Howell v. Western Railroad Company - 94 U.S. 463 (1876)
U.S. Supreme Court
Howell v. Western Railroad Company, 94 U.S. 463 (1876)
Howell v. Western Railroad Company
94 U.S. 463
1. Where a railroad company issues its hands, and mortgages its property to secure the payment of them and of the semiannual installments of interest thereon as they respectively fall due under the authority of an act of the legislature, which declares that the bonds shall not mature at an earlier period than thirty years, a provision in them that upon a failure to pay any coupon thereto attached, when presented at the place of payment and a continued default thereon for six months, the whole sum mentioned in the bond shall become due and payable, is void.
2. In such a case, the mortgage may provide that it shall be foreclosed upon nonpayment of interest. When suit in foreclosure is brought, if the sum ascertained to be due on the coupons be paid within such reasonable time as the court shall appoint, no further proceedings in the suit can be had until there is another default; if the sum be not so paid, a sale of the property, with a foreclosure of all the rights subordinate to the mortgage, should be ordered, with a direction to bring the proceeds into court, when, in distributing them, the sums secured by the mortgage must be protected, according to their respective priority of lien.