Law Commons^™

Principal And Surety - Right Of Surety To Subrogation To Claim Of Creditor Against Insolvent National Bank, William C. Whitehead

Michigan Law Review

At the closing of defendant bank the commonwealth of Pennsylvania had on deposit $135,000, which was secured by the bond of defendant with plaintiff as surety, and a pledge of bonds of $12,000 par value. The commonwealth received the first dividend, amounting to forty per cent, and plaintiff paid the balance, subtracting $12,441.44 obtained on the intermediate sale of the bonds. Plaintiff contends that it is entitled to subrogation on the basis of the full amount of the original claim of the commonwealth against defendant; and that dividends subsequent to the first should be paid on that claim, although not …

Bankruptcy- Municipal Reorganization - Fairness Of Plan, Kenneth J. Nordstrom

Michigan Law Review

A local government district, finding itself hopelessly in debt, filed a petition for relief under Chapter IX of the Bankruptcy Act as amended. The municipal debt composition plan provided that bondholders would receive eight cents on the dollar. The evidence showed that a considerable quantity of bonds were bought by local landowners at much more than eight cents on the dollar, evidently for the purpose of being used in getting the approval of some such plan as proposed, in the expectation of an increase in value of their lands by improvements to be made by the debtor through a loan …

Some Problems Arising Out Of Deposits To Pay Principal And Interest On Bonds, Paul P. Lipton

Michigan Law Review

Since Lawrence v. Fox contracts students have been puzzled by the numerous and varying relations that may arise when A, the debtor, delivers money to B to pay C, his creditor. Equally puzzling and much more complicated are the rights and relations of the obligor, trustee and bondholders with respect to sums deposited with the trustee to pay principal and interest on bonds.

The insolvency during recent years of many large trust companies that had been named as trustees in indentures securing corporate bonds, having on hand at the time of their failure large sums of money which …

Suretyship-Effect Of Death Of Surety On Rights Of Creditor, Jacob L. Keidan

Michigan Law Review

In a suit on a bond filed in accordance with statutory requirements by a depository designated by a court of bankruptcy, it was pleaded in defense that the surety died before any deposits were received by the designated bank. The circuit court of appeals held for the defendant, ruling that the bond was only a multiple offer and lapsed with the death of the surety. The Supreme Court reversed this decision on the ground that the bond was a single offer, and the designation of the bank as an official depository constituted an acceptance thereof. United States for the use …

Collateral Liabilities Under Section 77b, Homer Kripke

Michigan Law Review

The passage of section 77B of the Bankruptcy Act in 1934 suggested to some lawyers the possibility of using the section as a means of modifying or eliminating the responsibility of persons collaterally liable on obligations for which the corporation to be reorganized or its property was also responsible. The question arose in two common types of situations: (1) guaranties of payment of dividends on capital stock; (2) liability for payment of the bonds or other indebtedness of corporations. In either of these situations, can the liability of persons other than the corporaticm be discharged or modified by reorganization of …

Contracts-Liability Of Purchaser At Forclosure Sale For Obligations Of Forclosed Railroad

Michigan Law Review

The BN Company executed a mortgage on certain railroad properties as security for a bond issue of the Company. Thereafter the Lehigh Company leased the mortgaged property for a term of 999 years. The lease stipulated that "all its covenants are to apply to the parties hereto, and to the several successors and assigns * * * of the parties or their properties." The lessee covenanted therein to indorse a guaranty of payment on the bonds of the BN Company. and did so indorse. Subsequently a mortgage executed by Lehigh prior to the lease with the BN Company, but which …