Mayo v. Fitchburg and Leominster Street Railway Co.

• Decision Date: 30 October 1929
• Citation: 269 Mass. 118
• Parties: WINTHROP M. MAYO v. FITCHBURG AND LEOMINSTER STREET RAILWAY COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

269 Mass. 118

WINTHROP M. MAYO v. FITCHBURG AND LEOMINSTER STREET RAILWAY COMPANY.

Supreme Judicial Court of Massachusetts, Worcester.

October 30, 1929

April 8, 1929.

Present: RUGG, C.

J., PIERCE, WAIT SANDERSON, & FIELD, JJ.

Bond, Construction. Mortgage, Trust mortgage. Contract, Construction, Performance and breach. Waiver.

The holder of a bond of a corporation is not precluded, after default in payment according to its provisions, from maintaining an action upon the bond against the corporation by reason of the facts, that payment of three hundred bonds, including the plaintiff's, was secured by a trust mortgage executed contemporaneously with the bonds; that such trust mortgage provided that a majority in amount of the holders of the bonds at the time outstanding might by instrument in writing waive, or instruct the trustee to waive, any default, but that such action should not extend to affect subsequent defaults or impair rights resulting therefrom; and that a majority of the bondholders not including the plaintiff, had extended the date of payment beyond the date of the plaintiff's action: such provisions, preventing in the circumstances enforcement of the security, did not bar an action upon the principal debt.

CONTRACT upon bonds of the defendant described in the opinion. Writ dated August 3, 1926.

In the Superior Court, the action was heard by Dillon, J., without a jury upon a case stated. It appeared that the trust mortgage, described in the opinion, secured the payment of three hundred $1,000 bonds, among which were the plaintiff's. Other material facts and rulings by the judge are stated in the opinion. The judge found for the plaintiff in the sum of $3,505.17, and reported the action for determination by this court.

S.M. Salny, (E.W. Baker with him,) for the defendant. J.W. Healey, (C.D. Bent with him,) for the plaintiff.

WAIT, J. The plaintiff brings this action for the principal and interest due upon three bonds issued by the defendant which by their terms became payable upon February 1, 1921. Payment was secured by a mortgage provided for by a trust instrument executed contemporaneously with the bonds. In accord with a provision of the trust instrument, payment of principal and interest was extended to February 1, 1926. The plaintiff assented to this extension. Payment was not made on February 1, 1926, or at any later date. The bonds are now due and the defendant is in default, unless its default has been waived and the plaintiff is bound by such waiver. The plaintiff has made no demand that the trustee bring action for him or in his behalf against the defendant on the bonds. The trust instrument provided that a majority in amount of the bonds at the time outstanding might by instrument in writing waive, or instruct the trustee to waive, any default, but such action should not extend to affect subsequent defaults or impair rights resulting therefrom. By a written agreement bearing date January 13, 1926, executed by the defendant, the trustee, and a large majority of holders of outstanding bonds, the default of the defendant in payment of principal on February

1, 1926, was waived and the time of payment was extended to and including February 1, 1931. None of the assenting bondholders signed this agreement until more than three months had elapsed subsequent to February 1, 1926. The plaintiff never signed or assented to this agreement of waiver and extension. The essential question for decision is whether he is bound by it so that he cannot maintain this action on the bonds.

The trial judge who heard the action on a case stated, denied the defendant's motion for a finding in its favor, refused its requests for rulings, found for the plaintiff in the amount of principal and interest called for by the terms of the bonds, and reported the case. If the finding was justified on the case stated, and if the rulings and refusals to rule were correct, then judgment is to enter on the finding, otherwise judgment is to enter for the defendant. At the argument the defendant waived any question of the negotiability of the bonds. We do not consider it. No contention is made that the action of a majority of the bondholders has been inequitable, or that any opportunity has been denied the plaintiff to become a...