Bank of Kentucky v. Bonnie

• Decision Date: 02 December 1897
• Citation: 102 Ky. 343,43 S.W. 407
• Parties: BANK OF KENTUCKY v. BONNIE et al.
• Court: Kentucky Court of Appeals

43 S.W. 407

102 Ky. 343

BANK OF KENTUCKY v. BONNIE et al.

Court of Appeals of Kentucky.

December 2, 1897

Appeal from circuit court, Jefferson county.

"To be officially reported."

Action by the Bank of Commerce against the New Albany Rail-Mill Company and others, and the Bank of Kentucky, which in its answer made a cross petition against C. W. De Pauw and Bonnie Bros. From a judgment in favor of plaintiff, enforcing a prior lien against certain bank stock held by the Bank of Kentucky as collateral security, the Bank of Kentucky appeals. Reversed.

Humphrey & Davie, for appellant.

Helm &amp Bruce and Dodd & Dodd, for appellees.

LEWIS C.J.

This action was brought by Bank of Commerce, of Louisville, Ky against New Albany Rail-Mill Company, the Premier Steel Company, C. W. De Pauw, the Union Trust Company of Indianapolis, assignee of C. W. De Pauw, all nonresidents and the Bank of Kentucky, to enforce a lien and subject collaterals to pay three promissory notes. The first, for $10,000, was March 25, 1893, by the New Albany Rail-Mill Company, executed and made negotiable and payable four months after date at the New Albany Bank, to C. W. De Pauw or order who indorsed and had it discounted by the Bank of Commerce. The second and third, each for $10,000, were April 20, 1893, at Indianapolis, Ind., by the Premier Steel Company, executed and made negotiable and payable at the New Albany National Bank, one 30, the other 90, days after date, to C. W. De Pauw or order; by him indorsed to Bonnie Bros., a firm doing business in Louisville; and, as alleged, indorsed by them, and discounted by the Bank of Commerce. There was in the lower court no contest about any collaterals except 90 shares of capital stock of the Bank of Commerce, owned by C. W. De Pauw, and supposed to be worth about $15,000, upon which it asserted and was adjudged to have a superior lien for the three debts. In the answer of the Bank of Kentucky, made a cross petition against C. W. De Pauw and Bonnie Bros., these promissory notes, executed to and held by it, are set up, and the same bank stock asked to be applied to pay amount due of them. The first, for $10,000, dated January 18, 1893, payable four months after date, and the second, for $15,000, dated April 22, 1893, payable 30 days after date, were executed jointly by the Premier Steel Company and C. W. De Pauw. The third, for $25,177.90, was, June 29, 1893, executed by C. W. De Pauw alone; and it contains a recital that there were deposited with the Bank of Kentucky, as collateral security for the two notes first mentioned, said 90 shares of the Bank of Commerce stock, 50 shares of the Indianapolis National Bank stock, and 20 bonds of the De Pauw Plate-Glass Company. But, though that note comprises the sum of principal and accumulated interest of the other two, they were retained; and, though the 90 shares of bank stock were stipulated to be then deposited as security for the third note, the answer contains an averment, supported by evidence, that a certificate of that stock duly issued had in fact been previously assigned and delivered by De Pauw to the Bank of Kentucky, as security for the two preceding notes.

Whatever lien the Bank of Commerce may have upon shares of its capital stock owned by a debtor is purely statutory, and exists in virtue of section 6 of its charter, as follows: "The shares of capital stock shall be personal estate and transferable on books of the corporation according to its by-laws. But the corporation shall hold a lien on the shares of any stockholder who may be indebted to it. Such shares shall not be transferred without the consent of the president and directors until such debt shall be paid, or discharged." The note for $10,000, executed March 25, 1893, by New Albany Rail-Mill Company to De Pauw, appears to have been indorsed by him directly to, and discounted in due course of business by, the Bank of Commerce, before the Bank of Kentucky had acquired, by transfer of the certificate from him, any lien upon or claim to the 90 shares of stock. And as the paper is, by the law of Indiana, where it was executed...