The provisions relating to the certificates of the tion or increase of such an indebtedness are set out in another section.19 § 509. Issuance, Execution and Delivery of Bonds.-A bond is issued when, and not until, it is delivered to a third person for a valuable consideration.20 Engraved bonds, substituted for lithographed bonds of corresponding numbers, are to be regarded as mere duplicates or reissues of the lithographed bonds for which they are exchanged. If a liability on notes is conditioned on the issuance and delivery of bonds of the corporation payee, the latter cannot recover thereon where the bonds are never issued because of a failure of the required number of stockholders to consent thereto. And where it is contended that the maker of the note prevented the procuring of the required consents, the burden is on the corporation to prove that such was the case.2 Bonds themselves import their execution and validity, and a consideration, without further proof. An acknowledgment of the delivery of bonds to a person already in possession of them is a sufficient delivery to him.5 And possession of bonds by the trustee in an action to foreclose a mortgage securing them implies that they were delivered. 19. See supra, § 506. 20. Merced River Electric Co. v. Curry, 157 Cal. 727, 109 Pac. 264. 1. Illinois Trust & Sav. Bank v. Pacific R. Co., 117 Cal. 332, 49 Pac. 197. 2. Rauer's Law & Collection Co. v. Harrell, 32 Cal. App. 45, 162 Pac. 125. 3. Equitable Trust Co. v. Western L. & P. Co., 38 Cal. App. 535, 176 Pac. 876. 4. See supra, § 500. 5. Wenban Estate v. Hewlett, 193 Cal. 675, 227 Pac. 723. 6. Equitable Trust Co. v. Western L. & P. Co., 38 Cal. App. 535, 176 Pac. 876. § 510. Form of Bond and Coupons.-The following is suggested as a form of first mortgage coupon bond: United States of America. No. State of California. The A. B. Company. First Mortgage -% Gold Bond. ட் The A. B. Company, a corporation organized and existing under and by virtue of the laws of the state of California, and having its principal place of business in the city of in said state, for value received hereby promises to pay to the bearer, or if registered to the registered owner hereof, at of state of California, dollars ($ -), in gold coin of on the day of in the city the United States of or equal to the present standard of weight and fineness, with interest thereon in like gold coin at the rate of per cent per annum, payable semi-annually at the same place on the first day of and the first day of in each year, upon presentation and surrender of the proper annexed interest coupon therefor. This bond is one of an authorized issue of each, numbered from one to bonds of dollars both numbers inclusive, amounting in the aggregate to dollars ($- -), each bond being of like general form, tenor, effect and date, with all the other bonds. The payment of the principal and interest of this bond, according to its tenor and terms, as well as the principal and interest of each and every bond hereinabove referred to, is secured by and each and every of said bonds is issued and is to be held subject to the terms and conditions of that certain mortgage or trust deed bearing even date herewith, to the Trust Company as trustee, conveying and transferring to said trustee the property therein described for the security, use and benefit of the holders of said bonds until the same and each and every one of them are finally paid and redeemed. In case of default for the period of six (6) months, after the same has become due, in the payment of any installment of interest, as herein provided, the principal hereof may be declared immediately due and pay. able, as in the aforesaid mortgage or deed of trust provided. This bond may be redeemed on the maturity date of any interest coupon hereto annexed upon sixty days' prior published notice upon payment of dollars ($), together with interest to the date of redemption [or by payment of the call value hereof at said date as shown by the table of call values indorsed hereon] at the option of the A. B. Company, in the manner and with the effect provided in said mortgage or deed of trust. Any holder of this bond may register the same upon the books of the Trust Company, trustee, in the name of any designated owner, whereupon said trustee will indorse a memorandum of such registration hereon. After such registration no transfer of this bond shall be valid unless made on the books of said Trust Company by the registered owner or his attorney, but this bond may be discharged from registry by be ing transferred in like manner to bearer, after which transferability by delivery shall be fully restored and thereafter it shall continue subject to successive registrations and transfers to bearer as before. Such registrations shall not affect the negotiability of the interest coupons hereto attached, which shall continue to be transferable by delivery and will be redeemed at maturity in the hands of any holder, notwithstanding the registration of this bond. The holder of this bond at his option may surrender the same with all immatured attached coupons for cancellation in exchange for a registered bond without coupons as provided in said mortgage or deed of trust securing this bond. This bond shall not be in anywise binding or obligatory until authenticated by the signature of the said trustee to the certificate indorsed hereon. No recourse shall be had, directly or indirectly, for the payment of any part of the principal or interest of this bond to the personal liability of any stockholder, officer or director, present or future, of the said A. B. Company, whether by virtue of the constitution or of any statute, or by the enforcement of any assessment or penalty, or otherwise, and any such liability is expressly waived and released by the acceptance of this bond. In witness whereof, the A. B. Company has caused these presents to be duly executed by its president and secretary, and its corporate seal to be hereunto affixed, and the coupons for said interest, authenticated by the engraved facsimile signature of its secretary, as of the 19-. [Corporate Seal] day of On the first day of at the office of Trust Company, ($ California, dollars -), in United States gold coin, being six months' interest then due upon its first mortgage gold bond No., unless previously redeemed in accordance with the provisions of the mortgage or trust deed therein referred to. Secretary. § 511. Trustee's Certificate on Bonds.-A certificate of the trustee attached to each bond, whereby he certifies that the bond is one of a series of a specified number issued by the corporation and described in the mortgage therein referred to, and that said bond and the coupons attached thereto are genuine, is not a guaranty of the legal sufficiency of the security, but merely an assurance that the bonds and coupons are the issue of the corporation purporting to execute them.7-8 A trustee's certificate may be in the following form: Trustee's Certificate. This is to certify that the within bond is one of a series of nineteen hundred (1900) bonds issued by the A. B. Company, and described in the mortgage therein referred to, and that said bond and the coupons attached thereto are genuine. C. D. Company, Trustee. By E. F., President. Another form of certificate sometimes used is the following: Trustee's Certificate. This bond is one of a series of bonds described in the deed of trust within mentioned, which said deed of trust has been duly stamped and recorded. By President. § 512. Interim Certificates.-Charges against interim certificates for the amount of debts owing to it by the person to whom they were issued, made by the corporation at his request in good faith and without notice of the assignment of the certificates to a third person, are binding as against the assignee. Nor can the bonds called for by the certificates be deemed to have been issued and to have passed to the assignee as negotiable instruments under the maxim that equity regards as done that which ought to be done, where the original holder of the certificates waived the issuance of the bonds before the charges were made. A condition upon which bonds called for by interim certificates are to be issued, that the company shall have the right to retire them before maturity upon paying a specified premium, does not apply where the issuance of the bonds has been waived 7-8. Anisa v. Mercantile Trust Co., 174 Cal. 504, 163 Pac. 898. 9. Smith v. Central & Pac. Improv. Corp., 45 Cal. App. 384, 187 Pac. 456. by the holder of the certificates and they have never been issued.10 The following is suggested as a form of interim certificate, or agreement to issue bonds: For value received, the undersigned, A. B. Company, a corporation organized and existing under and by virtue of the laws of the state of California and having its principal place of business in the city of California, does hereby promise and agree to immediately proceed to authorize, create and issue its certain corporate bonds and to deliver dollars ($) par value of same to C. D., all to be done as soon as the proper steps can be taken to consummate the matter, and in no event shall said bonds be delivered to said C. D. later than months from date hereof. Said bonds shall be secured by a deed of trust which shall be a first lien or mortgage upon the following described property situated in the city of California: [Insert description]. county of state of Said bonds shall be first mortgage twenty year gold bonds and shall draw interest at the rate of per cent per annum, payable semiannually, the interest to be represented by the ordinary coupons. The bonds shall be dated 19, and shall draw interest from that date. The total amount of said bond issue shall be arrived at as follows: hereby appraised, for the purposes dollars ($- -). The architect's estimate of the The above described real estate is herein mentioned, at cost of the proposed building to be erected thereon by the undersigned, whose plans are accepted by the undersigned, shall be taken, and to this figure shall be added the said sum of dollars ($ -), and the total bond issue against said real estate and the improvements thereon shall be not to exceed per cent of said total figure. per cent at any time after Said bonds shall provide that they may be called in at their par value plus years from the date of said bonds. All other matters pertaining to said bond issue or the deed of trust securing the same, including the selection of the trustee, shall be entirely in the hands of the undersigned. In witness whereof the said corporation has caused this instrument to be executed in its corporate name by its proper officers and its corporate seal to be attached hereto, all being done at California, this A. B. Company, By E. F., President. Attest: J. K., Secretary. § 513. Negotiability of Bonds.-Whether or not a bond is a negotiable instrument depends upon whether it comes within 10. Smith v. Central & Pac. Improv. Corp., 45 Cal. App. 384, 187 Pac. 456. |