Bullard v. City of Cisco, 290 U.S. 179 (1933)

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Bullard v. City of Cisco

No. 10

Argued October 12, 1933
Decided December 4, 1933
290 U.S. 179

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

1. The right of a transferee of corporate bonds and coupons, payable to bearer, to sue in a federal court, notwithstanding a disability of his transferrers in that regard, turns on the nature of the transfer -- whether it be real or only a colorable device to enable the transferrers, through the favor and name of the transferee, to invoke a federal jurisdiction which they could not invoke in their own right. P. 187.

2. Numerous owners of defaulted municipal bonds and coupons, drawn payable to bearer, transferred them under a "bondholders’ protective agreement" to four persons, styled a "bondholders’ committee," for the purpose of conserving, salvaging, and adjusting the investment. To this end, the transferees were invested with full title to the securities and with broad discretionary powers to act by refinancing, composition, exchange of securities, and other means, including litigation. Held:

(1) That the transferees were owners of the securities subject to an express trust. P. 189.

(2) That, under § 41(1), Title 28, U.S.C. their right to sue in the federal court to collect the bonds and coupons depended upon their own citizenship and the amount they sued for, not upon the citizenship of the transferrers and the amounts of their individual interests. P. 190.

62 F.2d, 313 reversed.

Certiorari, 289 U.S. 718, to review a judgment of the Circuit Court of Appeals which affirmed, with a modification, a judgment of the District Court dismissing an action for want of jurisdiction. Both of the judgments are here reversed.