Mechanics' Bank v. Mechanics' Bank

• Decision Date: 31 March 1870
• Citation: 45 Mo. 513
• Parties: THE MECHANICS' BANK, Appellant, v. THE MERCHANTS' BANK, Respondent.
• Court: Missouri Supreme Court

45 Mo. 513

THE MECHANICS' BANK, Appellant,

v.THE MERCHANTS' BANK, Respondent.

Supreme Court of Missouri.

March Term, 1870.

Appeal from St. Louis Circuit Court.

Cline, Jamison & Day, for appellant.

I. The by-law set out in the agreed case is to be most strictly construed against the bank. It only purports to prevent the stock-owner from transferring his stock while he remains indebted to the corporation. It does not pretend to interfere with the rights of the general creditor to levy and sell the stock in the manner prescribed by law. (See tit. Executions, 1 Wagn. Stat. 607, §§ 25 26, 28.)

II. If the Merchants' Bank were permitted to set up a lien on this stock, it would be a fraud upon the purchaser at sheriff's sale. (Chouteau et al. v. Seddin et al., 39 Mo. 248; Newman v. Hook, 37 Mo. 207; 1 Greenl. Ev. 207; 26 Verm. 373; 7 Cow. 762; 7 Johns. 338; 12 Wend. 423; 9 Barb. 618.)

III. The Merchants' Bank was prohibited by the forty-third section of its charter from taking stock or any other personal chattels, except money, in payment of debts. And the stockowner was duly prevented from transferring his stock when in arrears on installments due for the stock. By clear implication, no bank was authorized to issue its stock until it was fully paid up. (Sess. Acts 1857, pp. 21, 25, 43, 45.)

IV. The court erred in applying the authority of The Perpetual Ins. Co. v. Goodfellow, 9 Mo. 149, to this case.

V. If the Merchants' Bank, by its charter, had been placed upon the same footing with the Perpetual Insurance Company, then the doctrine of that case could not apply to this, as the rights of a general creditor who has taken a perfect legal title at sheriff's sale, without notice of any court equities in favor of the Merchants' Bank, can not be effected thereby, and its right to recover in this case is fully maintained in the following cases: Chouteau Spring Co. v. Harris, 20 Mo. 383; Tuttle v. Walton, 1 Ga. 43; Bank of Utica v. Merch. & T. Bank, 20 N. Y. 501; Bates v. New York Ins. Co., 3 Johns. 238; Sargeant et al. v. Franklin Ins. Co., 8 Pick. 90.

VI. No lien exists at common law in favor of an incorporated company on the stock of its debtor. (Mass. Iron Co. v. Hooper, 7 Cush. 183; Heart v. State Bank, 2 Dev. Eq. 111; Frankfort & S. Turnpike Co. v. Churchill, 7 B. Monr. 427.)

T. T. Gantt, for respondent.

The judgment of the Circuit Court is in conformity with the ruling of this court in the case of The Perpetual Ins. Co. v. Goodfellow, 9 Mo. 149; vide also Union Bank of Georgetown v. Laird, 2 Wheat. 390; Brent v. Bank of Washington, 10 Pet. 596.

WAGNER, Judge, delivered the opinion of the court.

The plaintiff sued the defendant for the conversion of fifteen shares of stock. From the record it appears that the fifteen shares of the stock of the defendant were, on the first day of January, 1861, held by Alonson F. Doak, James D. Donnell, and John S. Williams, each holding five shares, the par value of which was $100 per share; that in September, 1861, Doak and Williams, being then directors of the branch of the Merchants' Bank at Osceola, took from the vaults the sum of $500 each, in gold; that Donnell was then indebted to the Merchants' Bank in the sum of $2,500, no part of which has been paid.

The charter of the bank, passed in 1857, and the amendments thereto, passed in 1864, were made part of the case. The amendatory act of 1864 contains the following: “The directors of the parent bank of the Merchants' Bank of St. Louis shall have power to make all by-laws, not inconsistent with any existing law of the State, for the management of its property, the regulation of its affairs, and the transfer of its stock; and the directors of any branch of said bank shall have a similar power, subject to the approval of the parent bank.”

On the 26th of February, 1864, the directors of the parent bank at St. Louis adopted the following by-law: “Owners of stock, upon the surrender of the certificates of stock which may have been issued to them, may receive certificates of same, signed by the president and cashier, in such portions and sums as they may choose, and transfer thereof shall only be made on the books of the bank at St. Louis. But no transfer of stock shall be made so as to change the legal ownership thereof, except upon the transfer book at the office where it shall be entered. * * * Nor shall any such transfer be made so long as the stockholder desiring to make such transfer is indebted in any manner to the bank.”

It further appears that Doak and Williams, at the time of the taking of the gold, as aforesaid, from the vaults of the bank, declared that they thereby intended to take out the amount of their stock in gold; that, under judgments rendered at the...