Brouk v. McKay
| Decision Date | 05 March 1940 |
| Parties | LAURA BROUK, PLAINTIFF AND RESPONDENT, v. SAM M. McKAY, AS SECRETARY-TREASURER OF JEFFERSON NATIONAL FARM LOAN ASSOCIATION OF BARNHART, JEFFERSON COUNTY, MISSOURI, A CORPORATION, AND JEFFERSON NATIONAL FARM LOAN ASSOCIATION OF BARNHART, JEFFERSON COUNTY, MISSOURI, A CORPORATION, DEFENDANTS; FRANK F. JOHNSTON, DEFENDANT AND APPELLANT |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of Washington County.--Hon. William R Edgar, Special Judge.
REVERSED AND REMANDED.
Case reversed and cause remanded.
Peyton R. Evans, G. V. Head and Walter R. Brown for Amici Curiae.
(1) The twelve Federal Land Banks are vitally interested in the outcome of this case. (2) Plaintiff did not assume the stock interests of Johnston, nor did The Federal Land Bank of St Louis consent to such an assumption. Scott v. Federal Land Bank of Louisville, 92 Ind.App. 249, 175 N.E. 16; Federal Land Bank of Louisville v. Robertson, 20 Tenn.App. 58, 95 S.W.2d 317; Federal Land Bank of Columbia v. Shingler, 174 Ga. 352, 162 S.E. 815. (a) Plaintiff obtained no transfer of the stock from Johnston. (b) Plaintiff did not, with the permission of the bank assume and agree to pay the mortgage debt. (c) Plaintiff was not, with the permission of the bank, elected to membership in the association. (3) The conveyance of land mortgage to a Federal Land Bank does not carry with it National Farm Association stock purchased in connection with the loan. (a) The transfer of stock in national farm loan associations is governed by the provisions of the Federal Farm Loan Act. Federal Land Bank of Columbia v. Shingler, 174 Ga. 352 162 S.E. 815; Scott v. Federal Land Bank of Louisville, 92 Ind.App. 249, 175 N.E. 16. (b) Association stock owned by a land bank borrower is personal property. Jellenik v. Huron Copper Mining Co., 177 U.S. 1, 20 S.Ct. 559; Tappan v. Merchants Nat. Bk., 86 U.S. (19 Wall.) 490, 22 L.Ed. 189; Brown v. Cuba-American Jockey & Auto Club, 2 F.2d 612; Lohman v. K. C. So. Ry. Co., 326 Mo. 819, 33 S.W.2d 112; Caffery v. Choctaw Coal & Mining Co., 95 Mo.App. 174, 68 S.W. 1049; Watson v. Woody Printing Co., 56 Mo.App. 145; Koelling v. Citizens Bank (Mo. App.), 237 S.W. 176; R. S. Mo. 1929, sec. 4549; Mobile Towing & Wrecking Co. v. Hartwell, 206 Ala. 7, 89 So. 446; De Nunzio v. De Nunzio, 90 Conn. 342, 97 A. 323; Hague v. De Long, 282 Mich. 330, 276 N.W. 467; Stone v. State Tax Commission, 197 Wis. 71, 221 N.W. 376; Elkhorn Land & Improvement Co. v. Childers, 30 Ky. L. R. 1121, 100 S.W. 222; Page v. Walser, 43 Nev. 422, 187 P. 59; Champollion v. Corbin, 71 N.H. 78, 51 At. 674; In re Jones Estate, 172 N.Y. 575, 65 N.E. 570; Banta v. Hubbell, 167 Mo.App. 38, 150 S.W. 1089; Addis v. Swofford (Mo.), 180 S.W. 548; Southington Bank & Trust Co. v. American Baptist Home Mission Society, 96 Conn. 107, 113 At. 166; Lockhart v. Dickey, 161 La. 282, 108 So. 483; Lowndes v. Cooch, 87 Md. 478, 39 A. 1045; Condit v. Galveston City Co. (Tex. Civ. App.), 186 S.W. 395; Bernier v. Griscom-Spencer Co., 161 F. 438; 13 Am. Jur. 414; Vidal v. South American Securities Co., 276 F. 855; Norrie v. K. C. So. Ry. Co., 7 F.2d 158; Vanstone v. Goodwin, 42 Mo.App. 39; Hook v. Hoffman, 16 Ariz. 540, 147 P. 722; Talbot v. Talbot, 32 R. I. 72, 78 A. 535; Fletcher, Cyclopedia of Corporations, sec. 3429. (c) An appurtenance, capable of being conveyed by a deed describing merely the land, must partake of the nature of realty. 4 C. J. 1466; 8 R. C. L. 1068; 9 R. C. L. 737; Scheidt v. Belz, 4 Ill.App. 431. (d) The act does not make association stock appurtenant to the mortgaged premises. (e) The courts have held such stock not to be appurtenant. Radford v. Snyder National Farm Loan Association (Tex. Civ. App.), 121 S.W.2d 478; Endlich, Law of Building Associations, sec. 465, 466; Gunby v. Armstrong, 133 F. 417; Peoples Savings Bk. v. Collins, 27 Conn. 142; In re Joseph, 15 Del. Ch. 455, 133 A. 696; Union Nat. Bk. of Hyams, 50 La. Ann. 1110, 24 So. 774; Building Assn. v. Esheback, 7 Pa. 189; Lewin v. B. & L. Assn., 9 Pa. Dist. 507; Erthal v. Glueck, 10 Pa. S.Ct. 402; Spring Garden Assn. v. Tradesmen's Loan Assn., 46 Pa. St. 493; Link v. Germantown Bldg. Assn., 89 Pa. 15; Green v. Second Allegheny Bldg. Assn., 311 Pa. 305, 166 A. 865; Bird v. Kendall, 62 S.C. 178, 40 S.E. 142; Sawtelle v. North American Savings, Loan & Bldg. Co., 14 Utah 443, 48 P. 211; Cantril Telephone Co. v. Fisher, 157 Iowa 203, 138 N.W. 436; Staples v. Hobbs, 145 Iowa 114, 123 N.W. 935; Stark v. Hogan, 193 N.W. 273; Palo Verde Land & Water Co. v. Edwards (Cal. App.), 254 P. 922. (4) The payment of the balance remaining due on the indebtedness to the Federal Land Bank gives the landowner no interest in the association stock. Green v. Second Allegheny Bldg. Assn., 311 Pa. 305, 166 A. 865.
Albert S. Ennis for appellant.
(1) National farm loan associations are corporations. Corporations, to be known as national farm loan associations, may be organized, etc. 12 U.S.C. 711. Capital stock of corporations is property. Although shares of stock "are intangible and rest in abstract legal contemplation," they nevertheless are property. Jellenik v. Huron Copper Min. Co., 177 U.S. 1, 20 S.Ct. 559; McAllister v. Kuhn, 96 U.S. 87. The three elements in the right of property . . . the legal title, beneficiary interest and the right of control . . . are found in corporate stock. Carnegie Trust Co. v. American Security L. Ins. Co., 111 Va. 1, 68 S.E. 412. (2) And such corporation stock is personal property. Shares of stock in a corporation are personal property, whether the property of the corporation itself is real or only personal. Jellenik v. Huron Copper Min. Co., 177 U.S. 1, 20 S.Ct. 559; Addis v. Swofford (Mo.), 180 S.W. 548; Banta v. Hubbell, 167 Mo.App. 38, 150 S.W. 1089. Shares of corporate stock being regarded as property, the owner of such shares may, as a general rule, dispose of them as he sees fit." Farmers L. & F. Co. v. Chicago, etc., R. E. Co., 163 U.S. 31, 16 S.Ct. 917; Gould v. Head, 41 F. 240; Addis v. Swofford (Mo.), 180 S.W. 584; Moore v. Bank of Commerce, 52 Mo. 377; Banta v. Hubbell, 167 Mo.App. 38, 150 S.W. 1089; 14 C. J. 510; American Live Stock Conn. Co. v. Chicago Live Stock Exchange, 143 Ill. 210, 32 N.E. 274; Blein v. Rand, 77 Minn. 10, 79 N.W. 606; People v. Holstein-Friesian Assn. (N. Y.), 41 Hun. 439; 14 C. J. 667; 13 Mo.App. 197. (3) Applicant can only become a stockholder after being voted in as a member of the corporation. 12 U. S. C., sec. 733. Individual liability of shareholders. Sec. 744. New members. Sec. 745. Investigation as to character and solvency of proposed stockholders. Secs. 718 and 751.
Frank Dietrich and R. E. Kleinschmidt for respondent.
(1) The Federal statutes applicable to the facts in this case show that plaintiff, having paid the balance of the mortgage in full and also the value of the stock in full, is entitled to the value thereof. Secs. 733, 744 and 771, 6th Subd., Code of the Laws of the U. S. of America. (2) Aside from Federal statutes, plaintiff is entitled to the fund here in question, under the ordinary principles of law and equity. (a) A purchaser of real estate may actually assume a mortgage even though there is no specific recital thereof in the deed under which he acquired title, and such evidence may be established by parol. Gilmer v. Powell (Mo. App.), 256 S.W. 124; Bensieck v. Cook, 110 Mo. 173, 186; Grace v. Gill, 136 Mo.App. 186, 191; 41 C. J., p. 723, sec. 769. (b) Equity regards that as done which in equity and good conscience ought to be done. Mutual Life Ins. Co. v. Burger et al. (Mo. App.), 50 S.W.2d 765; Krost v. Kleg et al. (Mo.), 46 S.W.2d 866; Johnson v. Brill (Mo.), 295 S.W. 558, 562. (c) Equity aids the vigilant, not those who sleep on their rights. Klebba v. Struempf (Mo. App.), 23 S.W.2d 205. (d) The word "may" in a statute is often interpreted as "shall" or "must," where common sense or other statutes clearly indicate that intention. 5 Words & Phrases (3 Series), p. 40. (e) As between respondent and the original borrower herein, respondent would be entitled to the par value of the stock on the ordinary principles of subrogation, because she paid the full value thereof in order to protect her own interest in the land upon which the mortgage, including the full value of the stock, was executed. Capen v. Garrison, 193 Mo. 335, 343; State Savings Trust Co. v. Spencer (Mo. App.), 201 S.W. 967, 969; Netherton v. Bank (Mo. App.), 63 S.W.2d 156, 158. (3) The giving of a note for an existing indebtedness is not a payment of the debt, unless it is given and accepted as such. Wiles v. Bank, 80 Mo. 47; Mutual Life of Illinois v. McKinnis et al. (Mo. App.), 15 S.W.2d 935, 937; Morton Electric Co. v. Schramm (Mo. App.), 277 S.W. 368, 371. (4) In order to entitle a defendant to interplead, he must have had no part in bringing about any of the conflicting claims to the fund and must stand perfectly indifferent to them, in the position of a stockholder. Greene v. Davis, 118 Mo.App. 636, 643; Brown v. Curtin (Mo.), 52 S.W.2d 387; 4 Pomeroy's Equity Jurisprudence (4 Ed.), p. 3172, sec. 1322.
Amici Curiae have so clearly and accurately made statement of the case in their brief that with slight changes we adopt the same as our statement of the issues involved, viz.: This is an appeal by defendant Frank F. Johnston from a judgment of the Circuit Court of Washington County, Missouri, in a suit originally brought by Laura Brouk against Sam M. McKay, as secretary-treasurer of Jefferson National Farm Loan Association of Barnhart, Jefferson County, Missouri, a national farm loan association organized under an act of Congress known as the Federal Farm Loan Act. The suit...
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