Bangs v. Blue Ridge Railroad

By the Court, Larremore, J.

The truth of the facts set forth in the complaint being admitted by the demurrer, the only question to be decided is whether a cause of action is clearly established.

It is alleged that the Blue Ridge Railroad, of South Carolina, on April 7, 1854, issued certain bonds for the sum of $1,000 each (with interest coupons attached), payable Novenaber 1, 1883, “ or until default made in the payment of the coupons or any of them, when said bonds are to become due and payable in pursuance of an instrument executed simultaneously therewith, and to be read as a part of said bond, which default has occurred.” That plaintiff owns seventy-six of said bonds and 1,446 of said coupons, which latter have long since accrued and are unpaid.

This statement shows an existing obligation to pay money, a default in its payment and a right of action for its recovery.

It is also alleged that, as additional security for the payment of said indebtedness (which constituted a part of the bonded debt of said company), the legislature of South Carolina, by an act passed September 15, 1868, • authorized the issue by said company of contracts or bonds to the amount of $4,000,000, for which the faith and funds of that state were pledged, by which act it was provided that so much of the first $1,000,000 of said issue as might be necessary not exceeding $300,000, should be applied to the redemption of the present bonded debt of the said company; that such bonds were issued in accordance with said act, and that all persons receiving the same took and received them under the obligation, limitation and trust created by said act, and with full knowledge thereof.

It is then averred that the defendants, Cameron, Steers and Patterson, entered into a written agreement for the purpose of buying the stock of the Blue Badge Bailroad Company, and therein agreed that the debts of said company (in which plaintiff’s demand was included) should be paid by them out of the proceeds of the said bonds and the assets of said company ; that the time to perform said contract has elapsed, and said defendants have failed in its performance.

Plaintiff then alleges that said defendants and said company confederated and conspired together to get control of the said $4,000,000 bonds, and, with intent to cheat, delay and defraud the creditors of said company,, did pledge, sell, transfer and convey the whole thereof, contrary to- the provisions of said act, for their own purpose and benefit, and without paying the bonded debt of said company or any part thereof, and refused and still refuse to appropriate any part of the proceeds of said bonds to pay plaintiff) although said defendants have realized from the sale of said bonds over $700,000 in cash, and that they have misappropriated the same; that by a recent act of the legislature of said state of South Carolina, passed March 2, 1872, it was provided that upon the surrender of said $4,000,000 bonds, or of any of them, revenue scrip bonds would be issued by said state, which latter have been issued to said defendants, who hold and are disposing of the same in fraud of plaintiff’s rights.

This demurrer is interposed in behalf of the defendants, The Blue Badge Railroad Company and John J. Patterson. A money judgment is sought against each. That the action is well brought against the company will scarcely be questioned. Patterson, by his written agreement, promised to pay the' debts of said company, in which (as is alleged) plaintiff’s claim was included; such promise inured to the benefit of the creditors (Lawrence agt. Fox, 20 N. Y., 268; Burr agt. Beers, 24 id., 178; Dingeldein agt. Third Avenue R. R. Co., 37 id., 575; Barker agt. Bradley, 42 id., 316; Secor agt. Lord, 3 Keys, 525).

It is unnecessary to enter into an extended examination of the grounds upon which plaintiff relies for equitable i-elief. The promise of Patterson to pay the debts of the company, taken in connection with the allegation that he (with the other defendants) fraudulently conspired to and did misappropriate the funds that were specifically charged with the payment thereof, raise such a presumption of liability on his part as to justify the court in putting him to his defense.

I think the demurrer should be overruled, and the order appealed from affirmed.