Ardmore State Bank v. Mason

• Decision Date: 14 November 1911
• Docket Number: Case Number: 1113
• Citation: 30 Okla. 568,120 P. 1080,1911 OK 348
• Parties: ARDMORE STATE BANK v. MASON.
• Court: Oklahoma Supreme Court

1911 OK 348

120 P. 1080

30 Okla. 568

ARDMORE STATE BANK v. MASON.

Case Number: 1113

Supreme Court of Oklahoma

Decided: November 14, 1911

Syllabus

¶0 1. BANKS AND BANKING--Banking Corporation--Stock--Transfer. A purchaser of bank stock may compel, by bill in equity, the transfer of the same on the books of the corporation, or he may sue in conversion and damages for the failure to so transfer.

2. PLEADING--Demurrer--Demurrer to Pleading Good in Part. Where a general demurrer is filed to a petition, if any paragraph states a cause of action, the demurrer should be overruled.

3. BANKS AND BANKING--Banking Corporation--Stock--Pledge--Notice of Sale. The statute requiring the pledgee, before the sale of pledged property, to give notice and sell same at public auction, was enacted for the benefit of the pledgor, and he may waive, by stipulation, both the notice and the public sale, and in that event a private sale is valid.

4. SAME--Stock--Pledge of Share--Lien of Bank on Stock--Priority. McL. owned ten shares, fully paid up, in the A. State Bank. On June 24th he was indebted to said bank for borrowed money in the sum of $ 2,000. On the same day he borrowed $ 5,255 from the F. State Bank, and secured the same by pledging, among other things, his ten shares of stock in the A. State Bank. On June 25th he paid in full his indebtedness to said A. State Bank, and from June 25th to July 8th he was not indebted to it in any sum whatever. On the latter date he borrowed $ 1,500 from the A. State Bank. During the time in which he was not indebted to said bank, actual knowledge was given to said bank of the pledging of his ten shares of stock to the F. State Bank, yet, notwithstanding such knowledge, the last loan of $ 1,500 was made. The contract of pledge stipulated that upon default of payment of the principal sum the pledgee might sell the pledged stock without notice and at private sale. On November 12th plaintiff bought, at private sale, the said shares and thereafter presented the same to the A. State Bank, and demanded that the certificate be canceled and a new certificate be issued, and that the said shares be transferred on the books of such A. State Bank, which was refused on the grounds that McL., the original owner, and pledgor, was then indebted to said A. State Bank, and that said bank had a statutory lien on said stock for such indebtedness and also for the further reason that the by-laws of said A. State Bank prohibited a transfer of stock by its stockholders who were indebted to said bank either as principal or surety. Held:

First. That the statutory lien which the A. State Bank had against such stock on June 24th was discharged when the owner of such stock on June 25th, paid all his indebtedness to said bank; and

Second. That after June 25th and up to July 8th, when McL., the owner of such stock, was not indebted to said bank, he had a right to sell, assign, or transfer by way of pledge the said stock, and that the same was free from statutory lien; and

Third. That when said A. State Bank, with knowledge of the pledge, again made McL. a loan, it did so at its peril, and that it was not entitled to a priority lien on such stock as against the pledgee who had received such stock in hypothecation when there was no indebtedness to the issuing bank at the time when its second credit was extended to said McL., and that such subsequent loan to said McL. by said A. State Bank made its statutory lien subsequent and secondary to that of the pledgee of such stock; and

Fourth. The pledgee, by virtue of the stipulation between the parties, had a right to sell such pledged stock at private sale, without notice, on November 12th, and the purchaser became the equitable owner and entitled to the legal title to said stock by having the same transferred on the books of the said A. State Bank; and

Fifth. The by-laws of said bank which prohibited the sale of stock by a stockholder while indebted to the bank was made for the benefit of the corporation, and its provisions do not apply to bona fide purchasers of stock in good faith at pledgee's sale, especially when the corporation has actual knowledge of the pledge and such pledge was made at a time when there was no statutory lien on the pledged stock, and the indebtedness by which the bank now claims its lien was created after the stock was pledged.

Error from District Court, Carter County; Stilwell H. Russell, Judge.

Action by I. R. Mason against the Ardmore State Bank to compel the transfer on the books of the corporation of certain shares of stock purchased at pledgee's sale, and for damages. From a judgment for plaintiff, defendant brings error. Affirmed.

This action was tried to the court on an agreed statement of facts, which statement contained all the facts save and except one question, as follows, to wit: "Did the Ardmore State Bank have notice at any time between the date of June 24, 1908, and July 8, 1908, that Richard R. McLish had pledged his ten shares of stock represented by certificate No. 3, to the First State Bank?"--which issue was submitted to a jury and was decided in the affirmative, and thus declared that the Ardmore State Bank did have notice between the said dates that McLish had pledged his ten shares of stock, represented by certificate No. 3, to the First State Bank. Thereafter the court made its findings of fact and conclusions of law as follows:

"FINDINGS OF FACT AND CONCLUSIONS OF LAW.

"(1) The court finds: That the Ardmore State Bank is a corporation incorporated under the laws of the state of Oklahoma, with a capital stock of $ 25,000 paid up, and that the said bank was authorized by the State Bank Commissioner to do business on May 19, 1908, and that it opened for business at Ardmore on June 1, 1908.

"(2) That Richard R. McLish was one of the organizers of said bank, and on June 4, 1908, there was issued to him certificate No. 3, representing ten shares of the capital stock of the par value of $ 1,000.

"(3) That on June 13, 1908, the Ardmore State Bank loaned to the said Richard R. McLish $ 2,000, which was paid on June 25, 1908. That on July 8, 1908, the Ardmore State Bank made a second loan to the said Richard R. McLish in the sum of $ 1,500, which amount was due and unpaid, on November 12, 1908, at which time the plaintiff herein purchased the stock issued to the said Richard R. McLish by the Ardmore State Bank.

"(4) That a meeting of the directors of the Ardmore State Bank was held January 12, 1909, at which meeting a dividend of five per cent. was declared on the capital stock of said bank and the dividend on the $ 1,000 stock standing in the name of Richard R. McLish was not paid to this plaintiff because the books of this bank showed said stock to be the property of the said McLish.

"(5) That a short time subsequent to January 12, 1909, the plaintiff presented to the president and cashier of the bank certificate No. 3, representing $ 1,000 of the capital stock of said bank issued to Richard R. McLish, and requested and demanded that said certificate be canceled, and, in lieu thereof, a new certificate be issued to this plaintiff by virtue of his having purchased this stock from the First State Bank of Ardmore on November 12th as aforesaid, and that the officers of the said bank refused to cancel said certificate and issue new certificate to plaintiff because they claimed to have a lien on the stock of the said Richard R. McLish by virtue of the fact that the said McLish was indebted to them, and, under the statute, they had a lien on said stock for such indebtedness.

"(6) That the said Richard R. McLish is now indebted to the Ardmore State Bank in an amount exceeding the book value and the market value or the par value of said stock.

"(7) That the plaintiff herein purchased said certificate of stock from the First State Bank of Ardmore, Okla., on November 12, 1908, who obtained the same from Richard R. McLish on June 24, 1908, as part security for a loan made to the said McLish by the First State Bank, and that the First State Bank held said stock until sold to the plaintiff herein as pledgee of the said McLish.

"(8) That the said Richard R. McLish on the 24th day of June, 1908, made, executed, and delivered to the Ardmore Loan & Trust Company his promissory note for the sum of $ 5,250 to become due and payable October 1, 1908, as part collateral of which he pledged the ten shares of stock in question, and that in said note the said McLish gave the legal holder of said note full power and authority to sell said ten shares of stock of the Ardmore State Bank, or any portion thereof, at public or private sale, at the option of the holder, on the non-performance of the obligation expressed in said note, and without advertising the same, and otherwise giving notice.

"(9) The court further finds that the question as to whether the Ardmore State Bank at the time it made its second loan of $ 1,500 to Richard R. McLish on July 8, 1908, had notice that McLish's stock was pledged to the First State Bank, could not be agreed upon by the plaintiff and defendant; the plaintiff contending that the Ardmore State Bank had notice and the defendant denying this. The question of fact was left to a jury, who, after hearing the testimony of the respective cashiers of each bank, found that Harold Wallace, cashier of the Ardmore State Bank, had been notified by J. B. Boone, cashier of the First State Bank, that this stock was pledged to the First State Bank, and the court further finds that the Ardmore State Bank by reason of this notice to its cashier is chargeable with such notice.

"(10) The court finds that the original indebtedness of McLish to the defendant bank existing on the 24th day of June, 1908, was paid by McLish on the 25th day of June, 1908, by check on the First State Bank of Ardmore, and that McLish had obtained the funds upon which this check was drawn by obtaining a loan from the First State Bank for which he gave a mortgage...