Colonial Trust Co. v. Central Trust Co.

Citations

• 243 Pa. 268
• 90 A. 189
• 1914 Pa. LEXIS 613

Syllabus

<p>Contracts — Promissory notes — Pledges—Pledge of securities as collateral — Right to sell pledge — Stock certificates.</p> <p>1. Legal rights are as safe in chancery as they are in a court of law and however strong an appeal may be to the conscience of a chancellor for equitable relief he is powerless to grant it if the one from whom it must come will be deprived of a legal right.</p> <p>2. Where securities are pledged as collateral for a loan under a contract authorizing the pledgee to sell at public or private sale at his option, on the failure of the pledgor to pay, without demand, advertisement or notice, with the right in the pledgee to purchase at such sale, free of all claims and trusts, the pledgee in the absence of fraud, has the right to purchase the securities at a private sale.</p> <p>3. In a suit in equity where the bill prayed that a sale to itself by the pledgee of certain securities pledged be declared void, and that an amount realized on a subsequent sale in excess of the indebtedness for which the securities were pledged be awarded to the trustee in bankruptcy of the pledgor, it appeared that the pledgor had deposited the securities as collateral for the payment of certain demand notes made in favor of the pledgee for money loaned wherein provision was made for the sale of the securities at public or private sale, with the right in the pledgee to become the purchaser thereof. On the refusal of a demand for the amount of the notes the pledgee notified the pledgor’s trustee in bankruptcy that the collateral would be sold at the office of the pledgee at an hour named. The securities were accordingly sold and the pledgee became the purchaser at a price equal to the pledgor’s then indebtedness. Thereafter the securities were sold by the pledgee at an amount in excess of the pledgor’s indebtedness to the pledgee. It did not appear that any fraud or deception had been practiced by the pledgee previous to or at the time of the sale of the pledged securi