Court Opinion

ID: 5238194
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:19:07.098383+00
Date Added: 2024-06-11T08:27:45.978671
License: Public Domain

Ingraham, P. J.:
I fully concur in the opinion of my brother Clarke in affirming this judgment. By the express provision of the bond reference is made to the trust agreement for. the nature and extent of the security, the rights of the holders of said bonds, and the terms and conditions upon which said bonds may be issued and secured. By reference to the trust agreement most careful provision is made for the enforcement of the bonds and the application of the security given to the trustee for the benefit of bondholders, and upon the trustee is placed the burden of enforcing the bonds, both in relation to the application of the property to secure their payment and for obtaining a judgment against the obligor. The pervading intent is that the enforcement of the obligation of the obligor was for the equal benefit of all the bondholders, so that no one bondholder should obtain a preference by any proceeding at law or equity over any other bondholder. Thus it is expressly provided, “ that all proceedings hereunder shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of said bonds and coupons,” thus subordinating the right of any one bondholder to an action or proceeding on-behalf of the trustee for the benefit of all bondholders equally. To allow a single bondholder to maintain an action, either at aw or equity, by which he could get a judgment against the obligor and then proceed by way of creditor’s bill or any other method to secure to himself a lien or advantage which would not inure to the benefit of all the bondholders equally, would, it seems to me, be a violation of the express agreement of each bondholder under the bond and the trust agreement.
The trustee, on behalf of all the bondholders, has commenced a proper action to realize upon the securities and property set apart for the security of the bonds, and has also obtained a decree which entitles the trustee to a personal judgment against the obligor and under which it will be able to secure satisfaction out of any other property of the obligor not specifically pledged to secure the payment of the bonds. To allow individual bondholders to obtain an individual lien or right to such property would, I think, be a violation of the expressed intent of this trust agreement, which, as before *677stated, was based upon the agreement that bound all the individual bondholders, that the obligation created by the bond as well as the pledge of property to the' trustee should be for the equal benefit of all of the holders of bonds and coupons.
It is not necessary in this case to determine what right a bona fide holder for value of coupons detached from the bonds would have as against the obligor. So long as the coupons are in the hands of the holders of the bonds, “ Their force and effect and character may be determined by reference to the bonds. * * Until negotiated or used in some way they serve no independent purpose; and while they are in the hands of the holder they remain mere incidents of the bonds, and have no greater or other force or effect than the stipulation for the payment of interest contained in the bonds.” (Bailey v. County of Buchanan, 115 Y. Y. 297.)
I, therefore, concur in the affirmance of the determination appealed from.
Determination affirmed, with costs.