Page:Federal Reporter, 1st Series, Volume 9.djvu/548

 COONS V. TOME. 533 �3. Patments— Application of. �The law will apply a payment in the way most beneficiai to the crediter, and therefore to the debt least secured. �In Eqnity. �William A. Stone, for plaintiffs. �J. 0. Parker, for defendants. �AcHBsoN, D. J. The Minnequa Springs Improvement Company, a corporation of the state of Pennsylvania, on the fifteenth of June, 1877, issued its coupon bonds of the denomination of $500 each, amounting to $250,000, payable to bearer on September 1, 1897, ■with interest payable semi-annually ; • which bonds were secured by the company's mortgage, of even date, to Benjamin S. Bentley, trustee of the bondholders. The mortgage covers a tract of land in Bradford county, Pennsylvania, containing about 20 acres, upon which are the "Minnequa Springs" and the "Minnequa House." �On January 24, 1878, the whole of these bonds were held and owned by Peter Herdic, who on that day sold them, and aliso 9,320 shares of the stock of the company, to the defendant Jacob Tome. The evidence establishes that Tome was a hona fide purchaser for value of all said bonds. The improvement company acquired, piior to the transactions about to be mentioned, other lands contiguous to the mortgaged premises. On the thirteenth of August, 1878, Coons & Braine, the present complainants, brought suit in the court of common pleas of Bradford county against the said corporation to recover damages sustained by them by the breaking of a dam alleged to have been improperly and negligently constructed by the company. This case was ruled eut and tried before arbitrators, who, by their award, filed in court on October 26, 1878, found the sum of $5,875 in favor of the plaintiffs. At this time, and from June 12, 1878, Jacob Tome was a director of the corporation, and its president, — Kelion Packard, and John W. Maynard being the other directors, — any two of whom constituted a quorum of the board. �While the suit of Coons & Braine was pending before the arbitra- tors, Jacob Tome, on October 18, 1878, instituted an action in this court against the corporation to recover his interest on said bonds, then past due and unpaid, and also some money he had advanced to the company. On the twenty-second of October, 1878, during an adjoumment of the arbitration, the board of directors of the corpora- tion met in special session, — the three directors, Tome, Packard, and Maynard, being present, — and passed a resolution authorizing and directing the solicitor of the company to confess a judgment in favor ��� �