541 S.W.2d 139 (Tenn. 1976), Impac Ltd., Inc. v. Third Nat. Bank

Citation:541 S.W.2d 139
Opinion Judge:The opinion of the court was delivered by: Fones
Party Name:IMPAC LIMITED, INC., et al., Appellants, v. THIRD NATIONAL BANK and First and Mid-South Mortgage Company, Appellees.
Attorney:Gail P. Pigg, Nashville, for appellant.
Case Date:August 16, 1976
Court:Supreme Court of Tennessee

Page 139

541 S.W.2d 139 (Tenn. 1976)

IMPAC LIMITED, INC., et al., Appellants,


THIRD NATIONAL BANK and First and Mid-South Mortgage

Company, Appellees.

Supreme Court of Tennessee.

August 16, 1976.

Page 140

Gail P. Pigg, Nashville, for appellant.

Thomas P. Kanaday, Jr., Stephen W. Ramp, Farris, Evans & Warfield, Nashville, for appellees.


FONES, Justice.

The question presented by this interlocutory appeal is whether a section of the National Bank Act prohibits a state court from issuing an injunction against a national bank, as mortgagee, temporarily restraining it from foreclosing upon appellant's property.

Appellant brought this action against appellee in the Chancery Court of Davidson County when appellee declared appellant in default on a note secured by a deed of trust on real property and advertised the property for sale, pursuant to terms contained in the deed of trust. Appellant sought to enjoin appellee from proceeding with the foreclosure sale and set forth the grounds upon which it sought the injunction. The Chancellor found, upon the pleadings, exhibits, and arguments of counsel at the show cause hearing, that there existed issues which shoudl be determined upon a full hearing; and that appellants would suffer irreparable harm if the foreclosure sale occurred prior to the hearing. Upon these findings, the Chancellor issued a temporary injunction prohibiting appellee from foreclosing on appellant's property prior to a full hearing on the merits of the cause.

Appellee then moved the Trial Court to dissolve the temporary injunction on the basis that 12 U.S.C.A. § 91, denied the Court jurisdiction to issue the injunction. The motion was granted, and the Chancellor allowed appellant a discretionary appeal to this Court.

The statute upon which appellee relies, reads as follows:

§ 91. Transfers by bank and other acts in contemplation of insolvency

All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.

Appellee maintains that this statute, and the case law construing it, prohibits the

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courts of this State from issuing an interlocutory injunction against a national bank under any circumstances. This view necessarily encompasses the position that regardless of the degree of wrongdoing on the part of a national bank against one of its debtors, resulting in irreparable damage, our courts, both state and federal, are prohibited from exercising jurisdiction and allowing an equitable remedy until...

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