A Hayward v. Eliot National Bank. PPEAL from the Circuit Court of the United States for the District of Massachusetts. In the year 1863 Hayward, the appellant, "for the purpose of opening a credit with the Eliot Bank," a corporation created under the laws of Massachusets, deposited certain securities with that bank with power to transfer the same, as well as any bullion, coin, or other securities which he might thereafter deposit with the bank. He expressly waived in the writing then executed, "all and every objection to the manner in which said securities may be sold, whether at public or private sale, or at the board of brokers, without any demand or notice whatever." Subsequently the bank was converted into a National banking association, under the name of the Eliot National Bank, and in the latter capacity, in October, 1866, it loaned to Hayward, first $6,500 and then $20,000, receiving in pledge, as security for the loan, 450 shares of stock in the Hecla Mining Company, incorporated under the laws of Michigan, but having an office in the city of Boston. The loans were understood at the time by both parties to be merely temporary, to go upon the demand-loan account of the bank, and to be promptly paid. In order that the bank might have full control of the security, Hayward caused the pledged stock to be transferred to R. B. Conant, to whom, as cashier of the bank, certificates, absolute in form, were issued for the whole 450 shares. Hayward did not meet the loans as he had agreed, but made provision for the interest up to April 1, 1867. After that date he paid no interest. During the year 1867 various assessments were made by the company upon its stock. Hayward was notified of and requested to meet them, but he failed to do so, and the bank, in order to save the security, and for its own indemnity, was compelled to pay the assessments, amounting in the aggregate to $9,972.15. On the 9th November, 1867, Hayward executed and delivered to the bank the following paper. "BOSTON, Nov. 9th, 1867. I hereby authorize the president and directors of the Eliot National Bank to sell, at their discretion, 450 shares of stock of the Hecla Mining Company, Hayward v. Eliot National Bank. held as collateral security for loan, proceeds of sale to be applied upon said loan. To the President and Directors of the Eliot Bank. CHAS. L. HAYWARD." This paper was obtained because it was doubtful whether the power of attorney given in 1863, when the bank was a State institution, was sufficient to authorize a sale of the stock by the National bank to pay Hayward's indebtedness to it. Thereupon the president of After the transfer in October, 1866, the stock was at times greatly depressed in value, the market price ranging from $15 to $70 per share, the latter being the ruling price in August, 1868. But even that price was insufficient to reimburse the bank for its loan and interest and for assessments on stock it had paid. The board of directors, on the 18th August, 1868, passed an order declaring that unless Hayward paid $5,000 during that week, and a like amount the following week, upon his loans secured by the Hecla mining stock as collateral, the president was directed to sell the same forthwith. Of this order Hayward was notified, but he did not comply with its terms. the bank determined to dispose of the stock in discharge of the bank's claim. Three of the directors, for the purpose, as the bank officers say, of preventing loss to the bank in which they were stockholders, but for the further reason, doubtless, that they regarded it a safe investment, proposed to the bank to take the stock at $87 per share, which was above the market price, each director to take 150 shares and pay one-third of Hayward's indebtedness to the bank. But before the directors would consummate this arrangement, they insisted that Hayward be advised of their proposition. The sale was consummated on the 8th September, 1868, and on that day each of the directors paid, by assuming absolutely, one-third of the bank's claim against Hayward, and received in consideration thereof a new certificate for 150 shares of stock. Immediately after this sale, the bank sent to Hayward a statement of his account, showing its claim against him on account of his loans, interest, and assessments paid to be $39,257.16, and closing with this credit: "Sept. 8, 1868, by cash, $39,257.16.” Hayward v. Eliot National Bank. In 1871 the Hecla Mining Company and the Calumet Mining Company, also a Michigan corporation, were consolidated under the name of the Calumet and Hecla Mining Company. New stock was issued from time to time, and at the commencement of this action, instead of the 450 shares originally held, the three directors hold in the aggregate 900 shares in the consolidated company. After the transfer of September 8, 1868, they met all assessments upon the stock, and received, individually, such dividends as were declared thereon. Other facts are stated in the opinion of the court. This action was instituted by Hayward against the bank, on the 14th March, 1872, for the purpose of obtaining a decree redeeming the stock, and requiring the bank to transfer to him the 900 shares of the stock of the Calumet and Hecla Mining Company, and to pay over whatever might be due him, upon taking account of the moneys received on account of the stock, and the amounts due the bank from him. Neither the mining company, nor the directors who purchased the stock, were made defendants. The bill was dismissed, and from that decree this appeal is taken. HARLAN, J. 1. This bill seems to have been prepared upon the supposition that the bank then held and owned the 900 shares of stock in the Calumet and Hecla Mining Company at the commencement of this action. It is evident, however, that the bank's connection with the stock ceased September 8, 1868, when it was sold to three of the bank directors. After that date the purchasers claimed and controlled the stock as their individual property, and their ownership was uniformly recognized both by the bank and the mining company. They paid all assessments laid, and received all dividends declared, after September 8, 1868. The evidence shows that the sale to them was absolute and unconditional. The title unquestionably passed to them, and if the appellant is entitled, upon any ground whatever, to a transfer of the stock, such relief can only be given in an action against those who hold it and are recognized by the mining company as its owners. Hayward v. Eliot National Bank. 2. A large portion of the very elaborate argument made in behalf of the appellant was in support of the proposition that the bank having received the stock in pledge to secure his indebtedness to it, could not, consistently with settled principles, buy from itself, and consequently could not sell to its directors. If these general principles were at all applicable in a case like this it would only prove that the bank, by violating its duty, had become liable to him for the value of the stock. But such liability is not charged, nor is such relief asked in the bill. The specific relief sought is a decree requiring the bank to transfer the stock to him— a thing now beyond its power to do. It is true that the bill contains a general prayer for such relief as may be consistent with equity and good conscience, but we incline to the opinion that its whole frame and structure are inconsistent with a right in this action to a decree for the value of the stock, even if the facts justified any such relief. 1 Dan. Ch. Pr. (3d Am. ed.) 382; Chalmers v. Chambers, 6 Har. & Johns. 29; Hobson v. McArthur, 16 Pet. 182; English v. Foxall, 2 id. 595; Thompson v. Smith, 7 Port. 144; Dwoner v. Fortner, 5 id. 10; Strange v. Wilson, 11 Ala. 324. 3. But waiving the consideration last mentioned, we discover nothing in the evidence which would entitle Hayward to a decree against the bank in any form of proceeding. The bank had the unquestionable right to sell the stock in satisfaction of his indebtedness. It is equally clear, that with his assent, the stock could have been taken by the bank in discharge of such indebtedness, or sold to any of its directors. Where such assent is clearly shown, and the sale to them was unattended by circumstances of fraud, unfairness, or imposition, we perceive no sound reason why it should not be upheld, especially after an unreasonable and unexplained lapse of time, without objection or complaint by the pledgor. Prior to the sale of the stock, Hayward was often requested by the bank to take up his notes, and to meet the assessments upon the stock. He failed to do either, and the bank was compelled to provide for the assessments. The indulgence extended to him by the bank was characterized by the utmost liberality. It was all that Hayward could have expected or demanded. When, Hayward v. Eliot National Bank. therefore, he was informed, as we do not doubt he was, of the settled purpose of the bank to sell the stock, and of the proposition of the three directors to purchase it, it was his duty, if he disapproved of the latter arrangement, to give expression, in some form, to that disapproval. So far from expressing disapproval, the weight of the evidence is that he gave his consent. It is quite certain that the directors made the purchase in the belief that he had been advised of their proposition, and had assented to its acceptance by the bank. The most favorable construction for him which can be put upon the evidence is, that he was silent when notified of the proposition, and made no objection to its acceptance. His silence, however, under the circumstances, taken in connection with his subsequent conduct, should be held as conclusive as if he had originally assented, in express terms, to the sale. If it be suggested, that after being informed of the proposition of the directors, sufficient time was not allowed him for deliberation before the sale was made, and if, for that reason, he could have repudiated the sale and reclaimed the stock, there is still no satisfactory explanation of his course after he learned that a sale had actually occurred. He was promptly advised of it and of the amount realized therefrom. He received, at the same time, an itemized account, showing the amount claimed by the bank upon the original loans, as well as for interest and for its advances to meet assessments. That account, it is true, contained no statement, in terms, of the sale of the stock, nor did it give the names of the purchasers. But he admits, in his cross-examination, that he was informed by the person who delivered the account that the stock had been sold, and that he understood the credit of $39,257.16 to denote the sum realized from such sale. There was no other mode, as he well knew, by which he could become entitled to so large a credit. He disputed no item in the account, expressed no disapproval of what had been done, made no complaint to the bank of its action. Although he was well acquainted with the bank officers, and met them frequently after the sale, often upon terms of familiar intercourse, he made no inquiry about the stock. He gave no intimation either of dissatisfaction or of any purpose to repudiate the sale, and look to the |