Jermyn v. Searing (225 N.Y. 525, 1919)

Crane, J.

Joseph J. Jermyn at all the times herein mentioned was a wealthy mine owner, resident in Scranton, Pennsylvania. Searing & Co. was a copartnership carrying on a banking and promoting business with offices at 7 Wall street, New York city.

The Empire Trust Company was a banking corporation of New York city which acted as trustee under mortgages to secure the bonds issued or to be issued by the four railroads hereinafter mentioned.

• The Delaware and Eastern Railroad Company was organized and incorporated in November, 1904, under the laws of the state of New York with an authorized capital of $600,000, to own and operate about forty-eight miles of railroad extending from the village of East Branch to the village of Arkville with a spur from Shavertown to Andes, all in the county of Delaware, New York state. Construction was commenced in September of 1905 and continued to completion in September of 1907. $1,000,000 par value first mortgage bonds were issued by this railroad company, $600,000 of which were placed by Searing & Co. upon the market.

The Empire Trust Company was the trustee under the mortgage to secure these bonds executed on or about January 1st, 1906.

The Hancock and East Branch Railroad was organized on July 11th, 1906, with a capital stock of $200,000, for the purpose of building a railroad from Hancock to East Branch, a distance of about seven miles. On or about January 2d, 1907, it executed