Bowden v. Farmers' & Merchants' Bank of Baltimore

3 F. Cas. 1029, 1 Hughes 307

• Court: U.S. Circuit Court for the District of Maryland
• Decided: April 15, 1877
• Status: Published

Opinion

GILES, District Judge.

The facts as proved before the court were as follows: The First National Bank of Norfolk was a bank duly organized under the national bank act of 1803 and 1864; that by the stock ledger of said bank a certain Burwell held twenty shares of the capital stock of the said bauk, of the par value of 5100 each; ’that be subsequently borrowed money of the defendant to this suit, and to secure the payment of the same, transferred to the defendant his twenty shares of the capital stock of the said First National Bank of Norfolk, which transfer was. made on the books of said bank by a surrender of his certificate, 'and a new certificate issued to the said defendant; that said defendant, when said loan was paid, returned said certificate of stock to said Burwell, with a power of attorney indorsed on the back of the same, authorizing him to retransfer the said twenty shares to himself, but this was never done; but the said stock continued to stand in the name of this defendant up to the time of the closing of the said First National Bank of Norfolk, without anything on the face of the books of said bank to show that the defendant held the said twenty shares over as security for a loan, and- not as the legal owner of the same; that subsequently, to wit, on June 3d, 1874, the comptroller of the currency, in pursuance of the power and authority vested in him by the said act of congress, closed the said bank and appointed the plaintiff receiver of the same; and on the 13th day of August, 1875, the said comptroller determined that, in order to discharge the legal debts and liabilities of the said bank, “it was necessary to enforce the individual liability of the stockholders, as provided for by the 12th section of the act of congress of 3d June, 1864” [13 Stat 102], and he directed the said plaintiff, as receiver, to institute such legal proceedings as might be necessary to enforce against the stockholders of said bank their liabilities under said act; in pursuance of which direction and authority this suit was brought.

The counsel for the defendant has contended that it is not responsible, upon the grounds, first, because it held the said twenty shares of the capital stock of the said Norfolk bank only as a security for a loan made to its real owner; and, secondly, because, before • the closing of the said bank, the loan had been paid to the defendant, and it had delivered to the borrower the certificate of the said stock with power of attorney on the back thereof to retransfer it to him.

The court does not consider either of these reasons sufficient to prevent a recovery of the amount claimed in • this suit. By the 12th section of the act. of 1864, it is provided, “that every one becoming a shareholder by such transfer shall in proportion to his shares, succeed to all the rights and liabilities of the prior holder of said shares,” and by the said section it is also provided that the shares shall be transferable on the books of the bank. Now, it was the duty of the defendant, having taken an assignment on , the books of the said bank of the twenty shares, when its loan was repaid to It, to have seen that these shares were transferred back to the said Burwell on the said books, and having failed to do so before the said bank was closed by the comptroller, the receiver was authorized to regard it as the legal owner of these shares. I therefore give judgment in this case for the sum of twc thousand dollars with the costs of this suit