Merchants National Bank v. Wehrmann - 202 U.S. 295 (1906)
U.S. Supreme Court
Merchants National Bank v. Wehrmann, 202 U.S. 295 (1906)
Merchants National Bank v. Wehrmann
Argued April 26, 1906
Decided May 14, 1906
202 U.S. 295
Where a national bank sued for debts of a partnership, shares of which it had taken as security and afterwards acquired in payment of the debt, sets up at every stage of the suit its intention of relying on the bankruptcy law of the United States, it cannot be required in the first instance to anticipate the specific and qualified form in which the immunity finally was denied, and if in addition thereto there is a certificate of the state court to the effect that it was material to consider the question of the
bank's power under the banking law to become liable for the debt and that the decision was against the bank, this Court has power on writ of error to review the judgment.
While a national bank may take by way of security property in which it is not authorized to invest, and may become the owner thereof by foreclosure in satisfaction of the debt, but, without deciding whether it could take share in a partnership formed for purely speculative purposes as security, it cannot, even in satisfaction of a debt so secured, become the absolute owner of such shares. It would be ultra vires, and, as it cannot take the shares, it is not and cannot be held liable for any of the debts of the firm.
The facts are stated in the opinion.