Meckel v. Continental Resources Co.

In 1969 the Florida Gas Company (defendant) issued convertible debentures that were redeemable by Florida Gas at any time under an indenture. Citibank, N.A. (defendant) was the indenture trustee. The indenture provided that notice of redemption of the debentures by Florida Gas could be given to the debenture holders by first-class mail between 30 and 60 days before the redemption date. In June 1979, Florida Gas agreed to merge with Continental Resources Co. (defendant). Florida Gas decided to redeem all its convertible debentures and instructed Citibank to send redemption notices by first-class mail to the debenture holders, giving the debenture holders until August 20 to convert their debentures into common stock. Three debenture holders who were customers of J. W. Seligman & Co. (Seligman) did not convert their debentures into common stock. Seligman filed a lawsuit in federal district court on behalf of their customers, arguing that Florida Gas and Citibank failed to give adequate notice of the redemption. At trial, Citibank submitted an affidavit describing their regular office procedure for mailing notices. The district court granted summary judgment for Florida Gas and Citibank, holding that the companies provided adequate notice under the debenture indentures by sending the notices via first-class mail. Seligman appealed.