Creswell v. Lanahan

• Decision Date: 01 October 1879
• Parties: CRESWELL v. LANAHAN
• Court: U.S. Supreme Court

101 U.S. 347

101 U.S. 347

25 L.Ed. 853

CRESWELL v. LANAHAN.

October Term, 1879

APPEALS from the Supreme Court of the District of Columbia.

The Freedman's Savings and Trust Company, and John A. J. Crewell and others, its commissioners, filed, June 26, 1875, two bills in equity in the court below against Thomas M. Lanahan and others. One bill charges that Juan Boyle, on or about July 31, 1871, being indebted to the company in the sum of $2,500, for which it held his note of that date, payable in one year, executed and delivered to Eaton and Stickney to secure its payment, a deed of trust of the same date (duly recorded), with the usual power of sale, conveying certain real estate in Washington.

It further charges that the note held by the company as part of its assets was, June, 1874, unlawfully, and to the prejudice of its depositors and creditors, taken from its assets, and delivered to Lanahan, who is now holding it in his possession and pretending to be the owner of it. The delivery and transfer of the note to him are then charged to have been unlawful and void, upon the ground that the act of Congress of March 3, 1865 (13 Stat. 510), organizing the company, requires the affirmative vote of at least seven members of the board of trustees to transfer any securities or assets belonging to the corporation, and the complainants charge that the note was transferred without any vote whatever, and without the knowledge and consent of any of the trustees.

The prayer of the bill is for general relief, and specially, that the pretended transfer of the note to Lanahan be declared null and void; that he be directed to bring it into court to be disposed of according to law; and that the trust property be sold and the proceeds applied to the payment of the note, for the benefit of the company and its creditors.

The other bill makes the same averments and claims the same relief as to a note for $8,000, executed to the company by Anna E. Boyle and others, secured in the same manner as the note of Juan Boyle, and transferred to Lanahan in the same way.

Lanahan answered, stating the circumstances under which he came into possession of the notes in question, and setting up a title thereto. They and so much of the charter of the company as relates to the case will be found in the opinion of the court.

The bill in each case, was, on final hearing, dismissed, and the commissioners appealed.

Mr. Enoch Totten for the appellants.

Mr. S. Teakle Wallis for the appellees.

MR. JUSTICE SWAYNE delivered the opinion of the court.

Several of the documents referred to by the witnesses in one of the cases have been lost or destroyed, and there is some uncertainty and conflict in the testimony with respect to them and the transactions to which they relate. The discrepancies are not material, and the substantial facts appear with sufficient clearness to enable us satisfactorily to dispose of the controversy. A statement, somewhat condensed, will be sufficient for the purposes of this opinion.

In 1873, the Freedman's Savings and Trust Company, the corporation represented by the appellants, found itself seriously embarrassed for the want of means to meet its current daily liabilities. In November or December of that year, it borrowed from the appellee Lanahan the sum of $10,000, for which it gave its note, payable at sixty or ninety days, probably bearing a high rate of interest, and secured by $20,000 of the improvement bonds of the District of Columbia at their par value. The note was executed by the actuary of the company. The loan was negotiated by the appellee, Juan Boyle, who acted as the agent of the company, by virtue of a written document under the hand of its president and its corporate seal. The money was applied in payment of depositors. The institution was suffering from the financial revulsion initiated and precipitated by the failure of Jay Cooke & Co., which swept over the entire country. It was deemed better to make loans at the interest paid, whatever it was, than to sell securities at the rates which then ruled in the markets.

About the 1st of May, 1874, it was agreed between Lanahan and Boyle that the former should lend the latter $21,000, including the note of the company for $10,000, and that Boyle should procure the company to transfer to Lanahan a note of Anna E. Boyle and others to the company for $8,000, secured by deed of trust to Eaton and Stickney, and the note of Juan Boyle to the company for $2,500, secured by another deed of trust to the same parties. Other collaterals, with which the company had nothing to do, were also to be delivered by Boyle to Lanahan. Boyle thereupon delivered the note for $10,000 to the company, and the company transferred and delivered to Lanahan the two notes of $8,000 and of $2,500. Both these notes were then overdue. This terminated Lanahan's dealings with the company, and these are the notes involved in this controversy. The bill, without imputing fraud, avers that Lanahan is not entitled to hold them, and prays that he may be decreed to deliver them to the complainants.

At the same time that Boyle delivered to the company is note for $10,000, he made a full and final settlement with it of all the liabilities of himself and of Juan Boyle & Co. He was found indebted to the company, after deducting the note of $10,000, in the sum of $28,522.38. Boyle thereupon gave the note of Juan Boyle & Co. for $28,000, secured it by certain collaterals, and paid the balance in cash. Subsequently the collaterals proved to be worthless, the firm became insolvent, and the debt is hopelessly lost to the company. It was considered safe by the actuary at the time of the transaction. Eaton, one of the trustees in the deeds of trust, died, and by proper proceedings the respondent Cull was substituted for him and Stickney. The...