Cameron v. Tome
| Decision Date | 05 February 1886 |
| Citation | 2 A. 837,64 Md. 507 |
| Parties | CAMERON v. TOME, TRUSTEE, AND OTHERS. |
| Court | Maryland Court of Appeals |
The franchises and property of the People's Passenger Railway Company were sold under foreclosure proceedings instituted by the second mortgage bondholders. The sale was made subject to a first mortgage by the company to Jacob Tome, trustee, to secure the payment of the principal and interest of $100,000 coupon bonds, and John W. Hall became the purchaser. Hall subsequently conveyed the property to the People's Railway Company, a new and distinct corporation. The appellant is the holder of certain interest coupons of the first mortgage bonds of the face value of $2,745, and these coupons he claims are entitled to the lien of the first mortgage upon the property of the People's Passenger Railway Company. The auditor and master to whom the papers were referred to state an account was, upon the proof submitted to him, of the opinion that the coupons held by the appellant were not entitled to the lien of the first mortgage, and that they were acquired by the appellant under such circumstances as to entitle him only to a claim against the company for money loaned. This appeal is taken from a pro forma decree ratifying the report of the auditor and master.
In support of the lien now claimed by him, the appellant contends that the coupons were purchased by him from the first mortgage bondholders, and constitute, therefore, a part of the mortgage debt. The appellees, on the other hand contend that the coupons were presented at the company's office for payment, in pursuance of a notice published by the company in the newspapers that they would upon such presentation be paid; that they were so paid by the proper officer of the company, and were accordingly delivered to him for retirement and cancelation, and not for assignment.
Is the appellant to be treated as a purchaser of the coupons in controversy? We think not. His own admission, the admissions to the company, and the proof before the auditor and master are all against any such contention. Tome, the trustee in the first mortgage, in the cross-bill filed by him, expressly charges that the company being without means to pay the interest coupons falling due first January, 1883, its president made an arrangement with the appellant whereby the latter was to advance the money to William H. Patterson (the secretary of the company) to take up said coupons, and which were to be delivered to the appellant, to be held by him as his property until the company should be able to raise the money to pay the same. He further charges that in pursuance of this arrangement an advertisement was published, signed by W. H. Patterson, as secretary of the company, notifying the holders of the first mortgage bonds to present their coupons at the company's office for payment; and that certain bondholders, in ignorance of the arrangement made with the appellant, presented and delivered their coupons to Patterson, the secretary, as they supposed, for retirement and cancellation, receiving from him the money therefor. The bill then charged that the whole arrangement was but to conceal the fact of a default having been made, and to avoid the consequences thereof, and that it was in fraud of the rights of the first mortgage bondholders.
The answer of the company to the cross-bill of Tome admits the facts set forth in the bill, but denies that the arrangement was fraudulent. The answer of the appellant admits, also, the facts stated, except that it denies all fraud, combination or improper motive in respect to the coupons, and alleges "that the money which was paid by the officers of the defendant company to the bondholders who delivered to them coupons due January 1, 1883, was the money of the said I. D Cameron, advanced by him to the company, and the said coupons are now held by him under the arrangement stated in the...
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