Canfield v. State Nat. Bank of Minneapolis

5 F. Cas. 11, 23 Int. Rev. Rec. 319, 1877 U.S. App. LEXIS 1632

• Court: U.S. Circuit Court for the District of Minnesota
• Decided: September 14, 1877
• Status: Published

Opinion

NELSON, District Judge.

The shares of •stock held by the bank are a security not objectionable, in my opinion, to section 5136, par. 7. Itev. St. U. S. If so, the right to sell three hundred shares pledged as collateral to the King notes, originally given Brack-ett and Mendenhall, is not doubtful. A second pledgee holds the security to the extent of the debt for which it is pledged, and can sell at any time after the debt is due and payable. It is optional with the bank to stind to its remedy against the pledge or sue for its debt, and the law gave it. the right to sell, ex mero motu, on proper notice of an intention so to do, or to file a bill in equity to foreclose and sell under a decree. 2 Hill. Mortg. Append. 52G. Although the King notes and the Brackett and Men-denhall notes had been overdue a long time, it is not deprived of this privilege given by law to select its remedy.

It is charged that the bank has no title to the remaining five hundred shares of stock, and that the same have not been pledged or deposited with it as a collateral security for any sum whatsoever, or with any right to sell. The answer of the bank, which was used upon the motion as an affidavit. denies this allegation, and the counter affidavit and exhibits produced by the complaint do not overcome, but rather support, the substantial claim set up in the answer by the bank to a lien upon this amount of stock. Applying the usual rule on motions of this kind, the complainant’s equity is not so clear as to entitle him to an injunction, for there is reasonable doubt as to the facts upon which the motion is based, and the injury resulting from a sale of the stock is not irreparable. The purchaser would take only such title as the pledgor had at the time the security was given, and the rule of caveat emptor will govern.

Having come to a conclusion adverse to the complainant’s application for the reasons stated, it is no-t proper to consider, at this time, the effect of the judgment set up in the answer as a defence, in a case in which the parties are substantially reversed. Motion for injunction denied.

[On the hearing of the appeal from the circuit court, the supreme court of the United States, Mr. Justice Matthews delivering the opinion, held that the judgment of the Minnesota supreme court conclusively established for the purposesj of the case, that the deed to Can-field was void, and that his equity to the stock was inferior to that of the bank; that the agreement between King and the bank as to the railroad bonds did not operate as a release of the latter’s lien upon the stock, and that, in the exercise of the privilege of redemption, Canfield should be charged the sum of $12,430.33, the amount paid by Morrison for the nine-tenths of the stock; and, as thus modified, the court affirmed the decree of the circuit court, and remanded the cause for further proceedings. Minneapolis Ass’n v. Canfield, 121 U. S. 295, 7 Sup. Ct. 887.]