The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1902-07-26

in that case as this. The McBryde bonds,
and the oLners are in like 1orIn' recite
that they are first mortgage coupon
bonds and are payable TO bearer, IN Unit
ed States Gold coin at the office or the
company. Honolulu, on July LIST, Hle.
and bear interest at rate OF per gent
PAYABLE semi annually and that they are
secured by q mortgage deed OF trust
covering the property OF the p1sntation
real and personal They are in form or
negotiable security as are the coupons at
tached thereto. The trust deed recites
the authority and purpose Tor lts e4ecu-
ton the form and number OF the pohos
and coupons, the nane-of the three tius
tees and the certificate to be endorsed on
the bonds by the trustees, and conveys 10
the trustees the property of the planta-
ton set out in detail and recites the par-
pose of the conveyance to be TOT tne
security and benefit OF the holders OF the
bonds above mentioned and herein secur-
ed to be paid and also for the like inter
est and benefit OF all others interested
in said bonds or the property TO De mere
by conveyed and that the grantors-tne
McBryde Sugar Company. Limited Is
authorized TO maintain possession OF the
property until after default in the pay
Inent OF any of the bonds or interest
thereon or any part thereof
Referring to the McBryoe trust deed
in particular the court adds:
''The sixth condition is that In case
of default in the payment of interest on
any of the bonds hereby secured, the
coupons therefor having been presented
and payment demanded. should such de-
fault in payment continue for the period
of three months after such demand.
then and thereupon the principal OF all
of said bonds, outstanding and unpaid
shall, at the option Of the holders OF
majority of the said bonus, signified In
writing become Immediately due ana
PAYABLE provided that non-action of any
of said bond-holders in case of any de-
fault shall not extend to and shall not
affect any subsequent default or any
right arising therefrom.'
This sixth condition lit is claimed rem
ders it Impossible for the trustee GUARD
ian) to foreelose or TO collect the princi-
pal of the bond upon default OF interest
and that it is delegation of his authority
TO the majority of the bond-holders and
his own motion as he is required TO do
by the terms of the trust. Is this posi-
ton correct:
Here follow a number of decisions in
which the theory of Judge Humphreys
is entirely disapproved. The decisions
cited are Farmers Loan & Trust Co
VS.. Chicago & Alton Railway Co., u
Fed. Commonwealth VS.. Susq. & Del.
River r. Co., 122 Pa ST., Seibert VS..
Minneapolis & st. L. Ry. Co. and 9TH
ers Continuing. Justice Galbraith
says:
.'It is true that there are statements
made in the text books of abstract prin-
ciples and the opinion in 80 l.. r. Oh.
Div quoted in the decision of the court
below, seems to support the contention
of the guardian ad Item. However. no
decision has been called to our attention,
and the exhaustive research OF counsei
Justify the inference that II there mad
been such decision it would have been
cited. APPLYING the rule contended for to
a provision similar to the sixth condition
of the MoBryde company trust deed
above set out The authorities above.
quoted demonstrate clearly that the rule
commended for is not applicable to trust
deed in the form of that under consider
alton The entire instrument must be
considered in the construction, Thus
considered it appears that the deed was
intended to protect the interests or the
bond-holders, not that of a majority only
but of the minority as well, eand that 1t
does not take away, or attempt to do so,
from the bond-holder the usual and or
binary remedies, available TO all in proper
cases in court of equity
THE trust deed is in the form demand
ed by commercial usage and by persons
who seek investments in such securities.
To sustain the contention OF the guard
ians ad Item would be to deny the right
of guardians and trustee to invest In
such securities although We might know
them to be as safe government bonds
We are unwilling. even if II were admit
ted that there was in this case technical
delegation of authority by the guardian,
to pursue technicality to that extent
The rule requires that the trustee shall
act honestly and discreetly and shall only
invest in such securities as prudent men
select when seeking investment Of their
own funds.
| IF the property covered by the trust
deed is ample to secure the payment CT
| the interest and principal of the ooBc5 at
maturity and is sufficient to commend
them as safe investments to men OF or
binary prudence and business Judgment
the guardian was justified in making the
investment
| I'VE do not understand that il makes
any difference in the application OF the
1 rule relating to the investment OF trust
funds. in the absence of statute or rule
Of court, whether the trustee is testa-
| mentary or conventional except that in
| the former case the rule may be en-
larged or restricted by the terms Of the
will.
! ''If the bonds of industrial corporations
are excluded. the field for the invest
ment OF trust funds in this jurisdiction
| is limited to real estate mortgages. There
are no government or municipal bonds
available within this Territory. If the
pressions' this reason would, perhaps,
appeal more strongly to the legislature
| than to the courts but the question in
the case at bar as OF changing a rule
adopted after careful consideration and
in operation for years without known dis
astrous effects and we consider this fact
entitled to consideration.
| ION the question of the suff1ciency or
the security for the McBryde bonds We
will state without going into detail that
we consider the evidence was ample TO
show that the property conveyed by the
| trust deed is sufficient security for the
80 bonds issued and the interest there
on.
| LAS to the waialua bonds the evidence
| was too neager to warrant a Judgment
and we EXPRESS none The evidence taken
| in the Bishop Estate matter and referred
| TO in the decision Of the court below was
not made part of the evidence In this
case and was not considered If there Is
| any reasonable doubt in the mind Of the
court below as to the sufficiency OF the