Chapin v. Vermont & Massachusetts Railroad

Merrick, J.* There is no doubt but that the instrument declared on in the present action is a bond. And it is a familiar and well settled rule of law, that bonds and other contracts under seal are not, in general, negotiable instruments, the legal interest in which may be transferred from one owner to another by mere delivery, so that an action thereon can be maintained by the assignee in his own name. They may be assigned; but after assignment, as well as before, all actions to recover damages upon the failure of the obligor to perform any stipulated engagements must be brought in the name of the first assignor. 1 Parsons on Con. 196, 240. Skinner v. Somes, 14 Mass. 107. It has, however, been held in some courts that bonds, with coupons, payable to bearer, pass by delivery from hand to hand, and that purchasers of them for good consideration paid may at then- maturity maintain actions upon them for the recovery of their contents. Morris Canal & Banking Co. v. [577] Fisher, 1 Stockton, 667. Redfield on Railways, § 239, ana cases there cited. And it is specially provided by one of our own statutes that “ all bonds and other obligations under seal, for the payment of money, purporting to be payable to the bearer, or to some person designated or bearer, or payable to order, issued by any corporation or joint stock company,” shall be negotiable like promissory notes. Si. 1852, c. 76. But the instrument on which the plaintiff declares is anomalous ; it does not come under the description contained in the statute. It is not payable to the bearer, or to any designated person, or to the order of any one. No payee is named in it. Yet in all other respects it is a complete and perfect instrument; and a blank space is left, wherein may be written, without interlineation, erasure or defacement, the name of an obligee. It is agreed by the parties that this bond, together with many others similar to it, amounting in the whole to about the sum of eleven hundred thousand dollars, were sold, at or near the time they bore date, by the defendants at public auction to numerous purchasers. The defendants realized the money for which they were sold, and applied it, partly in payment of preexisting obligations, and partly in expenditures to carry on and complete the enterprise in which they were then engaged. All these bonds purport upon their face to be secured by a mortgage of the same date made by the defendants of all their railroad property to trustees for that express purpose; which mortgage was in fact duly executed by them. At a subsequent period it was provided by a statute of this commonwealth, under whose authority the defendants hold their charter, that their “ proceedings whereby they conveyed, agreeably to a vote of the stockholders passed on the 29th day of June 1849, their said railroad property in mortgage to John Davis, Robert G. Shaw and Jabez C. Howe, trustees for the bondholders in said mortgage mentioned, to secure the holders of said bonds the payment of the same,” were thereby ratified and confirmed. St. 1850, c. 233. The proceedings of the defendant corporation, mentioned m the statute, included as well the contracting of the debts and the issuing of their bonds therefor, as the execution of the morí [578] gage. Indeed, as in other instances when property is pledged for security, the debt must have been considered the principal thing to be protected, and the mortgage only as collateral to the general purpose. Hence it is obvious that it was these various contracts of indebtedness, into which the defendants had entered, which it was the object and purpose of the legislature to' ratify and confirm. In issuing so large a number of bonds, each of them payable at a future and distant period, it is impossible to suppose that the defendants intended or expected that they should all remain in possession and ownership of the original purchasers. It could not but have been foreseen that many of them would necessarily and frequently change hands many times before they should become due; yet it was plainly the intention of the corporation to make themselves debtors to every person by whom any of the bonds should be then justly holden It is therefore fairly to be presumed, and indeed it is an unavoidable implication from all their proceedings, that they consented that any bona fide holder of one or more of these bonds, for value, might perfect the contract by inserting at his own pleasure his name as obligee of the bond in the blank space which had been left in it for that purpose. And this is undoubtedly one of the things which it was the object and design of the statute to ratify and confirm. It could not have escaped the attention of the legislature, of the bondholders, or of the defendants, that something of this kind was indispensable to make the creditors of the corporation secure. That was the end which, since it is exactly what good faith and justice required, all the parties in interest, as well as the government, must be supposed to have sought to accomplish; and the enactment of the statute was well adapted and sufficient for the purpose. The plaintiff then, being a purchaser for value and the true owner of the bond in suit, had a right, under the implied authority conferred upon him by the defendants and subsequently ratified by law, to insert his own name in the bond as the payee or obligee thereof; and thereupon the instrument became in all its parts a perfect and complete contract, and he may well maintain an action upon it in his own name. Judgment for the plaintiff. Footnotes [*] This case was decided, and the subsequent cases, except Webster v. Munger, post, 384, and Stone v White, post, 589, were argued and decided at Boston m January 1858, before all the judges but Thomas, J. ,