Chesapeake & Ohio Canal Co. v. Blair

Alvey, J., delivered the opinion of the Court. There is no question in this case as to the ownership and loss of the bonds. The proof as to those facts is full and complete. There are two questions presented by the record. 1st, Whether the State is a necessary party defendant; and, 2dly, Whether such relief can be granted as was decreed by the Court below. 1. We think the State was not a necessary party defendant. It is admitted that bonds, such as those described in the appellee’s bill, were issued and sold by the Chesapeake and Ohio Canal Company; and that such bonds were included among those authorized to be issued under the Act of 1844, ch. 281. There is no question therefore as to the liability of the Canal Company on the bonds, if produced, nor is there any question as to the extension or enlargement of the State’s waiver of priority under the Act of 1844. The State’s prior lien was waived only to the extent of the bonds that were issued under the Act of 1844, and the certificates of indebtedness decreed — 109 — to be issued by the Canal Company were designed to, and can only, stand in lieu of the lost bonds ; and if the bonds, or any of them," should hereafter be discovered, or be produced by parties entitled to hold them, the corresponding certificates would at once cease to be obligatory. Such certificates will have no negotiable quality, and if they should be assigned, the assignee would take them subject to all the equities and defences that the Canal Company would have as against the original holder. The State, therefore, has no such immediate and direct interest in the matter as to require it to be made a party. The distinction between a proper and a necessary party may well be taken here, in view of the non-liability of the State to be sued. We only decide that the State is not an indispensable party to the present bill. 2. As to the second queston, we think that, upon the allegations and proof, the appellee is entitled to the relief that was decreed him by the Court below. The relief invoked is administered by a Court of equity in the exercise of its jurisdiction to relieve against accident. Among the most ordinary instances of relief furnished under this head of equity jurisdiction are those in respect to lost bonds and negotiable securities. It is a jurisdiction, as applied to lost bonds and negotiable securities, long and well established, and it will be exercised and relief granted whenever the loss or destruction of the instrument has happened without the negligence or fault of the party applying, provided such relief can be given without derogating from any positive agreement, or violating any equal or superior equity in other parties. Sto. Eq. Juris., secs. 81, 85, 86. The foundation of the equity jurisdiction, in respect to lost bonds and negotiable securities, has been the superior powers and facilities possessed by the Courts exercising that jurisdiction over those possessed by the common law Courts, for doing full and complete justice between the parties; the Courts of equity making — 110 — it a condition of the relief granted that full and secure indemnity should be given the defendant against all risk. Walmsley vs. Child, 1 Ves., 341; Ex parte Greenway, 6 Ves., 812 ; East India Co. vs. Boddom, 9 Ves., 464; Hansard vs. Robinson, 7 B. & Cr., 90; Byles on Bills, 302. ■ The reason for the exercise of the jurisdiction with respect to lost bonds was somewhat different from that upon which the Court assumed jurisdiction in the case of lost negotiable securities not under seal; hut this case involves the exercise of the jurisdiction as'it-applies both to lost bonds and to lost negotiable instruments. The bonds in question were coupon bonds, in the usual form of such securities, and intended to pass by manual delivery, -and which, if not destroyed, have the qualities of negotiable paper, notwithstanding they were issued under the seal of the corporation. Such bonds are treated as negotiable by the commercial usages and understanding of the country, and their negotiable quality has been fully recognized, not only by many of the State Courts, hut by the Supreme Court of the United States; in repeated decisions; and being negotiable, the rules applicable to negotiable paper apply to them. White vs. Vermont & Massachusetts R. Co., 21 How., 575 ; Mercer County vs. Hackett, 1 Wall., 83; Gelpcke vs. City of Dubuque, 1 Wall., 175, 206 ; Murray vs. Lardner, 2 Wall., 110; Thompson vs. Lee County, 3 Wall., 327; Aurora City vs. West, 7 Wall., 82. The coupons, when severed from the bonds, are also negotiable and pass by delivery. From the time they are severed they cease to he incidents of the bonds, and become in fact independent claims, negotiable, and upon which separate actions may be maintained, without producing the bonds to which they were originally attached. They, therefore, have all the essential attributes of commercial paper. Thompson vs. Lee County, 3 Wall., 327 ; Clark vs. Iowa City, 20 Wall., 583. The principle of these cases has been fully sanctioned by this Court, in State of — 111 — Virginia vs. Chesapeake & Ohio Canal Co., 32 Md., 547, in reference to these bonds. Such being the character of the securities shown to have been lost or destroyed, it is contended by the appellant that it would be dangerous and unprecedented to furnish the relief decreed by the Court below. In this, however, we do not agree. We can perceive .no good reason why the ordinary relief should not be given, — such as would be afforded in case of the loss of a negotiable promissory note or bill of exchange, payable to bearer, or after blank indorsement. The bonds, and the coupons attached, stand upon the same footing as ordinary negotiable paper, and the principle that would afford relief in the one case ought to afford it in the other. The only special objection that can be urged against-affording relief in this case, which would not apply to the ordinary case of a lost promissory note or bill of exchange, is the length of time to elapse before the maturity of the bonds, and the difficulty of securing full and complete indemnity to meet all the contingencies that may occur in the mean time. It is said that, parties perfectly good to-day may die or become insolvent before the expiration of the period for the maturity of the bonds, and before the development of facts which may determine the liability of the appellant for the bonds supposed to be lost. This is certainly true, but the same may be said of all bonds intended as indemnity against events that may occur in the future. The whole subject, however, is fully in the control of the Court; and as indemnity is to be furnished upon each payment of interest, as well as upon the payment of the principal sum, if, at-any time before final payment, it be made to appear that the indemnity for past payment was insufficient, or had become insecure, the Court may well make it a condition precedent to the receipt of further payments on the certificates, that additional indemnity be given in respect to payments previously — 112 — made. The objection that this may and will entail trouble upon the officers of the corporation, to inquire and be informed as to the pecuniary standing and worth of parties, certainly has force; but, in a case like the present, where an accidental misfortune has happened to a party without his fault, and justice and good conscience require that he should be relieved, such an objection cannot be permitted to override the rights of the party. With proper precaution all risk may be provided against; and if the bonds should be discovered, or be presented by a bona fide holder, of course, the certificates, or such of them as may represent the bonds thus brought to light, will thenceforth cease to be of value. Heretofore the only remedy in case of lost negotiable instruments was to be obtained in a Court of equity; (Hansard vs. Robinson, 7 B. & Cr., 90;) but the legislature, at its last session, (Act 1876, ch. 345,) provided that any party, otherwise entitled to sue and recover at law, upon any promissory note, bill of exchange, bill of lading, warehouse or storage receipt, or other negotiable instrument, may sue and recover at.law, notwithstanding his inability, from any cause, to produce such instrument in evidence at the trial, or surrender the same to the defendant, provided that the absence of such instrument shall be sufficiently accounted for, under the ordinary rules of evidence, to allow the introduction of secondary proof of the contents thereof, and that no judgment shall be entered for the plaintiff until a good and sufficient bond shall have been first filed by the plaintiff, or on his behalf, in such penalty and with such sureties as the. Court shall approve, conditioned to hold and keep the defendant harmless, upon satisfaction of the judgment, to the same effect and intent as if the missing instrument were produced and then and there surrendered to the defendant. Whether this act can be fairly construed to embrace bonds, such as those shown to have been lost or destroyed in this case, is a question that — 113 — we need not now decide. But,, conceding that such bonds are embraced by it, it would form no ground for withholding relief in a case like the present, where a long time must elapse before the bonds mature and thereby become actionable, and in the meantime the evidence may be lost upon which the party could recover. (Decided 16th June, 1876 ) "We think the decree passed by the Court below is in all respects proper, and must therefore be affirmed. Decree affirmed.