Butterworth v. Kennedy

By the Court—Bosworth, Ch. J. The note in suit was discounted by the Island City Bank, for the defendant, on the security of a pledge of twenty shares of its own capital stock. The note has not been paid, and the pledgee, or its legal representative, still holds the stock and owns the note. There is no rule of law or equity which declares these facts to be a defense, either total or partial. [147] The 6th section of 1 Revised Statutes, 591, did not make it the absolute duty of the directors of the Island City Bank to sell this stock, even though the note was not paid within sixty days after its maturity. The charge that is to be made, to satisfy the last clause of that section, is a charge which is to preclude the making of any dividends thereafter by the Company, “ until the deficit so created be made good from the subsequently accruing profits of the Company.” The stock is not thereby actually extinguished, nor the debt of its pledgor satisfied. It does not affect the rights of the pledgor or pledgee, though the pledgee be a moneyed corporation, and the pledge be shares of its own capital stock. The judgment must be affirmed. Judgment affirmed.