was, that an amount equal to thirty-four shares of the par value, $80 per share, remained his property, and was liable to seizure and sale on execution.'

5. But the rule that an assignor of stock can convey a title, without paying what he owes the company, of course would not hold, if by the charter of the company it is provided, as is often done, that all debts due the company from a stockholder must be satisfied before any transfer shall be made. And this lien is not divested, by the circumstance, that the company has taken any other security. Thus, in the important case of the Union Bank of Georgetown v. Laird, which was an appeal in a bill of equity to the Supreme Court of the United States, James Smith, on the 19th of March, 1811, drew a bill at sixty days' sight, on James Patton, in favor of Andrew Smith, for 1800 dollars. This bill was accepted by Patton, and was discounted in the Union Bank of Georgetown, at the instance of Andrew Smith, and when it became due, another bill of the same tenor was drawn and accepted by Patton, and discounted for the purpose of paying the preceding acceptance. This last acceptance became due on the 14th and 17th of July, and was protested for non-payment; and at the time that it became due, Patton held 50 shares of stock in the Union Bank, which the bank considered liable to the payment of this acceptance, under their act of incorporation. At this time, also, James Patton had another debt pending in the bank. Being one of the original subscribers to the bank, for the above-mentioned 50 shares of stock, he borrowed of the bank, in January, 1811, the sum of 1500 dollars, and to enable him to obtain the loan, procured Marsteller and Young, and the defendant, Laird, to become his indorsers. This loan was renewed from time to time, and was continued, without any default of payment, until about the 29th of July, 1811. On the 26th of March, 1811, Patton obtained from the officers of the bank a certificate of

1 Hussey v. Man. and Mech. Bank, 10 Pick. (Mass.) R. 415.

2 Wheat. R. 390.

his 50 shares of stock, and on that day delivered it to the defendant, Laird, to secure him, as it was alleged, against his indorsement for Patton.

On the 10th of July, 1811, Patton executed a power of attorney, authorizing the defendant, Laird, to make a transfer of his stock; and on the 22d of August, 1811, he executed a deed of assignment to the defendant, Laird, of his stock; but as this assignment was not made upon the books of the bank, it was not considered a valid assignment, according to the rules of the bank. Laird, considering himself entitled to the benefit of these shares, under the circumstances, applied to the bank to transfer upon their books the shares for his own benefit. But the bank, upon the ground that the acceptance, which Patton had failed to pay, operated as a lien upon those shares, refused to suffer the transfer to be made until that debt was paid. Laird, some time after this refusal, to wit, on the 22d of February, 1812, paid the 1500 dollars, for which he was indorser for Patton, reserving, nevertheless, his equitable claim, upon the stock, and then instituted this suit in chancery, against the Union Bank, to compel them to suffer the transfer to be made on their books for his benefit, and to account with him for the intermediate profits. He charged in his bill, that when Patton obtained the certificate of his shares of stock, it was with a view of pledging those shares with him for his indemnification, and that the officers of the bank had a knowledge of this fact. He also alleged, that the power of attorney was granted with the same view. The directors of the bank filed their answer to this bill, and denied any knowledge of the object for which the certificate of shares was obtained; and alleged, that they knew nothing of any claim of Laird upon those shares, until after the protest of Patton's acceptance. The court below made a decree in favor of Laird, that the bank should suffer him to transfer the shares for his own benefit, and have an account for the intermediate profits. But Mr. Justice STORY, in delivering the opinion of the court, said, "The principle question is, whether, under the circumstances of this case, Laird, the original plaintiff, has a right to a transfer from the bank of the fifty shares of its capital stock, standing in the

name of Patton, without paying the acceptance of Patton; or, in other words, whether Laird has a priority of lien upon these shares. By the 11th section of the act of incorporation, (act of 18th February, 1811, ch. 86,) it is enacted, That the shares of the capital stock, at any time owned by any individual stockholder, shall be transferable only on the books of the bank, according to such rules as may, conformably to law, be established in that behalf, by the president and directors; but all debts actually due and payable to the bank (days of grace for payment being passed) by a stockholder, requesting a transfer, must be satisfied before such transfer shall be made, unless the president and directors shall direct to the contrary.' The certificate, issued to Patton for the 50 shares held by him, (which is in the usual form,) declares the shares to be 'transferable at the said bank, by the said Patton, or his attorney, on surrendering this certificate.' No person, therefore, can acquire a legal title to any shares, except under a regular transfer, according to the rules of the bank; and if any person takes an equitable assignment, it must be subject to the rights of the bank, under the act of incorporation, of which he is bound to take notice. The president and directors of the bank expressly deny that they have waived, or ever intended to waive, the right of the bank to the lien, for debts due to the bank, by the form of the certificate, and that they ever directed any transfer to be made to Patton which should stipulate to that effect. Under such circumstances, it must be held, that the shares are responsible for the debts due to the bank.

"The next inquiry is, whether the bank has done anything to deprive itself of the lien upon the shares for the acceptance of Patton, since the same became due, and to let in the equitable title of the plaintiff. The acceptance is not yet paid; and nothing has been done by the bank affecting its rights, unless the subsequent taking of security for the acceptance from Smith can be construed so to do. Certainly the bank had a right to require additional security from the indorser of the acceptance; and it cannot be perceived upon what principles this can be construed an extinguishment of its lien upon the shares of the acceptor. A creditor may lawfully take and hold

several securities for the same debt from his joint debtors; and he cannot be compellable to yield up either until his debt is paid. And in this case, there is no want of equity in holding the shares of Patton, who is the immediate debtor to the bank, liable in the first instance, rather than resorting to the security of an indorser, who is only liable upon the default of the acceptor. The decree of the circuit court was, therefore, reversed, and the bill dismissed."

So in the case of the Huntingdon Bank, in Pennsylvania; that bank, it appeared, was subject to the provision, that its stock "shall be assignable and transferable on the books of the company only in the presence of the president or cashier, and in such manner as the by-laws shall ordain; but no stockholder, indebted to the institution, shall be authorized to make a transfer, or receive a dividend, till such debt shall have been discharged, or security to the satisfaction of the directors given for the same." A stockholder, who was indebted to the bank on a note discounted, and also for an instalment due for the capital stock, gave a power of attorney to receive the dividends in his own name, and, at the same time, another power of attorney, to transfer his stock to the plaintiffs, who placed in the hands of an attorney a sum of money to pay the instalment; and the attorney, after depositing the money to his own credit, drew a check in favor of the stockholder, and the money was applied to the payment of the instalment, no notice having been given to the bank of the power to transfer the stock until some months afterwards. The court held the plaintiff was not entitled, either to a transfer of the stock, or to a return of the money which had been applied to the payment of the instalment.' If, by the charter, certificates of stock shall be assignable in the books of the corporation under such regulations as the board of trustees shall establish, it is competent for them to declare by a by-law, that no stockholder

1

Rogers, &c. v. Huntingdon Bank, 2 Serg. & Rawle (Penn.) R. 77; and see also Sewall v. Lancaster Bank, 17 Serg. & Rawle (Penn.) R. 285.

shall transfer while he is in default.' Where the plaintiffs went with the sheriff to attach (under the statute) shares of a stockholder in a bank, were informed by the cashier, that, by virtue of a by-law of the bank, the shares of the stockholder were pledged to the bank for their full value, as security for a loan made to him, and likewise that he had assigned the shares to another creditor, who had exhibited the assignment, with a certificate of the stock, and a power of attorney to transfer the same, and had demanded to have the shares transferred on the books of the bank, and that the bank had refused on the ground, that the shares were pledged to them; and the plaintiffs, nevertheless, obtained execution, and bought the shares at a sheriff's sale, under it; in an action for the plaintiffs against the bank for refusing to transfer the shares to them, it was held, that either the pledge to the bank, or the assignment to the other creditor, was valid, and that the plaintiffs therefore had no cause of action against the corporation.2

$6. Under the clause of the Pennsylvania act regulating banks, a question arose as to what was meant by the word "indebted;" and whether a stockholder, who had given a note to the bank, had a right to transfer before it became due. It was held, that a note, given by a stockholder to the bank, was a debt due from him to the bank, before as well as after it became due, according to the meaning of the act. Tilghman, C. J., observed, "No doubt, this restraint on the transfer of the stock was intended for the benefit of the bank. But of what benefit would it be, if the stockholder had the unrestrained right of transfer, at any time before his note fell due? The time of making this loan is that at which the directors must look out for security. If the stock was pledged by law, they might be easy as to other security. But if, trusting to this pledge, they discounted a stockholder's note, who had the

1 Cunningham v. Alabama Life Ins. Co. 4 Ala. R. (N. S.) 652. Plymouth Bank v. Bank of Norfolk, 10 Pick. (Mass.) R. 444.