United Verde Copper Co. v. Irving Trust Co. , 248 A.D. 583 ( 1936 )

Plaintiff was the owner of certain Fund B investment trust certificates issued under an indenture, dated April 15, 1927. Defendant I. M. C., Inc., is the manager of the investment trust, and defendant Irving Trust Company the trustee thereof. The Fund B indenture creating an investment trust, provided for the issuance of certificates representing separate, revocable trusts. To facilitate the management of the separate trusts, the indenture provided that they could be commingled to form a common fund. While plaintiff held its certificates, the United States government threatened to levy taxes directly against the common fund. To prevent the certificate holders from revoking their trusts in an attempt to escape sharing the risk of the threatened tax, the manager set up a reserve in the amount of the threatened tax. Plaintiff revoked its trust while the reserve was in existence. Plaintiff demanded reimbursement in the event that the reserve was not ultimately used to pay the threatened tax. Finally the government withdrew its threat. Plaintiff renewed its demand for reimbursement. Its demand was refused and the entire reserve, including plaintiff’s contribution, was canceled and thus automatically credited to the various trusts in existence at the time of the cancellation. Plaintiff brings this action to recover its proportionate share of the contingent tax reserve fund. The court directed a verdict in favor of defendants, after trial at Trial Term, without a jury. Judgment dismissing the complaint on the merits affirmed, with costs. No opinion. Present — Martin, P. J., McAvoy, O’Malley, Townley and Dore, JJ.; Martin, P. J., dissents and votes to reverse.