193 F. 204 | N.D. Ill. | 1912
From the bill filed herein it appears that complainant, being indebted to certain of the defendants upon the purchase price of the bonds hereinafter mentioned, in the sum of $331,025, together with one Franklin H. Head, executed a promissory note for said sum payable to their own order on or before 30 days after date and indorsed in blank, bearing interest at the rate of 6 per cent, after date, and delivered the same to certain of defendants on March 30, 1909. As security for the payment thereof, the maker deposited with said note 466 first-mortgage bonds of the Wichita Falls & Southern Railway Company of the face value of $1,000 each. By the terms of the collateral agreement, the legal owners of said bonds were authorized to sell at the maturity of the note or at any time thereafter, or before, in case of depreciation, any part or all of said bonds at public or private sale at their discretion without
Orator avers that Isaac H. Kempner made the sale to himself, for himself, or as agent of Elizabeth, and that no consideration was given therefor, and that said sale is fraudulent as against orator; that such sale was made for a price of $125,000 less than the real value of said bonds, and with a view to appropriating said’ sum of $125,-000 by said certain defendants; that orator is informed and believes said sales of bonds realized enough to pay said note, which was marked paid and returned to said Head.
Orator claims that said Elizabeth received from time to time many bonds and the proceeds of other bonds from the bank through Isaac H. Kempner, who acted for her, the amount of which she has no means of knowing without a discovery; that said bonds were worth par and interest; and that, by the use of due diligence, that amount, less a reasonable commission, could have been realized.
Orator alleges that defendants hold the bonds not sold, if any, and the proceeds of those sold, but refuse to account or turn over the
The bill asks that an accounting be had as to what sums defendants have, or by the use of reasonable diligence might have received for bonds sold; what bonds remain, what interest has been collected, what should be credited on said note; that on payment of said balance orator may be permitted to redeem said bonds, and that the same be surrendered to him, together with the proceeds of those disposed of; that those proceeds be disclosed and held in trust for orator and turned over to him; that if it appears that the holders of said collateral note have received from the sale of said bonds, or from any- source sufficient to pay said note, the excess and any unsold bonds be turned over to orator; that a receiver be appointed to hold any unsold bonds, collect interest, and principal thereof as it matures pendente lite, and for other relief, etc. The cause is now before the court on demurrer to the jurisdiction of a court of equity.
The allegation of the bill to the effect that concurrently with the execution of said note another agreement was made whereby the pledgees became trustees and took said bonds as such, or because otherwise invested or charged with any duty or liability except such as is expressed in said pledge contract, may’not be deemed of weight here. The terms of the collateral note must be assumed to have expressed the contract of the parties in that respect. Moreover, nothing-set out in the alleged verbal contract of trust which may not be held to be void as attempting to modify the written contract in any manner adds to or takes from the latter any of its obligations as creating a trust relation.
The only basis for the contention that a trust was created must be found, if at all-, in the terms of the collateral note and the dealings of the parties in relation thereto. The question there is whether in the transactions of the parties as pledgor and pledgee under the circumstances of the case any ground for equitable jurisdiction exists.
The bill makes no prayer for the setting aside of any sale. The bonds were placed in defendants’ hands for the purpose of enabling them to pass the title. But it ds not conceived that the question of title to the bonds is of the essence of this proceeding, since no case showing peculiar value, other than a money value, exists. In cases involving stocks or other articles, such as chattels — things that may not be treated as so much money — a different rule obtains. With a few exceptions, the right to relief in equity has been based upon some such considerations. El ere no reason is perceived why defendants should be deprived of their right to a trial by jury — a right which may.not lightly be denied them.
The demurrer for want of jurisdiction in equity is sustained.