Mermelstein v. Thermoid Co.

85 F.2d 913 | 3rd Cir. | 1936

BUFFINGTON, Circuit Judge.

In the court below Milton E. Mermelstein, owner of twelve five-year 6 per cent, sinking fund gold notes issued by the Thermoid Company, brought suit against such company to recover such matured bonds. Thereupon the latter moved to dismiss on the ground that plaintiff had no individual cause of action, but was bound by the provision that the individual bondholders had no right of action until the trustee had neglected to institute proper proceedings by way of remedy at the request of 25 per cent, in principal amount of outstanding notes. On the other hand, the plaintiff contended that, by virtue of a particular maturity provision in the bond, he had an unrestricted cause of action on maturity default After the case was decided the same clause came m question m a suit m the Court of Errors and Appeals of New Jersey, and it was there held that the individual stockholders could maintain a suk . -

, ., After argument and serious consideration, we are constrained to agree with the conclusion reached by the Court of Errors and Appeals of New Jersey in the case of Bullowa v. Thermoid Company, reported in 114 N.J.Law, 205, 176 A. 596

The bonds were issued by a New Jersey corporation, the highest court of that state has construed the contract in its able and exhaustive opinion, and, after protracted study and careful consideration, we are constrained to adopt its view. So regarding the judgment below is reversed and the cause remanded for procedure in due course in accord herewith.