Before GOODRICH, and McLAUGHLIN, Circuit Judges, and LORD, District Judge.
McLAUGHLIN, Circuit Judge.
The central issue on this appeal is whether a certain purported assignment of all the remaining claims of a corporation in receivership operated to transfer title to a subsequently adjudicated right to participate in damages for the redress of a fraud practiced upon the assignor many years earlier when it was the owner of particular stock certificates.
The corporation in receivership is the Lycoming Trust Company of Williamsport, Pennsylvania. The right to participate in damages is based upon that company's ownership in July, 1936 of 175 shares of the preferred and 549 shares of the common stock of Williamsport Wire Rope Company. All of these shares were sold by the liquidating trustees of the Lycoming Trust Company to Bethlehem Steel Company in December, 1936.
In 1937 all of the assets of Williamsport Wire Rope Company were sold to Bethlehem Steel Company. Nine years later, in 1946, some stockholders, former stockholders, and former bondholders of Williamsport Wire Rope Company began the within-named class suit to set aside the 1937 sale of Williamsport's assets to Bethlehem on the ground that such sale had been tainted with fraud. The trustees of the Lycoming Trust Company did not join in this action either as petitioners or as interveners, and so far as the record shows took no interest in the proceedings until after the adjudication.
The Lycoming trustees proceeded with the liquidation of that company. By August 9, 1952 they believed they had liquidated all of the assets transferred to them with the exception of a few notes, judgments and other claims which they considered to be of little or no value. They accordingly mailed to each of the Trust Company depositors a check described as "the 18th and final dividend of 4% which the holders of participation certificate 'A' will receive", and in the covering letter, they wrote:
"The Trustees have in their possession a very few notes and judgments remaining unpaid, and which, in their opinion, are of questionable value. These few remaining assets will be sold at public sale to the highest bidder, at 2:30 P.M., on the 17th day of September 1952, in the corridor of the Court House at Williamsport, Pennsylvania. The list of the assets to be sold will be available for examination at the office of the Sheriff of Lycoming County in the Court House, Williamsport, Pennsylvania."
They then inserted the following advertisement in the Williamsport Sun once a week for three consecutive weeks, commencing August 29, 1952:
"Notice is hereby given that there will be exposed at public sale on the seventeenth day of September, 1952, at 2:30 P.M., in the corridor of the Court House at Williamsport, Pennsylvania, certain assets now owned and held by Herbert M. Carson, Ira M. Witt and Peter G. Cameron, Liquidating Trustees of the Non-Liquid and Depreciated Assets of Lycoming Trust Company, and consisting of promissory notes secured by judgments entered in the Court of Common Pleas of Lycoming County and promissory notes not secured by judgments, certain shares of corporate stock, one piece of real estate and whatever other items appear on the list hereinafter mentioned, all of which are more specifically and particularly shown on a certain list of assets, which list is presently lodged in the office of the Sheriff of Lycoming County at the Court House, in Williamsport, Pennsylvania, and may be examined by any prospective bidder on any day except Saturday, between 9:00 A.M. and 5:00 P.M.
"The aforesaid assets will be sold to the highest bidder either in bulk or separately, or partly in bulk and partly separately, at the decision of the sellers. The right is reserved to withdraw from the sale any part or all of the items hereinabove referred to and as shown on the aforementioned list at any time up to the date and hour of said sale. The right, however, is reserved to reject any and all bids.
"Williamson & Cupp, Solicitors of the Liquidating Trustees of Lycoming Trust Company"
The list at the sheriff's office referred to in both the letter and the advertisement contained no reference whatsoever to the Williamsport stock certificates, to any claim which the trustees might have against Bethlehem Steel Company in connection with the sale of Williamsport's assets, nor to the proceeding which had been instituted in part by other former stockholders of Williamsport Wire Rope Company against Bethlehem.
At the public auction, held as scheduled on September 17, 1952, only two bids were made: one for $25 by Mr. Cupp, the attorney for the liquidating trustees; the other for $30 by Mr. Coble on behalf of Interstate Finance and Mortgage Company, the appellant herein. The $30 bid was accepted.
Immediately after the sale the parties made arrangements for the formal transfer of the assets sold to Interstate Finance and Mortgage Company. It was agreed that Mr. Coble should return to Williamsport in a week or ten days and at that time the Lycoming trustees would have a rubber stamp ready with which they could formally endorse the notes and other ...