the real party in interest entitled to bring this suit. Clark v. Chase National Bank, D.C., 45 F.Supp. 820; Spencer v. Standard Chemicals & Metals Corp., 237 N.Y. 479, 143 N.E. 651. *fn1"

 Ohl was first interrogated on depositions on March 16, 1950 as to how he became possessed of the bonds. At this hearing his answers were vague and uncertain. He testified that he acquired them in October of November 1949. He did not buy or pay for them but accepted them as trustee for owners whose names he could not give. His arrangement with the holder of each bond was to engage an attorney for him or her to bring suit on the bond for the collection of principal and interest and return the funds to the bond owners after legal fees had been deducted. He stated that he had copies of letters acknowledging his receipt of the bonds and that he would produce them at a further hearing. He made no suggestion at this hearing that he was the assignee of the bonds in question. *fn2"

 At a subsequent examination on March 31, 1950 he stated that he had not written such letters but had prepared a form of letter addressed to himself to be signed and forwarded to him by the bond owner. He produced these letters and one of them became available to the court. It is as follows:

 'Mr. Daniel J. Ohl

 c/o Security Adjustment Corporation

 16 Court Street

 Brooklyn 2, New York

 'Dear Mr. Ohl:

 'This will confirm the understanding which I had with you when the bonds of the Seaboard Ice Company which I own were delivered to you in November, 1949.

 'I did assign and transfer to you all right, title and interest in these bonds in trust, in order that you may bring suit for the payment of the principal amount of my bonds with interest, in your name.

 'It is my understanding that the attorneys you employ are to receive for their services, 50% of all the unpaid conditional interest due on these bonds.

 'I agree that this assignment is to remain effective for a minimum period of 6 months after suit is instituted.

 'If the principal of the bonds ($ 1,000) is paid within the six months' period, I am to receive the principal amount plus any regular interest that may be paid and you are to retain the conditional unpaid interest coupons and continue the suit in your name as my trustee until determination of the action.

 'I agreed at that time to deliver the bonds as soon as possible, and since then I have made delivery of the bonds to you through the Security Adjustment Corporation.

 'Very truly yours, 'Estate of Rose Krulewich Dec'd (s) 'Howard Freeman 'Executor.'

 'Dated- March 22, 1950.

 It is to be observed that the date of this letter is March 22, 1950 and that it postdated the first examination of March 16, 1950. The depositions indicate that it is similar to all the other letters and that they were dated and received in the interim between the two examinations. *fn3"

 The letters themselves are confirmatory of a previous assignee arrangement. While, as indicated, the depositions are vague and, in some instances, contradictory to the allegations of the complaint they are not of such character as to show conclusively that Ohl was an attorney in fact and not an assignee for the collection of the bonds. At best, the position of the fact issues raised in this area of the case are equivocal and they will be resolved with accuracy only upon final hearing. Frederick Hart & Co. v. Recordgraph Corp., 3 Cir., 169 F.2d 580, 581. Hence, the assertions of Ohl are sufficiently unchallenged to prevent the dismissal of the complaint at this stage on the attack that plaintiff is not a real party in interest under Rule 17(a). The depositions further showed that plaintiff had received bonds in the amounts and from parties listed as follows: Bond No. Owner Face Value M 149 Louis Segal $ 1,000 M 171 " " M 199 " " M 212 " " M 432 " " M 163 Estelle T. Hakes " M 164 Harry Sylvester " M 172 Joaquin Pereira " M 204 Security Adjustment Corp. " M 443 " " M 205 Howard Freeman, Executor " M 431 Helen T. Rind " M 148 Alvano T. Nickerson " A 166 " $ 80.00


© 1992-2004 VersusLaw Inc.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.