First National Bank v. National Broadway Bank

51 N.E. 398 (1898)

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Nature of the Case

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Facts

Securities were in the name of Hotchkiss as trustee, and were pledged as collateral for a note. The note was held by plaintiff (P). Hotchkiss was serving as trustee under a trust created by Imlay for his daughter, Georgiana, Hotchkiss' wife, and her issue. At the time of the loan, P also got a signed writing from Georgiana authorizing her husband to borrow the stock standing in his name as trustee for her benefit and owned by her. Hotchkiss defaulted on the note, and P purchased the shares at a public auction held pursuant to the terms of the note. Broadway (D), refused to transfer the stock. This action was instituted. The lower court ruled that the successor trustee to Hotchkiss was entitled to the assets because P had constructive notice that the shares were the subject of trust and that the pledge was contrary to its terms.