112 Iowa 551 | Iowa | 1900
S. W. Matteson, James H. Easton, who was president of the First National Bank of Decorah up to the time of its going into the receiver’s hands, and certain associates, jointly purchased a tract of land near the city of Duluth, Minn., known as -“Longview Addition” to that city. For a part of the purchase price said Matteson made his note to Easton for the aggregate amount of $37,600. Later the persons so interested in this real estate, incorporated as the Iowa & Minnesota Investment Company, and the real estate was conveyed to such company, which paid therefor by issuing $60,000 of its bonds, secured by a trust deed on the land. The capital stock of the investment' company was $100,000. Matteson and Easton each had a one-fourth interest in said investment company, and so were entitled each to $25,000 of the stock and $15,000 of its bonds. Thirteen thousand dollars of the bonds allotted to Matteson were issued and transferred to Easton, the remainder being held by the company as part of a reserve. After these transactions, and on May 15, 1894, Matteson and Easton entered into an agreement in writing, which, after reciting 'the original indebtedness of the former to the latter
“Schedule of notes executed by S. W. Matteson, by whom held, date, when due, rate of interest which same bear, referred to in the foregoing agreement:
Eor convenience we have affixed numbers to the different notes scheduled. It will be observed by this agreement, which is not in any way disputed here, the amount of Matteson’s indebtedness is fixed at $16,610.75, and the remainder of the $37,600 was assumed by Easton; that Matteson transferred to Easton $13,000 in bonds and $25,000 in stock to secure the former’s notes for the amount of the indebtedness which he was to pay. The agreement gives Easton a right to re-hypothecate the securities. This, however, by any rule of construction, must be held to mean that he had a right to pledge them to secure renewals of Matteson’s notes, and not that he had authority to divert and use them in securing any other debts than Matteson’s proportion of the principal sum mentioned in the article of agreement. With the consent of both parties to this agreement, the particular items of the Matteson indebtedness were specified, and the collaterals pledged as follows: The bonds: $5,000 to F. S. Easton (Nos. 7 and 8 of schedule). These are not involved in this action. $3,000 to Second National Bank of Freeport, 111. (Nos. 1 and 2 of schedule.) $2,000 to First National Bank of New Hampton (No. 4 of schedule). $3,000 to same bank (No. 5 of schedule). The Matteson bonds, as delivered, were numbered, respectively, 25, 64, 70, 71, 76, 77, 85, 86, 92, 93, 98, 99, 102, 103, 116, and 117. Of these, Nos. 85, 86,. 92, and 93 are involved in the equitable issue; these were deposited to secure payment of the $2,000 note to the New Hampton bank (No. 4 of schedule), and need not be. further considered at this time, for we shall follow the order of counsel’s argument, and dispose of the law branch of the case first. The shares of stock were deposited with the First Na