Real Estate Trust Co. v. Pennsylvania Sugar Refining Co.

Citations

• 237 Pa. 311
• 85 A. 365
• 1912 Pa. LEXIS 936

Syllabus

<p>Corporations — Corporate Bonds and Mortgages — Coupon Bonds Detached .Coupons — Arrears of interest — Preference.</p> <p>1. A bona fide holder of coupons detached from bonds secured by a corporate mortgage, who is not a holder of the bonds themselves, is entitled to a preference in the proceeds of a foreclosure sale given to arrears of interest by a clause of the mortgage which provided that the net proceeds of a sale by the trustee under the mortgage should be applied, “first, ...... towards payment to holders of unpaid bonds......of all arrears of interest remaining unpaid on such bonds.”</p> <p>2. Each bond with the coupon attached is an obligation protected by the mortgage. Each coupon is a part of each bond bearing upon its face the number of the bond to which it belongs, and, if the owner of any bond chooses to sever it from its coupon, he thereby divides it, and the holder of the coupon becomes equitably the owner of a proportion of the bond.</p>