Case ID: kan_12/html/0188-01.html
Source: Caselaw Access Project
Author: {"author": "Brewer, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

P. P. Elder and others v. First Nat. Bank of Ottawa and others.
    July Term, 1873.
    1. Equity: Maxims. ■ It is a cardinal principle of equity jurisprudence that he who seeks equity must do equity.
    '2. -: Injunction: Illegal Loan. Accordingly, where a party has borrowed money of a bank, although the loan be one forbidden by law, and the securities, therefore, void in the hands of the bank, the borrower may not, while retaining the money, obtain from the court of equity an order restraining the bank from negotiating the securities, or a decree canceling them and directing their return.
    Error from Franklin district court.
    Peter P. Elder and John Walruff, as plaintiffs, filed their petition ■against the First National Bank of Ottawa, the National Bank of Lawrence, and R. E. Jenness, as defendants, to enjoin and restrain the defendants from transferring certain notes and mortgages, and to ■compel the surrender and satisfaction of said securities, and of certain judgments. The probate judge of Franklin county granted a temporary injunction. The defendants moved to dissolve said injunction, and said motion was heard before Hon. O. A. Bassett, district judge, at chambers, March 8,1873, and sustained, and the temporary injunction dissolved.
    
      J. W. Deford, for plaintiffs in error.
    The defendants’ motion to discharge the injunction stated two grounds,, viz.: (1) That the said the Hon. A. Franklin, probate judge, had no jurisdiction to grant said order; and (2) that no cause ■of action, and no cause for an injunction, is stated in said petition. Judge Bassett discharged the injunction upon the ground that section 239 of the Code is. “unconstitutional and void,” and that, therefore, Probate Judge Franklin had no jurisdiction or power to grant it. This, we contend, was error. The granting of a preliminary injunction is within the sphere of jurisdiction at chambers. Gere v. Weed, 3 Minn. 352, 359, (Gil. 249;) Pitts-burg, Ft. W. & C. Ry. Co. v. Hurd, 17 Ohio St. 144. The probate court is a court of record. Const. Kan. art. 3, § 8. “The several justices and judges of the courts of record in this state shall have such jurisdiction at chambers as may be provided by law.” Id. art. 3, § 16. There can be no doubt that section 239 of the Code is entirely within the letter of this constitutional provision. But his honor below held (on the authority of Railroad Co. v. Hurd, 17 Ohio St. 144) that the true intent of section 16, art. 3, was to empower the ■“several justices and judges of the courts of record” to exercise such ■“jurisdiction at chambers in oases pending in their respective courts as ¡might be provided by law.” This interpretation reduces that section to an empty and superfluous form, since those magistrates would have had the usual “jurisdiction at chambers,” and such other as might have been “provided by law” in cases pending in their respective courts, without the aid of this “warrant in the constitution.”
    Does the petition state facts sufficient to entitle the plaintiffs to a. temporary injunction restraining the negotiation of the five notes and the mortgage given to secure them ? The bill and exhibits show that these securities were taken by the First National Bank of Ottawa in. plain and direct violation of sections 8, 28, and 29 of the national banking or currency act of June 3, 1865. 13 St. at Large, 99. Here is a loan of $10,000 by a national bank, whose whole capital stock was only $50,000, and this upon real estate, and not personal security. That such a transaction is illegal and void cannot, we think,, be successfully disputed. Fowler v. Scully, 5 Chi. Leg. N. 193; S. C. 72 Pa. St. 456; National Bank v. Rowell, decided at May term, 1873, of the United States circuit court for the district of Kansas.. The bill charges that the First National Bank of Ottawa has threatened to, and that plaintiffs fear it will, negotiate before maturity the notes and mortgage to some bona fide purchaser, and thereby cause vexatious litigation, etc. Under these circumstances. it is a *duty which this court owes, both to the plaintiffs and the public, to interfere, and continue the injunction in force.
    
      A. W. Benson, for defendants in error.
    The injunction was properly dissolved by the district judge. The-probate judge had no jurisdiction in the matter, and no power to. grant said injunction; hence it became the duty of the district judge to vacate said order, upon a proper application. A probate judge has certain specified and clearly-defined powers under the constitution of Kansas, and can exercise no powers not included therein, or necessary to the proper execution thereof. “Expressiounius est exclusio alterius.” Const. Kan. art. 3, § 8; Jordan v. Dennis, 7 Mete. 590; Horne v. State, 1 Kan. 60, 77. Section 239 of the-Civil Code, if construed as conferring upon the probate judge power to grant injunctions in cases pending in the district court, is unconstitutional and void.
    The matters alleged in the petition are not sufficient to authorize-the injunction. The plaintiffs are parties, according to their own showing, to an illegal contract. A court can grant them no relief.. “In pari delicto potior est conditio defendentis et possidentis.” 3 Story, Ecp Jur. §§ 298, 301. At all events, the court cannot lend its aid to either party in such a case, but if the contract is illegal, will leave them where it finds them. Even though the court would not enforce the contract in a suit brought upon the securities, it docs-not follow that it -will exercise its extraordinary powers to prevent the transfer thereof. Carifchers v. Weaver, 7 Kan. *119; Broom, Leg-Max. 525.
    The securities held by defendant are not void. The bank is clothbd with general' and all necessary powers in and about the business. of banking, discounts, etc. National Currency Act, § 8. The provisions of sections 28 and 29 of said act are but limitations thereon. The case is easily distinguishable from one where the corporate act is void for want of power. M’Lean v. Lafayette Bank, 3 McLean, 587, 611; Bushnell v. Beloit, 10 Wis. 230. The provisions of said sections 28 and 29 are directory merely, and no *penalty or forfeiture, other than that contained in section 53 of the same act, can be engrafted upon it. Barnes v. South Side R. Co., 2 Abb. (N. S.) 416; O’Hara v. Dever, Id. 422.
   Brewer, J.

Plaintiffs in error seek by this proceeding to have reversed an order of the district judge dissolving a temporary injunction. The facts as disclosed in the petition (and this was all the evidence on the hearing) are briefly these: On the twentieth of April, 1872, the First National Bank of Ottawa loaned to the plaintiffs $14,954.08, which was an amount exceeding one-tenth of its capital stock, of which amount $10,000, and interest, was secured ■ Ey a mortgage on real estate. The notes given for the $4,954.08 were transferred to the National Bank of Lawrence, and by it, after maturity, placed in judgment. The notes secured by mortgage were not due when this action was commenced. It was alleged that this mortgage and securities were taken in violation of the national banking act, under which the corporations defendant were organized; and that the Ottawa bank threatened to transfer these notes and mortgage for value to some innocent purchaser before their maturity, and thus prevent the plaintiffs from availing themselves of their legal defense to them. The prayer was that the Ottawa bank might be temporarily restrained from transferring the notes and mortgage, and that upon a final hearing these instruments be decreed to be void, and ordered canceled.

It is unnecessary for us to determine whether these securities are valid or not, for conceding that the whole transaction was one forbidden by the banking act, and that the notes and mortgage were void, and could not be enforced, still we think the petition discloses no Cause of action, — no ground for relief. The cardinal principle of equity — that which underlies its whole jurisprudence — is this, that he who seeks equity must do equity. To grant the plaintiffs the relief they ask would be in plainest disregard of this principle. They admit borrowing from the bank over fourteen thousand dollars of its money. They have never paid it back, but still hold it all. * With this money of another’s in their pocket they ask a court of equity to permit them to keep it. Grant that the bank was guilty of an infraction of the law in making the loan, and that by reason thereof it can never enforce payment in the courts, still the wrong of the bank does not give to the plaintiff any moral right to appropriate the money of another; It is not enough for the plaintiff in an equity suit to show that the defendant has done wrong; he must also make it appear that he has done right. Many words would not make this plainer, and until they can make it apparent that it is according to equity and good conscience to borrow money and not repay it, the plaintiffs need expect no relief in an action like this. Mott v. Trust Co., 19 Barb. 568. The case in many features resembles that of a usurious loan, and in such case it is well settled that the borrower must tender the amount borrowed before he can ask for the cancellation of the securities. 1 Story, Eq. Jur. § 301. The judgment will be affirmed.

Kingman, C. J., concurs; Valentine, J., not sitting in the ease,