Court Opinion

ID: 5543805
Source: CourtListenerOpinion
Date Created: 2022-01-10 18:54:46.750936+00
Date Added: 2024-06-11T08:34:52.759178
License: Public Domain

Ingraham, J.,
(dissenting.) I am unable to concur with my associates. The plaintiff was authorized by statute to execute a mortgage upon its property to secure existing debts. It has been held that when a bond of a corporation is issued it is a debt, and that a mortgage to secure such a bond is valid; but the bond, as between the obligor and obligee, where such obligee is one of the trustees of the corporation, is only an obligation for the amount paid thereon. When, therefore, the corporation issued to its trustees bonds for *870which they paid 75 cents on the dollar, the obligee could only have recovered from the plaintiffs the amount that he had advanced to the company, and the bond was a valid debt of the company to that extent only. The mortgage was valid to secure the payment of the valid debt, but was not valid to secure what never was a debt of the company. I do not think that the evidence justified the court in finding that all the stockholders ratified the acts of the trustees in giving to themselves obligations of the company at 75 cents on the dollar. Tiiere was no formal act of ratification. At most, it was a failure of the stockholders to take the bonds at that price when offered to them, and subsequently, after the transaction was completed, a failure to take proceedings in disaffirmance thereof. But the corporation was under the control of the same trustees who had authorized the issue of the bonds, and it does not appear that it was able to repay to the trustees to whom the bonds had been issued the amount that they had actually paid to the corporation. I think the stockholders had a right to wait until the obligations became due or the obligees attempted to enforce the obligation, and then tender the amount actually due. The delay of the stockholders has not changed the position of the parties, and there is nothing to show that either the corporation or its stockholders are estopped from asserting that the corporation is only liable to repay what it had actually received. It is clear that Ellis purchased the bonds for himself, paid for them with his own money, and took them in the name of Julia E. Ellis. It is not necessary to determine whether there can be any relief as against these bonds issued to Ellis in this action without making Julia E. Ellis a party. I think that plaintiff was entitled to a judgment declaring that the bonds issued to its trustees, and now held by them, are valid only to the extent of 75 per cent., and allowing it to discharge such obligation on a payment of that amount and interest. I think, therefore, the judgment should be reversed, and a new trial ordered.