National Bank v. Matthews - 98 U.S. 621 (1878)
U.S. Supreme Court
National Bank v. Matthews, 98 U.S. 621 (1878)
National Bank v. Matthews
98 U.S. 621
A. executed a promissory note to B., and, to secure the payment thereof, a deed of trust of lands, which was in effect a mortgage with a power of sale thereto annexed. A national bank, on the security of the note and deed, loaned money to B., who thereupon assigned them to the bank. The note not having been paid at its maturity, the trustee was, pursuant to the power, proceeding to sell the lands, when A. filed his bill to enjoin the sale upon the ground that by secs. 5136 and 6137 of the Revised Statutes, the deed did not inure as a security for a loan made by the bank at the time of the assignment of the note and deed. Held that the Bank is entitled to enforce the collection of the note by a sale of the lands.
On the 1st of March, 1871, Hugh B. Logan and Elizabeth A. Matthews executed and delivered to Sterling Price & Co. their joint and several promissory note for the sum of $15,000, payable to the order of that firm two years from date, with interest at the rate of ten percent per annum. The payment of the note was secured by a deed of trust, executed by her, of certain real estate therein described, situate in the State of Missouri.
On the 13th of the same month, the note and deed of trust were assigned to the Union National Bank of St. Louis. Price & Co. failed to pay the loan at maturity. The bank directed the trustee named in the deed of trust to sell. Said Elizabeth thereupon filed this bill in the proper State court to enjoin the sale. The bank in its answer avers that it
"accepted the said note and deed of trust as security for the sum of $15,000, then and there advanced and loaned to said Sterling Price & Co. . . . on the security of said note and deed of trust."
A perpetual injunction was decreed, upon the ground that the loan by the bank to Price & Co. was made upon real estate security, that it was forbidden by law, and that the deed of trust was therefore void. The decree was made upon the pleadings. No testimony was introduced upon either side. The bank removed the case to the supreme court of the state, where the decree was affirmed. The bank then sued out this writ of error.