Alabama & G. Manuf'g Co. v. Robinson

56 F. 690 | 5th Cir. | 1893

McCORMICK, Circuit Judge.

The Alabama & Georgia Manufacturing Company issued bonds to the amount of $65,000. In the mortgage to secure the same it is stipulated:

"To provide l'or tlie payment oí (he bonds aforesaid, and the interest thereon, at the time and place when and where the same shall respectively fail due and payable, the said J. J. Robinson, W. O. Yancey, and W. T. Huguley, or a majority of them, or their survivors and successors, are hereby authorized and empowered, should default be made in the jtayment of said bonds when they fall due, or in the payment of ihe interest on said bonds as it shall accrue, then, immediately on such default being made known by the holder or holders of said bonds, the holder or holders of said coupons attached ¡heredo, and if. after no!Ice is starved upon tlie president ol‘ said company, the same shall remain unpaid for six months after such default shall have been made in the payment of said interest or principal, as the case may be, and at the request of any one; or more of ttie holders of said bonds or coupons, and without any other or furl her authority from ihe said Alabama & Georgia Moihiui* furing Company, upon giving sixty days’ notice of the time and place of sate, together with the description of the property, in a newspaper published in the cities of Atlanta, I.a Grange, and West Point, Georgia, to proceed to sell at public auction, at the office of said company, in the city of West Point, Georgia, for cash, the property herein conveyed. or a sufficient amount of the same to pay ihe amount due, and apply the proceeds of the sale,’’ ra.

In each of the bonds there is Ihis provision:

“’file Alabama & Georgia. Manufacturing Company hereby acknowledges itself indebted, for value received, to the bearer hereof, in the sum of live hundred dollars, in lawful money of the United States of America, to be paid at the office of the company, in West I’oint, Georgia, on the first day of January, 1904, with interc-t at the rate of eight per cent, per annum, payable on 1he"first day of .January and the first day of July of each year, until the said principal shall be fuily paid, on the presentation of the annexed coupons as they respectively become due. And it is hereby expressly agreed by said company, with each and any holder of this bond, that in the case of the nonpayment of tiny interest coupon lireto attached, if such default shall continue for six months after maturity and demand of payment, the principal of this bond shall become immodiivtoly due and collectible.”

Subsequently, iu a suit, between stockholders and unsecured creditors of tlie company, all of its property was put in charge of a receiver by a slate court, and in tlie course of proceeding ordered sold subject to the foregoing mortgage, and passed by ihese proceedings to the Huguley Manufacturing Company. While said property was in the hands of the receiver of (he state court, interest was paid on said bonds within six months after the maturity of the coupons, hut not prompth at maturity, or within the days of grace; and after the Huguley Manufacturing Company purchased and took control of this property it paid interest which matured in January, 1890, in June of that year, and tlie interest tliat matured 1st of July, 1890, it endeavored to place in Atlanta, Ga., by tlie 31st of December of that year; but by some'means the remittance was delayed, and did not reach Atlanta in time to be available for the payment of interest at that point until January 2,1891. Thereupon, the holders of the majority of the bonds claimed that there was such a default in the payment of interest as authorized them to treat the bonds as matured, and procured the bringing of the suit by the trustee, J. J. Robinson. Demurrers were submitted, and were properly overruled for the reasons given in the opinion of the eminent judges who passed on said demurrers. One of the trustees being dead, the power and duties of the trustees devolved on the survivors. Perry, Trusts, § 343. W. T. Huguley is clearly shown to have had an interest adverse to the trust, and being before the court as a party to the suit, though named as a defendant in the bill, we consider it was in the power of the court to permit the single trustee to proceed.

The circuit court held that days of grace were not to be allowed on these coupons, and this is assigned as error. We do not express any views as to whether, by the general commercial law, or by the law of Georgia, these coupons were or not entitled to days of grace, for the reason that we consider it immaterial in this case. The coupons, in express terms, on their face, were payable on the 1st day of July, 1890. If they were entitled to grace, they were not subject to protest or action thereon — that is, to be dishonored— until the expiration of the days of grace; but, not being paid at any time during this period of grace, they were dishonored, and the office of grace was exhausted. 2sTow, for an entirely different purpose, the contract in this case provided another period of grace, — not an additional period, but another; not to be taclced onto the expiration of the period of commercial grace, but, like the days of commercial grace, to be computed from the day of payment named in the promise to pay, — and that period expired before the 2d of January, 1891.

All of the previous conduct of the appellant shows that its officers and legal advisers so construed this contract for six months’ grace. The appellant did not owe these bonds and coupons. Its property was subject to their payment according to their terms. It was not charged, and it did not concern itself, to save these cou-po3is and bonds from dishonor; did not, in other words, claim or accept and use commercial grace, but, on the contrary, systematically rejected this beneficence, and availed itself of the utmost limit of the contract grace that could consist with saving its property from the contingent maturity of these bonds. The money to pay the January, 1890, interest was deposited in the bank in Atlanta, June 30, 1890. The check for the money to pay the July, 1890, interest did not leave St. Louis until after banking hours, December 29, 1890, and by the utmost dispatch could not have reached Atlanta in time to be available before the beginning of banking hours, December 31,1890. We consider this practical construction of this provision the sound one. The check did not reach the bank in lime to be available before January 2, 3891, after die contract grace had expired, drawing with it the consequences expressed, unless waived by the holders, iso provision having' been made for the payment of these coupons at maturity, whether maturing without or with grace, at West Point or elsewhere, the holders were under no obligation, legal or moral, to hunt for a payor in Atlanta or elsewhere. The -appellant, if it would have sawed the consequences of the default, should have made payment or tender of payment, or used such reasonable endeavors to find the holders, and make the payment or tender, as would be taken as equivalent therefor. This it did not do. While forfeitures are not favored by courts, the systematic continuance for the longest possible time in the nonpayment after maturity of these interest coupons was such as does not, commend the appellants to (he favor of a court of conscience. Here time was the essence of the contract. The bonds had been dishonored by three successive defaults in the payment of interest. The holders might well he indulged some strictness in requiring that the party interested in preventing the contingent maturity of these bonds should keep within their letter, and said holders should not he held hound to have received their interest, even if tendered, on or after January 2, 1891. Some of the holders of these coupons, however, did receive that interest from the appellant, and surrendered said coupons. This must be held a, w'aiver of the default as to those bonds from which such paid and surrendered coupons had been detached. It is certain, therefore, that all of the bonds had not matured when this suit was filed. It was the duty of the complainant, to show how many of the bonds had matured. This has not been done. The complainant’s prayer is: “(1) That an account he taken of the holders of said bonds, and the amount for principal and interest due them, and each of them.” What is indispensable in a decree of foreclosure and sale, such as asked in this case, and which the decree appealed from purported to grant, “is that there should be declared the fact, nature, and extent of the default which constituted the breach of the condition of the mortgage, and which justified the complainant in filing his hill to foreclose if, and the amount due on account thereof, which the mortgagor is required to pay within a reasonable time, to he fixed by the court, and which, if not paid, a sale of the mortgaged premises is directed.” Railroad Co. v. Fosdick, 106 U. S. 47, 1 Sup. Ct. Rep. 10. In the case just cited the doctrine is dearly staled, and the authorities sufficiently cited and reviewed. We construe the recitation in the bond in this case to control and restrict the provisions for the maturity of the bonds on account of the nonpayment of interest to the particular bond or bonds on which the interest was not paid. It being clearly shown that interest, was paid on some of these bonds, it was manifestly necessary for the account prayed for to have been taken; and as no such account was taken, and the decree adjudged the principal and interest of the whole issue of the bonds to he due, it is obvious that, there was such a substantial error in that finding as must, on appeal, vitiate all subsequent proceedings. Therefore, on this ground, We must reverse the decree appealed from, and remand the case to he proceeded with in accordance with the views herein expressed.

Ordered that the decree of foreclosure and sale be reversed, and cause remanded