151 F.2d 520 (8th Cir. 1945), 13047, Buder v. Denver Nat. Bank

Docket Nº:13047.
Citation:151 F.2d 520
Party Name:BUDER et al. v. DENVER NAT. BANK.
Case Date:October 08, 1945
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 520

151 F.2d 520 (8th Cir. 1945)

BUDER et al.

v.

DENVER NAT. BANK.

No. 13047.

United States Circuit Court of Appeals, Eighth Circuit.

October 8, 1945

Rehearing Denied Nov. 14, 1945.

Page 521

Langdon R. Jones, of Kennett, Mo., for appellant Oscar E. Buder.

Taylor Sandison, of St. Louis, Mo., for appellants Gustavus A. Buder and another.

Thomas S. McPheeters, of St. Louis, Mo. (Bryan, Cave, McPheeters & McRoberts, of St. Louis, Mo., on the brief), for appellee.

Before GARDNER and THOMAS, Circuit Judges, and MILLER, District Judge.

GARDNER, Circuit Judge.

This is an appeal by Gustavus A. Buder and Oscar E. Buder individually and as copartners doing business under the firm name and style of Buder & Buder, from a judgment awarding appellee possession as pledgee of 3,500 shares of the common capital stock of Burroughs Adding Machine Company out of the remainder interest in 28,250 shares of such stock bequeathed to G. A. Franz under the will of his deceased father, Ehrhardt D. Franz, and decreeing that Oscar E. Buder and the partnership of Buder & Buder are estopped to assert that appellee's right to possession of said 3,500 shares is inferior or in any way subsequent or subordinate to their respective rights to possession of said stock, and also decreeing that appellee is entitled to hold said stock as collateral security for an indebtedness due it from G. A. Franz, deceased, in the principal amount of $32,749.87, with interest, in accordance with the terms of the notes evidencing such indebtedness and the agreements therein contained, and to apply or dispose of the same in accordance with such terms. The parties will be referred to as they were designated in the trial court.

The action resulting in this judgment was brought by the plaintiff bank to establish and enforce an equitable lien as against Oscar E. Buder and the firm of Buder & Buder in the 3,500 shares of stock of the Burroughs Adding Machine Company. It was the claim of plaintiff in the trial court, and it so contends here, that its lien on said stock is superior in equity to the liens claimed by the defendants because by their

Page 522

conduct they have been estopped as against plaintiff to assert any claim to this stock until after plaintiff's claim has been fully satisfied. This claim is based upon the conention that defendants by their conduct induced plaintiff to accept an order on the trustees of the Franz estate for the delivery to it of 3,500 shares of this stock as collateral to its loans, by the representation or assurance that such 3,500 shares were available and that is loans would be protected by such order, and that relying upon such assurance plaintiff postponed the foreclosure of liens upon similar stock which it already held as collateral, at a time when such foreclosure would have fully liquidated its loans.

An understanding of the issues makes it necessary to give some genealogy of the property involved.

Ehrhardt D. Franz died in 1898, leaving a will which provided a life estate in his widow, Sophie Franz, with remainder over to his ten children, to be divided among them in equal shares. In 1909 Sophie Franz executed a trust instrument by which she conveyed to one of her sons, G. A. Franz, and Gustavus A. Buder, as trustees, the property received by her from her deceased husband. This instrument specifically provided that the trustees should employ the law firm of Buder & Buder as their counsel, and that firm has in fact continuously represented the trustees. The instrument also provided that Oscar E. Buder should become successor trustee in the event of any vacancy. Among the assets devised by Ehrhardt D. Franz were 210 shares of stock of the American Arithmometer Company, which was exchanged for Burroughs Adding Machine stock, which in turn was 'split' as a result of stock dividends, and at the time of the death of Sophie Franz in 1930, there were in the hands of the trustees as trust property 282,500 shares of Burroughs Adding Machine Company stock, of which G. A. Franz, one of the ten children, was entitled to receive 28,250 shares. The named trustees continued to hold this stock, and proceedings for its distribution were pending in the United States District Court of St. Louis, Mo., throughout the period involved in the present controversy.

G. A. Franz was engaged in the development of mining properties in Colorado and became a borrower from the plaintiff bank. Shorly prior to April 10, 1939, his indebtedness to the bank had reached a total of $67,000, represented by several notes secured by the pledge as collateral of 5,333 shares of Burroughs Adding Machine Company stock. On that date the market price of this stock had materially fallen, and even prior to that date the bank had become greatly disturbed as to the sufficiency of the collateral security of the Franz loan and Franz was being importuned to furnish additional security. On March 26, 1939, Franz wrote the bank, explaining that because of his illness he would not be able to get back to S. Louis to get the 3,500 shares of Burroughs stock to be distributed to him; that he had had a wire from his attorney (Oscar E. Buder), advising that the litigation which had been holding up distribution of the este had been decided and that there was no reason why the entire estate could not be distributed as soon as he got back there; that if the market continued to drop he would have his St. Louis attorney send the bank additional collateral. On April 3, 1939, he again wrote the bank, saying that he was not strong enough to leave immediately for St. Louis but that if the market did not show strength he would phone St. Louis and have his attorney send the bank additional collateral. Just prior to April 10, 1939, Franz talked with Oscar E. Buder, his attorney, over the telephone, and as a result of that conversation on April 10, 1939, Oscar E. Buder wrote the plaintiff bank as follows: 'There is to be a partial distribution of the Franz Trust as soon as the mechanics thereof can be arranged wherein Mr. G. A. Franz will have clear 3500 shares of stock of the Burroughs Adding Machine Company, which he has directed me to notify his co-trustee is to be delivered to me to be sent to...

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