146 Misc. 462 | City of New York Municipal Court | 1933
Plaintiff has instituted an action at law as the holder of a bond in the principal sum of $1,000, issued by the defendant, Pressed Steel Car Company, maturing on the 1st day of January, 1933. Said bond is one of a series of bonds issued by the defendant, designated by it ten-year five per cent convertible gold bonds, aggregating the principal sum of $6,000,000, which said bond issue was created for the purpose of providing funds for the said defendant for the payment of indebtedness contracted by it and its subsidiaries in the usual course of its corporate business and to provide additional working capital.
The said bond issue was created under an indenture dated December 30, 1922, between the said defendant and the New York Trust Company, trustee. Under the terms of the bond on which plaintiff instituted bis suit it is provided therein that the defendant will unconditionally on January 1, 1933, pay the sum of $1,000 in gold coin of the United States of America of or equal to the present standard of weight and fineness, and will pay interest thereon from January 1,1923, at the rate of five per cent per annum, payable in like gold coin semi-annually on the first day of January and the first day of July upon the usual presentation and surrender of annexed coupons. The bond then further provides for the customary two per cent allowance for Federal income tax and the customary allowances for State tax. Further provision is therein contained as follows: “ This bond is one of an issue of bonds aggregating Six Million ($6,000,000.00) Dollars, in denominations of $1,000.00 and $500.00 all of like date and of like tenor except as to denomination, all of which bonds have been issued under and are equally secured by an Indenture dated December 30, 1922, between the Company and The New York Trust Company as Trustee, to which Indenture reference is hereby made for a state
The defendant does not seriously controvert any of the material allegations of the complaint, but sets up an alleged complete defense which alleges in substance that the bond sued on by plaintiff was created under the said indenture and that plaintiff is bound by the provisions of the said indenture, among which that contained in article 4, section 6, would act as a bar to plaintiff’s recovery in this cause of action. The said provision reads as follows:
“ Section 6. All rights of action on or because of the bonds and interest coupons or any of them, or under this indenture, except as hereinafter provided, are hereby expressly declared to be vested exclusively in the Trustee, and such rights may be enforced by the Trustee without the possession of any such bond or interest coupon. No holder of any such bond or interest coupon shall have any right to institute any suit, action or proceeding for the enforcement of any of the terms of this agreement or of such bonds or coupons without first giving to the Trustee written notice that one or more of the events of default hereinafter mentioned has occurred, nor unless the holders of one-fourth in principal amount of the then outstanding bonds shall have requested the Trustee in writing and shall have afforded it reasonable opportunity to institute such action, suit or proceeding in its own name and shall have offered indemnity satisfactory to the Trustee, and shall have deposited their bonds with the Trustee if so requested by the Trustee; but if the Trustee shall have failed to take such action for sixty days after such written notice, request, offer of indemnity and deposit of bonds, the holder of any bond or bonds may proceed thereon.”
It is not controverted that on January 3, 1933, plaintiff duly presented the bond for payment and payment of the same was refused, and the defendant in its answer specifically admits that the bond is unpaid with interest thereon from the 3d day of January, 1933.
Plaintiff moves on the pleadings for summary judgment under
In Rothschild v. Rio Grande Western Railway Co. (84 Hun, 103; affd., 164 N. Y. 594) we have an enunciation of the same principles . of law. It is very aptly stated in that opinion by the court that the provisions of the bond meet the eye of the purchaser and are
And at page 110: “ The provisions of the bond meet the eye of the purchaser and are designed by the corporation to influence their sale, and they cannot be nullified by an inconsistent provision contained in the trust deed. As before stated, these bonds and coupons contain an absolute promise to pay definite sums on specific dates, which implies a right of action in case of failure, and if the eighth article is capable of the construction contended for by the corporation it is utterly inconsistent with the bonds, which in that case .must prevail.” (See, also, General Investment Co. v. Interborough Rapid Transit Co., 200 App. Div. 794; affd., 235 N. Y. 133, Beach v. Supreme Tent of the Knights of the Maccabees of the World, 177 id. 100.)
The court has carefully considered the authorities cited in .the memorandum submitted by the defendant but cannot find that
The recent case of Relmar Holding Co., Inc., v. Paramount Publix Corporation, cited by the defendant, does not appear to be determinative of the issues involved herein, because it is obvious that that cause of action was brought by the plaintiff therein directly under the indenture and to restrain a violation of the terms of the said indenture.
I, therefore, do not deem that the alleged defense interposed is sufficient in law to defeat the plaintiff’s cause of action, and the motion for summary judgment is, therefore, granted. Submit order.