Manning v. Norfolk Southern R. Co.

• Decision Date: 01 January 1887
• Citation: 29 F. 838
• Court: U.S. District Court — Eastern District of Virginia
• Parties: MANNING v. NORFOLK SOUTHERN R. CO. [1]

29 F. 838

MANNING v. NORFOLK SOUTHERN R. CO. ^[1]

United States Circuit Court, E.D. Virginia.

January, 1887

Common-law action on coupons which had been cut from bonds made and issued by the defendant, and which were secured by a mortgage to Ford & Jordan, as trustees, dated September 1, 1880. The bonds were in the usual form of railroad bonds, and by each of them the railroad company promised to pay $1,000 to the bearer on September 1, 1920, with interest at the rate of 6 per cent., on the first days of March and September in each year, upon presentation and surrender of the coupons annexed to said bonds as they should severally become due. The bonds further recited that the payment of the principal and interest was secured by the said mortgage upon the terms and conditions set forth therein, and also contained a provision to the effect that, if interest should remain in default for six months, the whole principal sum might, at the option of the bondholder, become forthwith due and payable. The mortgage contained the same provision, making it obligatory upon the trustees to exercise such option, and declare the whole amount due, upon the request of the majority in interest of the bondholders, or, upon like request to waive their right to exercise such option. The mortgage then prescribed the proceedings to be taken by the trustees in case of default: First, to enter into possession of the mortgaged property, and to apply the net earnings to the payment of the interest coupons; or, second, to sell the property at public auction, after notice, and to apply the net proceeds to their payment; or, third, to enforce the rights of the bondholders under the mortgage by sale or entry or judicial proceedings, as it should be deemed most expedient for the bondholders' interest; but the duty of the trustees, and their power to make election, were declared to be subject to the right and power of a majority in interest of the bondholders to instruct the trustees to waive such default, or to enforce their rights.

Before maturity of the coupons, a majority of the bondholders waived the payment of interest for five years, agreeing to fund the coupons, and accept in place thereof scrip certificates; and requested the trustees to declare that the exaction of payment of interest should be waived, and that the time for the payment of such interest should be extended, and that no proceedings for the enforcement of the...