Turner v. Metropolitan Trust Co.

Citations

• 207 F. 495
• 125 C.C.A. 157
• 1913 U.S. App. LEXIS 1639

Syllabus

<p>1. Pledges (§ 50*)—Sale of Pledge—Rights of Pledgee as Purchaser— Bonds of Pledgok Corporation.</p> <p>That a corporation as collateral to its note pledges its own mortgage bonds does not change the rights of the pledgee under the contract, and where on default the pledgee becomes the purchaser of the bonds at public auction in good faith and strictly as authorized by the contract, it is entitled to enforce the same to their full face value as it might the obligation of a third person, although it exceeds the amount of the debt.</p> <p>LEd. Note.—For other cases, see Pledges, Cent. Dig. §§ 152-183; Dec. Dig. § 50.* j</p> <p>2. Bankruptcy (§ 316*) Provable Claims — Corporations — Bonds Purchased by Pledgee.</p> <p>The bankrupt corporation borrowed $600,000 from claimant trust company and to secure its note therefor, which was dated and made payable in New York City, pledged an entire issue of $2,000,000 of its own mortgage bonds. The contract authorized claimant on default to sell the securities at any broker’s board or public or private sale without advertisement or notice, which were expressly waived, and further provided that if the sale were at public auction claimant might become the purchaser. Bankrupt made default and was notified by claimant that, unless payment made before, the bonds would be sold at public auction in New York City 30 days after the note matured. Payment not being made, they were sold on the day fixed, after notice by publication the preceding evening and morning in the three papers most generally used for such purpose, and notice by mail to investers in such securities, and were bought by claimant for $25,000. The sale was made at the place designated for such sales by rule of the New York courts and at the regular weekly auction of such securities. The property of the bankrupt consisted chiefly of a steel plant in the state of Washington, which liad been operated unsuccessfully, and of undeveloped mining lands in Washington, Nevada, and