Lacombe v. Forstall's Sons - 123 U.S. 562 (1881)
U.S. Supreme Court
Lacombe v. Forstall's Sons, 123 U.S. 562 (1887)
Lacombe v. Forstall's Sons
Argued November 16-17, 1887
Decided December 5, 1881
123 U.S. 562
The respondents, holding a quantity of securities hypothecated as collateral for an indebtedness due them from an insolvent bank, sold them by public auction, in the manner stated in the opinion of the court, for less than the debt and proved the balance of the debt. When the judgment declaring a dividend was entered, it was stated in it, both parties consenting, that all the rights of both touching damages resulting from the sale of the bonds were expressly reserved. Held that this could not be construed into an admission of the liability of the respondents, or that a just cause of action existed against them.
On the facts established, the Court holds: (1) that the complainants, in endorsing the bonds which are the subject of controversy as payable to bearer after the sale which is objected to, and in delivering them in that condition to the respondents with the knowledge that they had been or were to be sold again by them, and for the purpose of enabling the respondents to transfer the bonds with a good title, must be considered to have waived any right to sue on the first sale; (2) that, conceding the first sale to have been invalid, it was nevertheless the respondents' duty to sell the bonds at as early a time as possible and to place the proceeds in the hands of their principals in payment of the debt for which the bonds were pledged, and that they had done this with the consent and aid of the complainants, and (3) that, on the complainants' theory of the relief to which they were entitled, their remedy was at law, and not in equity.
Bill in equity. Decree dismissing the bill. Complainants
appealed. The case is stated in the opinion of the Court.