Court Opinion

ID: 9418942
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:43:32.53475+00
Date Added: 2024-06-11T17:22:13.303107
License: Public Domain

Mr. Justice McReynolds,
concurring.
The challenged judgment, I think, should be affirmed upon the theory that subsequent to the enabling amendment of June 25, 1930, both parties recognized an existing obligation to observe the terms of the pledge agreement, and on this understanding maintained the relationship of debtor and creditor. Discussion of other questions seems unnecessary.
Prior to June 25, 1930, the Perry National Bank obtained deposits of public funds by undertaking to hypothecate certain of its assets to secure their payment. This went beyond the corporate power theretofore conferred. Texas & Pacific Ry. Co. v. Pottorff, 291 U. S. 245; Marion v. Sneeden, 291 U. S. 262; Lewis v. Fidelity & Deposit Co., 292 U. S. 559.
The amendment empowered the bank to secure such deposits by a pledge of assets. For more than three months thereafter the securities originally hypothecated were allowed to remain in the keeping of the trustee without suggestion of change in the outstanding agreement. And during that period prior deposits were allowed to remain with the bank. It closed October 18, 1930. Earlier insolvency is not relied upon.
The receiver claims that as the hypothecation was unlawful when made he became entitled to the assets free of lien.
After the amendment the bank had full power to do what it had undertaken to do. For three months it *375accepted the benefits of the agreement and allowed the assets to remain with the trustee. All parties assumed the validity of the arrangement and acted in reliance upon it. The result was the same as if the assets had been repossessed by the bank after June 25, 1930, and again hypothecated under an agreement identical with the original one.