Summary
In Haskins v. Albany Hudson R. P. Co., 74 App. Div. 31; Fleming v. Fairmont M.R. Co., 49 L.R.A. (N.S.) 155, supra, and the cases therein cited.
Summary of this case from Bartol v. G.B.S. Brewing Co.Opinion
June Term, 1902.
C.V. Nellany, for the appellant.
Harcourt Bull, for the respondent.
There is a single question of law to be determined upon this appeal. On the 1st of March, 1899, the defendant made and executed a certain trust mortgage to the Colonial Trust Company, for the purpose of securing an issue of bonds, aggregating $2,500,000. The plaintiff, before maturity, purchased two of the coupons of certain of these bonds, and brings this action to recover the amount promised to be paid upon such coupons. The defendant urges that the coupons, in the case at bar, are subject to the conditions of the bond and mortgage, and that this action is not maintainable because of the limitations contained in such bond and mortgage.
We are of opinion that the contention of the defendant cannot be maintained. Assuming that the coupons are to be governed by the conditions of the bond and mortgage, we are unable to find any limitation applying to the coupons after they are detached from the bonds and become in law negotiable instruments. ( McClelland v. Norfolk Southern R.R. Co., 110 N.Y. 469, 475, and authorities cited; Chase National Bank v. Faurot, 149 id. 532, 536.) The defendant in the trust mortgage specially provides that the "coupons shall always be transferable by delivery," thus clearly indicating an intention to make these coupons negotiable instruments, and subject to the same law in the hands of bona fide purchasers before maturity as promissory notes.
The provisions of the 5th article of the mortgage all relate to remedies of the trustee and bondholders, and were clearly never intended to apply to the coupons after they had been severed from the bonds and had thus taken on a new character. ( Williamsburgh Savings Bank v. Town of Solon, 136 N.Y. 465, 481.) This view of the question seems to be supported by the entire tenor of the mortgage, and there would seem to be no good reason why the defendant should not comply with the promise contained in these coupons, which read as follows: "Albany and Hudson Railway and Power Company will pay to the bearer hereof, at its financial agency in the city of New York, Twenty-five dollars ($25) in gold coin on the first day of A.D. 1 , being six months' interest on its Mortgage Bond No. ."
It was said in Batchelder v. C.G.W. Co. ( 131 N.Y. 42, 47): "It was, of course, correct for the trial court to authorize judgment to be given for the past due coupons, as by the express terms of the contract, as manifested by the mortgage, bond and coupon, the interest was made payable unconditionally on a specified day, and this was entirely consistent with the holding that the principal sum was not due; because, by the terms of the contract, it was not made unconditionally payable on the happening of the event mentioned."
The judgment appealed from should be affirmed, with costs.
All concurred, except GOODRICH, P.J., taking no part.
Judgment affirmed, with costs.