10 Paige Ch. 541 | New York Court of Chancery | 1844
The facts of this case, so far as they can be ascertained from the pleadings and proofs, are as follows : At the time of the repeal of the charter of the Lockport Bank, which repeal took effect on the 4th of June, 1837, C. F. Mitchell owed that institution three
Upon the question as to the time when this arrangement was finally agreed upon, there is some uncertainty in the testimony. But I am satisfied it must have been after this stock had been transferred to Mitchell; although in his direct examination Mitchell appears to suppose that it was before the stock was transferred to him that he obtained the certificate from Judge Dayton. The evidence upon which I base my opinion that the stock was transferred to Mitchell before he made any definite agreement with the complainants to sell them such stock, in part payment of the debt, is this : Mitchell swears that he contracted with Leonard for the stock a short time previous to the 19th of August, 1837, and that he had not made any definitive arrangement with the complainants for the stock at that time. It
What then were the rights of Mitchell as betwmen him and the trustees of the institution, or rather as between him and the other stockholders of the institution, on the 19th of August, 1837 1 For the rights of the other stockholders are those which are opposed to the claims of the complainants in this suit. The question whether the bank, while it was in existence, had any lien upon the stock of a debtor
Here, if Mitchell had been the owner of these eighty shares of stock at the time of the repeal of the charter, on the 4th of June, 1837, he could only have claimed his share of the effects of the defunct institution, after deducting therefrom the debt due from him on the three notes of the 18th of May, 1837. And if the trustees had paid him the full amount of his distributive share of the assets, leaving those notes unpaid, it would have been a violation of their
If the trustees have any other securities, belonging to Mitchell, which they hold as collateral to the payment of the notes, the complainants will be entitled in equity to such securities, upon payment of the debts due from Mitchell to the bank. But if the payment of the notes was only guarantied by third persons who stood in the situation of mere sureties for Mitchell, at the time he sold his interest in this part of the effects of the defunct institution to the respondents, the rights of those sureties will be paramount to those of the complainants; for the complainants sit in the seat of their assignor, and can claim no equitable rights which he could not have claimed, as against his sureties, if he had not assigned his interest in these eighty shares. This bill is not properly framed to reach any such collateral securities which the defendants hold, nor is it suggested in the bill that they have any such. No examination as to rights of that kind, therefore, can properly be made in this suit. But as it is suggested that the defendants hold securities of some kind for the debt of Mitchell, or for some part thereof, the decision in this case ought not to prejudice the corn
The decisions referred to, which have been made by courts in relation to the sale and transfer of stock in corporations which are existing and in full life have no bearing upon the case now under consideration, for the reasons above suggested. Nor does the stock-jobbing act apply to sales of distributive shares of the effects of a corporation which is dissolved; such shares not being stock, but mere choses in action which are not negotiable.- I have not thought it necessary, therefore, to consider any of the cases as to the transfer of stocks in existing institutions, or as to agreements to purchase stocks which did not belong to the vendor at the time of the agreement. And as the complainants wholly failed to show that they were entitled to this distributive share of the stock, without paying the notes of Mitchell, it is not necessary to examine the question whether the other stockholders of the bank, who alone were interested in resisting the claim of the complainants, were not necessary parties to the suit.
The decree of the assistant vice chancellor must be reversed, and the complainants’ bill dismissed with costs. But it must be without prejudice to any claim that they may have to any securities in the hands of the defendants, belonging to Mitchell, beyond the amount of the debts for which they are pledged, after applying his distributive share in the funds of the institution towards such debts. And neither party is to have costs as against the other in this court.
Decree accordingly.