Real-Estate Trust Co. of Philadelphia v. New England Loan & Trust Co.

93 F. 701, 1899 U.S. App. LEXIS 3013

• Court: U.S. Circuit Court for the District of Southern New York
• Decided: March 6, 1899
• Status: Published

Opinion

LACOMDE, Circuit Judge.

The written contracts contain no provisions regulating what is to be done when the loan company becomes bankrupt. From the day it went into the hands of the receiver it has been powerless to discharge any of the functions contracted for. It happens that the receiver, the officer of the court, finds in his hands some money paid by mortgage debtors on their mortgages. To what extent the loan company might have used this, if it had continued as a going concern, and as the agent of the trustees to collect such interest, is wholly immaterial. The mortgages were all transferred to the trustees, and expressly pledged as security for the debentures. The pledge of each mortgage carried with it, not only the principal, but also all interest which might accrue thereon. Interest and principal alike- should be treated as trust funds. The general creditors have no interest in either. Instructions accordingly.