Chaffee v. Middlesex R. Co.

• Decision Date: 07 March 1888
• Citation: 146 Mass. 224,16 N.E. 34
• Parties: CHAFFEE v. MIDDLESEX R. CO. MANUFACTURERS' FIRE & MARINE INS. CO. v. SAME.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

146 Mass. 224

16 N.E. 34

CHAFFEE v. MIDDLESEX R. CO.

MANUFACTURERS' FIRE & MARINE INS. CO. v. SAME.

Supreme Judicial Court of Massachusetts, Suffolk.

March 7, 1888

COUNSEL

L.M. Child, for defendant.

By the terms of the bond, and by the act of 1880, the defendant was bound, upon the date of the maturity of the interest warrant to be ready to do one of two things, at the option of the bondholder, viz., to pay for his bonds in cash, or to give him stock in exchange for his bonds. By the act of the legislature the defendant had no authority to issue stock except for the purpose of redeeming the bonds set forth in this complaint, and the only right it had was to exchange such stock for bonds, or to sell the stock for cash with which to redeem the bonds. Stock issued under that act for any other purpose would have been illegal and invalid. Chapter 103, Acts 1880, §§ 3, 4. Hence the time when this contract was to be performed on the part of the defendant was of the greatest importance and of the very essence of the contract. Hence it is claimed that the question of what is a reasonable time for the presentation of the bonds and signifying the option is not a part of this case, and cannot be considered; that the time was fixed, and that no other time can be considered, and that no question of a reasonable exercise of the right on the part of the bondholder can be raised here, because it was fixed at a time certain, and that time was an essential time. The first question, then, is what was the time fixed in the contract? It was either one of two days. It was either Saturday, the 31st day of January, or it was Wednesday, the 4th day of February. If, as is contended by the complainant, he was entitled to three days grace, then he should have presented his bond for redemption or for exchange, on the 4th day of February. If he was not entitled to grace, it should have been presented upon the first day of February, the date mentioned, were it not that it fell on Sunday. Therefore he was bound to present it on the day previous, or the 31st day of January. The defendant claims that his coupon has not all the attributes of a promissory note. It is the payment of interest, and, while it may be negotiable, still it has not all the incidents of a promissory note, and is not entitled to grace. The statute of Massachusetts makes bonds negotiable, and were it not for that statute, under the Massachusetts law it would not be negotiable. But it is claimed that this acknowledgement of indebtedness is not such an obligation as is contemplated by the statutes, and is therefore not entitled to grace. Cattle Co. v. Carroll, 63 Tex. 48; Martin v Shumatte, 62 Tex. 188; Stanton v. Shipley, 27 F. 498; Worden v. Dodge, 4 Denio, 159; Brown v Jordhal, 32 Minn. 135, 19 N.W. 650; Rand.Com. Paper, § 70. Certificates of stock, though passing by indorsement and delivery, are not negotiable paper. Shaw v. Spencer, 100 Mass. 382; Mills v. Townsend, 109 Mass. 115; Weaver v. Barden, 49 N.Y. 286; Leitch v. Wells, 48 N.Y. 585. A certificate of deposit issued by a national bank is not a negotiable instrument. Shute v. Bank, 136 Mass. 487. Nor is a receiver's certificate of indebtedness. Turner v. Railroad Co., 95 Ill. 134. Nor a county warrant, though negotiable in form. Canp v. Knox Co., 3 Lea, 199. And inasmuch as the statutes do not provide that the coupons of such a bond are negotiable, then it remains by strong implication that the intention of the statute was that they should not be negotiable like promissory notes. The omission of the coupons from the law shows that it was not intended to apply to coupons. Mere installments of interest are not entitled to grace. 1 Rand.Com. Paper, § 16; Bank v. Leach, 52 N.Y. 350; Macloon v. Smith, 49 Wis. 200, 5 N.W. 336.

In this case the certificates, though payable at a day certain, were convertible into stock at an earlier date, at the holder's option, and hence the certificate, not being payable at a day certain, was not entitled to grace. Chouteau v. Allen, 70 Mo. 290, 339; Way v Smith, 111 Mass. 523; Hubbard v. Mosely, 11 Gray, 170. Nor are those coupons negotiable promissory notes under the general law-merchant, because the days of grace are established by statute law, and the days of grace differ according to the different localities in various countries. Hence, without the statutes of Massachusetts on the subject, bonds, at least, could not be entitled to grace. Coupons upon railroad bonds, although to some extent negotiable, are not entitled to grace. They are not commercial paper, but installments of interest. 2 Daniel, Neg.Inst. (3d Ed.) §§ 1490a, 1505, 1506; Arents v. Com., 18 Grat. 750, 776; Bank v. County Com'rs, 14 Minn. 77, 79, (Gil. 59;) Myers v. Railroad Co., 43 Me. 232; Jackson v. Railroad Co., 48 Me. 147; Bank v. New Orleans, 5 Amer.Law Reg. (N.S.) 555; Com. v. County Com'rs, 32 Pa.St. 218; Armstrong's County v. Brinton, 47 Pa.St. 372; Beaver v. Armstrong, 44 Pa.St. 63; Rose v. Bridgeport, 17 Conn. 243. But the question here is not at what time the defendant might have to pay such coupon, but when the coupons were due, in the ordinary acceptation of the term. The days of grace are an indulgence the law extends after an obligation is due. Otherwise, there would be no grace. This contract to exchange stock is not entitled to grace, and therefore must be performed on the day mentioned, which was February 1st. If, as the plaintiff now contends, these certificates, or the interest warrants thereto attached, were entitled to grace, and the last day of grace was the date of maturity of the interest warrant, it was his duty not merely to call at the company's office before the day of maturity, but he must present his claim there at the expiration of the three days' grace in order to bind the corporation. The act of the president on February 2d did not bind the company, but was merely a statement of his opinion as to the date when the option must be signified; this officer's action in the matter not being within his official duties as such, and time being material and of the essence of this contract. Ang. & A.Corp. § 297; Boynton v. Gas-Light Co., 124 Mass. 197; Mahone v. Railroad Co., 111 Mass. 72, 75; Smith v. Smith, 117 Mass. 72; England v. Dearborn, 141 Mass. 590, 6 N.E. 837; Wheat v. Bank, (Ky.) 5 S.W.Rep. 305; Luse v. Railway, 6 Or. 125; Market Co. v. Jackson, 102 Pa.St. 269; Iron Mine v. Bank, 39 Mich. 644; Morrison v. Mountain Co., 52 Cal. 307; Brown v. Railroad Co., 67 Mo. 122. Even if the defendant did not have the stock on the second day when it was demanded, non constat but it might have procured the same, and been ready to exchange stock for bonds on the day when the contract required it so to do. The defendant being authorized so to do by the legislature, gave up and discharged all of its stock, and has no stock at the present time, nor is there any stock in existence anywhere, it all having been surrendered for the purpose of consolidating with the Highland Railroad Company. Hence the only decree that can be in this case, by this court, is, it being impossible for the defendant to perform its contract, to award a certain sum in liquidation of the damages caused by the non-fulfillment thereof. The measure of damage which the defendant should be called upon to pay is the value of the stock at or about the time--within a reasonable time--of refusal of the defendant to deliver the same; the price of the stock in the market for which the complainant might have purchased the stock. And it is not competent for the complainant to wait and demand that damages shall be governed by the highest price of the stock between the time that he might have procured it and the time of the termination of a suit for the purpose. At the present time it is well known that not only has the Middlesex Railroad stock all been canceled, but the stock of the Boston Consolidated Railroad Company, also a new corporation, been formed by consolidation, so that the market price cannot be ascertained of the original Middlesex Railroad stock by any process. 2 Suth.Dam. 382; Pinkerton v. Railroad Co., 42 N.H. 424; Quarles v. George, 23 Pick. 400; Railroad Co. v. Benedict, 10 Gray, 212; Essex Co. v. Mills, 14 Allen, 389; Wonson v. Fenno, 129 Mass. 405; Dyer v. Rich, 1 Metc. 180; Biddle v. Stock-Brokers, Id. 413. "A court of equity will not generally decree performance of a contract for the sale of stock or goods; not because of their personal nature, but because damages at law, calculated upon the market price of the stock or goods, are as complete a remedy to the purchaser as the delivery of the stock or goods contracted for, inasmuch as, with the damages, he may purchase the same quantity of the like stock or goods." Per Sir JOHN LEACH, V.C., in Adderly v. Dixon, 1 Sim. & S. 610; 2 Story, Eq.Jur. § 717; Cook, Stocks, §§ 337, 338; Ross v. Railway Co., Woolw. 26. The objection raised by the demurrer, that the plaintiff's remedy at law is plain and adequate, should therefore prevail. Bank v. Field, 126 Mass. 346. This bill is for specific performance, with alternative relief in damages. The plaintiff cannot obtain both in respect to the same transaction, and as he is proceeding for both, the court will not decide for him, but compel him to elect. Wat.Spec.Perf. §§ 5, 6; Eastman v. Simpson, 139 Mass. 348, 1 N.E. 346. Specific performance is a remedy that lies wholly within the discretion of the court, which will not make an idle decree. Wat.Spec.Perf. § 6; Pom.Spec.Perf.§§ 35-50; Bisp.Eq. (4th Ed.) §§ 376, 377. The plaintiff must show that damages would not afford an adequate compensation. Id. §§ 375, 376; Pom.Spec.Perf. §§ 9-27, 34. In England, prior to the chancery amendment act of 1858, if the plaintiff failed in his suit for damages, even where...