Risk v. Kansas Trust & Banking Co.

• Decision Date: 29 June 1893
• Citation: 58 F. 45
• Parties: RISK v. KANSAS TRUST & BANKING CO.
• Court: U.S. District Court — District of Kansas

58 F. 45

RISK v. KANSAS TRUST & BANKING CO.

United States Circuit Court, D. Kansas.

June 29, 1893

H. M Jackson, for petitioner.

David Martin, for receiver.

SANBORN Circuit Judge.

On March 13, 1893, the complainant in this action obtained a judgment at law against the defendant in this court for about $9,000. This judgment was based on an unsecured debt of the defendant, and the complainant had no beneficial interest in the debenture bonds hereafter mentioned that were issued by the defendant, or in the collaterals pledged for their payment. On the same day, upon motion of complainant, without notice to the secured creditors, and with the consent of the defendant, a receiver of the property of the defendant was appointed. Prior to the commencement of these proceedings the defendant had issued a series of debenture bonds called 'Series A,' in the following form:

'The Kansas Trust and Banking Company of Atchison Kansas, for value received, is indebted unto the registered holder hereof if registered, otherwise to _____, in the sum of ___ dollars, which shall be due on the ___ day of ___ 18__. This bond draws interest at the rate of _____ per cent per annum, payable semiannually, according to the interest coupons hereto attached. * * * This bond is secured by mortgages on real estate deposited with the First National Bank of Atchison, Kansas, in trust, in accordance with the certificate of said bank hereto attached, and without which certificate this bond is not valid.

[Signed]

'The Kansas Trust and Banking Company.'

The certificate indorsed on the said debenture bonds was in the following form:

'I, _____, president or cashier of the First National Bank of Atchison, Kansas, hereby certify that as security for the due payment of the debenture bond of the Kansas Trust and Banking Company of Atchison, Kansas, hereto attached, there are deposited in this bank mortgages on real estate equal in amount to the amount of said bond. Said mortgages are not to be removed from the custody of the bank until the said bond is paid, and evidence of such payment is furnished to said bank, except on the condition that the said the Kansas Trust and Banking Company shall deposit in place thereof other mortgages equal in amount to those, or cash, at the option of the Kansas Trust and Banking Company.'

This certificate was signed by the president or cashier of the bank. The face value of these outstanding bonds is...