Imágenes de páginas

First Department, November, 1911.

[Vol. 146. at the election and upon the declaration of the trustee or upon the declaration of the holders of one-third in amount of the bonds. The 11th clause, again in the interest and for the protection of the bondholders, provides that if default shall be made and continued for ninety days, the trustee may enter and take possession of the property of the company and operate it; but if after such entry all interest due on the bonds shall be fully paid out of the income of the property and the principal shall not be due by the terms of the bonds or by declaration, the trustee shall restore said property to the water company. The 12th clause provides that in case of default and upon request the trustee shall cause all of the property and franchises to be sold. The 15th confers power upon the trustee in case of default to begin foreclosure. By the 16th the water company, while any bonds are outstanding, shall not apply for the appointment of a receiver, and no holder of bonds shall have a right to begin foreclosure or other proceedings until the trustee shall refuse or neglect to act after sufficient request. By the 18th, in case of a foreclosure or any judicial or other sale of the property or franchises held in trust under this mortgage, the purchaser may, in completing payments of the purchase price, apply any bonds and coupons secured thereby then unmatured and unpaid.

So that the whole instrument, it seems to me, contemplates but one kind of a sale, and that is at the instance of a sufficient number of the bondholders or by the trustee in proceedings for the foreclosure of the mortgage and for the protection of the rights of the bondholders; and the phrase “any sale of the property and franchises” in the last paragraph of the 10th clause must refer to any sale contemplated and provided for by the terms of the mortgage itself.

In Lisman v. Michigan Peninsular Car Co. (50 App. Div. 311), where a similar clause in a corporate mortgage was under consideration, this court said: “Stress is laid upon the last sentence of the clause quoted, and particularly upon the words upon any sale of the property.' The sale referred to in this clause manifestly refers, not to a voluntary sale, but to one made after default and in proceedings taken to foreclose the mortgage, a sale under the mortgage and not a sale subject to

App. Div.] First Department, November, 1911. it. This is clear when the 9th clause is read in connection with the other provisions of the mortgage, and especially with the 2d and 5th clauses.

When all of the provisions of the mortgage are thus read and construed together, it is clear that it was never intended to give to the mortgagor the right by its own act to pay the principal of the bonds in advance of the time specified in them when the same would mature. Any other construction would not only be unreasonable and unfair to the bondholders, but contrary to the express provisions of the mortgage. If there be any doubt, which we do not think there is, as to what sale was referred to by the use of the words 'any sale' in the 9th clause, then that construction must be adopted which is most favorable to the bondholders, and one which will not impair their security in any way. The bondholders have a right to insist that defendant shall carry out its contract; that it shall pay its bonds when it agreed to, and not before, and that in the meantime the interest shall be paid at the times stipulated. The recent case of Missouri, K. & T. R. Co. v. Union Trust Co. (156 N. Y. 592) is in point. Judge VANN, delivering the opinion of the court in that case, said: “The outstanding bondholders have a right to receive their debt only as provided by the contract. That right is as sacred as to receive it at all. The obligation of the debtor is to pay the principal when it becomes due, and he has no right to compel the creditor to accept payment until it becomes due.""

There is a precise provision in this mortgage under which the mortgagor can pay the mortgage debt before it is due. It is expressly provided that it may at any time redeem any of the bonds at 105 per cent and accrued interest. We think the clear meaning of the whole instrument is that the company has promised to pay the bonds according to their terms at the due date expressed therein; that if it desires to pay them off prior to the time so fixed it can do so, and can only do so, upon the terms expressed in the mortgage, at 105 per cent and interest. That is a matter over which the company has control. The acceleration of the due date under the 10th and other clauses quoted is solely for the benefit of the bondholders and is brought about by their action or that of their trustee, and is evidenced

First Departinent, November, 1911.

[Vol. 146. by a formal declaration of the trustee or by the holders of onethird of the outstanding bonds or upon a sale of the property incident to foreclosure proceedings taken under the mortgage.

We think that the plaintiff and the trustee are right in their contention and that upon the submission there should be judg. ment for the plaintiff as prayed in the complaint, with costs.

INGRAHAM, P. J., SCOTT and DOWLING, JJ., concurred; LAUGHLIN, J., dissented.

Judgment ordered for plaintiff. Order to be settled on notice.

FREDERICK CARLSEN, Suing on Behalf of Himself and All Others

Similarly Situated, Plaintiff, v. THE OMAHA WATER COMPANY and THE FARMERS' LOAN AND TRUST COMPANY, as Trustee, Defendants.

First Department, November 3, 1911.

See head note in Harnickell v. Omaha Water Co. (ante, p. 693).

SUBMISSION of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.

Frederick Geller of counsel [Frederick Beltz, Jr., attorney), for the plaintiff.

Geller, Rolston & Horan, attorneys for the defendant Farmers' Loan and Trust Company.

Howard Mansfield of counsel (Lord, Day & Lord, attorneys], for the defendant The Omaha Water Company.


The plaintiff is the owner and holder of $2,000 in amount of the consolidated bonds of the Omaha Water Company, secured by its mortgage executed and delivered to the Farmers' Loan and Trust Company as trustee. The questions submitted are similar to those presented in Harnickell v. Omaha Ilater

App. Div.]

First Departinent, November, 1911. Co. (146 App. Div. 693), and for the reasons stated in the opinion therein handed down this day judgment should be for the plaintiff, as prayed in the complaint, with costs.

INGRAHAM, P. J., Scott and DOWLING, JJ., concurred; LAUGHLIN, J., dissented.

Judgment ordered for plaintiff. Order to be settled on notice.

LOUISE E. IRVING, Appellant, v. LOUISE S. REES and Others,

Respondents, Impleaded with EMMA M. SANDS and Others.

First Department, November 3, 1911.

Will — action under section 2653a, Code Civil Procedure — when grand

daughter of testatrix not entitled to sue – pleading - conclusion of law - demurrer.

A granddaughter of a non-resident testatrix who died leaving only per

sonal property in this State, and who was not mentioned in the will, is not entitled to maintain an action under section 2653a of the Code of Civil Procedure to set aside a probate of the will in this State merely because she survived the testatrix and is a beneficiary under the will of her father, who, under a subsequent will made by the testatrix and duly probated in the foreign jurisdiction, was bequeathed part of the personal

estate situated here. Such granddaughter is not one of the classes of persons authorized by sec

tion 2653a of the Code of Civil Procedure to maintain an action there

under, and the right to maintain the action is wholly statutory. The granddaughter cannot claim as an “heir” under said section where

the estate consists solely of personal property. An allegation that the plaintiff is next of kin of the decedent is a mere

conclusion of law not admitted by demurrer.

APPEAL by the plaintiff, Louise E. Irving, from an interlocutory judgment of the Supreme Court in favor of certain of the defendants, entered in the office of the clerk of the county of New York on the 8th day of May, 1911, upon the decision of the court rendered after a trial at the New York Special Term sustaining the said defendants' demurrers to the amended complaint in an action brought under section 2653a of the Code of Civil Procedure.

First Department, November, 1911.

[Vol. 146. George S. Franklin, of counsel [Joseph P. Cotton, Jr., and George H. Savage with him on the brief], Joseph P. Cotton, Jr., attorney, for the appellant.

John B. Pine, for the respondents. CLARKE, J.:

The complaint alleges that Emma C. Sands, a widow, died on the 29th of December, 1907, at Independence, Mo., leaving an estate consisting wholly of personal property, which was at the time of her death and still is situate in the city, county and State of New York; that on the 26th of March, 1908, defendant Rees filed in the Surrogate's Court of New York county a written instrument purporting to be the last will and testament of said Emma C. Sands, bearing date November 7, 1895, and a codicil bearing date June 2, 1906, together with a petition for probate; that on December 30, 1908, and within two years prior to the commencement of this action, said instrument was admitted to probate; that said written instruments so admitted to probate are not the last will and testament and codicil of Emma C. Sands, deceased; that on the 27th of December, 1907, at Independence, Mo., the said Emma C. Sands, being of sound mind and competent to make and declare her last will and testament, duly executed an instrument in writing as her last will and testament, thereby revoking all other wills and codicils by her theretofore made, and bequeathing all her estate situate in the State of New York, excepting some minor bequests, to her son Irving H. Sands and his wife Emma M. Sands, which said last will and testament was on January 12, 1908, duly admitted to probate as such in the Probate Court of Jackson county, State of Missouri; that on October 23, 1907, at Independence, Mo., the said Irving H. Sands duly executed an instrument in writing as his last will and testament, bequeathing and devising all his estate to his wife Emma M. Sands and his children Louise E. Sands (now Louise E. Irving), Edward R. Sands, Irving H. Sands, Maynard M. Sands and John R. Sands, which said last will and testament was on the 14th of September, 1909, duly admitted to probate as such in the Probate Court of Jackson county, Mo. And plaintiff alleges: “That plaintiff is a daughter

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