Biebinger v. Continental Bank

• Decision Date: 01 October 1878
• Citation: 25 L.Ed. 271,99 U.S. 143
• Parties: BIEBINGER v. CONTINENTAL BANK
• Court: U.S. Supreme Court

99 U.S. 143

25 L.Ed. 271

BIEBINGER v. CONTINENTAL BANK.

October Term, 1878

APPEAL from the Circuit Court of the United States for the Eastern District of Missouri.

The fact are stated in the opinion of the court.

The case was submitted upon printed arguments by Mr. J. O. Broadhead for the appellant, and was argued orally by Mr. Preston Player for the appellee.

MR. JUSTICE MILLER delivered the opinion of the court.

The partnership firm of Yeager & Co., composed of Yeager and Crandall, were declared bankrupts Oct. 24, 1873, by the District Court of the Eastern District of Missouri, and the appellant duly appointed assignee. At the time of their failure Yeager & Co. had the legal title to a mill in Washington County, Illinois, and the Continental Bank, the appellee, filed its bill in chancery in the Circuit Court for the Eastern District of Missouri, against the assignee, alleging a large indebtedness of the bankrupts to the bank, for the security of which they were entitled to an equitable lien on the mill property in Illinois, above mentioned.

The facts as recited in the bill, out of which this lien is said to arise, are shortly these: For several years prior to 1871 the bankrupts had been doing business with the bank and had a line of discounts amounting generally to upwards of $50,000. There had also been on deposit with the bank as collateral security for this current indebtedness, omong other paper of the same kind, a note of Harriman & Co. to Yeager & Co. for $20,000, secured by a mortgage on the mill. This note being overdue and unpaid, yeager & Co. applied to the bank for its delivery to them that they might foreclose the mortgage and collect the money, promising to pay the money if collected, or return to the bank whatever might be recovered in the foreclosure proceeding. The bank complied with this request, taking a receipt from Yeager & Co., which will be presently considered, dated Feb. 11, 1871. The mortgage was foreclosed, the property sold and bought in by Yeager & Co., who on the 6th of December, 1872, received in their own name the master's deed, which was duly recorded in Illinois, Dec. 20, 1872.

It is further alleged that shortly after this deed was made to Yeager & Co., it was, at the suggestion of the bank, delivered to it, and remained there until suspicion was excited that this deposit might not give them a lien on the property. A mortgage of the property to the bank was drawn up by its attorney, which one of the bankrupts promised should be executed, but which was not done; and matters remained in this condition when the bankruptcy proceeding was instituted, at which time, as the bill states, the bankrupts were indebted to them over $40,000.

Pending the litigation, the property was sold under a stipulation for $7,369.90, and the money paid into court; and for this sum a final decree was rendered in favor of the bank, from which this appeal is taken.

The assignee filed an answer, affirming ignorance of the facts alleged, and putting them in issue.

Most of the matters stated in the bill are supported by the evidence. The original pledge of the note and mortgage of Harriman, their withdrawal under a promise to return them or their proceeds, or to supply their places by some equivalent, seem fairly established. The purchase of the mill property under foreclosure proceedings, the deposit of the master's deed with the bank, and the indebtedness of Yeager & Co. to the bank at the time of their failure, are sufficiently...