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Spafford v. The First National Bank of Tama City.

tends to show a homestead right in a part of the mortgaged property, it will be ordered that the homestead shall not be sold, except to satisfy any deficiency remaining after the sale of the other property liable to either a general or special execution in this

case.

Affirmed.

SPAFFORD V. THE FIRST NATIONAL BANK OF TAMA CITY.

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A National bank has a right to take a chattel mortgage for the purpose of securing a previously contracted debt, and to enforce the same.

THE

plaintiff avers that Warren was owner of a private bank, called the Tama County Bank, with which the plaintiff did buiness for a year or more, prior to September 30, 1871; that loans had been made to and overdrafts allowed him at usurious rates, and thereby, at said date, he owed said bank $7,762.05; that $5,000 was due by note and the balance on account; that at said date the First National Bank of Tama city, a corporation uuder the laws of Congress, with a capital of $50,000, and in which Warren was cashier and principal stockholder, was organized and commenced business; that on said date, the business of the said Tama County Bank was transferred to the National bank, and, also, by agreement between plaintiff and Warren, cashier, the said claim, including usury, was transferred to said National bank, and plaintiff executed to said National bank two notes for the $5,000 note, one for $3,000 and the other for $2,000, and at the same time, also, executed a chattel mortgage to said bank, on the stock of goods in controversy, to secure said $3,000 note; that the balance of said claim was simply transferred from the books of one bank to the books of the other; that plaintiff afterward continued to do business with the National bank, up to the 17th day of February, 1872; and that said National bank, by agreement with the plaintiff, and contrary to the law of its organization, also received and charged usurious interest on loans

Spafford v. The First National Bank of Tama City.

to, and on drafts by, plaintiff up to said last date, when on settlement and by including all said usury, it was found that the plaintiff owed said National bank $9,000, and for which plaintiff executed his five several notes, and also executed a chattel mortgage on the stock of goods in controversy, to secure them; that not more than $50 of said sum was due defendant, after excluding usury, which sum plaintiff had offered in writing to pay, and it was refused; that defendant, the bank, had seized the stock of goods, and was about to sell them under the mortgage. Plaintiff asked an injunction against the sale of the goods; that the mortgage be declared null and void, and for an accounting, etc. A temporary injunction was allowed.

The defendants for answer, deny in toto the usury, transfer of the business of one bank to the other, the transfer of plaintiff's account as stated, and admitted, substantially, all the other averments of the petition; and also averred that the National bank loaned to plaintiff, on the date named, September 30, 1871, the $5,000 evidenced by the two notes, and the $2,762.05, stated as being in a book account.

On these pleadings, the plaintiff moved for judgment, as prayed for in the petition, because it appeared from the pleadings that the chattel mortgage was taken in violation of the act of Congress under which the defendant, the National bank, was organized. This motion was overruled; and the plaintiff appeals.

G. R. Struble and Applegate & Kinne, for appellant.
Stivers & Safely and Harmon & Mills, for appellees.

COLE, J. The only ground assigned in the motion is that the mortgage was taken in violation of the law of Congress entitled "An act to provide a National currency," etc. We can properly only consider and determine the questions made to and passed upon by the District Court. Latterett v. Cook, 1 Iowa, 1, and cases cited. Whether such a motion as was made in this case can properly, under Revision, section 3138, be made and entertained at the stage of the case when it was done and before a trial, we do not decide; but conceding it properly made, we dispose of the question upon its merits.

From the pleadings it is apparent that the indebtedness secured by the mortgage was contracted to the National bank on and after

Elder v. First National Bank of Ottawa.

September 30, 1871, and prior to the mortgage, February 17, 1872. The fact that a part of the debt, the note for $3,000, was secured by a chattel mortgage contemporaneous with its creation to the bank, can have no hearing here, since that security has been canceled and surrendered. If its invalidity be granted, such invalidity would not follow the debt, which was in no manner tainted by it, into the new security subsequently acquired.

Conceding, as we do, that the National bank defendant, "being the mere creature of the law, possesses only those properties which the charter of its creation confers upon it" (Dartmouth College v. Woodward, 4 Wheat. 518), and conceding as we may (but without deciding it), that the second subdivision of section 28 of the National Bank Act, to wit: "Second, such as shall be mortgaged to it in good faith by way of security for debts previously contracted," relates only to real estate; yet there being no express prohibition we hold the mortgage valid, and that the authority in the bank to take, hold and enforce it, for a previously contracted debt, exists under the implied power to protect itself from loss, save its property and security from sacrifice, and successfully to execute the purpose of its creation. We thus hold, both upon principle and authority, as we think; and this, too, without calling in aid of the same conclusion, the express grant to such corporations of the same right as natural persons" to make contracts, sue and be sued," contained in section 8 of the act. The First National Bank v. Haire, 36 Iowa, 443 (ante, p. 480).

Affirmed.

ELDER V. FIRST NATIONAL BANK OF OTTAWA.

(12 Kansas, 238.)

Loans in excess of one-tenth of capital.

A National bank will not be enjoined from transferring to an innocent third person securities taken to secure a loan, on the ground that such loan was in excess of one-tenth of its capital stock.*

*The same point was ruled in Shoemaker v. National Mechanics' Bank, 31 Md. 396, but as it is well settled that a loan is not void because in excess of one-tenth of its capital stock it is not necessary to include that case in this collection.

Elder v. First National Bank of Ottawa.

ETITION for an injunction. The opinion states the case.

PETITION

J. W. Deford, for plaintiff in error.

A. W. Benson, contra.

BREWER, J. Plaintiffs in error seek by this proceeding to have reversed an order of the district judge dissolving a temporary injunction. The facts, as disclosed in the petition (and this was all the evidence on the hearing) are briefly these: On the 20th of April, 1872, the First National Bank of Ottawa loaned to the plaintiffs $14,954.08, which was an amount exceeding one-tenth of its capital stock, of which amount $10,000 and interest was secured by a mortgage on real estate. The notes given for the $4,954.08 were transferred to the National Bank of Lawrence, and by it, after maturity, placed in judgment. The notes secured by mortgage were not due when this action was commenced. It was alleged that this mortgage and securities were taken in violation of the National Banking Act under which the corporations defendant were organized, and that the Ottawa Bank threatened to transfer these notes and mortgage for value to some innocent purchaser before their maturity, and thus prevent the plaintiffs from availing themselves of their legal defense to them. The prayer was, that the Ottawa Bank might be temporarily restrained from transferring the notes and mortgage, and that upon a final hearing these instruments be decreed to be void, and ordered canceled. It is unnecessary for us to determine whether these securities are valid or not, for conceding that the whole transaction was one forbidden by the Banking Act, and that the notes and mortgage were void, and could not be enforced, still we think the petition discloses no cause of action, no ground for relief. The cardinal principle of equity, that which underlies its whole jurisprudence, is this, that he who seeks equity must do equity. To grant the plaintiffs the relief they ask would be in plainest disregard of this principle. They admit borrowing from the bank over fourteen thousand dollars of its money. They have never paid it back, but still hold it all. With this money of another's in their pocket they ask a court of equity to permit them to keep it. Grant that the bank was guilty of an infraction of the law in making the loan, and that by reason thereof it can never enforce payment in the courts; still,

Ornn v. Merchants' National Bank.

the wrong of the bank does not give to the plaintiff any moral right to appropriate the money of another. It is not enough for the plaintiff in an equity suit to show that the defendant has done wrong; he must also make it appear that he has done right. Many words could not make this plainer, and until they can make it apparent that it is according to equity and good conscience to borrow money and not repay it, the plaintiffs need expect no relief in an action like this. Mott v. Trust Co., 19 Barb. 568. The case in many features resembles that of a usurious loan, and in such case it is well settled that the borrower must tender the amount borrowed before he can ask for the cancellation of the securities. 1 Story's Eq. Juris., § 301. The judgment will be

Affirmed.

ORNN V. MERCHANTS' NATIONAL BANK.

(16 Kansas, 341.)

Mortgage of real estate to National bank.

A National bank took a mortgage on real estate to secure the payment of money previously loaned. There was a prior lien on the property which the mortgagor agreed to discharge, but he being unable to do so, the bank at his request and in order to protect its own lien advanced the money and took another bond and mortgage to secure such advance. Held, that such second bond and mortgage were valid.*

A

CTION to foreclose a mortgage given by the defendant Ornn to the plaintiff, a National bank. The court found the following facts:

"1st. That at the time of the execution of the note and mortgage stated in this case, the defendant, Lewis Ornn, owed the plaintiff about $4,000; that $2,500 of this sum was secured by a mortgage upon his mill at Cherokee, Crawford county, and the remaining $1,500 was secured by a deed conveying to the plaintiff certain property in the city of Chicago, Illinois, both of which last-mentioned securities were taken to secure indebtedness existing against Ornn prior to their being taken by plaintiff.

* See Kansus Valley National Bank v. Rowell, ante, p. 264, and case referred to in note.

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