Hower v. Weiss Malting & Elevator Co.

• Citation: 55 F. 356
• Parties: HOWER v. WEISS MALTING & ELEVATOR CO. et al.
• Decision Date: 18 April 1893
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

55 F. 356

HOWER v. WEISS MALTING & ELEVATOR CO. et al.

United States Court of Appeals, Second Circuit.

April 18, 1893

Emanuel J. Myers, for appellant Weiss Malting & Elevator Co.

Fisher A. Baker, for appellant First Nat. Bank.

W. C De Witt, for appellee.

Before WALLACE, LACOMBE, and SHIPMAN, Circuit nd SHIPMAN, Circuit Judges.

LACOMBE Circuit Judge.

This action was brought in the supreme court of the state of New York, and was removed from that court to the United States circuit court for the eastern district of New York. Prior to the removal, the state court had granted an injunction restraining the defendants from transferring, disposing of or in any wise interfering with, certain certificates of stock, representing 8,102 shares of the Fred Hower Brewing Company, during the pendency of the action. After the removal the defendants moved in the circuit court to dissolve the injunction. The circuit court, held by Judge Benedict, after hearing the parties, made an order denying the motion to dissolve, and continuing the injunction in force. The defendants have appealed from this order.

It is insisted for the appellants that the injunction should not have been granted, because the case presented by the pleadings is not one of equitable cognizance, but one in which the plaintiff has an adequate and complete remedy at law. Succinctly stated, the facts shown by the bill of complaint are these: On or about September 23, 1891, the defendant the elevator company had acquired 2,503 shares of the stock of the Fred Hower Brewing Company, pursuant to an agreement between the plaintiff and the elevator company that the plaintiff should buy the stock for the sum of $25,033 payable in five years thereafter, in equal semi-annual installments, and that, as a security for the payment, the elevator company should hold in pledge these shares, together with 5,600 other shares of similar stock owned by the plaintiff. Shortly afterwards the elevator company delivered the stock to the plaintiff, and these shares, together with the other 5,600 shares, were left with one Meyers, acting for both parties, 'upon the express understanding and agreement between the plaintiff and the elevator company that the said shares of stock should not be given or delivered to the elevator company until the agreement aforesaid had been reduced to writing, and executed by the elevator company. ' Pending the execution of the written contract, the plaintiff, at the solicitation of the elevator company, without any consideration therefor, and solely for its accommodation, and upon its promise that it would carry and renew the same for the period of five years, running parallel with the periods described in the agreement aforesaid, signed a negotiable promissory note, payable six months after date, to his own order, and indorsed by him, for $25,023, and delivered it to Meyers upon the agreement with the elevator company that Meyers was not to deliver the note to it until the execution of the aforesaid written agreement. The note contained a recital that the maker had deposited, as collateral security for the payment of the note, two certificates of stock, one being for the 2,503 shares, and the other for the 5,600 shares, and a condition authorizing the holder, in case of default in the payment of the note, to sell the certificates at public or private sale, and apply the proceeds to the payment of the note. Shortly afterwards the elevator company 'fraudulently and wrongfully obtained from said Meyers' possession the note, and all of plaintiff's securities aforesaid, and departed therewith from the state, without signing or executing the agreement reduced to writing as aforesaid;' placed the note and the certificates in the hands of the defendant the First National Bank of the City of New York for collection; and refused, and still refuses, to execute the written contract. When the note became due, the defendant the bank made presentment, and demanded payment of the plaintiff. The bill alleges that the defendants propose to sell and convert the shares of stock to their own use. The bill also alleges that the stock in question represents nearly all the property which plaintiff owns, that it has no market value, and that, if sold, it will be sacrificed at a loss of more than two thirds of its value. The prayer of the bill is that the defendants be enjoined from selling, or in any way disposing of, the stock certificates, and that the elevator company cancel and destroy the stock note.

The chief contention of the appellants is that the complainant has an adequate remedy at law, and therefore cannot maintain a suit in equity to restrain the defendants from enforcing the note or disposing of the stock. If it were only a question of the note, this objection would no doubt be a sound one. All the equities could be pleaded against the payee, or, the note being now past due, against any one to whom he might transfer it. But the fact that a sale of the stock, which, for all that appears in the papers, might clothe the purchaser thereof with a title superior to complainant's equities, puts the case in an entirely different aspect. The stock is apparently of uncertain value it represents a controlling interest in the corporation; and, in view of these circumstances, the possible recovery in any action for damages for its conversion would not be an adequate remedy. The theory of damages for the conversion of such property is that the sum recovered by plaintiff will put him financially in the position he was in before the conversion, but it is by...