THE

St. Louis National Bank v. Brinkman.

opinion states the case.

Sterry & Sedgwick, for plaintiff.

Gardiner Lathrop, for defendant.

FOSTER, J. The plaintiff is a National bank, duly organized under the act of Congress of June 3, 1864 (13 U. S. Stat. 99), and is established and doing business at the city of St. Louis, State of Missouri. It brings this action against the defendant, who is a citizen of the State of Kansas, to recover the sum of $138.51, with interest from August 10, 1878, at 10 per cent per annum, for so much money collected by defendant for the use and benefit of plaintiff.

The defendant maintains that the plaintiff, being a National bank established out of this judicial district, this court has no jurisdiction.

The question is one upon which I have found no adjudicated case, and we have to look to the several acts of Congress to determine the point at issue.

Involving, as it does, the right of National banks to sue in the Federal courts out of the district in which they are established, the question presented is an interesting one. The amount in controversy in this case being less than $500, that alone would defeat the jurisdiction, unless there is some law authorizing National banks to sue in the Federal courts out of the district where they are established, and without regard to the sum in controversy.

Section 59 of the act of 1863, commonly known as the "Currency Act" (12 U. S. Stat. CS1), reads as follows:

"That suits, actions and proceedings, by and against any association under this act, may be had in any Circuit, District or Territorial court of the United States, held within the district in which such association may be established."

The act of June 3, 1864 (13 U. S. Stat. 116, § 57), re-enacts this section, omitting the words "by and," so it in terms only authorized proceedings in said courts against such associations and not by them. But the Supreme Court, in Kennedy v. Gibson, 8

St. Louis National Bank v. Brinkman.

Wall. 506, held that the omission of those words was accidental and not intentional, so the law remained in that respect as it was originally enacted. When the revision of the United States Statutes was had, this section was dropped from the Currency Act, title, "National Banks," and was placed under the title "Judiciary," and there reads as follows:

"The Circuit Courts shall have original jurisdiction as follows:

“Tenth. Of all suits by or against any banking association, established in the district for which the court is held, under any law providing for National banking associations." U. S. Rev.

Stat. 110, 111.

It will be seen that this provision is in substance the same as that contained in the Currency Acts before mentioned, and very clearly limits the jurisdiction to suits by or against banking associations established in the district where the court is held, and that jurisdiction in no way depends upon the amount in controversy.

There is but one other provision of the law touching this question, and that is found in the Rev. Stats. (2 Edm.) 993, under the title "National Banks," and among the enumerated powers conferred on these banks is the following: "To sue and be sued, complain and defend, in any court of law and equity as fully as natural persons." This provision is copied verbatim from the Currency Acts of 1863 and 1864.

There is nothing in this enactment conferring any special jurisdiction on the Federal courts in cases where National banks are parties; but these banks are placed on an equal footing with natural persons in all courts of law and equity.

Now in the case of natural persons the citizenship of the parties and the amount in controversy in actions of this nature are both material, and are the controlling elements to jurisdiction in this court.

I need not decide or discuss the question whether a National bank organized under the law of Congress and established in the State of Missouri is a citizen of that State under the rule recognizing corporations organized under the laws of a State as citizens.

Moore v. Jones.

of that State, for the purpose of suing and being sued in the Federal courts. Even if the affirmative of that proposition could be maintained, there would still be a want of jurisdiction in this case, as the amount in controversy is not sufficient, and on that ground this case must be dismissed, and the costs paid by defendant refunded to him.

MOORE V. JONES.

(3 Woods, 53.)

Pledgee of stock — liability of, for bank's engagements.

One who procures a transfer to himself, on the books of a National bank, of stock in such bank, becomes liable for the engagements of the bank as prescribed in the National Bank Act, although such stock was pledged to him by the owner, simply as security for a debt.*

(Circuit Court, District of Louisiana.)

ILL to enjoin a receiver from prosecuting a suit at law, and

BILL

for a decree to correct a transfer of stock, and declare the plaintiffs not liable as shareholders. The bill alleged that the defendant Jones, as security for his debt, delivered to the plaintiffs certificates of National bank stock, owned by Jones, and that the plaintiffs, in ignorance of their legal rights, had the stock transferred to themselves on the bank books, erroneously supposing that step necessary to the validity of the pledge; and that the bank subsequently failing, the defendant Case, receiver of the bank, had commenced an action at law against them to enforce their individual liability as shareholders for the debts of the bank. A demurrer was interposed.

John Finney and Henry C. Miller, for complaint.

John D. Rouse, for receiver.

WOODS, J. The demurrer is well taken. The Currency Act

*See Thomp. N. B. Cas. 471, to same effect.

Moore v. Jones.

(Revised Statutes, § 5139) declares that "the capital stock of each association shall be divided into shares of one hundred dollars each and be deemed personal property, and shall be transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of said shares."

Now, according to the averments of the bill, Moore & Janney, became the transferees of the stock of Jones by transfer on the books of the association. According to the terms of the act, such transfer made them stockholders and subjected them to all the rights and liabilities of the prior holder of the shares, among which is that shareholders shall be held individually responsible equally and ratably, and not one for another, for all contracts and engagements of such association to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.

So far as the bank and public were concerned, Moore & Janney were the owners of the stock. They were entitled to vote the stock at stockholders' meetings, to draw dividends, and to transfer the stock to whom they pleased. The public were advised by the list of stockholders kept in the office where the business of the bank was transacted (see Rev. Stat., § 5210), that Moore & Janney were shareholders to the amount of sixty-five shares. By appearing on the stock-book of the bank and upon the list of shareholders required to be posted in the business room of the bank, they assumed the liability of shareholders. Neither the bank nor the public were required to take notice of the private understanding between Moore & Janney and the person from whose name the stock had been transferred. The individual liability falls upon the person who appears on the stock-book of the bank by transfer to him to be the owner of the stock. The law organizing the banks seems to place it there. To allow one, who, by inspection of the stock-book, appears to be a shareholder, who has allowed himself to be held out by the bank to the public as a shareholder, to set up secret arrangements between himself and the real owner as a deVOL. II-19

Bowdell v. Farmers and Merchants' National Bank of Baltimore.

fense to his individual liability for the debts of the bank, would be to make of no avail the individual liability clause of the Cur rency Act.

"It is well settled that one to whom stock has been transferred in pledge or as a collateral security for money loaned, and who appears on the register of the corporation as the owner of the stock is, in the event of the insolvency of the corporation, chargeable as a stockholder for the benefit of creditors." Thompson on Stockholders, 223; Adderly v. Storm, 6 Hill, 624; Rosevelt v. Brown, 11 N. Y. 148; Matter of Empire City Bank, 18 id. 199, 223; Holyoke Bank v. Burnham, 11 Cush. 183; Magruder v. Colston, 44 Md. 349; s. c., Thomp. N. B. Cas. 554; Crease v. Babcock, 10 Metc. 525, 545; Wheelock v. Kost, 77 Ill. 296; s. c., Thomp. N. B. Cas. 408; Pullman v. Upton, 96 U. S. 328. Moore & Janney, so far as the bank and public were concerned, were to all intents and purposes shareholders and individually liable as such. The demurrer to the bill must be sustained.

BOWDELL V. FARMERS AND MERCHANTS' NATIONAL BANK OF

Shareholder

BALTIMORE.

(14 Bankers' Magazine, 387.)

· individual liability—collateral security — surrender of certificate. One in whose name shares of the stock of a National bank stand on the bank. books is subject to the individual liability of a shareholder, although his holding of the stock was originally as collateral security for a loan, and the loan has been repaid, and the stock certificate surrendered with an executed power of attorney for transfer.

GILES, J. In this case a jury trial was waived, and it was tried before the court in pursuance of the provisions of section 649 of the Revised Statutes of the United States. The facts exposed before the court are as follows: "First National Bank of Nor