Anderson v. Philadelphia Warehouse Co

• Decision Date: 21 April 1884
• Parties: ANDERSON, Receiver, etc., v. PHILADELPHIA WAREHOUSE CO. 1
• Court: U.S. Supreme Court

111 U.S. 479

4 S.Ct. 525

28 L.Ed. 478

ANDERSON, Receiver, etc., v. PHILADELPHIA WAREHOUSE CO.¹

April 21, 1884.

Preston K. Erdman and Edward Harvey, for plaintiff in error.

R. C. McMurtree and Geo. Junkin, for defendant in error.

WAITE, C. J.

This suit was brought by the receiver of the First National Bank of Allentown, an insolvent national bank, to recover an assessment made by the comptroller of the currency on the shareholders to pay debts, and the only question presented for determination is whether, upon the facts, the Philadelphia Warehouse Company was in law a shareholder of the bank at the time of its failure, and as such liable to creditors. The facts, as shown by the undisputed testimony or found by the jury, are these:

From the seventeenth of April, 1864, until December 27, 1871, William Kern was the registered holder of 490 shares of the stock of the bank. Kern was one of the partners in the banking and business firm of W.H.Blumer & Co., composed of himself, William H. Blumer, and Jesse Line. Blumer was the president of the bank, and the other two partners in the firm directors. A son of the president was cashier and also a director. In the latter part of the year 1871 Blumer & Co., through William H. Blumer, arranged with the Philadelphia Warehouse Company, in Philadelphia, for a loan or banker's credit, to be secured by a deposit of collaterals. The account was opened and the first drafts paid upon a deposit of gas stocks as security. On the twenty-seventh of December, 1871, Kern transferred 450 of the shares of the stock standing in his name on the books of the bank, and had a new certificate issued in the name of T. Charlton Henry, president. This certificate was receipted to the bank by Blumer, its president, and by him either taken or sent to the warehouse company as further security for the credit extended to Blumer & Co. The certificate came into the hands of Henry, the president of the company, on the twenty-eighth of December, and soon after another draft of Blumer & Co. for $10,000 was paid. On or before the second of January the fact of the transfer of the stock to the name of Henry, president, was brought to the attention of some of the directors and members of the executive committee of the warehouse company. At once it was deemed inadvisable to have the stock stand in the name of the president, and the certificate was, on the third of January, transferred, under the seal of the company and the signatures of its president and secretary, to Dennis McCloskey, an irresponsible person, and a porter in its employ. The certificate with the transfer upon it was sent the same day by the secretary of the company to Blumer & Co., with a request that the stock might be transferred and a new certificate issued in the name of McCloskey and returned. To this request Blumer replied as follows:

'WM. H. BLUMER, President.

J. A. BLUMER, Cashier.

'THE FIRST NATIONAL BANK OF ALLENTOWN.

'ALLENTOWN, PENN' A, January 4, 1872.

'T. Charlton Henry, Esq., President: To-day I received one remittance from your L. S. Maderia, to-wit, certificate of stock for four hundred and fifty shares of the capital stock of the First National Bank of Allentown, with a request to assign the same and make a new certificate to Dennis McCloskey. I do not understand t e nature of this transaction, and would respectfully ask you to give me explanation why the stock is to be transferred to a third party; and if it would be better to place other securities with you, such as gas stock, in cases where you pledge them with outsiders.

'If my remarks seem improper, pardon me, for I only ask questions to gain wisdom.

Very respectfully,

'WM. H. BLUMER.

'For W. H. BLUMER & CO.'

To this letter the company sent the following answer:

'JANUARY 6, 1872.

'Wm. H. Blumer, Esq., Pres't—DEAR SIR: I am in receipt of your favor of the fourth inst., and in reply would say that I am not surprised at your inquiry, since you were requested to have the certificate made out in my name. We have no need to borrow any money, nor do we expect or intend to put this stock out of our hands, but the failure of one or two national banks lately led our directors to consider the clause in the national bank act which renders all stockholders liable, in case of failure, to pay up to the receiver the full amount of the stock in their name; and on this account we determine to have the certificates of national bank stock put in the name of Dennis McCloskey, who is the boy in our office, taking his power of attorney to transfer the same. Hoping this explanation will prove satisfactory,

'I am yours, respectfully,

'T. C. HENRY, Pres't.'

Upon the receipt of this letter the stock was transferred in due form, January 10th, to McCloskey, on the books of the bank, and a new certificate issued in his name. This certificate was receipted for McCloskey by W. H. Blumer, and forwarded to the warehouse company as an inclosure in the following letter:

'OFFICE OF THE ALLENTOWN GAS COMPANY.

'W. H. BLUMER, President.

J. M. LINE, Treasurer.

'ALLENTOWN, PA., January 10, 1872.

'T. C. Henry, Esq.—DEAR SIR: Inclosed I hand you certificate of 450 shares First National Bank of Allentown. It is never out of the way if you are cautious, but in this case I presume there would have been no danger. I would not sell the gas stock for $50,000.

Truly,

'W. H. BLUMER.'

McCloskey never had possession of the certificate, and, at the request of the warehouse company, executed in blank, as of the date of January 3d, an irrevocable power of attorney for the sale and transfer of the stock. He died in 1875. After his death the stock was transferred on the books of the bank, at the request of the company, to Francis Ferris, another employe and also an irresponsible person. This certificate was delivered to the company, and Ferris indorsed thereon an irrevocable power of attorney for its transfer. The stock stood in his name at the time of the failure of the bank, in 1878, the company holding the certificate. Dividends were paid regularly on this stock to Kern or Blumer & Co. from the time of the original transfer up to and including December, 1876. The warehouse company never received any dividends and never acted as a shareholder. Blumer & Co. failed in 1877, largely indebted to the warehouse company, which still held as security the stock standing in the name of Ferris....