In Morley v. University of Detroit, decided May 16, 1933, the Supreme Court of Michigan reaches a conclusion not only of intense interest as a matter of legal doctrine, but also tremendously important, if followed, in determining the location of losses that may run into large sums. The defendant had floated a large bond issue secured by trust mortgage to a Trust Company. Among the obligor's undertakings in the mortgage was one to the effect that it would punctually pay the principal and interest of every bond according to the terms of the bond and coupons and would "deposit the necessary funds for such purpose with the trustee at least five days prior to the respective due dates." The defendant obligor had made the required deposit of funds with the trustee, but plaintiff who held certain bonds and coupons which such deposit was intended to cover failed to present them at the due date. The Trust Company shortly thereafter closed its doors, and the case developed as a claim by the holder of such bonds and coupons against the obligor for the full amount thereof. The court denied the claim, the bonds and coupons being deemed paid.
Ralph W. Aigler,
BILLS AND NOTES-BONDS PAYABLE AT OFFICE OF TRUSTEE WHICH BECOMES INSOLVENT AFTER DUE DATE BUT BEFORE BONDS PRESENTED,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol32/iss2/5