Northern Counties Investment Trust, Ltd. v. Street

Headnote

Northern Counties Investment Trust, Ltd., v. Street, 165 App. Div. 908 , affirmed.

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered November 25, 1914, affirming a judgment in favor of defendants entered upon a dismissal of the complaint by the court on trial at Special Term in an action to charge defendants as trustees for breach of their fiduciary duties either as directors of a corporation or as a committee for all of its second mortgage bondholders. The question was as to the liability of six of the seven directors of an insolvent corporation who, as directors, succeeded in arranging for a sale of all the company’s property to pay its second mortgage bondholders (its stock being worthless and its first mortgage bondholders amply secured), and who then, as a self-appointed and so-called “ readjustment ” committee representing (as they contend) only depositing bondholders, having, according to the previous arrangement with the purchaser, bought the property at foreclosure sale, sold it at

an advance, and distributed the difference among the depositing bondholders alone. The question "was whether they were liable to the non-depositing bondholders.