ROSS, Circuit Judge,
after making the foregoing statement of the case, delivered the opinion of the court.
We regard the case as a plain one. The delivery by Mrs. Moore of 5,000% shares of the Sanger Company’s stock, held by her as collateral security for the indebtedness of the Moore & Smith Company to her, was made to the defendant bank at the request of the Moore & Smith Company, and in fulfillment of one of the covenants contained in the agreement between it and the bank of September 18, 1894; and they were so delivered to the defendant bank, not as an ordinary bailment, but in trust. It is so declared in express terms, not [856]*856only in the receipt and agreement executed by the bank to Mrs. Moore at the time of the delivery to it of the stock, but also in the contract of September 18, 1894. One of the conditions of the trust agreement was that whatever dividends might be paid during the period of five years therein mentioned on the stock so delivered should be paid over by the bank to Mrs. Moore, her heirs or assigns, it being therein expressly declared that the stock was not delivered to the bank as collateral security for any debt or claim due to it by Mrs. Moore, or any other person or company, but only to enable the Moore & Smith Company to carry out its agreement with the bank of September 18, 1894, to give to it a majority of the stock of the Sanger Lumber Company “for the purpose of voting”; in other words, to give the bank the control of that corporation. By the agreement of the parties it was further stipulated, in express terms, that the bank should not be required to return to Mrs. Moore the identical shares of stock so delivered to it by her, but might, at its option, cause those certificates to be canceled and other certificates of stock to be issued in lieu thereof in such other name as it might choose, and at the expiration of the five years return to her an equal number of shares of the stock of the Sanger Company.
The stock pledged to Mrs. Moore by the Moore & Smith Lumber Company was accompanied by an express agreement on the part of that company to pay all assessments levied thereon, with a provision to the effect that, if not paid by the company, Mrs. Moore should have the right to pay the same, and add the amount thereof, with interest, to the notes for which it was held as security, and the further right, in that event, to treat the notes and interest as immediately due and payable.
As between Mrs. Moore and the defendant bank, the agreement was that she should pay all assessments levied on the stock delivered by her to the bank during the five-year period, with a provision that “if not so paid, and paid by this bank, then this bank to recoup itself, with interest at six (6) per cent, per annum, out of subsequent dividends, holding the stock in the meantime as collateral security.” It will be observed that under this provision no money paid by the bank as assessments upon the stock delivered to it by Mrs. Moore could be recovered by it from her, but only out of subsequent dividends upon the stock; until the payment of which, however, the bank should have the right to hold the stock as collateral security for assessments so paid by it. Perhaps this provision may have had something to do with the failure of the bank to avail itself of the privilege of paying the assessment upon the 5,000% shares of stock delivered to it by Mrs. Moore; for, however promising the outlook may have been at the time of entering into the agreements in question, it is quite evident from the record that “dividends” on the stock of the Sanger Lumber Company, during the period for which the stock in controversy was placed with the defendant bank, were impossible. It is not claimed that the bank ever notified Mrs. Moore that it had caused the stock delivered to it by her to be reissued in the name of one of its employés, the defendant Young, as trustee, nor that the bank ever notified her of the assessment levied by the Sanger Lumber [857]*857Company, or of the fact that the assessment upon the 5,000% shares of stock then standing in Young’s name was not paid.
Considering the 5,000% shares delivered by Mrs. Moore to the bank as being represented only by the certificate afterwards issued at the bank’s request in the name of Young, trustee, we think the bank is, in equity, bound to return to the complainant an equal number of shares, unconditionally, unless it has paid some assessment or other charge thereon. The testimony of Mrs. Moore is distinct and positive that she did not know of the assessment, and that she was financially able to have paid it. It is earnestly insisted on the part of the bank that, in view of the relationship existing between her and A. D. Moore (in whose interest and for whose benefit she manifestly delivered the stock to the defendant bank), it is incredible that the husband did not inform the wife of the assessment. We do not think so. The assessment under which the 5,000% shares standing in the name of Young, trustee, were sold, was levied January 9, 1896. The undisputed evidence is that A. D. Moore made strenuous efforts to induce the defendant bank to loan the Moore & Smith Lumber Company sufficient money with which to pay the assessment upon all the Sanger Lumber Company’s stock owned by it. It further shows that he was in London—the home office of the defendant bank—endeavoring to accomplish that result at the time of the delinquent sale. While striving and hoping to bring about that end, and thus to comply, among other things, with the obligation of his company to his wife to pay the assessment upon the stock it had pledged to her, we do not think it incredible that he failed to inform her of the assessment, or of the inability of the Moore & Smith Company to pay it as it had agreed to do. Husbands do not always tell their wives of their troubles and shortcomings. As a matter of course, in this instance A. D. Moore should have done so; but the testimony of Mrs. Moore is positive that he did not, and we see nothing in the circumstances of the case to justify the rejection of her testimony as being untrue.
As the defendant bank held the stock in question in trust for Mrs. Moore, for its own purposes, with the right to place it in the name of another of its own selection, and with the privilege of paying—in the event its cestui que trust did not do so—all assessments thereon during the trust period, recouping the amount thereof, with interest, out of the contemplated dividends, and as the bank, in the exercise of the right conferred upon it, did cause the stock of its cestui que trust to be placed in the name of one of its own employés, thereby giving it the control of the corporation, it was, upon the most obvious principles of fair dealing, bound to give its cestui que trust notice, not only of the assessment, but also of the fact that the stock which had been turned over to it in trust then stood in the name of its employé Young. Otherwise how, in any event, would its cestui que trust know upon what stock to pay? We know of no principle of equity under which a trustee of stock so placed and held, and with the stipulated right in itself to pay the assessments thereon and recoup the amount thereof with interest, can permit the same to be sold for delinquency and bought in by the corporation, other stock of which it holds, without notice to its cestui que trust either of the fact of the assessment [858]*858or of the person in whose name it has caused the trust stock to be placed. But we are of the opinion that it does not appear that any of the trust stock was ever sold for any assessment.
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ROSS, Circuit Judge,
after making the foregoing statement of the case, delivered the opinion of the court.
We regard the case as a plain one. The delivery by Mrs. Moore of 5,000% shares of the Sanger Company’s stock, held by her as collateral security for the indebtedness of the Moore & Smith Company to her, was made to the defendant bank at the request of the Moore & Smith Company, and in fulfillment of one of the covenants contained in the agreement between it and the bank of September 18, 1894; and they were so delivered to the defendant bank, not as an ordinary bailment, but in trust. It is so declared in express terms, not [856]*856only in the receipt and agreement executed by the bank to Mrs. Moore at the time of the delivery to it of the stock, but also in the contract of September 18, 1894. One of the conditions of the trust agreement was that whatever dividends might be paid during the period of five years therein mentioned on the stock so delivered should be paid over by the bank to Mrs. Moore, her heirs or assigns, it being therein expressly declared that the stock was not delivered to the bank as collateral security for any debt or claim due to it by Mrs. Moore, or any other person or company, but only to enable the Moore & Smith Company to carry out its agreement with the bank of September 18, 1894, to give to it a majority of the stock of the Sanger Lumber Company “for the purpose of voting”; in other words, to give the bank the control of that corporation. By the agreement of the parties it was further stipulated, in express terms, that the bank should not be required to return to Mrs. Moore the identical shares of stock so delivered to it by her, but might, at its option, cause those certificates to be canceled and other certificates of stock to be issued in lieu thereof in such other name as it might choose, and at the expiration of the five years return to her an equal number of shares of the stock of the Sanger Company.
The stock pledged to Mrs. Moore by the Moore & Smith Lumber Company was accompanied by an express agreement on the part of that company to pay all assessments levied thereon, with a provision to the effect that, if not paid by the company, Mrs. Moore should have the right to pay the same, and add the amount thereof, with interest, to the notes for which it was held as security, and the further right, in that event, to treat the notes and interest as immediately due and payable.
As between Mrs. Moore and the defendant bank, the agreement was that she should pay all assessments levied on the stock delivered by her to the bank during the five-year period, with a provision that “if not so paid, and paid by this bank, then this bank to recoup itself, with interest at six (6) per cent, per annum, out of subsequent dividends, holding the stock in the meantime as collateral security.” It will be observed that under this provision no money paid by the bank as assessments upon the stock delivered to it by Mrs. Moore could be recovered by it from her, but only out of subsequent dividends upon the stock; until the payment of which, however, the bank should have the right to hold the stock as collateral security for assessments so paid by it. Perhaps this provision may have had something to do with the failure of the bank to avail itself of the privilege of paying the assessment upon the 5,000% shares of stock delivered to it by Mrs. Moore; for, however promising the outlook may have been at the time of entering into the agreements in question, it is quite evident from the record that “dividends” on the stock of the Sanger Lumber Company, during the period for which the stock in controversy was placed with the defendant bank, were impossible. It is not claimed that the bank ever notified Mrs. Moore that it had caused the stock delivered to it by her to be reissued in the name of one of its employés, the defendant Young, as trustee, nor that the bank ever notified her of the assessment levied by the Sanger Lumber [857]*857Company, or of the fact that the assessment upon the 5,000% shares of stock then standing in Young’s name was not paid.
Considering the 5,000% shares delivered by Mrs. Moore to the bank as being represented only by the certificate afterwards issued at the bank’s request in the name of Young, trustee, we think the bank is, in equity, bound to return to the complainant an equal number of shares, unconditionally, unless it has paid some assessment or other charge thereon. The testimony of Mrs. Moore is distinct and positive that she did not know of the assessment, and that she was financially able to have paid it. It is earnestly insisted on the part of the bank that, in view of the relationship existing between her and A. D. Moore (in whose interest and for whose benefit she manifestly delivered the stock to the defendant bank), it is incredible that the husband did not inform the wife of the assessment. We do not think so. The assessment under which the 5,000% shares standing in the name of Young, trustee, were sold, was levied January 9, 1896. The undisputed evidence is that A. D. Moore made strenuous efforts to induce the defendant bank to loan the Moore & Smith Lumber Company sufficient money with which to pay the assessment upon all the Sanger Lumber Company’s stock owned by it. It further shows that he was in London—the home office of the defendant bank—endeavoring to accomplish that result at the time of the delinquent sale. While striving and hoping to bring about that end, and thus to comply, among other things, with the obligation of his company to his wife to pay the assessment upon the stock it had pledged to her, we do not think it incredible that he failed to inform her of the assessment, or of the inability of the Moore & Smith Company to pay it as it had agreed to do. Husbands do not always tell their wives of their troubles and shortcomings. As a matter of course, in this instance A. D. Moore should have done so; but the testimony of Mrs. Moore is positive that he did not, and we see nothing in the circumstances of the case to justify the rejection of her testimony as being untrue.
As the defendant bank held the stock in question in trust for Mrs. Moore, for its own purposes, with the right to place it in the name of another of its own selection, and with the privilege of paying—in the event its cestui que trust did not do so—all assessments thereon during the trust period, recouping the amount thereof, with interest, out of the contemplated dividends, and as the bank, in the exercise of the right conferred upon it, did cause the stock of its cestui que trust to be placed in the name of one of its own employés, thereby giving it the control of the corporation, it was, upon the most obvious principles of fair dealing, bound to give its cestui que trust notice, not only of the assessment, but also of the fact that the stock which had been turned over to it in trust then stood in the name of its employé Young. Otherwise how, in any event, would its cestui que trust know upon what stock to pay? We know of no principle of equity under which a trustee of stock so placed and held, and with the stipulated right in itself to pay the assessments thereon and recoup the amount thereof with interest, can permit the same to be sold for delinquency and bought in by the corporation, other stock of which it holds, without notice to its cestui que trust either of the fact of the assessment [858]*858or of the person in whose name it has caused the trust stock to be placed. But we are of the opinion that it does not appear that any of the trust stock was ever sold for any assessment. As has been seen, under the trust agreement the bank was not required to hold or to return the specific shares it received from Mrs. Moore, but was expressly authorized to convert them into other shares, and was only required to return, upon the expiration of the five-year period; an equal number of shares of the stock. The record shows that the bank commenced to exercise the rights thus conferred almost immediately upon entering upon its trust, and wiped out the identity of the shares it received from Mrs. Moore by causing the certificate therefor to be canceled, and the stock to be issued in the name of its employé Young. But the bank all the time retained in its possession an equal number of shares, and more. It held continuously the 7,209% shares it received from the Moore & Smith Lumber Company as collateral security, and more than a year before the expiration of the trust period undertook to acquire all of the interest of the Moore & Smith Company therein, and thereafter caused the certificate for those shares to be broken up and one of the certificates issued in lieu thereof to be issued in the name of the defendant Young for 5,000% shares. All of this was done, according to the testimony of the officers of the bank, for the distinct purpose of being ready to return to Mrs. Moore an equal number of shares of the same stock it had received from her, when the proper time should arrive. And these 5,000% shares it did actually tender her in writing, upon the expiration of the five-year period, in response to her demand for her stock. Having thus treated 5,000% of the shares pledged to it by the Moore & Smith Lumber Company as “the equal number of shares” it had bound itself to return to its trustor, the bank cannot now be allowed to change the position it has all along assumed, and to successfully contend that, in fact, its trustor’s stock was sold while standing in the name of one of its own employés, in which it had caused it to be placed without notice to its trustor, and without notice to her that any assessment thereon had been levied. Equity does not so regard the rights and obligations of trustee and trustor.
While the defendant bank failed to exercise the right, reserved to it by its agreement with Mrs. Moore, of paying the assessment on the stock delivered to it by her, and recouping the amount with interest out of subsequent dividends thereon, it did advance the money for the payment of the assessment upon the 7,209% shares that were held by it as collateral security for the indebtedness of the Moore & Smith Lumber Company. The assessments upon that stock were paid; but they were paid by the Moore & Smith Lumber Company, to which the bank loaned the money for that .purpose, and to which company the bank charged the money so advanced upon its books, with interest. This fact is distinctly testified to by two of the principal officers of the bank, and is further shown by the record of a suit brought by the bank to recover of the Moore & Smith Lumber Company, and from A. D. Moore and H. C. Smith individually, a large sum of money, including the moneys loaned by it to that company with which to pay the assessments upon the 7,209% shares of [859]*859stock of the Sanger Company. And those loans, it must be noted, were made in pursuance of the agreement between the defendant bank and the Moore & Smith Company, of date September 18, 1894, hereinbefore set out, wherein, in consideration of certain securities given it by that company and certain agreements on its part, the bank agreed to
“Open an account with the company in which the company shall be debited with said sum of $100,000, and all taxes, insurance, and expenses connected with said mill and timber lands, and the sum of eighty one thousand four hundred and ninety one dollars, being the actual cost to the bank of the stock of the Sanger Lumber Company, and with interest on such amounts at the rate of six per cent, per year from July 1st, 1894, and shall be credited with any dividends on said stock of the Sanger Lumber Company, and with the proceeds of any sales. of said stock made under the permission hereinafter given, and with the proceeds of any sales of the said mill property or timber lands made under the permission hereinafter given, and with all sums paid to the credit of said account by the company, and with interest on all such credits at the rate of six per cent, per year, the interest so to be charged and credited to be adjusted and charged and credited at the end of each six months.”
That agreement further provided that:
“The bank shall hold said stock of the Sanger Lumber Company and said mill and timber lands as security for the amount due to it as shown by said account, and may any time sell said mill or any part of the whole [of] said timber lands for any price it pleases, provided that if at any time it can sell said mill and lands for $100,000, it shall be bound to do so; and it may at any time sell not more than one-half of said stock of the Sanger Lumber Company for any price it pleases, giving the company, however, the preference of purchasing at the price the bank is willing to accept. At any time within five years from the date thereof, the company may pay the bank the balance of debt shown by said account, and on such payment the bank shall cause to be conveyed to the company all then remaining unsold of said mill and timber lands, and shall transfer and deliver to the company all then remaining unsold of said stock of the Sanger Lumber Company. At the end of five years from the date hereof, the balance of debt shown by said account shall be due and payable by the company to the bank, and if not paid, the bank may foreclose its lien for the same against said mill and timber lands,” etc., etc.
It thus appears by the written agreement of September 18, 1894, not only that the bank contemplated making advances upon the credit of the Moore & Smith Lumber Company, but that such sums of money as it should be willing to loan that company during the continuance of that agreement should not become due and payable until the expiration of five years from the date of the agreement, unless “the right of the bank to vote the Sanger Lumber Company’s stock, either that held by it as security, or that held by it in trust as aforesaid, shall be for any reason successfully resisted,” in which event “at the option of the bank, of which no notice shall be given to the company, or said Moore, or said Smith, the amount shown to be due by said account” should become immediately due and payable, and the bank have the right to foreclose its liens on the Washington property, and also on the stock of the Sanger Lumber Company held by it as security. The bank may have made a bad bargain, but, if so, it constitutes no just ground for contending that money it loaned to the Moore & Smith Lumber Company at inter[860]*860est, for the purpose of paying assessments upon the Sanger Lumber Company’s stock, should be treated as a payment by itself of those assessments. The bank never having paid any assessment upon the stock in question, so far as appears, the payment demanded by it as a condition to a return of the 5,000% shares was wholly without right.
It results that the judgment must be so modified as to decree that the defendant bank deliver to the complainant certificates for 5,000% shares of the stock of the Sanger Lumber Company, properly indorsed, unconditionally and without the payment of any money or other thing, and costs of suit; and, as so modified, it will stand affirmed.