Commonwealth ex rel. Todd v. Traders' & Mechanics' Bank of Pittsburgh

• Decision Date: 05 October 1914
• Docket Number: 7
• Citation: Commonwealth ex rel. Todd v. Traders' & Mechanics' Bank of Pittsburgh, 92 A. 750, 246 Pa. 519 (Pa. 1914)
• Parties: Com. ex rel. Todd, Attorney General, v. Bank of Pittsburgh, Pa
• Court: Pennsylvania Supreme Court

92 A. 750

246 Pa. 519

Com. ex rel. Todd, Attorney General, v. Bank of Pittsburgh, Pa

No. 7

Supreme Court of Pennsylvania

October 5, 1914

Argued May 21, 1914

Appeal, No. 7, May T., 1914, by William C. Hagan, from order of C.P. Dauphin Co., Commonwealth Docket, 1908, No. 23 refusing to direct a receiver to surrender certain securities to petitioner in case of Commonwealth of Pennsylvania ex rel M. Hampton Todd, Attorney General, v. Traders & Mechanics Bank of Pittsburgh, Pa. Reversed.

Proceedings upon the suggestion of the attorney general to wind up the business of a bank.

Rule to show cause why a receiver should not be ordered to deliver certain securities to petitioner. Before McCARRELL, J.

The opinion of the Supreme Court states the facts.

The court discharged the rule. Petitioners appealed.

Error assigned was the order of the court.

The judgment of the court below is reversed. The rule upon the receiver, to show cause why he should not be directed to surrender the collateral of petitioner upon payment of the note, to secure which, it was deposited as collateral, is made absolute.

Benj. C. Tunison, with him Walter Lyon, for appellant. -- The trust company and the bank had knowledge that petitioner owned the stock: Houseman v. Girard Mutual Bldg. Assn., 81 Pa. 256; Danville Bridge Company v. Pomroy, 15 Pa. 151; Hood v. Fahnestock, 8 Watts 489; Boggs v. Lancaster Bank, 7 W. & S. 331; Kersey Oil & Mineral Company v. Oil Creek & A.R. Co., 5 W.N.C. 144; First National Bank of Bethlehem v. Peisert, 2 Penny. 277.

The stock was deposited by petitioner as security for the joint loan of $8,000, and for no other purpose and cannot be applied for purposes other than those for which it was pledged: Smuller v. Union Canal Company, 37 Pa. 68; James' Appeal, 89 Pa. 54; Selden v. Bank, 69 Pa. 424; Buckley v. Garrett, 60 Pa. 333; Campbell v. McClenachan, 6 S. & R. 171; Oliver v. Oliver, 4 Rawle 141; Chalfant v. Williams, 35 Pa. 212; Powelton Coal Co. v. McShain, 75 Pa. 238; Shugart v. Moore, 78 Pa. 469; Caley v. Philadelphia & C.C.R. Co., 80 Pa. 363; Greenawalt v. Kohne, 85 Pa. 191; Martin v. Fridenberg, 169 Pa. 447; Spencer v. Colt, 89 Pa. 314; Juniata Bldg. Ass'n v. Hetzel, 103 Pa. 507; Thomas v. Loose, 114 Pa. 35; Cullmans v. Lindsay, 114 Pa. 166; Westinghouse v. German National Bank, 188 Pa. 630; Petrie v. Clark, 11 S. & R. 377; 22 A. & E. Encyc. 848-9; Altoona Second National Bank v. Dunn, 151 Pa. 228 (25 A. Repr. 80); Davis v. Funk, 39 Pa. 243; McKinney v. Crawford, 8 S. & R. 351; Chestnut Street National Bank v. Ellis, 161 Pa. 241.

L. M. Shoemaker, with him Clarence Burleigh and William A. Challener, for appellee, cited: Olcon v. Rosenbloom, 55 Pa.Super. 1.

Before FELL, C.J., BROWN, POTTER, ELKIN and MOSCHZISKER, JJ.

OPINION

MR. JUSTICE POTTER:

In this proceeding a rule was taken upon the receiver of the Traders and Mechanics Bank of Pittsburgh, to show cause why he should not be directed to surrender to their owner, William C Hagan, certain securities, upon the payment to the receiver, of the note, to secure which, the collateral had been deposited by the petitioner. It appears from the record and from the history of the case, that on May 21, 1906, the petitioner owned thirty-seven shares of the preferred stock of the Standard Ice Company, and the same number of shares of the common stock of the same company. Mr. Francis J. commone stock of the same company. Mr. Francis J. Torrance was also the owner of the same number of shares, and Charles A. Muehlbronner was the owner of thirty-eight shares each, of the common and preferred stock in said company. Certificates for the stock owned by each of them was issued to each of the said parties. Previous to the said date, the said certificates of stock had been by the said parties deposited as collateral security for a joint loan, with the Provident Trust Company of Allegheny, upon which loan there was due on said date by the said parties, the sum of $8,000. Payment of this loan was required by the Provident Trust Company. After certain negotiations the loan was transferred to the Treasury Trust Company, and the certificates were transferred in blank and deposited with the Treasury Trust Company. The loan was made to the three parties jointly, but at the suggestion of the president of the trust company, the note for the sum borrowed was signed by Mr. Muehlbronner alone. This note has since been reduced to the sum of $3,465. All of the payments made on account of said note, as well as the interest thereon, were paid by petitioner, and Mr. Torrance and Mr. Muehlbronner in equal proportions. Of this fact it appears that the trust company had full knowledge. The loan was subsequently taken over by the Traders and Mechanics Bank, which was owned and controlled by the Treasury Trust Company. On February 4, 1908, a receiver was appointed for the Traders and Mechanics Bank, who took into his possession the note in question, together with the certificates of stock above referred to. The petitioner made demand for an equitable adjustment of his rights in the premises and for the delivery to him of his certificates of stock. This was refused by the receiver, under the claim that the certificates of stock owned by the petitioner were liable not merely as security for the payment of the note in question, but were also held to secure the payment of any other liability of Muehlbronner to the bank, and that Muehlbronner was in fact liable to the receiver as an endorser on other notes, to a considerable amount. This claim of the receiver, is based upon the language of the collateral note, which contained the statement usual in such form of note, that the maker had "deposited herewith as collateral security for payment of...