Hower v. Weiss Malting & Elevator Co.

LACOMBE, Circuit Judge. This action was brought in the su- preme court of the state of New York, and was removed from that court to the United States circuit court for the eastern district of New York. Prior to the removal, the state court had granted an injunction restraining the defendants from transferring, disposing of, or in any wise interfering with, certain certificates of stock, representing 8,102 shares of the Fred Hower Brewing Company, during the pendency of the action. After the removal the defendants moved in the circuit court to dissolve the injunction. The circuit court, held by Judge Benedict, after hearing the parties, made an order denying the motion to dissolve, and continuing the injunction in force. The defendants have appealed from this order. [357] It is insisted for the appellants that the injunction should not have been granted, because the case presented by the pleadings is not one of equitable cognizance, but one in which the plaintiff has an adequate and complete remedy at law. Succinctly stated, the facts shown by the bill of complaint are these: On or about Sepfernber 28, 1891, the defendant the elevator company had acquired 2,508 shares of the stock of the Fred Hower Brewing Company, pursuant, to an agreement between the plaintiff and the elevator company that the plaintiff should buy the stock for the sum of §25,-033, payable in five years thereafter, in equal semi-annual installments, and that, as a security for the payment, the elevator company should hold in pledge these shares, together with 5,600 other shares of similar stock owned by the plaintiff. Shortly afterwards the elevator company delivered the stock to the plaintiff, and these shares, together with the other 5,600 shares, were left with qine M oyere. acting for both parties, “upon the express understanding and agreement between the plaintiff and the elevator company that the said shares of stock should not be given or delivered to the elevator company until the agreement aforesaid had been reduced to wilting, and executed by the elevator company.” Pending the execution of the written contract, the plaintiff, at the solicitation of the elevator company, without any consideration therefor, and solely for its accoirmiodatioii, and upon its promise that it would «any and renew the came for the period of five years, running parallel with the periods described in the agreement aforesaid, signed a negotiable promissory note, payable six months ait or date, to bis own order, and indorsed by him, for §35,033, and delivered it io Meyers upon the agreement with the elevator company that Meyers was not to deliver the note to it until the execution of the aforesaid written agreement. The note contained a recital that the maker had deposited, as collateral, security for the payment of the note, two certificates of stock, one being for the 2,50?. sharers, and the other for the 5,600 shares, and a condition authorizing the holder, in case of default in the payment o! the note,to soli the certificates at public or- private sale, and apply the proceeds to the payment of the note. Shortly afterwards the elevator company “fraudulently and wrongfully obtained from said Meyers’ possession the note, and all of plaintiff’s seenrites aforesaid, and departed therewith from the state, without signing oi' executing rhe agreement reduced to writing as aforesaid;” placed the note and the certificates in the hands of the defendant the First Matron?)] Bank of the City of Mew York for1 collection; and refused, and sill] refuses, to execute the written contract. When che note became due, the defendant the bank made presentment, and demanded payment of the plaintiff. The bill alleges that the defendants propose to sell and convert tiro shares of stock to their own use. The bill also alleges that the stock in question represents nearly all the property which plaintiff owns, that it has no market value, and that, if Bold, it will be sacrificed at a loss of more than two thirds of its value. The prayer of the hill is that the defendants be enjoined from selling, or in any way disposing [358] of, the stock certificates, and that the elevator company cancel and destroy the stock note. The chief contention of the appellants is that the complainant has an adequate remedy at law, and therefore cannot maintain a suit in equity to restrain the defendants from enforcing the note or disposing of the stock. If it were only a question of the note, this objection would no doubt be a sound one. All the equities could be pleaded against the payee, or, the note being now past due, against any one to whom he might transfer it. But the fact that a sale of the stock, which, for all that appears in the papers, might clothe the purchaser thereof with a title superior to complainant’s equities, puts the case in an entirely different aspect. The stock is apparently of uncertain value; it represents a controlling interest in the corporation; and, in view of these circumstances, the possible recovery in any action for damages for its conversion would not be an adequate remedy. The theory of damages for the conversion of such property is that the sum recovered by plaintiff will put Mm financially in the position he was in before the conversion, but it is by no means certain that any possible recovery in such action would give to the plaintiff the equivalent of the controlling interest in the corporation. Nor would an action for replevin lie. Complainant has no right to the possession of the stock. Upon the facts as set out in the bill he parted with his possession under an agreement by wMch the right to such possession was transferred to another party until complainant should have paid $25,033, and he had five years in which to pay such sum. He could maintain no action to recover the possession of the stock without tendering the $25,033 for which it was pledged. Such an action, requiring such anticipation of his promised payment, is not an adequate remedy. He is entitled to hold the defendant to his agreement, without himself assuming any greater burden than he originally undertook. As the damage which would probably he suffered by the plaintiff if the securities were sold is irreparable, and the bill and affidavits make out a case for equitable relief, and no' irreparable injury would result to the defendant should the injunction be continued until all the facts are , fully brought out upon the trial, the order appealed from should be affirmed. On behalf of the defendant the First National Bank of the City of New York it is also insisted that under section 5242, Rev. St. U. S., there was no power in the state court to issue this injunction, nor in the United States circuit court to continue it. The practical effect of Judge Benedict’s order was to enjoin the defendants pending the litigation, and, if that court had the power to issue an injunction against a national bank, such order should be sustained, irrespective of the question whether the state court which originally enjoined the defendant bank bad or had not power to make such an order. The proMbition upon which the defendant bank relies is found at the close of section 5242, Rev. St. U. S., in the following language: “No attachment, injunction, or execution shall be issued against such association [a national bank] or its property before [359] í"íl;iI judgment in any unit, action, or proceeding in any state, county. or municipal court.” Thin clause contains no direct restriction upon the power of circuit courts of the United States. It was held tit Bank v. Mixier, 124 II. S. 721, 8 Sup. OL Eep. 718, that under this provisión a circuit court was not anihomed to issue attachments on mesne procesa against a national bank. That conclusion, however, was readied becaueo the only grant of such power to the uijv.uit court was found it? section 915, 'Rev. St. U. 8., which provides that "in common-law causes in the circuit and district courts the plaintiff shall be entitled to similar remedies, by attachment or oilier process, against the property of the defendant, which are now provided by the laws of the state in which such court is held for the courts thereof.” Inasmuch as the prohibition of section “243 left the state courts without power to grant attachments on mesne procesa against nation:*.! banks, no such power was conferred on the circuit court by section 915. The power to issue an injunction, however, is inherent in the original jurisdiction, in equity which is conferral upon the circuit courts by section 629 of Rev. St. II. 8., and Its various amendments, and is not curtailed by the provisions of ¡he section upon which the appellant bank relies. The order appealed front should be affirmed, with costs.