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St. Louis and San Francisco Railroad Co. v. Guaranty Trust Co. of New York

Supreme Court of New York, Appellate Division

May 12, 1911

ST. LOUIS AND SAN FRANCISCO RAILROAD COMPANY, Plaintiff,
v.
GUARANTY TRUST COMPANY OF NEW YORK, Defendant.

SUBMISSION of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.

COUNSEL

Page 441

Morgan J. O'Brien of counsel [John W. Dixon with him on the brief],O'Brien, Boardman & Platt, attorneys, for the plaintiff.

Adrian H. Joline of counsel [Arthur H. Van Brunt and Lewis H. Freedman with him on the brief], for the defendant.

CLARKE, J.:

Plaintiff is a Missouri corporation owning and engaged in the operation of lines of railroad and other properties, franchises and rights in the States of Missouri, Kansas, Oklahoma, Arkansas, Alabama, Mississippi, Tennessee and other States. Defendant is a New York corporation and the successor as corporate trustee to the Morton Trust Company.

Plaintiff made, executed and delivered to the Morton Trust Company and William H. Thompson, as its trustees, a refunding mortgage dated June 20, 1901, upon its railroads and railroad property, franchises and rights, to secure an issue of $85,000,000 of its refunding bonds bearing interest at the rate of four per cent per annum; $67,719,000 of the refunding bonds have been issued under said mortgage. All the refunding bonds are to mature July 1, 1951.

The mortgage provided: 'Second. The Trust Company shall certify the refunding bonds and deliver the same as follows: A. $51,574,000 of the refunding bonds, or such less amount thereof as shall be necessary for that purpose, shall be reserved to be issued and delivered in exchange for or to take up at maturity or before maturity the following bonds (which are hereinafter called collectively the underlying bonds), with all unmatured and unpaid coupons belonging thereto.'

Fourteen classes of bonds issued by various companies with the amounts thereof and terms thereof and when payable were enumerated. 'Whenever the Railroad Company shall tender or cause to be tendered to the Trust Company, and whether before or after the maturity thereof or the payment thereof, any of the underlying bonds, with all the unmatured coupons thereunto belonging, the Trust Company shall, in exchange therefor, certify and deliver to the Railroad Company, or to its order, refunding bonds of a face amount equal to the face

Page 442

amount of the underlying bonds so received by the Trust Company. * * * Any refunding bonds which shall no longer be required to be reserved for issue and delivery in exchange for or to take up at or before maturity the underlying bonds in accordance with the preceding provisions of this subdivision, may, after all the refunding bonds reserved under the following subdivision C of this article shall have been issued or have been set apart, be certified, issued and delivered in accordance with the provisions of said subdivision C and in addition to the bonds reserved for ssue under said subdivision.

'B. $10,926,000 of the refunding bonds, or such less amount thereof, as in the judgment of the Railroad Company, shall be required for that purpose, shall be certified and delivered to the Railroad Company for use, in its discretion, in the refunding of the underlying bonds, on the delivery to the Trust Company from time to time of a certified copy of a resolution of the board of directors of the Railroad Company or of the Executive Committee of said board, requesting such delivery and stating that the bonds so delivered or their proceeds will be used by the Railroad Company only for the purposes of such refunding. Any refunding bonds which after all the refunding bonds reserved under the following subdivision C of this Article shall have been issued or have been set apart, shall not have been used for refunding the aforesaid indebtedness, or in the judgment of the board of directors of the Railroad Company, to be expressed by a resolution of said board, shall no longer be required to be reserved for use for such purpose, may be certified, issued and delivered in accordance with the provisions of said subdivision C.

'C. The residue of the refunding bonds shall be certified and delivered and used only for the following purposes or some one or more of them, namely: The construction or acquisition of additional side tracks, second-tracks, spur-tracks, terminals or other additions to or betterments of, or improvements upon, along or appurtenant to the lines of railroad, terminals or other properties which shall then belong to the Railroad Company and be subject to the lien of this indenture, or which shall then belong to any of the companies the line of ...


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