Opinion
May Term, 1897.
Samuel H. Ordway, for the plaintiff.
Henry M. Ward and George L. Nichols, for the defendant.
The facts admitted are very voluminous, are stated in the record, and need not be recited here.
The first question presented is whether the holders of the bonds were entitled to interest thereon from the time the principal became due and payable, January 1, 1891, until the time such principal was actually paid, July 1, 1891. The principal, by the terms of the bonds, was made payable at a specific time and place, January 1, 1891, at the Union Trust Company, in the city of New York. Payment not having been made at the time agreed upon, the holders of the bonds could maintain an action without presentation or demand to recover such principal. In such action, if the company alleged and proved that it had the money to pay the principal ready at the time and place of payment agreed upon, and thereafter kept it there, or paid it into court, the holders could recover only the principal without interest or costs, and would be chargeable with defendant's costs, but unless such allegation and proof were made the holders could recover not only the principal, but the interest and costs also, and nothing would stop the running of the interest except actual payment of the principal or tender duly made. ( Hills v. Place, 48 N.Y. 520, and cases therein cited.)
It is admitted that the company did not have the money to pay the principal ready at the time and place of payment agreed upon, nor at the time agreed on at any other place to pay the principal. Interest, therefore, ran upon the unpaid principal until the time it was actually paid, unless there was a tender of such principal on February 24, 1891, duly made. We are unable to find in the statement of admitted facts anything showing such tender. The only fact claimed as amounting to such tender is the notice of February 21, 1891. That notice was published in three New York newspapers for one week (presumably on each day of the week, although a daily publication is not admitted). Some of the holders of the bonds lived in Boston, Mass., and some in Baltimore, Md. It is admitted that the notice was not actually brought to their attention until after July 1, 1891. This notice stated that the principal of the bonds would be paid February 24, 1891, not at the place of payment agreed upon in the bonds, but at the Mercantile Trust Company in New York city, and that no interest would be paid after that date. It needs no argument to show that this notice in no way constituted a tender of payment of the principal so as to stop the running of interest. The holders of the bonds were, therefore, entitled to interest on the bonds until the principal was actually paid, July 1, 1891.
The next question presented is whether the rate of interest to which the holders were entitled was seven per cent, the rate specified in the bonds, or the legal rate of interest in 1891, which was six per cent. There was no agreement in the bonds to pay interest after the maturity of the bonds, January 1, 1891, and unless there was some agreement outside the bonds to pay such interest the recovery of interest would be only in the nature of damages for the breach of contract to pay the principal on January 1, 1891, and interest so recoverable as damages would be only at the legal rate, six per cent. It is claimed that an agreement was made to continue paying interest at the rate of seven per cent until the payment of the principal was actually made, by the circular notice of December 22, 1890. This notice was brought to the attention of the holders of these bonds, and they relied upon its terms, and were thereby induced to forbear presenting their bonds for payment until July 1, 1891. This notice was given by the new company, but this company had the duty imposed upon it of paying these bonds. The notice was equivalent to an undertaking on the part of the company, that, in consideration of the holders of the bonds forbearing to present the bonds, and demand and enforce payment of the principal until July 1, 1891, the company would pay the higher rate of interest until the principal should actually be paid. We see no reason why the agreement was not founded upon a sufficient consideration and could not be enforced. No question of usury was involved, because the company was a corporation and could not allege usury. The company assumed that the agreement was a binding one, and paid interest at the higher rate until February 24, 1891, when it claimed it had the right to pay the principal and stop the interest. It did have the right at any time before July 1, 1891, to pay or tender payment of the principal and thus stop the interest, but the notice of February 1, 1891, as we have seen, did not amount to a tender of payment, and actual payment was not made until July 1, 1891. We think, therefore, that the holders of the bonds were entitled to interest on their bonds, at the rate of seven per cent, until the principal was actually paid.
The remaining question presented is whether the defendant is liable to the plaintiff for the interest from February 24, 1891, to July 1, 1891, which defendant failed to collect as directed by the holders of the bonds.
It is claimed by the defendant that there was no privity of contract between the defendant and the holders of the bonds as to the collection of the principal and interest in question. There is a line of cases holding that where the holder of commercial paper employs a bank to collect a bill in a distant place, and this bank employs another bank in such distant place as its correspondent and agent to collect the bill, the second bank not being the agent of the holder of the paper, but merely the agent of the first bank, is not liable to such holder for any neglect in regard to the collection. ( Montgomery Co. Bank v. Albany City Bank, 7 N.Y. 460; Corn Exchange Bank v. Farmers' National Bank, 118 id. 443.) This principle, however, is not applicable to the facts of this case. By the 31st and 32d clauses of the statement of admitted facts it is said that the bonds and the order for the interest in question were delivered by the holders of the bonds to the Boston bank as their agent for transmission to New York city with instructions by the holders to the Boston bank to transmit them to its correspondent in New York for collection for them and their account, and the holders directed the Boston bank to instruct its correspondent to collect for them and for their account the principal and interest. The bonds and interest order were in accordance with these instructions transmitted and delivered by the Boston bank to the defendant. Upon these admitted facts the defendant was made the agent of the holders of the bonds, and was, therefore, liable to them for its neglect to collect the full amount of the interest order. Without asking for any instructions from its principals it accepted the amount of the bonds and interest at seven per cent only to February 24, 1891, and surrendered the bonds, and all the bonds secured by the mortgage were canceled and the mortgage was discharged. The defendant was, therefore, guilty of neglect or wrong which rendered it liable to the holders of the bonds for this uncollected interest.
The plaintiff by assignment has become the owner and holder of this claim against the defendant.
We think judgment should be rendered in the case in favor of the plaintiff against the defendant for the amount claimed, $612.50, with interest from July 1, 1891, with costs.
PATTERSON, O'BRIEN, INGRAHAM and PARKER, JJ., concurred.
Judgment ordered for plaintiff for amount claimed, $612.50, and interest from July 1, 1891, with costs.