Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/697

 CHAP. XI.] CORPORATION AND CREDITORS. [§ 680. and made payable by transfer only on the books of the com- pany." l Accordingly, the rights of a purchaser in good faith are not impaired by equities affecting the title of his vendor. 2 § 680. Overdue and unpaid interest coupons do not of them- selves make the bond to which they are attached dis- honored paper. 3 When severed from the bond, coupons are negotiable and pass by delivery. 4 They then cease to be incidents of the bonds and become independent claims. Consequently, if the bonds are cancelled or paid before ma- turity, the severed coupons do not thereby lose their negotiable character, nor their ability to support separate actions, and the amount of their face draws interest from the time when it is 209; White v. Vermont, etc., R. R. Co., 21 How. 575; Carr v. Lefevre, 27 Pa. St. 413; Mason v. Prick, 105 Pa. St. 162 ; Haven i Grand Junc- tion R. R. Co., 109 Mass. 88; Morris Canal, etc., Co. v. Fisher, 9 N. J. Eq. 667; Brainard v. New York and Har- lem R. R. Co., 25 N. Y. 496; American Nat. B'k v. American Wood Paper Co., 19 R. I. 149; Hebbard r. So. West. Land & Cattle Co., 55 N. J. Eq. 18; see§ 326. Compare Railroad Co. v. Howard, 7 Wall. 392. 1 Savannah, etc.. R. R. Co. c. Lan- caster, 62 Ala. 555. But bonds con- taining a provision whereby the com- pany reserves the right to pay them off at any time by adding twenty per cent, to the amount of the principal are not negotiable. Chouteau v. Allen, 70 Mo. 290, 339; see, also, Mc- Clelland v. Norfolk Southern R. R. Co., 110 N. T. 469. 2 Kneeland v. Lawrence, 140 U. S. 209; Murray v. Lardner, 2 Wall. 110. The doctrine of applied notice of a lis pendens does not apply to nego- tiable bonds. See § 327, also Ex parte Williams, 18 S. C. 299. As to effect of notice to a trustee for bondholders, see § 814. A corporation is not liable on its bonds, which are stolen before the I certificate of the trustee or the com- pany's seal is affixed, to an innocent holder; the certificate and seal hav- ing been forged after the theft. Maas v. Missouri, K. and T. R'y Co., 83 N. Y. 223. 3 Railway Co. v. Sprague, 103 U. S. 756; Cromwell v. County of Sac, 96 U. S. 51; Buffalo L.. T. & S. D. Co. v. Medina Gas Co., 162 N. Y. 67. See National Bank v. Kirby, 108 Mass. 497. But see First Nat. Bank v. County Commissioners, 14 Minn. 77; Morton v. New Orleans, etc., Ry. Co., 79 Ala. 590; see, also, § 326. 4 The title to interest coupons passes by delivery. A transfer of possession is presumptively a trans- fer of title. Especially is this so when the transfer is made to one who is not the debtor and is under no obligation to receive or pay them. But cutting oft coupons when due and transferring them to other hold- ers gives to such holders no priority of right over the holders of the bonds from which the coupons have been cut, nor over the subsequently ma- turing coupons. Ketchum v. Dun- can, 96 U. S. 657; cf. Holland Trust Co. v. Thompson-Houston Elec. Co., 170 N. Y. 233. 677