Hirsh v. Canadian Pacific Ry. Co.

43 N.E.2d 304, 69 Ohio App. 102, 23 Ohio Op. 508, 1941 Ohio App. LEXIS 672

• Court: Ohio Court of Appeals
• Decided: December 8, 1941
• Docket: 3822
• Status: Published

Opinion

Lloyd, J.

On July 3,1939, Harry B. Hirsh, as trustee, and Fred H. Hawley, commenced an action in the Court of Common Pleas against the Canadian Pacific Railway Company to recover an amount claimed due as interest on certain bonds of the Minneapolis, St. Paul & Sault St. Marie Railway Company. The bonds were of a series of bonds dated July 18, 1888, and maturing July 1, 1938. They were secured by a mortgage or trust deed, to which reference is made therein. On March 27,1941, Hirsh, on his motion granted by the court, withdrew from the action as a party plaintiff therein, the cause thereafter being prosecuted by Hawley alone, who filed an amended petition claiming in his first cause of action therein to be the owner of twenty-one of the bonds of the issue aforesaid, the payment of interest upon which, it is alleged, was guaranteed by tbe defendant railway company. In a second cause of action in bis amended petition, Hawley seeks a judgment for interest on four bonds, tbe only difference between tbem and those described in tbe first cause of action being tbe rate of interest. Tbe Minneapolis, St. Paul & Sa-ult St. Marie Railway Company defaulted in tbe payment of tbe bonds at maturity. Tbe Canadian Pacific Railway Company paid, when due, whatever interest was due and payable prior to tbe maturity of tbe bonds, and, claiming that by tbe terms of tbe bonds as pleaded in tbe amended petition it was not liable for interest thereafter accruing, it filed a general demurrer which was sustained by tbe Court of Common Pleas, followed by dismissal of tbe amended petition at tbe costs of tbe plaintiff Hawley. From this judgment Hawley appeals on questions of law.

Tbe bonds in question provide that tbe principal thereof is payable on July 1, 1938, with interest thereon at tbe rate of 5 per cent (4 per cent on those described in plaintiff’s second cause of action) payable at its agency (Central Trust Company of New York, trustee of tbe mortgage securing the bonds) semiannually on tbe first days of January and July in each year, upon presentation of tbe annexed coupons as they severally become due.

Tbe foregoing is all that is recited in tbe bonds as to tbe payment of interest.

On tbe bonds described in tbe first cause of action appears tbe following:

“For value received, Tbe Canadian Pacific Railway Company, hereby guarantees tbe payment of tbe interest on this bond at tbe rate of five per cent (5%) per annum at tbe place and time therein stated.

“In witness whereof, tbe said company has caused this, guarantee to be subscribed by its secretary pur suant to resolution of its board of "directors dated May 6, 1925.”

The guaranty on those described in the second cause of action is different in phraseology, but the effect and meaning thereof is the same.

It was alleged in the petition filed by Hirsh and Hawley, which allegations were stricken from the petition on motion of the defendant, that a prospectus issued by defendant represented to prospective buyers of the bonds that they were being sold, secured by the credit and backing of the defendant with interest guaranteed, and that the payment of the interest was guaranteed unconditionally by the defendant. Also, there was stricken from the petition the allegation that:

“Plaintiffs further allege that it was an intended purpose of the guarantor, Canadian Pacific Railway Company, in the event of default of principal on said bonds, to continue to pay interest at the stipulated rate of five per cent per annum, payable as stipulated in said bonds.”

This action of the court is assigned as prejudicial error in addition to the claim that the amended petition does state a cause of action.

Whether or not the alleged error in striking the foregoing allegations from the petition can be preserved when an amended petition was filed by Hawley upon leave of court asked for by him, it is not necessary to consider because in the judgment of this court these allegations add nothing to the clear import and intent of the express conditions of the bonds which, to repeat, are that the interest thereon was to be paid on the first days of January and July upon presentation to The Central Trust Company of New York “of the annexed coupons as they severally become due.” All of the interest coupons were paid and none thereafter remained for presentation or payment, and that is all that the guarantor agreed to do. It agreed unconditionally to pay the interest coupons ‘ ‘ at the place and time” stipulated in the bond, and clearly it was not obligated to do more than that.

Thus viewing the questions presented on this appeal, this court concludes that the judgment of the Court of Common Pleas should be and therefore is affirmed.

Judgment affirmed.

Overmyer and Carpenter, JJ., concur.