McDowell v. North Side Bridge Co.

251 Pa. 585 | Pa. | 1916

Opinion by

Mr. Justice Stewart,

This case is a sequel to the case reported in McDowell v. North Side Bridge Co., 247 Pa. 190. We there held, reversing the judgment, that the facts shown upon the trial were sufficient to overcome the presumption of payment, which, otherwise, because of the fact that more than twenty-one years had elapsed between the maturity of the coupons and the bringing of the action, would have defeated the right to recover. The present appeal is from a judgment for the plaintiff upon a verdict after a trial upon the merits. A motion for binding instructions for the defendant had been refused, and motion for judgment non obstante as well. The refusal of the latter motion is the subject of the first assignment. The evidence differs in no material respect from that on the former trial. With the presumption of payment overcome, a prima facie case for the plaintiff was fully made out, and the burden then rested upon the defendant. The genuineness of the obligations was not questioned; neither was payment alleged. The sole defense was that the interest coupons for which recovery was sought were, as between the Bridge Company and McDowell, plaintiff’s decedent, accommodation paper, against the payment of which the latter had agreed to protect the former. While defendant offered no direct evidence in support of this contention, it must be admitted that there is much in the circumstances surrounding the transaction, as developed by the testimony, that lends color to this view; but that the effect was to leave no justifiable ground for any other inference than that such was the true relation between the parties with respect to the coupons, is a proposition to which we cannot agree. The chief reliance of the defendant was on the testimony of McDowell in an equity proceeding begun by him in 1886 against one Hutchinson who had been associated with him in the matter of financing the bridge enterprise which had been undertaken by McDowell, as contractor, and for which he had received certain mortgage bonds of the company to which the interest coupons here in suit were attached. It is insisted that what McDowell there said was an unqualified admission that he had no right to require payment of these coupons by the bridge company, and that binding instructions in favor of the defendant should for this reason have followed. That an unqualified admission by a plaintiff of the existence of a governing fact, not contradicted or explained after opportunity afforded, may be sufficient to ■warrant binding instructions, is not to be questioned. But this was not such a case. This was not an unqualified admission of the existence of a governing fact; it was simply the expression of an opinion with respect to a question of legal liability without any statement of the facts upon which such conclusion was based, and that too by a man since dead who can now- have no opportunity to explain. What McDowell said was that he did not consider that he had any right of action against the bridge company for these coupons, and that when the litigation then pending between himself and Hutchinson was settled, and he was able to do it, he would turn the coupons over to the company; and this was said in the course of a contention with Hutchinson against whom he was then attempting to enforce reimbursement for the expense he had incurred in connection with these very coupons, at a time too when the bridge company was unable to redeem them, a fact which no one knew better than McDowell himself. Furthermore, there is contained in the remark a distinct assertion of his right to the coupons even as against the bridge company until he should be reimbursed to the extent of his interest or ownership, whatever that was. Conceding that what he said can be regarded as an admission, it was, nevertheless, to be considered and weighed precisely as other evidence, its weight depending on its character and the circumstances under which it was made, and the effect of such circumstances to be determined by the jury alone. Clearly the case upon the evidence was for the jury.

It is next complained that error was committed in allowing recovery for interest upon the coupons, the contention being that inasmuch as they were past due for more than six years, and were detached from the bonds they originally accompanied, that action thereon was barred by the- statute of limitations. The argument in support of this view, as we understand it, admits that interest coupons attached to the bond, though overdue, carry interest from the date of maturity. What is urged is, that once severed from the bond they became independent, negotiable instruments no longer under the protection of the bond after the lapse of the statutory limitation. That no express authority for this view is to be found in any of the decisions of this court is also admitted; but it is argued, as against this, that no case is to be found asserting a contrary doctrine. The argument fails to give proper effect to the decision in the case of Huntingdon & Broadtop Mountain R. R. Co. v. Waln, reported in 105 Pa. 217, under title of Philadelphia & Reading R. R. Co. v. Fidelity Ins. Tr. & Safe Dep. Co. The action in the case we refer to was brought to recover on 96 separate interest coupons which had originally been attached to bonds of the appellant company. The defense set up in the affidavit of defense filed, was, first, that all the coupons of which copies had been filed had been severed from the respective bond to which before severance they belonged; and second, that all of the said coupons which matured prior to the 28th of March, 1867, were barred by the statute of limitations, as more than six years had intervened between the maturity of these coupons and the commencement of the suit for their recovery. A rule was granted at the instance of the plaintiff in the suit to show cause why judgment should not be entered for want of a sufficient affidavit of defense. The rule was made absolute and damages were assessed for the amount of the 96 coupons with interest from the date of maturity. The defendant in its appeal assigned as error the entry of said judgment, the allowance of interest on the coupons, and the overruling that portion of the affidavit of defense which set up the statute of limitations. The judgment was affirmed in an opinion by Mercur, C. J. True, in the opinion the assignment with respect to the overruling of the defense of the statute of limitations is not discussed, not even as much as referred to; nevertheless, the affirmance of the judgment which included such interest, in the face of the assignment of error, is none the less definite and conclusive of the question than it would have been had the question been specially discussed. The opinion rests the case largely upon Philadelphia & Reading R. R. Co. v. Smith, a case argued at the same term and reported in the same volume on page 195, in which the legal status of interest coupons is discussed at length by the same writer, and to which he makes special reference. The opinion in the earlier case thus 'adopted, leaves no room to doubt that coupons remaining attached to the bond have no advantage over such as have been severed; that both alike are within the protection of the bond. In the still earlier case of Williamsport Gas Co. v. Pinkerton, 95 Pa. 62, we have the characteristics of interest coupons thus defined:

“The corporation which issues a coupon bond is -in the position of á maker of a promissory note, not of the drawer of a check or bill of exchange. There is no obligation on the holder to present and demand it within a reasonable time. The same rule applies to the coupons as to the bond. In fact he may hold on to the coupon just as long as he can hold on to the bond without requiring payment. The coupon is nothing but an acknowledgment of interest due and it is but an incident of the principal. It is attached to the bond and may be detached from it for the convenience of the holder. The possession by the corporation is evidence of its payment.”

While suit on the coupon in that case was brought within six years from maturity, and the point raised in the present case was therefore not ruled in that, yet, we have here the express statement that the same rule applies to the coupons as to the bond, that they may be held just as long as the bond without requiring payment, and that they may be detached from it for the convenience of the holder, the clear inference being that though detached the coupons are still protected by the bond. In the very recent case of Real Estate Trust Co. v. Penna. Sugar Refining Co., 237 Pa. 311, the present Chief Justice, dealing with th'e question of preference between coupons attached and coupons severed, says (p. 315) :

“There is no conceivable reason why there should be any difference between a válid coupon detached from a bond and one attached to it as the representative of interest due, and no such difference is made in the clause in the mortgage giving preference to unpaid interest. Coupons are not mentioned in it. Interest, an intangible thing, is its sole subject. Coupons, tangible things, stand for and represent interest, and, when they are paid, the interest represented by them is paid......each bond with the coupons attached, is an obligation protected by the mortgage. Each coupon is a part of each bond, bearing upon its face the number of the bond to which it belongs, and, if the owner of any bond chooses to sever it from its coupon, he thereby divides it,’and the holder of the coupons becomes equitably the owner of a proportion of the bond: Burke v. Short, 79 Fed. Repr. 6.”

In view of these cases and what has been said by this court in connection with their adjudication, it is incorrect to say that the question here raised is an open one in Pennsylvania; and this being so, it is needless to argue further. It may be well enough, however, to remark in this connection, that the legal status this court has allowed interest coupons as specialties, partaking equally with the bond in the privileges and securities of the latter, whether attached or severed, is exactly the same as that accorded them in most jurisdictions. “Coupons detached from the bonds to which they were formerly annexed retain the same nature and character and do not thereby become simple contract debts, and as to the period of limitations are governed by the same statute as other sealed instruments”: 25 Cyc. 1035. Out of the many authorities supporting this view, it will answer every purpose to cite only the case of City of Kenosha v. Lamson, 76 U. S. 477, where in an opinion by Mr. Justice Nelson, the very question here raised was thus disposed of; we quote from the opinion in the ease (p. 484):

“The coupon is simply a mode agreed on between the parties for the convenience of the holder in collecting the interest as it becomes due. Their great convenience and use in the interest of business and commerce should commend them to the most favorable view of the court; but even without this consideration, looking at their terms and in connection with the bond, of which they are a part, and which is referred to on their face, in our judgment it would be a departure from the purpose for which they were issued, and from the intent of the parties, to hold, when they are cut off from the bond for collection, that the nature and character of the security changes, and becomes a simple contract debt, instead of partaking of the nature of the higher security of the bond, which exists for the same indebtedness. Our conclusion is, that the cause of action is not barred by lapse of time short of twenty years”’

Our own cases as we have shown, are in entire harmony with the doctrine here declared. The assignments of error .are overruled and the judgment is affirmed.