Estabrook v. Consolidated Gas Electric Light & Power Co.

Stockbridge, E, delivered the opinion of the Court. By the decree from which this appeal is taken, the firm of Estabrook & Company were required to specifically perform a contract for the purchase of bonds of a par value of $312,000 of the Consolidated Gas Company of Baltimore (hereinafter called the Gas Company). The bonds contracted to be sold and purchased were a part of an issue of $15,000,000 of bonds provided for by the terms of a mortgage dated April 1, 1904:. The validity of a portion of these bonds has been twice before this Court, once in the case of Diggs v. The Fidelity and Deposit Co. et al., 112 Md. 50 , and once in the case of Orrick et al. v. The Fidelity and Deposit Co. et al., 113 Md. 239 , and the facts relating to and attendant upon the issue of the bonds provided for in the mortgage are set out with such fullness of detail in the opinions filed in those cases as to render a repetition of them' unnecessary.

By the terms of the mortgage a certain number of the bonds to be issued, were to be applied to specific, designated purposes, and not merely was the aggregate amount applicable to each object clearly stated, but bonds bearing named serial numbers were dedicated to each purpose. The cases herefi>fore before this Court arose out of an attempt to treat as valid under the mortgage, bonds, the proceeds of which had been or were to be used for the acquisition of property by the Consolidated Gas Electric Eight and Power Company (hereinafter called the Consolidated Company) after the Gas Company had ceased to exist, as the result of a consolidation ; and this Court held that bonds, purporting to be the ⁶⁴⁵ •obligations of a corporation no longer having any vitality, •could not be deemed to be included under the protection of the mortgage, when not issued for a purpose definitely specified in the mortgage, and which bonds up to that time remained unissued and not dedicated to the immediate purpose for which they were proposed to> be issued. The present case arises under an entirely different clause of the mortgage from that under consideration in the prior cases. In both of those this Court was considering the clauses of 'the mortgage providing for the issuance of bonds for the purpose •of acquiring additional plant or property.

The clause involved in the present ease reads as follows: “Fifteen hundred (1,500) of said bonds, numbered from one thousand and one to twenty-five hundred, both inclusive, shall be held by the Trustee for the purpose of redeeming the present outstanding certificates of indebtedness of said Gas Company which amount to a sum at face value of one million five hundred thousand dollars ($1,500,000.) ; whenever from time to time the Gas Company shall deliver to said Trustee any of said certificates of indebtedness the said Trustee shall certify and deliver to said Gas Company upon the order of its President and Secretary an amount of said bonds equal at their face value to the face value of the certificates of indebtedness so delivered; the Trustee shall thereupon cancel such certificates.” It appears from the record that prior to the consolidation and formation of the present appellee all of the bonds mentioned in the foregoing clause had been executed by the ■officers of the Gas Company, delivered to the trustee, certified by it and that of the fifteen hundred bonds set apart for the redemption or retirement of the certificates of indebtedness which had been issued, eleven hundred and seventy-one had ■actually been used for the specified purpose. It further •appears that subsequent to the consolidation, seventeen more of the bonds had been so used prior to the agreement of sale ■out of which this case arises. The sole question now is, can ⁶⁴⁶ or not the remaining three hundred and twelve bonds of the total number of fifteen hundred provided for in the mortgage be validly sold and delivered and come under the