Page:Federal Reporter, 1st Series, Volume 1.djvu/395

 ■gbbhard ». canada botjthebn bt. 00. 881 �Gebhard ». The Canada Sotjthhbn Eailwat Oompahï. �{Oireutt Court, 8. D. NeiB Torh. January 24, 1880.) �CoNTBACT— Placb of Pbrfobmancb — ^Lbx Foki. — The payment of cer» tain flrst mortgage railroad bonds executed and issued in the dominton of Canada, and payable in the city of New York, is not discharged by virtue of an act of parliament of the dominion of Canada authorizing such railroad to issue new bonds, bearing a lower rate of interest, in substittition of such former bonds. �Wallaob, J. The plaintifF sues upon certain obligations executed and issued by the defendant representing instal- incEts of interest due and unpaid upon the defendant's issue of first mortgage bonds. The case, for convenience, may be considered as though the action were brought to reoover sev- eral instalments of interest due on the first day of January, 1877, upon the first mortgage bonds of the defendant. These bonds were executed and issued in Canada, but by their terms were payable at the city of New York. �The defendant is a Canadian corporation, and insists in defence that it is discharged from 'payment of these bonds by virtue of an act of the parliament of the Dominion of Can- ada, passed in April, 1878, whereby the defendant was au- thorized to issue new bonds, payable iq 30 years, in substi- tution of its first mortgage bonds, and bearing a lower rate of interest, This act declares that the assent of the holders of the first mortgage bonds shall be deemed to have been given to the substitution of the new bonds, The plaintif in fact never assented to the substitution of the new bonds in the place of the first bonds. �On first impression the defence seems an extraordinary one. It rests upon the theory that the original bonds hav- ing been issued in Canada are eontracts controUed, as re- spects the obligation and its discharge, by the law of Canada ; : and that the Canadian parliament, in the exercise of its unlimited powers, has discharged or modified the obligation of the contract, and that, even thongh this be an arbitrary or unjust act, it is conclusive upon the rights oî the parties, �Several generaJ propositions applicable to the case are ele- ��� �