Hamer v. New York Railways Co.

Citations

• 244 U.S. 266
• 37 S. Ct. 511
• 61 L. Ed. 1125
• 1917 U.S. LEXIS 1632

Syllabus

<p>With the delivery of a mortgage to secure bonds of one corporation there was delivered to the trustee stamped on each bond a guaranty by another corporation whereby the latter guaranteed “to the Trustee of the within-mentioned mortgage, for the benefit of the holders thereof, punctual payment of the principal of the within bond and the interest thereon . . . according to the tenor of the several coupons belonging thereto.” Upon foreclosing the mortgage, the trustee obtained judgment against the guarantor company for a deficiency.</p> <p>Held: (1) That whether the guaranty were treated as having created an aggregation of as many obligations as there were bonds, each constituting a separate contract between the guarantor and the respective bondholder, or a-single-obligation for the benefit of the bondholders collectively, in either case there was a merger of the original cause or causes of action in the single judgment recovered by the trustee.</p> <p>(2) The judgment being held as an unit by the trustee, for the benefit of all the bondholders, a suit to enforce it by a majority of-them, though alleged to be on behalf also of all others similarly situated, could not be maintained without joining the trustee as a necessary party.</p> <p>(3) In such suit, for the purpose of testing the District Court’s jurisdiction on the basis of diverse citizenship, the trustee, though made a defendant, must be realigned as a plaintiff, no hostility on its part appearing beyond a refusal to institute the action, assignable to no other motive than to aid the federal jurisdiction, and its real attitude being friendly as evinced by its answer.</p> <p>One corporation, after guaranteeing bonds of another, passed into a receivership in the District Court which ended in foreclosure of its own bonds and sale of its property, without reservation in the decree of liens or similar rights or power of the court concerning them. Meanwhile by independent proceedings in a state court the bonds of