1939

Mfrs. Tr. Co. v. Roanoke Water Works Co.

Supreme Court of Virginia

172 Va. 242, 1 S.E.2d 318

City of Roanoke instituted condemnation on Water Company to acquire its entire system. Water Company was mortgaged to Manufacturers to secure bonds issued in the amount of $3,362,800, which matured in 1950. Award was $4,523,437, which was paid into court. Trustee under mortgage appeared and mortgage was transferred to award. Trustee sought to administer total amount of award. Trial court ruled that award should be paid directly to bondholders and condemnation had accelerated maturity of bonds to 1938. Trial court further directed local bank to pay funds to bondholders upon surrender of bonds, with balance to go to Water Company. Supreme Court affirmed in part, reversed in part and remanded. On appeal, issue of whether proceeds should have gone through Trustee was moot. Remaining question concerned those bondholders who had not yet surrendered the bonds for payment. Bondholders not before the court could not have their property rights terminated by the court. They were still entitled to be paid the bond interest in accordance with their original contract. To terminate their contractual property rights was a violation of the due process clause of the Fourteenth Amendment of the U.S. Constitution.

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