Rogers v. Chicago & Northwestern Railway Co. — 6 Abb. N. Cas. 253

Majority

p. 253

ROGERS v. CHICAGO & NORTHWESTERN RAILWAY COMPANY.

N. Y. Supreme Court, Second Department, Second District;

Special Term, July, 1878.

Headnote

Railroads.—Registered Coupon Bonds.—Destroyed Securities. —Issue oe Duplicate Bonds.

Where registered, coupon railroad bonds were destroyed at the same time that their owner lost his life by the burning of a steamship, and an action was brought by the administrator of the decedent to

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compel the railroad company to pay interest in arrears, and issue duplicate bonds,—Held, that upon receiving an indemnity bond with sureties, the defendant should comply with the demands of the plaintiS.

Trial by the court.

This action was brought by Charles W. Rogers as administrator, &g., of Henry Rogers, against The Chicago and Northwestern Railway Company, to compel the defendant to issue and deliver to the plaintiff a duplicate of two certain registered bonds, with the coupons, which had been destroyed, and also to recover $350 back interest on said bonds.

J. F. Barnard, J., before whom the case was tried without a jury, found as matters of fact, that the defendant issued certain bonds, amounting in the aggregate to $3,500,000, dated July 1, 1859, and payable August 1, 1885, with interest payable semi-annually, and that a mortgage was made to secure said bonds; that two of said bonds, of the denomination of $1,000 each, and numbered respectively 3245 and 4918, were owned by Henry W. Rogers at the time of his decease, and were registered in the office of the defendant as his property, and were at the time of the trial so registered, and that the principal was payable only to him, and the bonds transferable only by him and Ms attorney, on the books of the defendant; that attached to said bonds were interest coupons for $35 each, payable every six months ; that the said Rogers on November 9, 1875, perished on the steamer Waco, which was destroyed by fire in Galveston harbor ; that he had with him at that time said bonds with the coupons attached, and they were then destroyed; and that $350 interest was due, and had not been paid.

He also found, at defendant’s request, that each of said bonds were printed lithographically, with appropriate devices and vignettes, and were executed by said company under their corporate seal, and countersigned

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by the president, treasurer and secretary of said company ; and that each of said bonds recited and stated on its face, that it was one of a series of bonds of the same tenor and date, amounting in the aggregate to $3,500,000, with a contingent provision for a further issue, not to exceed in amount $100,000, and that payment was secured by a deed of trust executed and delivered by the defendant to Samuel J. Tilden, trustee, conveying the railway of said company as therein mentioned; and each of said bonds contained a provision that it should not be valid or obligatory until it should have been authenticated by a certificate indorsed thereon, duly signed by the said trustee or his successors ; and that said bonds might pass by delivery or might be registered, at the option of any holder, and after such registration, and the indorsement of a certificate thereof upon the bond, no transfer should be valid, unless such transfer be registered and indorsed as aforesaid, or unless the last registry be to bearer or in blank; that the said trust deed mentioned in said bonds, was duly executed and delivered, and is commonly known and described as a mortgage, and said bonds were ordinarily known and described, and were designated by indorsements on them as first mortgage bonds; that the said defendant had not in its possession or under its control, nor did it have any knowledge of the existence of the lithographic stone from which said bonds were printed, nor had it any impression from said stone, except the one produced on the trial, the coupons upon which had all been canceled.

D. T. Walden (Sterling & Walden, attorneys), for plaintiff.

The court has the right to order the payment of the coupons upon the lost bonds, and to order the execution of duplicates of them. If securities are destroyed, a recovery may be had without indemnity (Des Arts v. Leggett, 16 N. Y. 582 -586).

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The United States government provides in respect to its registered bonds, in case of destruction, that duplicates will be issued (U. S. Rev. Stat. §§ 3702-3706). A court of equity has complete power to protect the defendant by requiring suitable indemnity (Story’ s Eq. §§ 81, 82, 84 and note, 85, 88 ; Statute 9 and 10 Wm. 3, c. 17; Byles on Bills, 378 ; 2 Daniels on Neg. §§ 410, 1466 ; Lawrence v. Lawrence, 42 N. H. 109 ; 1 Mod. c. 24; 1 Fombl. Eq. b. 1, c. 1, § 3 ; Stokoe v. Robson, 19 Ves. 385 ; 3 Ves. & B. 54, and in 1 Danl. Ch. Pr. 661; 2 Ib. 716 ; Shelmardine v. Hanop, 6 Mod. 40; 1 Jones on Mortgs. § 100 ; 1 Story Eq. 111, 112). The security to be required for the defendant’s protection should not be equal to the amount of bonds and coupons (Des Arts v. Legget, 16 N. Y. 582 ).

J. B. Lawrence, for defendant.

The power of a court to order the re-execution of a paper has not been exercised except in a case where the party who has sustained loss is exposed to undue perils in the future assertion of his rights. In this case there is no danger, as the intestate’s title appears of record in the books of the company. The doctrine that a court of equity has power to order the execution of a duplicate security in place of one that has been lost has been expressly denied (Hoddy v. Hoard, 2 Ind. [Carter] 474). The court can, without exercising any doubtful power, fully protect the plaintiff by decreeing judgment of both principal and interest as it shall mature upon equitable terms of security. A further evidence of title might be afforded by directing the issuing of a certificate by the defendant that such bonds were registered in the name of Rogers. The security to be given should be sufficient to indemnify the defendant against the full amount of the principal and interest due and to become due on the bonds. The defendant

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should not be required to execute new bonds, because it has not the stone upon which they were printed and no impressions thereof except an imperfect one, and because the bond recites that it would not be obligatory until certified by the trustee, and- as he is not a party, no such certificate can be ordered, so that a so-called duplicate bond would be of no avail to the plaintiff.

found as conclusions of law, the following, to wit :

“1. That the plaintiff is entitled to judgment that on delivering to the defendant a bond with two sureties in penalty of $3,000, to indemnify the defendant against all claims by any other person on account of such bonds or coupons and against all costs and ex-' penses by reason of such claim, that the defendant pay to the plaintiff the interest coupons, which have become due since August 1,- 1875, amounting to $350. 2. That the defendant execute a duplicate of each of the said bonds, numbers 3245 and 4918, so lost and destroyed, in like tenor and effect in all respects, registered in the name of Henry Rogers, together with coupons thereon, from the time said duplicates are made, and deliver the said duplicates to the plaintiff.”

An order was thereupon entered in accordance with, the above conclusions of law.

Cases cited

Des Arts v. Leggett 16 N. Y. 582 N.Y. p. 255, p. 256