Coghlan v. South Carolina R. Co. - 142 U.S. 101 (1891)
U.S. Supreme Court
Coghlan v. South Carolina R. Co., 142 U.S. 101 (1891)
Coghlan v. South Carolina Railroad Company
Argued October 21-22, 1891
Decided December 7, 1891
142 U.S. 101
When a contract for the payment of money at a future day, with interest meanwhile payable semiannually, is made in one place and is to be performed in another both as to interest and principal, and the interest before maturity is payable according to the legal rate in the place of performance, the presumption is, in the absence of attendant circumstances to show the contrary, that the principal bears interest after maturity at the same rate.
The report of the master in a suit in equity to foreclose a railroad mortgage, to whom it had been referred to take proof of the claims, found as to a bondholder that his bonds were due and unpaid, that certain coupons had been paid, and that certain other subsequent coupons had been paid, but made no mention of the intervening coupons. No exception was taken to this report. Held that it was a reasonable inference that the claimant did not offer these coupons in proof, and that the failure to find as to them could not be urged as an objection to the final decree.
The Court stated the case as follows:
By an Act of the general assembly of South Carolina of December 19, 1835, the Cincinnati and Charleston Railroad Company was incorporated with power to construct a railroad from Charleston, South Carolina, to Cincinnati, Ohio. 8 Stats.S.C. 409. See also 8 Stats.S.C. 354, 355, 380, 384, 406. Subsequently, December 21, 1836, the name of that company was changed to that of the Louisville, Cincinnati and Charleston Railroad Company. 8 Stats.S.C. 96. By a later act, passed December 19, 1843, the name of the latter company was changed to that of the South Carolina Railroad Company, which acquired, subject to certain conditions, the rights, privileges, and property of the South Carolina Canal and Railroad Company, incorporated December 19, 1827, 11 Stats.S.C. 273.
The Louisville, Cincinnati and Charleston Railroad Company, before its change of name and by virtue of an Act of December 20, 1837, and an act amendatory thereof, passed December 19, 1838, 6 Stats.S.C. 571, 604, issued its bonds for the sum of about £450,000 sterling, redeemable on the first day of January, 1866, and bearing interest at the rate of five per cent. per annum, some in denominations of £500, others of £250. The £500 bonds were in the following form:
"£500 st'g. £500 st'g."
"United States of America, State of South Carolina."
"Five Per Cent. Loan"
"The Louisville, Cincinnati and Charleston Railroad Company, under the guaranty of the State of South Carolina, promise to pay to bearer five hundred pounds sterling, redeemable on the first day of January, one thousand eight hundred and sixty-six, and not before without the consent of the holder of this certificate, with interest thereon at the rate of five percent per annum from the date hereof, the said interest to be paid semiannually, on the first days of January and July, on presenting the proper coupons for the same at the house of
Palmers, Mackillop, Dent & Co., London, where the principal will also be redeemed on the surrender of this certificate."
"In witness whereof, the said company has caused its corporate seal to be hereunto affixed at Charleston, this 31st day of December, 1838."
"ROB'T Y. HAYNE, President"
"E. H. EDWARDS, Sec'y & Treas'r [Seal]"
To each bond a warrant or coupon was attached in this form:
"Louisville, Cincinnati and Charleston Railroad Company, warrant No. 49, for £12.10s., being half-yearly interest on bond C. No. 18, payable January first, 1863. E. H. EDWARDS, Treas'r."
These warrants were endorsed: "Payable at Messrs. Palmers, Mackillop, Dent & Co."
The £250 bonds were in the same form as the ones of larger amount, the coupons or warrants calling only for £6.5s. interest.
Upon the back of each bond was endorsed the above act of December 20, 1837, in these words:
"An act to lend the credit of the state to secure any loan which may be made by the Louisville, Cincinnati and Charleston Railroad Company, and for other purposes."
"Be it enacted by the Senate and House of Representatives, now met and sitting in general assembly, and by the authority of the same, that the faith and funds of the State of South Carolina be, and the same are hereby, pledged to secure the punctual payment of any contract which shall be made for borrowing money by the Louisville, Cincinnati and Charleston Railroad Company from any person or persons, company or companies, corporation or corporations, to any amount not exceeding two millions of dollars, either in the United States or in Europe, and when such contract or contracts shall be made by bond or bonds, certificate or certificates, or other instrument or instruments, signed by the president of the said company, under its seal, and countersigned by the secretary thereof, it shall be the duty of the comptroller general of this state to endorse thereon that the faith and funds of the State
of South Carolina are pledged to the faithful performance of the said contract or contracts both as it respects the punctual payment of the principal and of the interest, according to the terms of the said contract or contracts, provided that the interest to be received thereby and made payable thereon shall not exceed the rate of five percent per annum, and provided also that the comptroller general shall not endorse any such contract until five hundred thousand dollars shall be paid to the company on the stock thereof, in which event he shall pledge the funds and faith of the state for one million of dollars, and when five hundred thousand dollars more shall be paid to the company on the stock thereof, the comptroller general shall pledge the funds and faith of the state for one other million of dollars."
Immediately following this copy of the act on each bond was this guaranty:
"The condition of the above act having been faithfully complied with, I do hereby, for and in behalf of the State of South Carolina, endorse her guaranty on this bond for the payment and redemption of the principal and interest of the same. Wm. Ed. Hayne, Comptroller."
The appellant, being the owner of six of the £500 bonds, and of twelve of the £250 bonds, with seven semiannual coupons attached to each, and also some odd coupons, brought this suit, April 4, 1881, in one of the courts of the state of South Carolina, against the South Carolina Railroad Company and others, and prayed that the property covered by the mortgage created by the Act of December 20, 1837 -- which mortgage the state had failed to foreclose, and could not be compelled by suit to foreclose -- be sold, and the proceeds applied first, to the expenses of the suit and then to the payment of the bonds held by the plaintiff and other creditors of the same class, with interest up to the time of payment, and exchange on London.
The suit was removed into the Circuit Court of the United States for the District of South Carolina, a receiver of which court held possession of the property under an order made September 19, 1878, in the case of Claflin v. South Carolina Railroad Company.
It is stated in an opinion of the court below that after the bonds matured, in 1866, various plans to arrange the debt were suggested, adopted, and abandoned; that finally the railroad company offered to settle past-due sterling bonds by issuing in exchange first mortgage bonds, not guaranteed by the state, so that for each sterling bond of £250, and the interest due thereon, the holder would get a first mortgage bond of £300, and for each bond of £500 and interest, a first mortgage bond of £600; that the proposed new bonds were dated July 1, 1868, called for semiannual interest at five percent, and were made payable, as were the guaranteed bonds, in London; and that Coghlan declined to exchange his bonds for the new ones, but consented to receive, and in fact received, payment of semiannual installments of interest, precisely as if he had made the exchange -- that is, he received interest on his £500 and £250 bonds as if they were, respectively, for £600 and £300.
By a decree entered December 15, 1883, it was adjudged that the plaintiff's recovery for bonds held and proved by him should be as follows: upon each bond for £500 and £250, respectively, and past-due coupons attached, so held and proved, the sums of £600 and £300, respectively, with interest thereon from first July, 1868 at the rate of five percent per annum, payable semiannually, as if said bonds had on the latter date been exchanged for new bonds for £600 and £300, respectively, dated first July, 1868, less all amounts that may have been paid on account of the same by the South Carolina Railroad Company, or the receiver thereof, as semiannual interest.
The cause was referred to a special master to take an account of the amount due on the bonds and coupons held by Coghlan. From that decree Coghlan took an appeal, which was, upon his motion, dismissed by this court, May 27, 1887, for the reason, no doubt, that the decree appealed from was only interlocutory. 122 U.S. 649. Upon the return of the cause the master reported the amount due him up to July 1, 1887, upon the bonds, as if exchanged, calculating the interest at five percent with semiannual rests, and giving interest
upon interest at the same rate, was £10,620; and up to February 28, 1883, upon the same basis, was £8,625 20/100. He reported also that on the date last named, a tender was made to the plaintiff's then attorney of $44,600. In making his calculations, the master reported that the pound sterling in all payments was to be estimated at $4.44 4/9.
By the final decree, passed November 2, 1887, it was adjudged that the amount due the appellant was £10,798.19 9/100, the principal and interest on the bonds held by him calculated according to the principles of the master's report; and, rating the pound at $4.44 4/9, the above amount was equivalent to $47,995.28; the interest, after the decree, to be at the rate of seven percent per annum.
[This sum did not include the coupons for January and July, 1867, and January and July, 1867, and January, 1868. The record was silent as to the reason for the omission.]