Bryce v. National City Bank of New Rochelle

17 F. Supp. 792
CourtDistrict Court, S.D. New York
DecidedFebruary 2, 1937
StatusPublished
Cited by9 cases

This text of 17 F. Supp. 792 (Bryce v. National City Bank of New Rochelle) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bryce v. National City Bank of New Rochelle, 17 F. Supp. 792 (S.D.N.Y. 1937).

Opinion

WOOLSEY, District Judge.

My judgment in these causes is that the complaints be dismissed without costs.

*793 I. The plaintiff’s quest in these causes is for property to satisfy a judgment on an award of arbitrators entered in his favor on June 21, 1933, in the New York Supreme Court of Westchester county against the Brsemoor Corporation.

II. The National City Bank of New Rochelle, now in the hands of a receiver appointed by the Comptroller of the Currency—hereinafter referred to as the bank .—is a corporation formed under the National Banking Act, with its principal office in New Rochelle, in the county of Westchester, N. Y.

Both the bank and its receiver are joined in these causes as defendants with Brsemoor Corporation, the judgment debt- or.

III. On March 4, 1933, the bank closed and has never reopened.

On March 21, 1933, the Comptroller of the Currency appointed Rennie, then president of the bank, the conservator thereof.

On August 4, 1933, at the request of Rennie, the Comptroller appointed Lough-man as conservator of the bank to succeed Rennie.

On February 1, 1934, the Comptroller appointed Loughman as receiver of the bank.

The Brsemoor Corporation—hereinafter referred to as Brasmoor—is a New York corporation, formed under the Business Corporations Law of New York State (Consol.Laws, c. 4), on March 30, 1932, to be used by the bank as its nominee or agent in matters with which it could not or did not wish to deal direct. The stock of Braemoor was all owned by the bank. Its officers were bank employees who were paid by the bank, and it was in effect an appendage of the trust department of the bank. But, although wholly controlled by the bank, it was a separate legal entity—as has already been decided by the New York Supreme Court for Westchester county.

IV. The events which led to the plaintiff’s securing judgment against Brsemoor are, of course, merged therein, but, in order to clarify the situation, it is necessary to consider them briefly and also certain other facts which are common to the two causes on trial.

On or about March 17, 1930, the White Plains Daily Corporation gave to the bank a bond for $80,000, and as security therefor a mortgage on its land at 107 Mamaroneck avenue, White Plains. On February 17, 1932, an additional bond and mortgage for $10,000 was given by it to the bank. These two mortgages were duly consolidated as a single first mortgage of $90,000 on the same date.

«By December, 1932, the White Plains Daily Corporation was in default under this mortgage, and had filed a petition in bankruptcy in this court.

The bank was desirous of getting as much salvage as it could out of the situation, and, being under the impression that the building at 107 Mamaroneck avenue was peculiarly adapted to newspaper uses, entered into conversations, on or about December 30, 1932, with the plaintiff Bryce looking to his taking over fhe property and operating it as a newspaper plant.

Some time early in February, 1933, it was explained to Bryce that, as it was a national bank, the bank could not buy or own stock in a newspaper plant, but that the contract with him could only be made with its subsidiary Brsemoor. This was the first time Bryce had heard of Brsemoor. But before the contract was signed I find that he thoroughly understood that the bank was not and could not be a party to it. He, therefore, went into this newspaper venture trusting to Brsemoor’s credit only, and knowing that Braemoor only was legally responsible to him, though he knew ¡that the whole matter was being fostered by the bank.

• On February 28, 1933, a contract was entered into between Bryce and Braemoor ■which, so far as here important, recited, jinter alia, that Braemoor had agreed to try 'to acquire title to the real property, machinery, etc., of the White Plains Daily ■Corporation of 107 Mamaroneck avenue, White Plains, then in bankruptcy, and then to give a lease of the property to a new corporation which was to be organized by Bryce, and that the preferred capital stock thereof was to be subscribed for jointly by Bryce and Braemoor.

Brsemoor agreed, so far as here relevant, that it would use its best endeavors (1) to secure title to the real and personal property of the White Plains Daily Corporation provided it did not have to bid any amount in excess of the mortgages thereon; (2) to secure an agreement from the bank as holder of the first mortgage consenting to lease of the premises to the new corporation as tenant, and an agreement from the bank not to foreclose the mortgage during the term of the lease so long as the tenant should not be in default *794 under the terms thereof; (3) to sell to the new corporation the office furniture and equipment for .5 shares of preferred stock and 500 shares of the common capital stock; and. (4) to subscribe for 50 shares uf the preferred stock at $100 per share.

Bryce agreed (1) to organize, under the laws of the state of New York, a new corporation to be known as the Westchester Social .& Shopping News, Inc., with a capital stock of 250 shares of the par value of $100 each, of 7 per cent, cumulative nonvoting preferred stock, and 500 shares of no par value commoii stock; (2) to allow Braemoor to have two directors in the new corporation; (3) to cause the new corporation to sign the lease above mentioned, a copy of which was annexed to the agreement.

It was agreed by both parties, inter alia, that they would arbitrate, under the provisions of the Arbitration Law of the State of New York (Consol.Laws, c. 72), any and all disputes or controversies of any sort which might arise under the agreement.'

On March 17, 1933, the referee in bankruptcy having charge in Westchester County authorized the sale of the property of the White Plains Daily Corporation to Braemoor.

On March 24, 1933, a deed by the Irving Trust Company, as its trustee in bankruptcy, conveyed title thereof to Braemoor by deed providing that it was subject to the outstanding first mortgage lien of $90,000 held by the bank. Through some error the deed was not delivered that same day, and when later delivered it was not recorded by Braemoor.

V. Bryce performed his part of the contract.

On March 1st the bank wrote the plaintiff a letter which reads ás follows:

“We wish to advise you that Braemoor Corporation is a wholly owned subsidiary of The National City Bank of New Rochelle, having been formed for the purpose of acting as nominee for the bank in such cases as it may be deemed necessary. The various directors and officers are employees of the bank and hold their office at the pleasure of the bank.
“In connection with a certain agreement dated February 28, 1933 between Braemoor Corporation and yourself, Frank W. Bryce, this bank hereby agrees to the terms and conditions as outlined in the said agreement.”

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Bluebook (online)
17 F. Supp. 792, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bryce-v-national-city-bank-of-new-rochelle-nysd-1937.