Nature of the Case
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Facts
Van Swerigen Corp. issued notes in 1930 and named Guaranty Trust Co. (D) as the trustee with power and obligations to enforce the rights of the noteholders against the assets of the corporation, and the Van Swerigens. One year later, when the Corporation could not meet its obligations, D agreed to a restructuring of the notes; repurchase of the notes at 50% of face value and 20 shares of the corporation's stock for each $1,000 note. York (P) received $6,000 of the notes from a donor who has not accepted D's offer. P sued D in federal court under diversity on a class action for a breach of trust. D moved for summary judgment based on a summary judgment previously granted in Hackner v. Guaranty Trust case where that summary judgment was based on the statute of limitations. P contended that the statute of limitations did not bar the suit because the suit was one in equity and under federal rules, federal courts in equity consider the delay in bringing suit but are not strictly bound by the statute of limitations. D got they summary judgment. On appeal, the Circuit Court of Appeals found that in a suit brought in equity, the court was not required to apply the state statute of limitations even though it would govern similar suits in state courts, this despite the fact that the exclusive basis of federal jurisdiction was diversity of citizenship. If the suit had been taken in state court, it would have been barred by the state statute of limitations. D argued for application of the state statute of limitations. The Supreme Court granted review to decide whether federal courts should apply state statutes of limitations in such cases.
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