Heart v. State Bank, 17 N.C. 111, 2 Dev. Eq. 111 (1831)

Dec. 1831 · Supreme Court of North Carolina

17 N.C. 111, 2 Dev. Eq. 111

Spencer L. Heart et al. v. The State Bank et al.

A corporation has no right to retain the stock of an insolvent corpora-tor to secure a debt due from him. Whether a by-law subjecting the stock of corporators to debts due to the corporation will give them this power ? Qu.

The bill was filed in Wake, and the case made by it was, that one Barnes, being insolvent, conveyed all his property to the plaintiff, for the purpose of securing Ms debts ; that among other things there were five shares of stock in the State Bank ; that the plaintiffs under a power fr0Jn Barnes applied to have the stock transferred, upon the books of the bank, into their names which was refused. The bill prayed that the defendants might be compelled to transfer the stock.

The answer admitted the facts stated in- the bill, but alleged that Barnes was indebted to them, and insisted that they had the right to retain the stock, as a security for that debt.

The cause was heard upon bill and answer.

Devereusc, for the plaintiff.

Badger, contra.

Habí, Judge.

Stock in a bank is the subject of sale and of purchase ; and the mode of transferring it is pointed out by law. It is ás free from incumbrance as any other part of the debtor’s property. The president and directors of the bank have the management and control of it, for ordinary hanking purposes ; hut they have no lien upon it for any debt, which the holder of it may owe to the hank. The stockholder borrows money from the bank upon giving security for the payment of it, as any other person does who is not a stockholder; and the money is loaned upon the strength of such security ; not upon any supposed liability of the stock.

In the case of the assignees of Evans, a bankrupt, against the Hudson Bay Co. reported at large in 7 Vin. Ab. 125, pi. 2, the company had made a by-law, subjecting the stock of any of its members in the first place to debts which they might owe the company. King, Chancellor, thought that by-law not a good one. But Raymond., Chief-Justice, and Baron Price thought otherwise. But they were all of opinion, that without a by-law, or some other law subjecting the stock to the company’s debts, they had no lien or claim upon it. That seems an authority much in point. ■ The same case perhaps, under another name, is to be found in 1 Strange 645 & 2 P. Wms. 207, tho’ much more hriefly reported. I feel but little hesitation in saying, that the prayer of the bill ought to be granted.

Per Curiam.' — Decree accorbiNgxy.