225 F. 718 (2nd Cir. 1915), 293, Wagner v. Kohn

Docket Nº:293.
Citation:225 F. 718
Party Name:WAGNER v. KOHN.
Case Date:July 06, 1915
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 718

225 F. 718 (2nd Cir. 1915)




No. 293.

United States Court of Appeals, Second Circuit.

July 6, 1915

Page 719

Barber, Watson & Gibboney, of New York City (Stuart G. Gibboney and George M. Burditt, both of New York City, of counsel), for plaintiff in error.

McKennell & Appell, of New York City (Thomas Abbott McKennell and Alfred H. Appell, both of New York City, of counsel), for defendant in error.

Before LACOMBE, WARD, and ROGERS, Circuit Judges.

ROGERS, Circuit Judge.

This is an action brought by plaintiff as receiver of the Mt. Vernon National Bank to recover on a note made to the bank by the defendant. At the time the note was given and as a part of the transaction there was deposited as collateral with the bank certain bonds issued by the Westchester County Brewery Company and which had a face value of $4,000. It appears that the Westchester County Brewery Company, hereinafter referred to as the Company, was indebted to the defendant in the sum of $6,000, secured by a mortgage on its property. This mortgage was found to interfere with the plan of the Company to put out a bond issue, and defendant was asked to discharge it of record, and it was so discharged in August, 1910, and at that time it paid $3,000, one-half the amount due. In October following defendant was pressing for payment of the balance. The Company had $1,000 available for that purpose, and applied to the bank to borrow $2,000 additional. The president of the bank advised the Company that the bank already 'had all the loaning paper the bank could stand under the Westchester County Brewery's name,' and it was agreed to ask defendant to sign a collateral note for $2,000, which the cashier was to discount. It was also agreed between the bank and the Company that the bonds of the latter to the value of $4,000 would be given to the cashier as collateral to secure the payment of the note, and at that interview the president of the bank handed the cashier bonds to the amount named to be used for the purpose. The evidence shows that the president of the bank was also the money adviser of the Company, and was to float the bond issue of the latter, and had at the time some of the bonds in his possession with authority to sell. The defendant assented to this

Page 720

arrangement, executed the collateral note, and received the cashier's check drawn to his order. The note and bonds were put into an envelope and left with the bank.

The note made by defendant is dated October 25, 1910. It recites that the undersigned promises to pay on demand to the bank or its order $2,000, with interest at the rate of 6 per cent. per annum, 'having deposited with the said bank as collateral security for the payment of this and any other liability or liabilities of the undersigned, or of the guarantors hereof, * * * the following property, viz.: Four thousand dollars ($4,000) par value first mortgage bonds Westchester County Brewery, * * * and the undersigned also hereby gives to the holder hereof a lien for the amount of all the said liabilities upon all the property or securities,' etc. It also empowers the holder, upon nonpayment 'of any of the liabilities above mentioned when due,' to sell at public or private sale the said securities or any part thereof.

There was testimony to...

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