Hubbard v. Bank of United States

12 F. Cas. 777, 5 Hunt Mer. Mag. 75

• Court: U.S. Circuit Court for the District of Southern New York
• Decided: June 15, 1840
• Status: Published

Opinion

THE COTJRT

remarked that there was no proof to support the allegation that the purchase by the complainant was collusive or fraudulent with respect to the creditors of Lanman. The controversy, then, was between a bona fide purchaser and the attachment creditors, and it turned exclusively upon questions of law. The rights and interests of proprietors or stockholders in banking companies pass by assignment, and no other formality »is requisite to vest the full property therein, in a purchaser, 2 Cow. 770; 11 Wend. 627; 6 Pick. 324; 8 Pick. 90; 9 Pick. 202; 10 Pick. 422. The existence of by-laws of the bank prohibiting any transfer of stock, except upon the books of the bank, affects only the corporation or individual corporators, and cannot control the rights of third parties. An as-signee becomes absolute owner of the stock without observing that method of transfer, and notwithstanding any prohibitory bylaw. The by-law will be allowed to operate no further, as against third parties, than to protect liens of the corporation upon the stock existing previous to its sale or assignment. Although the purchaser acquires the full property-of the stock by sale and assignment, yet, to give him every beneficial enjoyment of it (the right of a corporator, for instance), it may be necessary that it should be transferred to his name at the bank; and, if the bank refuses to give him that benefit .of his purchase, a court of chancery will compel it to open its transfer books and register the assignment in his behalf. [Mechanics’ Bank of Alexandria v. Seton] 1 Pet. [26 U. S.] 299; 16 Mass. 101. These two considerations determine the case in favor of the complainant, and entitle him to the decree he prays for. And the court observed ' it was not therefore called upon to decide whether the stock is protected from attachment as the sole property of Mrs. Lan-man, but that it saw no reason to doubt, upon the proofs, that Mrs. Lanman had a right to hold this property exempt from the debts of her husband, or that a court of chancery might, in the form of proceeding, interpose its guardianship over her interests, and preserve them from the attachment of his creditors. 5 Johns. Ch. 464; 6 Johns. Ch. 25; Id. 178; Id. 222.

On the question of costs, the court observed that the defendants did not stand in the relation of naked trustees, seeking the direction of the court or submitting themselves to it, but were litigant parties contesting the complainant’s right, and maintaining the permanent right of creditors. Whether they are personally interested in these debts would not vary the case, because they must be regarded as acting under a guaranty, or as assuming this adversary attitude at their own hazard; and it is no less meet in equity than at law that they should bear the expenses created by a resistance to the rights of the complainant, found on examination not to be well founded. Decreed accordingly that the Bank of the United States transfer to the complainant the twenty-five shares of stock mentioned in the pleadings, and that the trustees of the attaching creditors pay the complainant’s costs.