Minneapolis Association v. Canfield - 121 U.S. 295 (1887)
U.S. Supreme Court
Minneapolis Association v. Canfield, 121 U.S. 295 (1887)
Minneapolis Association v. Canfield
Argued March 30-31, 1887
Decided April 18, 1887
121 U.S. 295
In November, 1872, K. was the owner of all the capital stock and in possession of all the real estate (using it as his own) of an agricultural association, incorporated under the laws of Minnesota. Two hundred shares of this stock he had purchased from G., giving notes therefor secured
by pledge of the stock, which notes and stock were transferred to a state bank by G. to secure payment of a loan to himself. One hundred shares of the stock were purchased by K. of M., who in like manner transferred them to the state bank as collateral. K. transferred the remaining shares to B. as collateral for his obligation to B., with authority also to hold them as additional security for K.'s note, held by the bank. In August, 1873, K. contracted in writing to sell a large part of the real estate to C., the purchase money to be paid in railroad bonds, and verbally agreed to transfer all the capital stock and procure a deed of the real estate from the corporation. C. had no knowledge of the transaction with the bank and with B. It was then agreed between K., B., and the bank that the bank should take part of the railroad bonds in exchange for the stock held by it, the stock to be sent to the Park Bank in New York for exchange, and K. gave an order on C. for the bonds. In pursuance of the agreement, K. procured a deed of the real estate to be executed by individual directors in the name of the corporation, which deed was never authorized by the directors at a meeting of the board, and delivered it to B. together with a warranty deed thereof in his own name. The order for the bonds was never presented to C., nor were the bonds deposited at the bank in New York, nor was the stock delivered C., but K. retained the hoods and C.'s notes for his own use. C. took possession of the real estate and conveyed a part of it to a harvester company. The association and the state bank filed a bill in a state court in Minnesota against C. to have the respective rights of the parties in the property determined. The supreme court of that state held on appeal that the deed to C. conveyed no title to him, but that, subject to the rights of the bank and of B., C. was the equitable holder of the stock. Proceedings then took place at the motion of the state bank which resulted in a portended sale of the stock to various parties, whereupon C., who had filed his bill in the circuit court of the United states against the agricultural association and the state bank, filed a supplemental bill, including the purchasers of the stock, the general purpose of both bills being to establish his equities in the capital stock and corporate property of the association. Held (1) that it was not now open to him to set up that the deed of the directors was valid as the deed of the corporation, and that he acquired title through it and through K.'s deed, those being res judicata; (2) that the equities of the state back in the stock were superior to those of C.; (3) that the pretended sale of the stock by the bank was not a real transaction; (4) that, subject to some modifications, the decree below should be affirmed.
In equity. The case is stated in the opinion of the Court.