237 Pa. 311 | Pa. | 1912
Opinion by
This appeal is from a decree distributing the proceeds of a foreclosure sale of the property and franchises of the Pennsylvania Sugar Refining Company. The sale was made by the trustee named in a first mortgage executed by the company to secure the payment of $3,000,-000 of coupon bonds. The seventh clause of article six of the mortgage directs that the net proceeds of the sale by the trustee shall be applied by it as follows: “First, in or toward payment, to the holders of unpaid bonds, pari passu, in proportion to the amount due to them respectively, and without any preference or priority whatsoever, of all arrears of interest remaining unpaid on such bonds. Secondly, in or towards payment to the holders of unpaid bonds, pari passu, in proportion to the amount due to them respectively, and without any preference or priority either on account of any bond having been drawn for redemption or otherwise howsoever, of all principal moneys due on such bonds, whether such principal moneys shall or not be payable
Adolph Segal delivered to the Easton National Bank, the appellee, as collateral security for the payment of his obligations held by it, certain unpaid coupons, which he had detached from the first mortgage bonds of the Pennsylvania Sugar Refining Company, of which bonds he was the owner. How the bank happened to get these coupons, or whether it became a holder of them for value, is utterly immaterial, in view of two facts found by the court below, which have not been assigned as error. They are: (1) “The bank at the time it received the overdue coupons had no notice or knowledge of any invalidity of the title of Mr. Segal thereto. In fact no evidence has been presented to show that Mr. Segal had not a good title to the coupons or to the bonds from which they were detached, unless the fact that he was the promoter of the company in some way affects his title. Nor is there any evidence that the coupons or any of them were ever paid by or for the Pennsylvania Sugar Refining Company. Nor is there any evidence that said Adolph Segal or any one for him ever represented to the pledgees or owners of the bonds from which the coupons were detached that they or any of them had been paid or were to be cancelled, or would be postponed in their payment in favor of the bonds orj coupons attached thereto”; and (2) “It has not been shown that the general body of bondholders or even those who acquired from Segal the bonds from which the coupons were cut have any defense to the claim on
If the coupons held by the appellee are to be preferred as arrears of interest, the preference claimed for them must be found in the first item of the seventh clause of article six in the mortgage, which provides that the trustee shall apply the proceeds of the sale, “first, in or toward payment, to the holders of unpaid bonds, pari passu, in proportion to the amount due to them respectively, and without any preference or priority whatsoever, of all arrears of interest remaining unpaid on such bonds.” The contention of the appellants is that this provision, being free from all ambiguity, must be read exactly as it is written, and, when so read, the only coupons to be preferred are those presented by the holders of the bonds from which they were detached. The learned auditor and the court below refused to so read it, and we are unable to so construe it. Its purpose was to secure the payment of interest due on the bonds secured by the mortgage, if the proceeds of the sale of the mortgaged property should be insufficient to pay both principal and interest. What
Though the appellants do not contend that the detached coupons held by the appellee are not to participate at all in the distribution here reviewed, such must be their fate if the appellants’ construction of the seventh clause of article six in the mortgage is to prevail. The three items of that clause provide where the proceeds of the sale are to go, and they cannot go elsewhere. Detached coupons cannot be paid under