Fleming v. Montana Coal & Iron Co.

286 F. 453, 1923 U.S. Dist. LEXIS 1804

• Court: District Court, D. Montana
• Decided: February 5, 1923
• Docket: No. 103
• Status: Published

Opinion

BOURQUIN, District Judge.

Owning some of defendant’s bonds, plaintiff seeks to enjoin its purchase in open market of any of the issue. It appears the bonds are secured by a trust deed which provides that defendant will maintain a sinking fund of 2 to 5 cents per ton of coal by it mined; that, whenever this fund amounts to $10,000, the trustee (Empire Trust Company) shall solicit and purchase bonds offered at the lowest price, but not to exceed 105; that, if offers do not suffice to exhaust the fund, to that end the trustee shall draw by lot, call, and redeem bonds at 105; and that at any time defendant may draw by lot, call, and redeem bonds at 105. It further appears that defendant has been purchasing its bonds at par or less in open market, but it does not appear it has failed to perform its contract in respect to the sinking fund.

Plaintiff contends that the methods of redemption of the trust deed are exclusive, that therein he has a prospect of redemption of his bonds at 105 before maturity, and that defendant’s open market purchases defeat this prospect and impair his right. In so far as compulsory redemption prior to maturity is concerned, plaintiff is right; but this in no wise debars defendant from voluntary redemption — that is, from purchasing in open market or private sale any bonds that the owners are willing to sell. It is very clear that this right of purchase is not of the terms of, and is unaffected by, the trust deed — has not been bartered away.

Plaintiff has no ground for complaint. Indeed, it is to plaintiff’s advantage that surplus funds are devoted to decrease the bond debt, instead of to increase dividends. For thus (apologies to Monsieur Coué) from day to day in every way his security is getting better and better; Nor is it material that defendant does not resist injunction, for injunction is an extraordinary remedy, not' to be made ordinary, and so abused, merely because unresisted.

Denied.