Rea v. Pennsylvania Canal Co.

Citations

• 245 Pa. 589
• 91 A. 1053
• 1914 Pa. LEXIS 926

Syllabus

<p>Contracts — Corporate, mortgages — Bonds—Agreement to purchase coupons — Construction of contract — Equity — Maxims— “Equity considers that as done which ought to have been done”' — • Contemporaneous construction — Unambiguous contract.</p> <p>1. The maxim, “Equity considers that as done which ought to have been done,” is of much more limited application than its terms would suggest. It presupposes a contract under which a party would have had a benefit from something which it was agreed should be done, but which was not done. In such case there is an equitable right to have the case considered as if the thing contracted for had been done. But in the application of this principle the court is not at liberty to go beyond the sphere of contract relation created by the parties. Courts cannot make for them an agreement into which they have not entered.</p> <p>2. Where an agreement is stated in clear and unambiguous language, so that there is no uncertainty as to the sense of the language which was used, there is no room for the consideration, of any contemporaneous eonstnietion by the parties.</p> <p>3. In a proceeding in equity by the trustee of bondholders under a corporation mortgage to foreclose the mortgage and make distribution of the proceeds of sale Of the mortgaged premises, in which certain bondholders were intervening defendants, a decree awarding priority to the bonds over certain coupons was reversed where it appeared that the bonds in question to the amount of $3,-000,000 had been issued on July 1, 1870, on the property of a canal company, and contained endorsed thereon an agreement by a railroad company that in ease of the failure of the canal company to pay the interest coupons then the “railroad company will purchase the said coupons at their par value from their respective holders on presentation thereof”; that in pursuance of a reserved power in the mortgage the canal company had from time to time sold portions of its property to the railroad compa