Burke v. Short

79 F. 6 | 6th Cir. | 1897

LURTON, Circuit Judge,

after stating the facts as above, delivered the opinion of the court.

Whore there is a fund in court to be distributed among a class of creditors, a decree of distribution which seems to make no provision for some of the class will not ordinarily preclude any of the class, having rights similar to those of other claimants, from asserting by bill or petition their right to a share in the fund. The question of delay in filing such claim is one largely governed by the particular circumstances of the case, and by the question as to whether any of the fund remains, out of which equity may be done the tardy applicant. In re Howard, 9 Wall. 175; Williams v. Gibbes, 17 How. 239. It is unnecessary to consider how far the decree of distribution made in this case is subject to be reopened by one of the class secured by the foreclosed mortgage, inasmuch as we are of opinion that that decree, properly construed, does provide for the equal distribution of the proceeds of sale among all the beneficiaries under the mortgage. The averment of the petition that the decree of December 20, 1890, makes no provision for the payment of the interest coupons held by petitioners may be treated as an inadvertent conclusion of law, not estopping the court or the petitioner. The facts entitling her to relief are stated, and the meaning of that decree, as well as others made later, is matter of law, for legal ascertainment. If the decree of distribution is to bo construed as adjudging that the proceeds of sale are to be exclusively distributed iu payment of the principal of the bonds secured by the mortgage, and that holders of interest coupons are not enti(led to consideration, or to any benefit of the common security, (hen appellee was entitled to no relief, however erroneous the decree. inasmuch as she was, at least by representation, a party to the cause in which that decree was made. Such a construction is wholly unauthorized. Conceding that her rights must depend upon the real meaning and legal effect, of the decree of foreclosure, the decree of distribution, and the later orders made iu the cause, we think the decree from which appellants have appealed was right. The decree of distribution, properly construed, was intended to deal with the ownership of bonds and their coupons under the general designation of “bonds.” The decree of foreclosure had found that three interest coupons had matured and were unpaid. The mortgage provided for a preference of interest over principal, and it is inconceivable that the court meant that the principal should be paid in preference to the coupons, or to exclude the coupons from consideration as independent subjects of ownership. The case of a separation of a bond from its coupons was doubtless not in the mind of the court, because at that time the bonds and coupons were in the hands of the same» persons. The share to be paid to each bond was insufficient to pay both principal and interest, and it was unimportant to pay' one sum on account of interest and another on account of principal, lienee the order that $058.70 should be paid “on each of said one hundred and twelve bonds, * * * with interest from December 20, 1800.” This order clearly meant: the bond with its proper coupons,—the coupons found thereon by the decree of foreclosure. This idea is further found in the direction of the same decree which allowed appellants to deposit 350 bonds, “with the coupons attached thereto,” as a security for the payment of the distributive share due to the owners of the bonds not owned by them, when the question of ownership should be settled. The subsequent order allowing appellants to withdraw those bonds, and the later order allowing a withdrawal of the share due to bonds subsequently acquired by them, upon paying into court the bonds so purchased, contemplated a payment into court of a bond with its proper coupons, and all sums withdrawn by appellants under such orders in excess of the share properly due to a bond without its coupons were inadvertent overpayments, and should be returned to the registry of the court, as improperly obtained.

The objection to so much of the decree, as is based upon coupons maturing after the decree of foreclosure is predicated upon the argument that by the decree of foreclosure the coupons not matured were merged in the bonds. This may be admitted. But it does not: dispose of the question. The circuit court regarded the accrued interest at date of foreclosure as preferred over the principal, and the principal of the bond with its annexed unmatured coupons as together constituting the principal of the bond. If the owner of such a bond chose to sever the bond proper from its unearned coupons, he thereby divided the bond. The holder of the several coupons would become equitably the owner of a proportion of the bond. The court therefore treated Mrs. Short, so far as she held coupons maturing before the decree of distribution and after the foreclosure decree, as equitably entitled to that part of the dividend due on the principal of the bond represented by tbe proportion which the par value of the coupons bore to tbe par value of the bond from which it was taken. We see nothing inequitable in tills. The decree must be affirmed, with costs.