| Ill. | May 14, 1881
Lead Opinion
delivered the opinion of the Court:
The claim for priority, interposed by Humphreys and others, is predicated upon the decisions of this court to the effect that where several notes, payable at different dates, are secured by a mortgage, the notes, in the absence of any special provision in the mortgage to the contrary, are entitled to payment from the proceeds of the mortgaged property, in the order of their maturity. This is the doctrine of Sargent v. Howe, 21 Ill. 148" date_filed="1859-01-15" court="Ill." case_name="Sargent v. Howe">21 Ill. 148, Vansant v. Allmon, 23 id. 35, Gardner v. Diederichs, 41 id. 170, and subsequent eases. But does the case under consideration fall within the principle of these eases ? Here, the bonds all bore date May 21, 1864, and were all payable on the 1st day of July, 1894, with interest from and after January 1, 1865, at the rate of seven per cent per annum, payable semi-annually. So far as the bonds are concerned and the interest thereon, they are all due and payable at one and the same time. The deed of trust provides, that if there shall be a default in the payment of semi-annual interest on any or either of said bonds, for the space of six months after the same becomes due, then the whole principal sum mentioned in all the bonds, shall become due and payable, and the trustees named in the deed of trust shall take possession of the road, and sell the same at public auction. The deed then provides: “That out of the moneys or proceeds arising either from said tolls, earnings or receipts of said railroad and premises, or out or from said sale so to be made as aforesaid, after first deducting the expenses so incurred in the sale or the running the road, parties of the second part shall pay said twelve hundred bonds, or so many as shall be outstanding, together with all arrears of interest then due or owing upon the same, paying over the surplus money, if any, to party of the first part. ” It seems plain, from this provision, that it was intended by the parties to the deed of trust that no sale should be made except for the whole debt, and hence the provision that in default of payment of the semi-annual interest all of the bonds should become due. Indeed, the deed of trust does not authorize a sale of the railroad for the interest which fell due semiannually ; but if the interest was not paid, then the whole debt matured, and a sale was authorized to satisfy the whole debt, both principal and interest.
Again, the language of the deed of trust, in regard to payment, precludes the idea that there should be a priority. The language that the trustees “shall pay said twelve hundred bonds, or so many as shall be outstanding and unpaid, together with all arrears of interest then due and owing upon the same, ” 'clearly implies that if there is not money enough realized from the sale to pay all the bonds and interest, then the same shall be paid pro rata, regardless of the time when interest may have become due and payable on any of the bonds.
This case is entirely different from the cases where this court has held that the holder of one of a series of notes maturing at different times, and secured by one mortgage, is entitled to priority, and the decision in those cases can have no application here. The fact that Morton and McCracken obtained the interest on the bonds they held, while the holders of the other bonds did not, is entitled to no special consideration. If the holders of these bonds were not willing that the railroad company should pay Morton and McCracken the interest on their bonds, and receive no interest themselves, they had the remedy, at any moment they might use it, to compel a sale of the road, and a payment pro rata of both principal and interest; and the fact that'such holders remained silent, knowing, as they did, that Morlón and McCracken were receiving the interest regularly on their bonds, may be regarded as an assent on their part to the payment that was made, and having assented to such payment, they are in no position now to claim a priority over Morton and McCracken in the distribution of the proceeds of the sale of the road.
We now come to the cross-errors of Morton and McCracken. They claim that the interest on the bonds held by Humphreys and others, which accrued from 1871 to 1878, should he postponed until the bonds they held should be paid and satisfied. When the bonds were placed in the hands of Hatch & Son, of New York, for sale, this latter firm published a circular, which contained a description of the road, its connections with other roads, and the opportunity afforded for investment in its bonds. John Allen, the president of the road, published a notice in New York papers, that interest on the bonds would be paid at a certain bank in New York City. We perceive nothing in the notices or the conduct of Allen and others, who held the bonds, which could properly deceive or defraud Morton or McCracken, nor did they do anything which would estop them or their assignee from now sharing ratably with any other holder of the bonds in the proceeds of the sale of the road. They were under no legal obligation to present the bonds they held for payment of interest, nor did the law require them to notify or inform Morton and McCracken that no interest was being paid on their bonds. We perceive nothing in the record that would prevent them from sharing with other holders of bonds in the proceeds of sale.
But it is urged that the court erred in allowing interest on the interest warrants after their maturity. The interest war-' rants are not set out in the record, and we have no means of determining whether they could properly draw interest after maturity or not. If a decision on this question was deemed important, the interest warrants should have been incorporated in the record and abstract. We have examined both, but are not able to find them.
We are of opinion that the decision of the circuit court on the applications for priority in the disposition of the proceeds of the sale of the road was correct, and it will be affirmed.
Decree affirmed.
Subsequently a rehearing was granted in this cause, whereupon the following additional opinion was filed:
In the opinion heretofore filed in this case, the question of whether the court below erred in allowing interest on the interest warrants after their maturity, was not passed upon, because the interest warrants were not incorporated in the record. A petition for rehearing was presented, praying that a rehearing be ordered, and leave given to amend the record so as to incorporate therein these warrants. The petition was supported by a stipulation of the parties agreeing that the record should be amended by embodying the interest warrants therein, and the prayer of the petition was thereupon granted, and a rehearing was ordered for the sole purpose of enabling the court to pass upon the question of whether the court below erred in allowing interest upon the interest warrants. The record having been amended in accordance with the stipulation, the question sought to be raised is now fairly before us.
The following is one of the interest warrants:
“$35.00. Peoria, Pekin and Jacksonville Railroad Co. c, “Interest warrant for thirty-five dollars, payable at the Importers’ and Traders’ Bank of the City of New York, on the first day of July, 1894, for six months interest on bond No. 753
L. Chapman, Jr., Secretary.”
That interest was properly allowed and computed on this instrument, is settled by Harper et al. v. Ely et al. 70 Ill. 581" date_filed="1873-09-15" court="Ill." case_name="Harper v. Ely">70 Ill. 581, and the cases there referred to; and reference may also be made to Clark v. Iowa City, 20 Wall. 583" date_filed="1875-01-11" court="SCOTUS" case_name="Clark v. Iowa City">20 Wall. 583, Town of Genoa v. Woodruff et al. 92 U. S. (2 Otto,) 502, and Amy v. Dubuque, 98 U. S. (8 Otto,) 473, holding the same doctrine.
The objection that, to fix.the liability to pay interest, a demand at the place of payment and a refusal to pay must have been shown, is answered by Butterfield v. Kinzie, 1 Scam. 445, President of New Hope, etc. Bridge Co. v. Perry et al. 11 Ill. 467" date_filed="1850-06-15" court="Ill." case_name="President of the New Hope Delaware Bridge Co. v. Perry">11 Ill. 467, and Wood & Co. v. M. S. L. and T. Co. 41 id. 267, which hold directly the reverse; and that is matter of defence to be pleaded and proved by the maker, that he was ready, at the time and place, to pay. The interest, as an incident to the debt, must go with the debt, and in giving priority to the warrants, priority to the interest must follow as a matter of course.
We perceive no cause to change our former ruling.
Dissenting Opinion
I dissent to the previous and present opinions.
I think the coupons over-due when the principal became due, should be paid in full before distribution upon the principal. »