Barron v. McKinnon

• Decision Date: 13 May 1910
• Docket Number: 656.
• Citation: Barron v. McKinnon, 179 F. 759 (D. Mass. 1910)
• Parties: BARRON v. McKINNON.
• Court: U.S. District Court — District of Massachusetts

179 F. 759

BARRON v. McKINNON.

No. 656.

United States Circuit Court, D. Massachusetts.

May 13, 1910

Whipple Sears & Ogden and Alexander Lincoln, for plaintiff.

Walter I. Badger and Wm. Harold Hitchcock, for defendant.

LOWELL Circuit Judge.

The plaintiff's amended declaration alleges that the defendant is the shareholders' agent of the National Bank of North America in New York; that Morse, the vice president and director of the bank, owning the majority of its capital stock and controlling its management, acting on behalf of the bank sold the plaintiff 2,000 shares of stock of the New York &amp Porto Rico Steamship Company.

In payment therefor the bank took the plaintiff's note for $50,000, and on the bank's behalf Morse and the plaintiff agreed that the bank should hold the stock as collateral security for the payment of the note and should guarantee the plaintiff against any loss in the transaction from the execution and delivery of the note. Thereafter the bank transferred the note, the transferee brought suit against the plaintiff, and recovered judgment for more than $56,000, which judgment the plaintiff has paid. The plaintiff further alleges that the stock has not been sold, that he is still its owner, and--

'that the value of said stock with all increment received by him therefrom was at all times and is now much less than the amount which the plaintiff has been obliged to pay and expend by reason of said suit, and much less than the amount of the plaintiff's liability upon said promissory note, and that he has sustained great loss in said transaction arising from the execution and delivery of said note.'

The defendant demurred to the declaration upon several grounds, of which the court need notice but two:

I. That the suit was brought against the shareholders' agent, and not against the bank itself.

Had action been brought against the receiver of the bank, appointed under the banking act, the defendant's contention would seem to be sound. Lantry v. Wallace, 182 U.S. 536, 21 Sup.Ct. 878, 45 L.Ed. 1218, was an action brought by the receiver of an insolvent national bank to recover an assessment duly levied upon the shareholders. The defendant set up by way of cross-petition or counterclaim that the bank had induced him to become a purchaser of its stock by means of fraud. The Supreme Court said:

'We perceive no ground whatever upon which the defendant can have a judgment upon his cross-petition or counterclaim against the receiver. That officer had nothing to do with the fraudulent transactions of the bank prior to its suspension. His duty was to take charge of its assets, and have them administered according to the rights of parties existing at the time of such suspension. Whether, if the defendant claimed a judgment against the bank or its officers for the alleged fraud or deceit of the latter officers, he could participate in the distribution of the proceeds of the stock assessment until all the contract obligations of the bank had been met, was not decided by the Court of Appeals.'

Weeks v. International Trust Co., 125 F. 370, 60 C.C.A. 236; International Trust Co. v. Weeks, 203 U.S. 364, 27 Sup. 69, 51 L.Ed. 224,...