58 F. 639 | U.S. Circuit Court for the District of Oregon | 1893
Chester A. Congdon fdes his petition of intervention in this suit, claiming to he the holder and owner, for value, of 5,866 coupons of the consolidated first mortgage bonds of the defendant company, of the par value of |30 each. These coupons matured on July 1, 1890, and January 1, 1891. There was a decree of foreclosure heretofore made in thb suit, of the mortgage in question, but such decree did not provide for the payment of any coupons maturing prior to January 1, 1891, or in any way refer
On tbe 27th day of February, 1891, G-. W. Hunt was tbe president, manager, and in fact owner, of tbe Oregon & Washington Territory Railroad, and of all its bonds, except 1,142 of a first issue on what is known as tbe Pendleton Division, already sold, and then owned by O. B. Wright. On tbat day be entered into tbe following agreement with Wright:
“Philadelphia, Pa., Fob. 27, 1801.
“It is hereby agreed between O. B. Wrigbt, of Philadelphia, Pa., and tí-. W. Hunt, of Walla Walla, Wash., as follows: The said Hunt agrees to deliver, and the said Wright to take, all of the issue of bonds of the Oregon & Washington Territory R. R. Co., (except 1,142 bonds of the first issue on the Pendleton Division, already sold,) at 90 per cent, of their par value, at $20,000 per mile, or at a purchase price of $18,000 per mile. There are said to be 111 miles of said road, but the exact mileage shall be determined by actual measurement, by two competent parties, one - to be selected by each of the parties to this contract. If said road is not in a fair and reasonable good condition, according to the standard of western railroads, the said Hunt agrees to put it in such a condition, to the reasonable satisfaction of the president and chief engineer of the Northern Pacific, at his own expense. This provision applies only to roadbed, not to stations or other improvements. The said Hunt further agrees to deliver to said Wright, without additional compensation, 51 per cent, of the capital stock of said corporation.
“It is further agreed that said Hunt shall be paid for all the rolling stock of said corporation or of said Hunt, and used by said corporation, an additional sum, to be determined by T. F. Oakes, president of the N. P. R. R., and G-. W. Hunt. Also, that the said Hunt shall be allowed to build and complete, ready for the rolling stock, about 42 miles of extension of said road, as follows:
“About IS miles to the Snake river.
“ 12 “ to the near Conalle.
“ 12 “ to the near Milton.
—All in Washington and Oregon, whenever the same shall be built, and at such price as may be agreed on with the said T. F. Oakes.
“The terms of payment to be as follows, $75,000 cash, which immediate payment shall be further secured by said Hunt pledging with said Wright, as collateral security, until the second payment is made, all the capital stock of said corporation remaining and belonging to said Hunt, over and above the 51 per cent, aforesaid.
“$800,000 to be paid on Friday, April 17th, 1891.
“$300,000 “ “ “ “ July 1st, 1891.
“$400,000 “ “ “ “ September 1st, 1891.
—And the balance on December 1st, 1891. Deferred payments to draw interest at, 0 per cent.
*641 “It is further agreed that said road shall ho delivered clear and free of floating (or unsecured) indebtedness, and that the said Hunt, as president of said corporation, shall lend his best efforts and his time to the reorganization of said corporation, as the said Wright, or his successors shall direct.
O.B. Wright. I Seal.] “In the presence of
(t. W. Hunt. [Seal.] “C. E. S. Wood.
C. B. Wright.” “O. B. Wright, Jr.
While this agreement does not, in exact terms, state that the sale includes all the cofipons of all the bonds not already owned by Wright, such is its effect! The provisions that Hunt is to deliver, and Wright take, “all of the issue of bonds,” except 1,142 already owned by Wright; that the road shall he delivered clear and free of floating or unsecured indebtedness; that the bonds are to be taken at !)0 per cent, of their par value, at §20,000 per mile, “or at a purchase price” of the road “of §18,000 per mile,” and the further provision for the purchase of all the rolling stock of the road and of Hunt, and of 42 additional miles of road to be built by Hunt, at prices to be determined by T. F. Oakes, president of the Northern Pacific Railroad Company, — show that this was intended to be a purchase of the road free from all indebtedness, and that the pureliase of lhe bonds of the road was merely a means to that end.
The remaining question, then, is, did Congdon, the petitioner-, purchase these coupons, as claimed by him, under circumstances that entitle him to the protection of a bona fide purchaser?
At the time the agreement between Hunt and Wright was made', the bonds in question were deposited as collateral security for Hunt’s debts with the Park National Bank and J. Kennedy, Tod & Co., both of New York. Of the overdue coupons now in controversy, 2,388 were at the former bank, and 3,478 at the bank of J. Kennedy, Tod & Co. The collaterals held by the Park National Bank were, in greater part, to secure Ladd '& Tilton. All of them were so held in the first instance, but subsequently, at different times, at Hunt’s request, portions of them were agreed to be held to secure certain other creditors, whose debts were pressing. These bonds and coupons are still in the Park National Bank. The 3,478 coupons at the bank of J. Kennedy, Tod Sc Co. were delivered to O. E. S. Wood, upon his order, but on account, presumably, of Mr. Congdon, whose attorney Mr. Wood now is. These latter coupons were offered in evidence on this hearing in behalf of Mr. Congdon. The coupons in question w-ere overdue at the time of the agreement between Hunt and Wright It is claimed for Congdon that they had been detached from the bonds prior to that time, and that he purchased them in good faith, without notice of Wright’s claim, and in pursuance of an agreement with Hunt theretofore had, prior to the latter’s agreement with Wright. In his testimony, Hunt does not state when the coupons were ent off, further than that it was done by his order at different times, by the parties who held the bonds; that he had ordered them cut off whenever they were due. The witness King, loan clerk of the Park National Bank, testifies that he does not know how or when the coupons belonging to the bonds in that hank were
Hunt testifies that he had been “carrying” these coupons, and that' he means by this that he was paying the interest on the bonds out of his own pocket, and that Wright knew this. He further explains this statement by saying, “The bonds belonged to me, and I borrowed moneys, and put up the bonds as collateral security to the parties I owed.” But this would not alter his relations to the coupons. It has no bearing upon the question of sale to Wright, which, so far as such “carrying” of the bonds is concerned, may as well have been of coupons as of bonds.
Hunt’s assignment of coupons to Congdon is dated April 2, 1891, —more than a month later than the agreement between Hunt and Wright. The consideration stated is $120,000. This $120,000 was a pre-existing debt due Congdon from Hunt. Notwithstanding the rliiim made that Congdon took these coupons on this debt in
I conclude that, by the agreement between Hunt and Wright, the latter became the owner of the coupons in controversy; that such was the intention of the parties, and is the effect of their agreement; that the detaching of these coupons was an afterthought on the part of Hunt and the petitioner; that the latter took his assignment subsequent to the agreement between Hunt and Wright, and probably subsequent to the refusal of the latter to accept Hunt’s order, although it antedates such refusal; and that he took such assignment with notice of Wright’s purchase. The prayer of the petitioner is denied.