North German Lloyd Sued by New Yorker on Interest Default

Miss Katherine Perry, of 551 Fifth Avenue, has filed suit against the North German Lloyd to recover a judgment of $30, due on an interest coupon of a $1,000 bond of the company which was defaulted Wednesday.

Jacob Chaitkin, counsel for Miss Perry, said that the action of Miss Perry is the challenge of an individual bondholder leveled against “the intolerable practice of foreign corporations which placidly default on their obligations without the slightest remorse.” Mr. Chaitkin said that sixteen foreign loans were defaulted during the week. Coincident with the defaults the bonds increased in price, he said.

Mr. Chaitkin expressed the opinion that the “usual apathy” of the holders of foreign bonds has been chiefly responsible for the matter-of-fact attitude of the companies and the market toward corporate defaults.

He recalled that by the terms of a recent decision of the appellate courts, an individual bondholder may bring suit against a defaulting corporation for the interest due him. He said that courts have established the precedent that a bondholder need not form committees and act through the trustee named in the indenture if he wishes to press for payment on what is due under terms of the bond. In the case of a foreign corporation the bondholder has the right to attach assets ot the defaulting corporation before the judgment is obtained.

Miss Perry’s action is notice to foreign corporations floating issues here that they cannot with impunity default their obligations and attempt to impose their own terms of settlement on American bondholders, Mr. Chaitkin said.

NEXT STORY