Court Opinion

ID: 5182220
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:43:40.142286+00
Date Added: 2024-06-11T08:26:36.748456
License: Public Domain

O’Bbieh, J. (dissenting):
The plaintiff alleges that he is the owner and holder of coupons “ upon eleven bonds of the Evansville and Richmond Railroad Company,” which company, “ in and by each of said coupons, promised and agreed to pay to the bearer thereof'the sum of twenty-five dollars in gold coin.” The guaranty given by the defendant reads : “ For a valuable consideration * * *' the Evansville and Terre Haute Railroad Company hereby guarantees to the holder of the *309within bond the punctual payment of the principal and interest thereof when and as the same shall become due and payable.”
That by this wording the guaranty is exclusively a contract with the holder of the bond, and not with the holder of any of the cou- . pons separated from the bond, I cannot assent to. As said in The City of Kenosha v. Lamson (9 Wall. 484): u The coupon is simply a mode agreed on between the parties for the convenience of the holder in collecting the interest as it becomes due. Their great convenience and use in the interests of business and commerce should commend them to the. most favorable view of the court; but, even without this consideration, looking at their terms and in connection with the bond, of which they are a part, and which is referred to on their face, in our judgment it would be a departure from the purpose for which they were issued, and from the intent of the parties, to hold, when they are cut off from the bond for collection, that the nature and character of the security changes, and becomes a simple contract debt, instead of partaking of the nature of the higher security of the bond, which exists for the same indebtedness.” This ease is commented upon and explained in Clark v. Iowa City (20 Wall. 583), wherein we find in the opinion this statement: “ Coupons, when severed from the bonds to which they were originally attached, are in legal effect equivalent to separate bonds for the different installments of interest. The like action may be brought upon each of them, when they respectively become due, as upon the bond itself when the principal matures, and to each action—to that upon the bond and to each of those upon the coupons ■—■ the same limitation must upon principle apply.” So I think, considering the language used, the intent of the parties, and the fair inference to be drawn from the allegations of the complaint, that the interest guaranteed on such bonds was known to be, and was in fact, represented by coupons ; and that, recognizing what was said in the opinion just quoted, that coupons when thus severed from the bonds “ are in legal effect equivalent to separate bonds for the different installments .of interest,” the intent and purpose was to extend to the holder of the bonds and to the holder of the coupons, whether they were the same or different persons, the benefit of the guaranty.
Unless, as is fairly to be inferred, the parties intended the guaranty *310to be to the holder of the bonds and the holder of the coupons, irrespective of whether they were held by the same or different persons, we would have the anomaly that in one case.the coupons were guaranteed, in the other not. If' then the guaranty, which it is conceded attached to the coupons when held by the holder of the bond, should not be extended to the coupons in the hands of a third person, the value of such coupons for negotiable purposes, though they represent the interest guaranteed, and are payable to bearer and transferable by delivery, would be materially lessened.
A coupon, though an independent, instrument in the sense that suit may be brought upon it without the production of the bond, is still a part of the bond, and the fair inference from the wording that the defendant “ guarantees to the holder of the within bond the punctual payment of the principal and interest ” is that it includes whoever holds that which is representative of the interest as well as that which represents the principal. If there was any intention that the guaranty should not extend to the coupons when severed from the bonds and in the hands of a third party, there is .nothing in the language employed to show any such intention, nor is it fairly inferable from the. language of the guaranty.
Concluding as I do that the coupons, though in the hands of a person other than the holder of the bonds to which they were originally attached, are Within the terms of defendant’s guaranty and undertaking, I dissent.
Williams, J., concurred.
' Judgment ordered for defendant, with costs, with leave to plaintiff ' to amend complaint within twenty days on payment of costs.