The opinion of the court was delivered by: EGAN
These two actions arise out of the same situation and will be disposed of at one time. Originally begun in the state courts, they were removed here on motion of the defendant because of the diversity of citizenship that exists.
The plaintiff, Netherlands Trading Society, a commercial banking house, is a Dutch corporation having its principal place of business in this country, in New York City. Defendant, Sentry Corporation, is a Delaware corporation having its principal place of business in Philadelphia. It is a holding company owning outright the stock of four subsidiary companies, including that of Sentry Sanitary Corporation.
In the course of business, plaintiff became the holder of two of a series of six promissory notes issued by the defendant, Sentry Corporation, each in the amount of $ 60,000 and both payable February 15, 1958. These notes were not paid at maturity and three days later, on February 18, 1958, plaintiff instituted foreign attachment proceedings in assumpsit against the defendant to recover on the notes in the Common Pleas Court of Philadelphia County. In accordance with state court practice, plaintiff later filed its complaint in that case setting forth its cause of action, a copy of which was served on the defendant.
The Liberty Real Estate Bank and Trust Company and the Sentry Sanitary Corporation were named as garnishees in the attachment proceedings. The bank filed its report as garnishee in the state court stating that it holds funds of the defendant in the amount of $ 3,283.32. No return has yet been filed by Sentry Sanitary Corporation.
The Common Pleas Court issued a rule to show cause why the injunctive relief prayed for in the complaint in equity should not be granted preliminarily and fixed a date for hearing. Before hearing could be held, the defendant removed to this Court, the original action in foreign attachment, becoming Civil Action No. 24280 and the equity proceedings becoming Civil Action No. 24281. Plaintiff renewed its motion for a preliminary injunction in the latter case after it landed here, except that it now asked that the United States Marshal be the custodian instead of the Sheriff of Philadelphia County.
On February 20, 1958, a few days after the commencement of the assumpsit action in the Pennsylvania court, the defendant, Sentry Corporation, instituted suit in the United States District Court for the Southern District of New York against the several holders of the series of notes referred to, including plaintiff here, wherein it seeks, inter alia, to rescind the transaction out of which they were originally issued.
In substance, defendant alleges that the plaintiff is not a holder in due course; that the notes in question were delivered to a payee who negotiated them to plaintiff and others under suspicious circumstances and that by reason of the payee's fraud, there was a failure of consideration of which plaintiff had actual or constructive notice prior to the time it took the notes.
Obviously we are not here concerned with the merits of the controversy. The only matters before us for decision at this time are the motions filed by the respective parties which are:
1. Plaintiffs motion for preliminary injunction.
2. Defendant's motion for stay of motion for preliminary injunction (C.A. No. 24281).
3. Defendant's motion for dismissal of motion for preliminary injunction (C.A. No. 24281).
4. Defendant's motion for stay of the assumpsit action (C.A. No. 24280).
5. Defendant's motion for dismissal of assumpist action (C.A. No. 24280).