Potomac Manuf'g Co v. Evans

• Decision Date: 12 April 1888
• Citation: 6 S.E. 2,84 Va. 717
• Parties: Potomac Manuf'g Co. et al. v. Evans.
• Court: Virginia Supreme Court

6 S.E. 2

(84 Va. 717)

Potomac Manuf'g Co. et al.

v.Evans.

Supreme Court, of Appeals of Virginia.

April 12, 1888.

1. Mortgagor—Trust Deed—Power of Sale—When Right to Exercise Accrues.

A deed of trust, to secure certain coupon bonds, with interest coupons payable "upon presentation and surrender" as they become due, after providing that the interest shall be paid punctually when due, and on default, at any time " after demand" for any period exceeding six months, the trustee shall sell the trust property on demand in writing of the bondholders, contains the following clause: "It is further agreed, * * * in the event of any default in the payment of interest * * * which shall continue for a period of six months, * * * the whole principal * * * shall become due, " provided a majority of the bondholders shall make a written demand upon the trustee. Held, that a default in the payment of interest can be predicated only upon refusal to pay after a demand has been made, and such default must continue for a period exceeding six months before a right of action accrues.

2. Same—Trust Deed—Decree of Sax, e.

A trust deed provided for a sale of the property on default in the payment of interest when due, for six months after demand. A suit was brought within six months after demand. Held, that a decree of sale must be reversed, though made more than six months after the commencement of the suit; the court being restricted, in making the decree, to the case made by the pleadings.

Appeal from circuit court of city of Alexandria.

S. F. Beach, for appellants.

Chas. E. Stuart, for appellee.

Lewis, P. This suit was commenced in November, 1886, to foreclose a deed of trust executed by the Potomac Manufacturing Company to secure the payment of certain coupon bonds, and the coupons thereto attached, issued by the said company. There was a demurrer to the bill, which raises the question whether or not, upon the allegations of the bill, the contingency has arisen upon which the holders of the bonds and coupons are entitled to a sale of the property conveyed by the deed. The appellants, who were defendants in the court below, deny that it has. In other words, they contend that the suit was prematurely brought, and that the demurrer ought to have been sustained. The bonds are dated November 1, 1882, and are payable 10 years after date, "with interest thereon at the rate of six per centum per annum, semi-annually, in the city of Boston, on the first day of May and November in each year, upon the presentation and surrender of the coupons attached as they severally become due." The deed of trust, a copy of which is exhibited with the bill, contains, among other things, the following clauses: First. That the company will punctually pay its interest, "as the same shall become due and payable, according to the terms of the said bonds, " and will also pay the principal of the bonds at maturity. Second. That if the company shall, at any time after demand made, make default, or refuse, neglect, or omit, for any period exceeding six months to pay its interest when it becomes due, or shall refuse, neglect, or omit, for a like period of six months after maturity, to pay the principal of the bonds, then, and in either of such cases, the trustee shall sell, if requested in writing so to do by a majority in value of the bondholders. And then, as a part of the same clause comes the following provision: "And it is further agreed and covenanted, by and be-tween the parties hereto, that in the event of any default in the payment of any installment of interest which shall become due upon any of the bonds aforesaid, and in case such default shall continue for a period of six months after the same shall become due, the whole principal of all the said bonds then outstanding shall become due and payable; provided, that the holders of a majority in value of the said bonds then outstanding shall demand and shall request him so to'do by a written notice served upon said trustee." The bill charges that on the 1st of November, 1886, certain of the interest coupons which became due on that day, and certain other coupons of the company, then past due, were duly presented for payment in the city of Boston, and that payment...