Blake v. Federal Land Bank of Springfield

106 A.D.2d 882, 483 N.Y.S.2d 500, 1984 N.Y. App. Div. LEXIS 21791

Opinion

Order and judgment unanimously affirmed, without costs, in accordance with the following memorandum: Plaintiffs have no cause of action against the Federal Land Bank. The shares of stock held by the bank as collateral for plaintiffs’ loan were shares of stock in the bank which had been purchased by the Federal Land Bank Association of the Finger Lakes. In order for plaintiffs to become eligible for a loan from the bank, they were required to become members of the association and to buy shares in the association in an amount equal to 5% of their loan. Five per cent of the loan proceeds was allocated by the bank to the association for such purchase. The association then purchased a like amount of stock in the bank. Under the statutory scheme, the bank was required to retire those shares “upon the full repayment of the loan”, and was entitled to cancel the stock where, as here, the loan was in default (US Code, tit 12, § 2034). Moreover, since the stock was the property of the association and not that of plaintiffs, plaintiffs have no recourse against the bank (see US Code, tit 12, §§ 2016-2034; Byrne v Federal Land Bank, 61 ND 265; 9 CJS, Banks and Banking, § 885, subd a). (Appeal from order and judgment of Supreme Court, Monroe County, Rosenbloom, J. — summary judgment.) Present — Denman, J. P., Boomer, Green, O’Donnell and Schnepp, JJ. [122 Misc 2d 71.]