Court Opinion

ID: 9417342
Source: CourtListenerOpinion
Date Created: 2023-08-02 20:09:17.222762+00
Date Added: 2024-06-11T17:21:39.050974
License: Public Domain

Me. Chiee Justice Waite,
with whom concurred Mr. Justice- Harlan, dissenting.
I am unable to agree to the judgment in this case. In my opinion default had been made in the payment of the’ interest on some of the bonds, within the meaning of the eighth clause of the mortgage. The company having given notice that the coupons due Oct. 1, 1878, would not be paid if presented, ho presentation was necessary in order to create the default. This notice was a waiver of. a presentation in form. Coupon-holders were in effect told it was useless to make a demand, because if made it would not be met.. Confessedly this default as to the coupons on $698,000 of the bonds continued more than six months. Holders of bonds to this amount declined to enter into the scheme for extension. They kept their coupons, hoping some plan might be devised for payment, but retaining all their rights under the mortgage, if their hopes were not realized.
This default having happened, and having continued more than six months without the consent of the holders of the coupons, by the express terms of the eighth clause, the principal of all the bonds secured by the mortgage became immediately due and payable. If after that the holders of a majority of th.e outstanding bonds had requested the trustees in writing to foreclose the mortgage, it would have become the imperative duty of the trustees to institute the necessary proceedings for that purpose. But if no such request was' made, it seems to me that the trustees were not precluded from commencing such proceedings on their own motion, in case the safety of the trust *80made it necessary. It is possible, if a majority of tbe bondholders had, in an appropriate way, interfered to prevent the trustees from going on, some relief might have been afforded them; but when all came in and availed themselves of what had been done, the corporation was in no position to defend, because a request had not been formally made in advance. As to the corporation, the.principal of the bonds became due and payable when a default occurred which continued the requisite length of time. Whether a foreclosure should be had because of the default, rested alone with the bondholders and trustees. The provision in the mortgage for the written request was, as it seems to me, not for the protection of the company, but the bondholders. If the bondholders are satisfied with what the trustees have done, the corporation is in no condition to complain.
That the trustees were justified in commencing proceedings on' their own motions seems to me clear. Some of the bondholders, having coupons, and bonds, as to which default had been. made, began a suit for foreclosure in a • state court, and secured the appointment of a receiver. The company was very much embarrassed financially, and, so long as the receivership continued, could do nothing to extricate itself from its difficulties. It was a necessity, therefore, for the trustees to interfere. When they did, the company did not relieve itself from the consequences of its default, in the payment "of coupons on the. $698,000 of bonds. All the bondholders seein to have been satisfied with what was done, and they united with the trustees in pressing the foreclosure.
Under these circumstances, in my opinion, the court properly treated the principal .of all the bonds as due, and decreed accordingly.
These cases were decided at the last term, before the appointment of .Mb. Justice Gray and Mr. Justice Blatchfobd.