Reed v. Farmers National Bank

63 Pa. D. & C. 591, 1948 Pa. Dist. & Cnty. Dec. LEXIS 402
CourtPennsylvania Court of Common Pleas, Northumberland County
DecidedJune 29, 1948
Docketno. 789
StatusPublished

This text of 63 Pa. D. & C. 591 (Reed v. Farmers National Bank) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Northumberland County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reed v. Farmers National Bank, 63 Pa. D. & C. 591, 1948 Pa. Dist. & Cnty. Dec. LEXIS 402 (Pa. Super. Ct. 1948).

Opinion

Troutman, J.,

Plaintiff, Howard Reed, filed a bill in equity for discovery in aid of pleadings in behalf of himself and all plaintiffs in actions at law now pending in the Court of Common Pleas of Northumberland County to nos. 86 to 106, inclusive, and 162 and 163, February term, 1946, alleging that all of said actions arise out of actions, matters and things therein complained of, or to be complained of, and in which the interests, insofar as the purposes of the bill are concerned, are common and identical and constitute sufficient grounds for uniting the causes of action. All of the said suits are actions in trespass.

The bill avers that plaintiff and all members of the class represented by him are owners of certain bonds issued by the Montgomery-Clinton School Association, or purported to be issued by it, all of which bonds were authenticated, or purported to be authenticated, by defendant in its capacity as trustee, and that defendant, as trustee for bondholders under the mortgage of Montgomery-Clinton School Association, paid all of the coupons due or purporting to be due to the various holders thereof, without question upon presentation, until January 1, 1944, upon which date, when coupons were presented by plaintiff and other plaintiffs, they were dishonored by defendant because, as informed by defendant, the coupons were not valid obligations of the said association and not entitled to payment.

[593]*593It is averred that plaintiff, Howard Reed, is the owner of bonds of the face value of $17,000, and the approximate face value of the bonds owned by the other members of the class represented by plaintiff is $90,000; and all of the said bonds are coupon bonds negotiable in form, with both the instrument and the coupons attached thereto, payable to bearer on the several dates thereof.

The bill further avers, upon information and belief, that defendant in its capacity as trustee and in its proper corporate person through its officers knew, had known, and in the exercise of due care should have known and was on notice in both capacities that the bonds and coupons held by plaintiff and other plaintiffs were not valid obligations of the said association and neglected to inform plaintiff and those represented by him, from taking proper steps to protect themselves, but on the contrary, defendant actively concealed the facts so set forth and conspired and cooperated with others to conceal said facts and failed to disclose facts coming to its knowledge in such a way as to be bound by such knowledge in both of its capacities, which, plaintiff alleges, may constitute felonies by other persons which defendant herein not only failed to disclose, but may have condoned, concealed and compounded and in so doing, said defendant was guilty of negligence, fraud and breach of trust, whereby plaintiff and those whom he represents herein were damaged.

The bill further avers that plaintiff and those whom he represents are unable to prepare and file a complete and precise statement of their causes of action in the suits which they have instituted against defendants herein, because they do not know the various numbers of the various bonds which were truly authenticated; the various times of presentation and payment of the various coupons, and which of them were coupons appurtenant to valid obligations and which were appurtenant to obligations of said Montgomery-Clinton [594]*594School Association which are alleged to be invalid; the times when defendants knew, or should have known, of the alleged defects of said obligations, and other like matters, all of which facts are exclusively within the knowledge of defendants, because defendants kept, as part of their corporate duties under the trust indenture issued in connection with the issue of the said bonds, all records of authentication, redemptions, interest payments, and other like matters.

The bill prays the court to make an order upon defendant requiring it to produce for inspection by plaintiff, his agents and attorneys, at such time and place and under such circumstances and conditions as the court shall decree all bonds, coupons, files, day books, journals, ledgers, correspondence, deposit slips, or duplicates thereof, resolutions, or copies thereof, all records of authentication, redemptions, interest payments, and other like matters in defendant’s possession, under its control, or known to it concerning, any and all bonds or coupons of said Montgomery-Clinton School Association, whether issued or unissued, valid, or alleged to be invalid, authenticated or unauthenticated, redeemed or canceled, or cremated, or unredeemed or outstanding, in which the Montgomery-Clinton School Association is or purports to be the obligor.

An answer was filed by defendants in which the averments of the various paragraphs of plaintiff’s bill in equity are denied and prays that the bill for discovery be dismissed. The answer avers that the mortgage under which defendants are alleged to be trustee for the bondholders is recorded and such mortgage, to which plaintiff has access, sets forth the numbers and kinds of bonds authorized to be issued and the manner in which they are to be executed and authenticated, all of which information is available to plaintiff. For further answer, defendants deny that under the trust indenture issued in connection with [595]*595the issuance of said bonds it was the duty of defendant trustee to keep a record of authentications, redemptions, interest payments and other like matters, and on the contrary, aver that it was the duty of the association to execute and deliver to the trustee all bonds authorized and that it then became the duty of the trustee to certify and return all bonds to the association and that when the bonds in the aggregate sum of $200,000 as authorized in said mortgage were issued and executed by the proper officers of the said association and delivered to the trustee, they were all authenticated by a certificate endorsed thereon by the trustee and all of said bonds were returned to the association as provided in said mortgage and the trustee secured from said association a proper receipt therefor, dated April 16, 1929. Defendants deny that they were obliged to keep a record of authentications, redemptions or interest payments under the terms of said mortgage.

Defendants, for further answer, aver that the prayer of plaintiff’s bill must be denied for the reason that the subject matter of the facts sought to be inquired into are not stated with sufficient precision to disclose any materiality to the determination of the issue at law and the particular bonds, coupons, files and other papers and documents desired are not designated and the court is without power to make an order to direct defendants to allow plaintiff to examine all bonds, coupons, files, etc., in defendant’s possession, regardless, whether the papers desired to be examined are material and pertinent.

From the testimony taken in support of plaintiff’s bill and defendants’ answer, the chancellor makes the following:

Findings of fact

1. Plaintiff, Howard Reed, is a resident of the Borough of Hughesville, Lycoming County, Pa.

[596]*5962. Defendant, Farmers National Bank of Watson-town, Pennsylvania, is a National bank corporation.

3.

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Bluebook (online)
63 Pa. D. & C. 591, 1948 Pa. Dist. & Cnty. Dec. LEXIS 402, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reed-v-farmers-national-bank-pactcomplnorthu-1948.