Dunn v. Reading Trust Co.

CLARK, Circuit Judge.

A national bank became a trustee under a mortgage and sold the bonds to the public. Seven years after this transaction (1925-1932) the mortgagor defaulted in two successive installments of interest. The trustee bank followed the Micawber theory of the day and paid the overdue interest itself. Although with no assurance that such theory was shared by the bondholders, they were nevertheless left with rosy dreams of profitable property. The rude awakening followed upon the banking holiday and the insolvency of this bank.

The receiver now claims the repayment of these advances…