Rolston v. Central Park, North & East River Railroad

Daly, P. J. The action was brought to recover $70, the amount of two coupons for interest, due June 1 and December 1, 1895, at 7 per cent., issued with bond No. 994 of the defendant corporation, on December 1, 1872; and the complaint averred that the bond and coupons had been lost and that the plaintiff is ready and willing to execute an undertaking with two sureties in such •amount as the court' may fix to indemnify the defendant against any claim by any other persons, Code, § 1917. A bond of indemnity was tendered on the trial, The defendant moved to dismiss the complaint on the ground that the coupon Was not a promissory note, and was not an unconditional promise to pay, and is governed by the terms and conditions of the mortgage' (which provided for the payment of interest on the bond “ on the presentation and delivery'of the coupons, or interest warrant ” thereto annexed); that, as the coupon was attached to the bond when lost, it has never been negotiated and serves no independent purpose; .and that the only contract is the bond, which is not sued upon nor [441] proved. The motion being denied, the .defendant proved a copy of the bond and mortgage, and asked for a direction of a verdict upon the grounds stated, and upon the ground that the terms and conditions of the bond had not been complied with. The court directed a verdict for the plaintiff. The very clear and satisfactory opinion of Chief Justice Van Wyck, of the City Court, in affirming the judgment disposes of most of the points now raised by the appellant. By the decisions of the court of last resort of this state, it is settled that interest coupons payable to bearer and attached to bonds issued by a corporation are negotiable promissory notes. Evertson v. National Bank of Newport, 66 N. Y. 14; McClelland v. Norfolk S. R. R. Co., 110 N. Y. 469-475. Hence the Code provision (§ 1917), that an action can be maintained upon a lost negotiable promissory note or bill of .exchange upon the giving of an undertaking of indemnity, applies to actions upon lost coupons. It is argued that, inasmuch as the bond to which the coupon in suit was attached contained a provision that “ the interest will be paid upon the presentation and delivery of. the coupon,” the negotiability of the coupons is affected, if not destroyed, and that the section of the Code cited does not apply. To this argument, we think it may be reasonably answered: H the lost coupon is a negotiable promissory note, the plaintiff may recover upon giving the undertaking. If it is not negotiable, he may recover without giving the undertaking; for there is no law which prohibits a recovery upon a contract because it has been lost, if satisfactory secondary evidence of it is produced. If the lost instrument is1 not negotiable, an action may be maintained upon it without a bond. Wright v. Wright, 54 N. Y. 437. It is also argued that the provision in the bond requires the production of the coupon, as a prerequisite to recovery. Eo reason for such a rule is advanced, except the convenience to the corporation in ascertaining by the surrender of the coupons the extent at all times of its obligations upon its bonds' and the injustice of compelling it to accept, in lieu of coupons, the bond of a third party. The answer to this is that that Code in the section in question (1917) recognizes no distinction between corporate and other debtors, nor between the holders of obligations of corporations and of private persons. As to the effect of the clause in the bond requiring the presentation of the coupon, that does not prevent a recovery, if the coupon [442] be lost. Had the provision been incorporated in -the coupon itself, it would not have had that effect. -Where currency was deposited with a party, who gave 'his receipt therefor, promising to pay it “.on return of this receipt,” it was held he was entitled to recover, the receipt having.been lost', as the provision did not make it payable on a contingency or constitute a condition precedent. Frank v. Wessels, 64 N. Y. 155. - The provision of the Stock Corporation Law (§ 51), prescribing the cases iff which the issuing of a new. certificate of shares in a corporation may be compelled) where the original certificate is lost, and discharging the corporation from liability upon it, after the new certificate is issued,, leaving claimants upon such originals lo recover- only against the indemnitors or security given upon the new issue, indicates the. disposition of the -legislature to guard corporations against contending shareholders, but it does not affect in- any manner their liability to creditors under section 1917 of the Code, or at common law. Judgment affirmed, with costs. McAdam and Bischoff, JJ., concur. Judgment affirmed, with costs.