Welch v. Northern Bank & Trust Co.

Citations

• 100 Wash. 349
• 170 P. 1029
• 1918 Wash. LEXIS 747

Syllabus

<p>Action—Joinder—Same Transaction. A cause of action arising out of a breach of contract relating to the sale of bonds to the plaintiff, and a cause for false representations inducing the purchase, are properly united as arising out of the same transaction, where recovery was sought for nonperformance of or negligent disregard of the contract, resulting in fraud upon the purchaser of the bonds.</p> <p>Corporations—Trust Deed—Corporate Bonds—Rights of Bondholders. Where the sale of corporate security is made through the mediumship of a trustee, he accepts an active trust, and his liability to purchasing bondholders must be measured by the terms of the trust deed securing the issue of the bonds, and does not attach merely from the time of the purchase of the bonds.</p> <p>Same. In such a case, the trustee is liable to the bondholders for negligence in failing to preserve the title to the property and retire a prior lien, where the deed contemplated that the bonds would be issued upon titles vested in the company, for the equal pro rata benefit .of all the bondholders, who were to be secured by first lien, and that the existing liabilities would be retired by. the bond issue, and further reserved the discretion of selling and handling the property, and provided that no bondholder should begin any suit for the foreclosure of his bond and that the trustee should receive reasonable compensation for all services rendered in execution of the trust.</p>