Court Opinion

ID: 8745898
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:07:13.319496+00
Date Added: 2024-06-11T17:00:40.292325
License: Public Domain

SANBORN, Circuit Judge
(dissenting). In'a single respect the opinion of the majority seems to me to fail to carry to its legitimate conclusion the admirable argument it contains. The securities in the hands of the Boston Company were pledged to secure the payment of the debentures of the Kansas, Company. Nineteen-twentieths of those debentures (all but the one-twentieth held by Campbell) were exchanged by their holders for the debentures of the Colorado Company. They were thereby paid, discharged, and surrendered. The securities in the hands of the Boston Company were discharged of all lien to secure their payment, and these securities were not pledged to secure the payment of the debentures of the Colorado Company. The result was that these securities stood pledged for the payment of the four debentures held by Campbell, and for the payment of these alone. These securities, or their proceeds, have come to the possession of the receiver in this case, and he has realized from them far more than an amount sufficient to pay the debt of Campbell. Why should he not first pay out of the proceeds of these securities the entire indebtedness of Campbell, with interest and costs? It does not seem to me to be material that the Colorado Company and the other holders of the Kansas debentures intended to acquire the securities in the hands of the Boston Company, and to pledge them as security for the indebtedness of the Colorado Company. If they had such an intention, it could never have become effective without the payment or the discharge of the established lien which Campbell had upon the securities. That lien covered all of them,—bound them all to pay his debt. It never was discharged, and it seems to me to remain unassailable to the present day. A. issues 20 notes to 20 different holders, and secures them by a pledge of collaterals. B. induces 19 of them to surrender their notes in exchange for his own, and for his promise or intention to obtain the collateral and pledge it to' secure his debts. He fails to release it from the lien of A.’s single debtor. The result is that the collateral stands pledged for the payment of the outstanding debt of A., and of that debt alone, and it cannot be lawfully applied to the payment of the indebtedness of B. until the single debt of A. is first discharged. In my opinion, the decree in this case should be for the payment of the entire indebtedness of Campbell from the proceeds of the securities originally pledged to the Boston Company to secure the debentures of the Kansas corporation.