Metro. Lumber Co. v. Fordham Nat. Bank in N.Y.

• Decision Date: 09 May 1928
• Citation: 141 A. 742
• Parties: METROPOLITAN LUMBER CO. v. FORDHAM NAT. BANK IN NEW YORK et al.
• Court: New Jersey Court of Chancery

141 A. 742

METROPOLITAN LUMBER CO.

v. FORDHAM NAT. BANK IN NEW YORK et al.

Court of Chancery of New Jersey.

May 9, 1928.

Bill by the Metropolitan Lumber Company against the Fordham National Bank in New York and others. Decree dismissing bill advised.

Stein, McGlynn & Hannoch, of Newark, for complainant.

John G. Flanigan, of Jersey City, and Wm. J. Cogan, of Bayonne, for defendants.

CHURCH, Vice Chancellor. This is a motion to restrain the defendant Fordham National Bank of New York from exercising its rights in a mortgage made to it, and covering an assignment of rents.

The motion is opposed, first, because the United States statutes prohibit a state court from issuing an injunction before final decree. 12 United States Code Annotated, "Banks and Banking," § 91 (B. S. § 5242), provides as follows:

"* * * And no attachment, injunction or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any state, county, or municipal court."

This statute has been construed as follows: In Van Reed v. People's National Bank, 198 U. S. 554, 25 S. Ct. 775, 49 L. Ed. 1161, on appeal from the Court of Appeals of New York (173 N. Y. 314, 66 N. E. 16, 105 Am. St. Bep. 666) the court said:

"The right of Congress to determine to what extent a state court shall be permitted to entertain actions against national banks and how far these institutions shall be subject to state control, is undeniable. National banks are quasi public institutions, and for the purpose for which they are instituted are national in their character, and, within constitutional limits, are subject to the control of Congress and are not to be interfered with by state legislative or judicial action, except so far as the lawmaking power of the government may permit."

"'It was further said that, if the power of issuing attachments has been taken away from the state courts, so also is the power of issuing injunctions. That is true.' Pacific National Bank v. Mixter (Mass. 1888) 124 U. S. 721 [8 S. Ct. 718, 31 L. Ed. 567]. * * * The issue of a preliminary injunction is forbidden to state courts by the provisions in the text. Freeman Mfg. Co. v. National Bank of Bepublic, 160 Mass. 398 . * * * 'This statute is a complete bar to the issuance of an injunction by a state court against a national banking association. * * * For the foregoing reason alone the injunction was properly dissolved as against the bank.' Meyer v. Cœur d'Alene First National Bank (1904) 10 Idaho, 175 . The prohibition as to injunction applies not only in the case of the general assets of a national bank, but also to an order restraining the transfer or enforcement of particular securities as wrongfully pledged to the bank with notice. Freeman Mfg. Co. v. National Bank of Republic (1894) 160 Mass. 398 . This section, providing that no injunction, attachment, etc., shall issue against a national bank before final judgment in any suit in the state court inhibits the state court from enjoining national banks before final judgment against it. American National Bank of Macon v. Dure,...