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Independence Indemnity Co. v. Central Farmers' Trust Co.

August 21, 1931

INDEPENDENCE INDEMNITY CO.
v.
CENTRAL FARMERS' TRUST CO. (TWO CASES)



Appeal from the District Court of the United States for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.

Author: Davis

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

DAVIS, Circuit Judge.

These are two cases between the same parties, involving the same question of law with slightly different facts.

Case No. 4574.

This is an appeal from a judgment entered for want of a sufficient affidavit of defense.

The N. E. Second Avenue Company of Miami, Fla., issued its bonds secured by a first mortgage on certain lands which it owned, to the Biscayne Trust Company, as trustee for the bondholders. The defendant Independence Indemnity Company guaranteed the payment, principal and interest, of the bonds. The guaranty, among other things, provided that:

"First. The payment to said Trustee of the Interest of the said 'Bond' at the rate therein specified and within sixty (60) days after the same shall have become due and shall have been demanded by the Trustee with interest thereon at the rate specified in said 'Bond.'

Second. The payment to said Trustee of the principal of the 'Bond' within twelve (12) months after the same shall have become due and shall have been demanded by the Trustee, with regular payment in the meantime of interest thereon at the rate specified in the 'Bond', subject, however, to the following conditions."

One of the conditions was that: "D. No suit, action or proceeding shall be instituted or maintained against the 'Guarantor' under this instrument unless brought within eighteen (18) months after default in the payment of the principal or interest on the bond, whether such maturity resulted by the bond becoming due on its face or whether it resulted by reason of one of the acceleration clauses in the deed of trust provided."

The Biscayne Trust Company failed, and the plaintiff, Central Farmers' Trust Company, was substituted as trustee.

The mortgage or deed of trust provided that if default be made by the mortgagor in the payment of the principal of the bonds or of the interest coupons thereon, and if that default should continue for thirty days, the principal amount of all outstanding bonds, whether or not due and payable on their face, at the option of the trustee, became due and payable forthwith, and the trustee, if requested by the holders of 25 per cent. or more of the amount of the bonds then outstanding, should declare the principal amount due and cause suit to be brought for the sale of the mortgaged premises.

Interest on the bonds was payable on June 15th and December 15th. On December 15, 1928, interest in the amount of $8,043.75 on bonds totaling $247,500 became due and payable, but was not paid or tendered within thirty days, and so on January 23, 1929, after having been requested by the required number of bondholders, plaintiff notified defendant that it declared the principal of the bonds then outstanding, amounting to $233,750, due and owing because of the failure to pay the interest within thirty days after it became due.

On February 2, 1929, defendant tendered to the plaintiff the interest which by agreement of the parties was accepted without prejudice to the ...


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