Holston Nat. Bank v. Wood
| Decision Date | 23 October 1911 |
| Citation | 140 S.W. 31,125 Tenn. 6 |
| Parties | HOLSTON NAT. BANK v. WOOD. |
| Court | Tennessee Supreme Court |
Appeal from Chancery Court, Knox County; Will D. Wright, Chancellor.
"To be officially reported."
Suit by the Holston National Bank against A. H. Wood. From a judgment for complainant for less than the relief demanded, it appeals. Affirmed and remanded.
Webb & Baker, for appellant.
Jourolmon Welcker & Smith, for appellee.
The facts of this case necessary to be stated are these:
A. H Wood was bound to the Holston National Bank upon three notes as indorser or joint maker, and in 1907 addressed to the bank the following letter:
The note of the Harriman Knitting Mills, referred to above, was executed by the Knitting Mills and A. H. Wood jointly. It was upon one of the bank's printed collateral forms, authorizing the bank upon default to sell said collateral at public or private sale and to become the purchaser of said collateral at such a sale. The note also contained two provisions material in this suit, as follows:
1. "In case of any exchange or addition to said collateral, we agree that the above agreements and provisions shall extend to such new or additional collateral."
2. "If this note is placed in the hands of an attorney at law for collection, we agree to pay 10 per cent. attorney's fees, and all expenses incurred in its collection, and that if it is sued on said attorney's fees and expenses shall be taxed up in judgment."
This note of the Harriman Knitting Mills was renewed several times after the deposit with the bank of the additional collateral referred to in the agreement of Mr. Wood quoted above. The original note of the Harriman Knitting Mills mentioned in its face, as collateral deposited to secure its payment, only the $15,000 of bonds of the Harriman Knitting Mills. The renewals of this note were drawn in the same way, and in none of them was any reference made to the stock of the Tennessee Iron Ore Company or the stock of the Big Brushy Coal & Coke Company deposited with the agreement heretofore referred to.
After several renewals of this note, no payment having been made thereon, the bank advertised for sale all said stock, and also the bonds of the Harriman Knitting Mills Company. It appears that this sale was enjoined by proceedings in the chancery court; but, upon appeal to this court, the injunction was modified, so as to restrain only the sale of the stock of the Big Brushy Coal & Coke Company, and the bank was allowed to proceed with the sale of the Tennessee Iron Ore Company stock and of the bonds of the Harriman Knitting Mills Company.
Other advertisement was made, and at public sale the bank became the purchaser of both stock and bonds, bidding in the bonds for $4,000 and the Iron Ore Company stock for $2,500. It credited the $15,000 note with $6,500, the amount of its bid less expense of advertising, and has brought this suit against Mr. Wood to recover the balance due on the $15,000 note, together with 10 per cent. attorney's fees. The attorney's fees amount, it claims, to $1,588.50; that being 10 per cent. of the face of the note, with some interest added.
An answer to this bill was filed by the defendant below, and subsequently a cross-bill. The substance of these pleadings by defendant was that the bank had no authority to sell and bid in the stock and bonds as it had done, or at least to bid in the stock, and it was charged that the bank was guilty of a conversion with reference to the stock, which it was claimed was worth about $17,000. A decree was therefore sought against the bank by this cross-bill for the value of the stock. It was also maintained by the defendant below that in any event the attorney's fees claimed by the bank were unreasonable and should not be allowed.
Considerable proof was taken in the case, and upon the hearing the chancellor was of opinion that the bank was entitled to sell the bonds of the Harriman Knitting Company and to purchase same itself, but that it was not authorized to become the purchaser of the stock of the Tennessee Iron Ore Company. He was further of opinion that the bank was entitled to 10 per cent. attorney's fees only upon the balance due on the note, and not to 10 per cent. attorney's fees on the whole amount. Inasmuch as the bank was still in possession of the stock of the Tennessee Iron Ore Company, and had a right to subject it to the payment of the balance due on the note, the chancellor directed that said stock be sold and the proceeds of the sale credited upon the note, and that after such credit was duly made the bank be given a decree against the defendant for the remainder due upon the note and for some $1,300 attorney's fees.
From this decree the bank has prayed and obtained an appeal to this court, in so far as it was held that it was not entitled to become the purchaser of the stock of the Tennessee Iron Ore Company at the sale, and from the chancellor's allowance as to attorney's fees.
In disposing of this case, we may first observe that there was no conversion of this stock by the bank, regardless of whether it was entitled to become the purchaser of said stock at the sale or not.
The bank is still in the possession of the stock, and it is still within the power of the bank to return this stock...
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