Court Opinion

ID: 9717023
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:56:18.775395+00
Date Added: 2024-06-11T18:23:50.726629
License: Public Domain

Dissenting Opinion by
Weight, J.:
Bond M-127 (Exhibit B) contains, inter alia, the following provisions: “This bond is one of an issue of coupons bonds of the Association ... all issued under and equally secured by an Indenture of Mortgage . . . to all the provisions of which said Mortgage this bond is subject”; “This bond shall not become obligatory until it shall have been authenticated by a certificate endorsed thereon and duly signed by the Trustee of the Mortgage”; “Trustees Certificate. This is one of the bonds described in the within mentioned mortgage. Farmers National Bank, Watsontown, Penna. E. D. Deitrick, Trust Officer”.
*618The mortgage in question (Exhibit A) sets forth that there “shall be issued”, inter alia, 135 bonds of $1,000.00 denomination numbered consecutively from M-l to M-135 inclusive; that the mortgage has been executed “for the purpose of equably and ratably securing payment of the principal and interest on all of said bonds”; and that “Right of Action under this mortgage is vested in the Trustee”.
The complaint avers that, in due course and without notice of any defect, plaintiff’s predecessor in title became the holder of bond M-127, and for many years collected interest thereon; that the Association eventually gave notice (Exhibit C) that said bond “is not recognized by it as a legal and binding obligation and will not be paid”; and that the Trustee thereafter refused to honor the interest coupons. In my view it was proper under the circumstances for plaintiff to bring suit against the Trustee1 upon the theory of breach of warranty in the certificate of authentication.
While the Uniform Commercial Code did not become effective until July 1, 1954, counsel for appellee concedes that section 8-208 thereof2 is a codification of the prior law in Pennsylvania. Under its provisions an authenticating trustee warrants “that (a) the security is genuine and in proper form; and (b) his own participation in the issue of the security is within his capacity and within the scope of the authorization received by him from the issuer; and (c) the security is within the amount specified in such authorization”. *619Simply stated, an authenticating trustee warrants that the security upon which its certificate appears has become obligatory.
I do not agree that plaintiff should be first compelled to institute an individual action against the Association. Under the provisions of the mortgage, to which the bond is subject, it is doubtful whether he can do so. My position is that the trustee in the case at bar should be required to protect plaintiff from the belated assertion of the Association that bond M-.127 is not its legal and binding obligation. I would therefore hold that the preliminary objections should be overruled with right to plead over. See Pa. R. C. P. No. 1028(d).
Gunther, J. joins in this dissent.

 The docket entries disclose that tlie time within which the Trustee may attempt to join the Association as an additional defendant has been extended “to the expiration of sixty (60) days after date of order of court disposing of preliminary objections to plaintiffs complaint in the event such order should dismiss said preliminary objections”.

 Act of April 6, 1953, P. D. 3, section 8-208, 12 A. PS §8-208.