Lyon v. Bleeg
| Decision Date | 03 March 1917 |
| Docket Number | 4697. |
| Citation | 240 F. 405 |
| Parties | LYON v. BLEEG. In re DAKOTA PLOW & WAGON CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
W. H Lyon, of Sioux Falls, S.D. (Davis, Lyon & Bradford, of Sioux Falls, S.D., on the brief), for appellant.
P. G Honegger, of Sioux Falls, S.D. (Bailey & Voorhees, of Sioux Falls, S.D., on the brief), for appellee.
Before SANBORN and SMITH, Circuit Judges, and AMIDON, District Judge.
This is an appeal from a decree of foreclosure of a mortgage upon the property of the Dakota Plow & Wagon Company, a corporation of South Dakota, and it presents the single question whether its bonds numbered 29 to 52, aggregating $12,000, which, if valid, are secured by the mortgage, are valid or void in view of section 8 of article 17 of the Constitution of South Dakota, which reads in this way:
The case is presented to this court without the evidence upon the findings of fact and the decree of the court below. The facts thus found that are material to the question at issue in this court are these: During the years 1911 and 1912, the Sioux Falls Plow Company, which subsequently became the Dakota Plow & Wagon Company, borrowed from the Sioux Falls Savings Bank $12,000, which was used in the business of the former company, and that company gave its promissory note to the bank indorsed for its accommodation by five of its directors for this sum. After the Sioux Falls Plow Company became the Dakota Plow & Wagon Company, the latter company took up that note and gave its own note to the bank therefor with the same accommodation indorsers. In June, 1913, the bank was pressing the Dakota Plow Company for the payment of this note and, as the court below found, 'in order to secure said note and protect said directors for their personal indorsement thereof, and to extend the time of payment of said note, and as collateral thereto, the said Dakota Plow & Wagon Company * * * delivered to the said Sioux Falls Savings Bank' the bonds here in question. Thereafter, about June 30, 1913, the accommodation indorsers gave their note to the bank for the debt of $12,000, and with their note took up the note of the Dakota Plow & Wagon Company. At the time the bank delivered up to these indorsers the note of the plow company, it offered to return to them the bonds; but at the request of the indorsers the bank kept and held the bonds as collateral security for the payment of the new note. The new note was subsequently renewed by the same parties, and that renewal note was finally paid by W. H. Lyon, one of its makers, about June 22, 1915, and it was then assigned and delivered to him by the bank together with the bonds. Mr. Lyon claimed that the bonds were valid, that they were secured by the mortgage, and were therefore entitled to share in the proceeds of the foreclosure with the other bonds secured thereby. The court below, however, held that the...
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