Fourth Nat. Bank of Nashville v. Stahlman ( 1915 )

Mr. Justice Fancher

delivered the opinion of the Court.

These two suits were tried together upon the same facts and involving the following questions:

The Fourth National Bank of Nashville, Tennessee, was a highly prosperous and growing concern. It owned its own banking house, situated upon Third avenue north in the city of Nashville, and a short distance south of Union street, but this house was not adequate to the increasing demands made upon it for banking-facilities. This location was in the center of the financial district of the city, and was considered a very desirable location, but there was another lot on the corner of Third avenue and Union street, owned by the defendant E. B. Stahlman, which was considered a better location for a banking business than that owned by the bank. This corner lot was an old banking site which had been used for such purposes since before the Civil War. The Fourth National Bank at first had in view the construction of a banking building upon its own lot, and appointed a committee as early as 1902 to consider the question of remodeling the old building, or the construction of a new building in order to secure a larger banking room and more commodious quarters. This committee visited a number of cities in the North and East and examined up-to-date banking-buildings. The bank considered the question of purchasing adjacent lots of land in order to give it additional room for a larger building. These matters were considered by the committee and the officers of the bank, and postponed from time to time nntil in the year 1905.

In that year, Maj. E. B. Stahlman approached the hank on the subject of acquiring the adjacent real estate belonging to the Fourth National Bank and other adjacent lands to his corner lot. on Union street and Third avenue, and suggested tearing down the old buildings and erecting a modern twelve-story office building on the corner, with large and elegant banking room immediately on the corner on the first floor of the building, with vaults and other necessary rooms to be occupied by the bank under a long lease. He offered to promote a corporation for this purpose, and suggested that the bank convey its lands to the corporation at the price of $58,000 to be paid for in the preferred stock of the building corporation, and that the bank would also loan $45,000 for the purpose of assisting in the construction of the building upon long-time notes. He desired this $45,000 to be secured by the stock in the corporation. The bank refused to malee the loan upon the terms desired, 'because it was not according to its custom of business. Major Stahlman next proposed that the bank subscribe for this $45,000 of stock, and he would buy the stock back from it at stated intervals, and in order to guarantee that he would carry out the contract, he would give security other than the stock itself.

The building contemplated a total investment of about $875,000, and it was suggested that the preferred stock should amount to $400,000', and that common stock-would be issued to an amount to be agreed upon later. On April 12, 1905, these suggestions were embodied in a contract signed and executed by Major Stahlman, as promoter, and the bank, and the agreement was that the stock to be taken by the bank should be preferred, and providing a guaranteed cumulative dividend of six per cent, per annum, the dividends to begin when the deed was made for the real estate, as to the stock for the purchase of the lots, and to begin when the money should be paid by the bank, as to the $45,000 of subscription stock. It was provided that the bank should have certain desirable quarters on the first floor and in the basement at a rental of $12,000 per annum, for a period of ten years and renewable at that price for another ten years. For other periods extending the whole time of the right to lease to fifty years, the bank should have the option and the terms to be agreed upon or fixed by arbitration.

The promoter agreed that he would bring out a corporation for these purposes, and that it would expend not less than $40,000, nor more than $45,000 for vaults, railings, counters, desks, marble fixtures, decorations of. ceiling and walls, etc., according to plans to be selected by the bank. The banking room was not to be less than 4,500 square feet in the clear, and also in connection with the banking room there would be constructed and furnished 3,000 square feet in the basement, to be arranged, subdivided, and equipped to the best needs and convenience of the bank.

It was further stipulated that the bank should have the right to transfer and assign its lease and renewals thereof, but that the said building corporation to be brought out should not rent any space in the building to any other bank, person, firm or corporation doing a banking business, and giving the Fourth National Bank exclusive banking quarters. A time limit within which these things should be done was agreed upon. This time limit was further extended on July 20, 1905, and'further stipulations concerning the contract were then entered into. On April 5, 1906, the final agreement was concluded, reciting these former agreements, making it the final contract between the parties.

Mollie T. Stahlman, the wife of E. B. Stahlman, joined in this final contract, and it was provided that, in consideration of the payment of the subscription of the Fourth National Bank of said $45,000 of capital stock, that the said Stahlman and wife would buy from the bank, and the bank agreed to sell to the said Stahl-man and wife the said $45,000 of capital stock at par or face value thereof, to be taken and paid for at intervals from December 1, 1909, to December 1, 1912, and provided, further, that if any dividends upon said stock remained unpaid at the time of said purchases, Stahl-man and wife were to pay the accumulated dividends, which were to be at the rate of six per cent per annum, or one-half per cent, per month. Said E. B. Stahlman and wife were to have the right at any time to take up and pay for the stock at the price stipulated,' and they deposited with the bank insurance policies on the life of E. B. Stalilman, legally assigned to the bank, to an amount equal to $45,000.

This building .corporation had, in the meantime, been organized as the Mecklenburg Real Estate Company, a conveyance had been executed by the bank prior to this final agreement, conveying the real estate to the Mecklenburg Company, and the building was then in process of erection.

The bank reserved the option to sell and dispose of the $45,000 of stock subscribed for by it at any time to any persons, but it was agreed that Stahlman and wife, or either of them, should have the option to buy said stock at par and accumulated dividends at any time or times before the bank sold it to others, and in order that this might be done, at least thirty days notice of the desire of the bank to sell the stock or any part thereof shall be given Stahlman and wife before the bank shall have the right to sell to others.

Is the contract of Stahlman and wife of April 5, 1906, under the circumstances of this case, to buy from the bank this $45,000 of stock for which the bank had subscribed, enforceable? This is the leading issue in the litigation. It is insisted by the defendants that a national bank cannot take stock in another corporation because it is against public policy, ultra vires the powers of the bank, and the contract, still being exec-utory, cannot be enforced; also that the contract for the purchase of the stock by Stahlman is unenforceable for want of a valuable consideration; that the so-called agreement to purchase was a mere option, with no corresponding obligation on the part of the bank to sell to Stahlman; and if enforceable at all, accumulated unpaid dividends, or interest, cannot be recovered as'upon a loan, as the hank contends; that upon any construction of the rights and obligations of the parties, the provisions in the contract for security are exclusive, and that collaterals held by the hank on other loans cannot be retained to cover this liability.

Major Stahlman owed the bank a number of loans made to him and the Banner Publishing Company, and others for whom he was security, and on one of these notes of $24,400, the bank held as collateral security a block of one hundred shares of stock in the Banner Publishing Company said to be very valuable. These various notes held by the bank contained general printed stipulations that the pledged securities—

“shall be applicable in like manner to secure the payment of any other obligations of the undersigned, whether past or future, held by the holder of this obligation. All such securities in their hands shall stand as one general continuing security for the whole of such obligations so that the deficiency on any one shall be made good from the collateral from the rest. ’ ’

The position of the defendant is that this collateral security agreement will not be construed as applying to secure contracts or obligations different in nature from those for which they were placed, but only those of like kind; that is, on promissory notes or purely banking obligations.

The suits originally involved a number of questions, many of which are now eliminated. A short time before the suits were brought the bank made a call on Major Stahlman to pay, by a given day, all his obligations, including large bank loans, and the stock purchase debt with dividends thereon, which had not been paid by the Mecklenburg Company.

Major Stahlman thereupon demanded an itemized statement of all these debts, which was furnished by the bank, and he then, on the date demanded by the bank, tendered to the bank the full amount claimed, except the amount claimed under the $45,000 stock purchase agreement, and demanded the surrender to him of all collaterals held on the note for $24,400', which tender the bank refused, on the ground that it did not include the amount under the stock purchase agrees ment.

Aftei the suits, however, Major Stahlman did pay, either to the bank direct or into court, all these bank debts, leaving only an item of interest which had been omitted in the statement by the bank and the stock purchase debt unpaid.

The chancellor held that Major Stahlman was liable on his contract to purchase the stock and for dividends thereon, and that the complainant was entitled to hold ■ all collaterals, decreed a sale of them to .pay the judgment, and for the costs of the case. He released Mrs. Stahlman on a plea of coverture, and held that the bank was not entitled to recover attorney’s fees on a note of $24,400, as provided on its face, on the ground that Major Stahlman tendered payment in full on this note. Judgment was had on all these loans due the hank, to he credited by the money in court under the tenders.

Defendant Stahlman appealed to this court.

We will now consider the stock purchase agreement of April 5, 1906.

It is urged hy defendant that the bank actively aided in the promotion of the Mecklenburg Company, dictated its affairs, had placed on its board of directors and among its officials numbers of the hank officials and patrons; that its cashier’s letter was attached to the prospectus, and it otherwise actively secured subscriptions to stock; that its own stockholders to a large number became stockholders in the building concern; that it dictated a limit on the issue of common stock; required Stahlman to give his proxy to the bank to vote $100,000 of the common stock for a period of five years, and that this was not a good-faith transaction by the-bank; that it had ample real estate upon which to build a structure of its own, and various circumstances are urged why it was not necessary to take stock in the Mecklenburg Eeal Estate Company.

The bank had a capital of $600,000 and its undivided profits and surplus amounted to about $528,000. It could have built on its own property and thus secured a house adequate to its needs for about $225,000. But the officials of the bank show that such a building would have depreciated in value as time progressed more than the lot would have become enhanced, and that the economical and businesslike thing to do was to do as they did, secure a more suitable location in a large and handsome office building at a smaller outlay of cash.

The bank officials had something to say about how the building should be constructed and the contemplated cost and use of same, but no harm was done any one in this. The fact that several persons interested in the bank were also interested to a small extent in the Stahlman Building is within itself no evil.

The proof is abundant that it was not the purpose of the bank to promote a sky scraper building, or to own and control stock in such a structure, further than was absolutely necessary and in order to procure an adequate and suitable banking home, commensurate with the growing needs of this thriving institution, situated, as it was, in a growing city. Its paramount purpose in selling the ground and in taking in pay therefor stock in the Mecklenburg Real Estate Company and subscribing the stock of $45>,000 in this company was to avoid expensive building, preserve its large surplus, and to secure for a term of year's the use of the handsome and commodious banking quarters provided for in the contract.

The question arises, Was the purchase of this $45,000 of Mecklenburg stock by the bank so far in excess of the real powers of a national bank as to put it without the law and forbid its enforcement of the contract to dispose of this stock?

National banks are organized under federal statutes and controlled thereby, and this is a federal question, to be determined under the decisions of the federal courts. California Bank v. Kennedy, 167 U. S., 362, 17 Sup. Ct., 831, 42 L. Ed., 198; Mapes v. Scott, 94 Ill. 379, 62 L. R. A., 536, note, 12; Talbot v. First National Bank, 185 U. S., 172, 22 Sup. Ct,. 612, 46 L. Ed., 857; Portland Nat. Bank v. Scott, 20 Or., 421, 26 Pac., 276.

The federal statute provides that a national hank:

(1) May purchase and hold such real estate as is necessary for its immediate accommodation in the transaction of its business (R. S., section 5137); and

(2) May exercise all such incidental powers as shall be necessary to carry on the business, etc. (R. S., section 5136).

A leading federal case touching this question is Brown v. Schlier, 118 Fed., 981, 55 C. C. A., 475. A national bank in Denver leased a lot from Schlier on which to erect a four-story building and to cost not less than $100,000, the building to become the property of Schlier. The bank agreed to pay an annual rent of $13,975. The building was to contain banking quarters, and the other parts of the building were to be used as offices and rented out by the bank. The term of the lease was for ninety-nine years with a right to renew for fifty years. The bank erected a building costing $305,000 though its capital stock was but $300,000.

Upon litigation involving the question as to whether the lease was ultra vires, the court of appeals (eighth circuit) said:

“ That 'a national hank may purchase a lot of land and erect such a building thereon as it needs for the accommodation of its business admits of no controversy under the language of the statute, and we perceive no reason why it may not likewise lease property for a term of years, and agree with the lessor to construct such a building as it desires, provided, always, that it acts in good faith, solely with a view of obtaining an eligible location, and not with a view of investing its funds in real property or embarking them in speculations in real estate. Nor do we perceive any reason why a national bank, when it purchases or leases property for the erection of a banking house, should be compelled to use it exclusively for banking purposes. If the land which it purchases or leases for the accommodation of its business is very valuable, it should be accorded the same rights that belong to other landowners of improving it in a way that will yield the largest income, lessen its own rent, and render that part of its funds which are invested in realty most productive. There is nothing, we think, in the National Bank Act, when rightly • construed, which precludes national banks, so long as they act in good faith, from pursuing the .policy above outlined. ’ ’

Though the lot was leased for one hundred years to erect a larger house than the bank could use, and for the purpose of renting most of it to tenants for office purposes, and did erect a building costing more than the capital stock of the bank, it was not ultra vires, because it was a question of a good faith transaction, in which the bank secured a desirable banking house and incidentally so constructed the building as to make it of profit to the bank. That case was taken to the supreme court of the United States, where this holding was not disturbed, though the case was there disposed of on another proposition.

The case of Brown v. Schlier is referred to, and the principles there decided adhered to by other courts. It is well settled that a national bank has power to lease or purchase real estate for the purpose of obtaining good banking quarters when the transaction is in good faith and solely for that purpose. If a national bank makes an unauthorized purchase of real estate, it is held that the federal government alone can object. U. S. Rev. Stats., secs. 5136, 5137; Brown v. Schlier, 118 Fed., 981, 55 C. C. A., 475; Id., 194 U. S., 18, 24 Sup. Ct., 558, 48 L. Ed., 857; Wingert v. First Nat. Bank, 175 Fed., 739, 99 C. C. A., 315; Id., 223 U. S., 670, 32 Sup. Ct., 391, 56 L. Ed., 605; Weeks v. Int. Trust Co., 60 C. C. A., 236, 125 Fed., 370; 3 Rul. Case Law, sec. 57; 3 Michie, Banks and Banking, pages 1983/1992; Farmers’ Dep. National Bank v. West. Pa. Fuel Company, 215 Pa., 115, 64 Atl., 374, 114 Am. St. Rep., 949; Union Nat. Bank v. Matthews, 98 U. S., 621, 25 L. Ed., 188.

The federal courts have given a broad and liberal interpretation to the National Banking Act. Though the act limits the holding of real estate to such “as shall he necessary for its immediate accommodation in the transaction of its business ” yet when there is no ulterior purpose, the directors and officials are given latitude in determining the question.

It is not objectionable that a bank uses its necessary real estate in such way as to put it to the best use possible, consistent with good business judgment.

The proposition is. undisputed that one corporation cannot invest its money in the stocks of another corporation, as a general proposition, but this is on the ground that it is unlawful as tending toward monopoly, or as being speculative and outside the scope and purpose of its organization, and not permitted as a matter of public policy. Marble Co. v. Harvey, 92 Tenn., 115; California Bank v. Kennedy, 167 U. S., 362, 17 Sup. Ct., 831, 42 L. Ed., 198; First Nat. Bank of Concord v. Hawkins, 174 U. S., 564, 19 Sup. Ct., 739, 43 L. Ed., 1007; First Nat. Bank v. Converse, 200 U. S., 425, 26 Sup. Ct., 306, 50 L. Ed., 537; Merchants’ Nat. Bank v. Wehrmann, 202 U. S., 295, 26 Sup. Ct., 613, 50 L. Ed., 1036.

That it is unlawful for a national bank to deal in stocks will not be disputed. This, while not prohibited by the national banking laws in express terms, nevertheless the prohibition is implied from a failure to grant the power. First Nat. Bank v. Exchange Nat. Bank, 92 U. S., 122, 128, 23 L. Ed., 679; California Bank v. Kennedy, 167 U. S., 362, 17 Sup. Ct., 831, 42 L. Ed., 198.

A national hank may loan money on shares of other corporations and in order to collect its debt purchase the stock, or it may acquire such stock in protecting itself against loss in compromising a doubtful liability. Germania Nat. Bank v. Receiver, 99 U. S., 629, 25 L. Ed., 448; First Nat. Bank v. Exchange Bank, 92 U. S., 122, 23 L. Ed., 679.

So, after all, it is a question of good faith in determining whether a national bank has made an improper investment, and whether the investment was in pursuance of its proper and legitimate banking operations under the limitations imposed by the federal laws.

The object of the restrictions on a national bank to hold real estate or to become interested therein are to keep the capital of the bank flowing in daily channels of commerce; to deter it from engaging in hazardous real estate speculations; and to prevent the accumulations of large masses of such property in its hands to be held as it were in mortmain. The intent, not the letter of the statute, constitutes the law. National Bank v. Matthews, 98 U. S., 621, 25 L. Ed., 188.

The bank could have built an office building in order to provide a banking home; why could it not effect the same purpose by expending a small fraction of the necessary money, paying a reasonable rental thereafter? Suppose it had built the entire structure. It appears that the investment has not paid dividends, and the stock is quoted at only about fifty cents on the market. It did a more businesslike thing. It conserved its resources for doing a banking business instead of embarking in a course of extravagant building. Did tbe provision tbat Stahlman should repurchase the $45,000' of stock render the proposition odions to a sense of the legitimate scope of the undertaking? Did it not rather tend less toward monopoly and had public policy to provide a plan by which this stock should be merely taken for the time being in order to enable Major Stahlman to construct the building and then at a later period relieve the bank of the ownership?

Granting that appellant is correct in his position that a bank cannot acquire stock in other corporations for other than those legitimate purposes connected with the prosecution of its strictly banking business, 3ret a reasonable interpretation of that principle must be had. This position is based upon the idea tbat this purchase of stock in the Mecklenburg Company was in aid of a pure promotion scheme and in order to control and dictate the affairs of that company. The premise is not well founded.. The fact was not that way. The principles contended for are wise when applied to the reasons to be attained. But we must not lose sight of the reason back of the law. The restriction sought to be invoked here has its inception as a preventive of monopoly and other grave dangers. One railroad cannot purchase stock in a competing line because the tendency is toward monopoly. A bank is not permitted to purchase stock in another bank because it-may tend toward monopoly. A national bank cannot buy real estate not needed in its banking* business because the statute creating it has not permitted, on grounds of public policy, so as to confine its operations within the channels so much needed in the world of finance, and to render it at all times a purely banking institution. No reason has been suggested, and we believe none can be, why a national bank should not be permitted to own a small minority of stock in a building concern in order that it may better its own condition and render it a greater institution for the purposes of its creation. The reasons back of those cases cited by appellants, holding the acts of banks and other institutions ultra vires are wholly wanting. This stock was taken as a business measure to get the best banking house possible, in the most reasonable way, as seen by its officials.

If a national bank can buy expensive real estate in a banking district where real estate is costly, .and then in order to so use its property- as to make it a paying proposition instead of a losing one, as it can clearly do under the well-settled federal authorities, we see no reason why its officials may not be permitted a reasonable discretion in doing a lesser act, to take reasonable stock to get a desirable banking home. If it may build or lease a structure for that purpose, why may it not take a smaller interest, such as undivided interest, or subscribe for stock in order to reach the same result?

We therefore conclude that the chancellor did not err in holding that the contract of Stahlman to purchase this $45,000' of Mecklenberg stock was not ultra vires the bank, illegal, against public policy, void, and unenforceable.

This disposes of the first assignment of error.

The second assignment of error raises the question as to whether there was any legal and valid consideration to said stock purchase contract. Defendant says that the only consideration is recited on the face of that contract, viz., that complainant bank would pay its subscription to the Mecklenburg Real Estate Company for the stock theretofore made by it. It is said this is no consideration, because if its agreement to take this stock was not void, it was simply an agreement to pay its own obligation to the corporation, and that this conld be no consideration moving between the bank and Major Stahlman. The contract recites the consideration as above stated, but it is very apparent that this was not the only consideration. The obligation was mutual that the bank would sell and Stahlman would buy at par, with accumulated dividends added. So it may be more correctly said that the real moving consideration was not only that Major Stahlman was willing to purchase the stock if the bank would subscribe and pay the building corporation he was promoting therefor, but the agreement of Major Stahlman to purchase was a consideration for the agreement of the bank to sell. This assignment is therefore overruled.

The third assignment of error is that the stock purchase contract was not an absolute agreement to sell the stock at the prices and times stated therein, but only an option to defendant and his wife to take it at the prices and times stated in the event complainant bank did not, in the meantime, .dispose of it to others.

The facts in regard to this agreement are stated ahoye. This was not a mere option to sell, hut an unconditional agreement upon the ■ part of defendant Stahlman and wife to bny from the Fourth National Bank the said $45,000 of stock, and they were to take and pay for the same, one hundred shares of the par yalne of $10,000 on December 1, 1909, another one hundred shares December 1, 1910, one hundred shares December 1, 1911, and one hundred and fifty shares December 1, 1912. It is stated in the contract that it is the desire of E. B. Stahlman and wife to buy said stock from the bank. The bank reserves in the agreement an option to sell this stock if it so desires at any time or times to other persons, and thereupon, if all of same should be sold so that the claims of the said bank against E. B. Stahlman and wife were fully paid, that the bank would cancel and surrender this agreement, but that option was a conditional one because it was further provided that Stahlman and wife, or either of them, should have the option to buy said stock at par and accumulated dividends at any time or times before the bank sells it to others, and that at least thirty days’ notice of the desire of the bank to sell said stock, or any part thereof, should be given Stahlman and wife, or either of them, of such desire before the bank should have the right to sell said' stock to others. It was therefore an unconditional promise upon the part of Stahlman to purchase and an unconditional promise upon the part of the bank, to sell. The bank did have the light to sell t'o others if Stahlman did not buy, but this option gave Stahlman preference at all times, and in case the bank did not sell to others, which it has not done, the agreement of Stahlman was obligatory and bound him unconditionally to purchase the stock. This unconditional agreement upon his part to buy cannot be called an option. It was somewhat of the nature of a guaranty upon his part that the bank should not lose anything on the Mecklenburg .stock, but Stahlman and wife stood ready to purchase the stock at stated intervals. This assignment is therefore not well taken.

The fourth assignment of error is that this stock purchase contract, if valid and enforceable, should not bear interest as upon a loan, but provides that dividends unpaid shall be included, and inasmuch as no dividends were earned, none can be recovered.

This is not a fair construction of the agreement. It is provided in the contract.that this is guaranteed six per cent, cumulative preferred capital stock, and that if any dividend upon said stock remains unpaid at the time of said purchases to be made by Stahlman and wife, they will also pay the accumulative dividends upon the stock represented by each of said purchases. As long as the six per cent, dividends which this stock should bear were unpaid by the company, it was the obligation of Stahlman to pay same to the bank. It was the plain meaning that the dividends upon said stock remaining unpaid did not refer to only such dividends as the company might declare, but it was guaranteed stock, and was cumulative, so that the obligation of Stahlman and wife was to take care of any dividends unpaid by the company, making it in the nature of a loan to Stahlman and wife.

The fifth assignment of error, is that the chancellor erred in not holding that the provisions of said alleged contract of April 5, 1906-, for its own security, were exclusive, and that the bank could not hold or retain other choses in action or property of defendant for its security. This involves the question made in the sixth assignment of error, raising the point whether the pledge contained in the note of defendant of April 10, 1911, for $24,400, of the shares of stock therein mentioned, extended to and entitled the bank to hold said stock for the security of the stock purchase claim of $45,000.

The eighth and ninth assignments involve the sufficiency of the tender made by Major Stahlman on July 31, 1911, just before the bill in this case was filed, and whether the same was kept good pending the litigation. These assignments take the position that the tender, being good, operated to discharge the collateral held by the bank on the loan. It is argued that the bank did not object to the tender as made, except on the ground that it did not include' the stock purchase claim of $45,000. If the bank was entitled to retain all this collateral, then the tender was not sufficient to release the same.

Therefore the fifth, sixth, eighth, and ninth assignments of error depend for their solution on whether the collaterals held to secure the $24,400' note were likewise applicable to the payment of the stock purchase obligation. After all other matters arising in this cause had been determined by the court, only four members sitting, Chief Justice Neill being incompetent by reason of relationship to one of the parties, the court by the chief justice, requested Governor Rye to appoint another justice to sit in the further determination of the cause, whereupon the governor appointed Hon. W. 0. Caldwell, a former member of this court, to act in the place of the chief justice, and the cause was again argued by attorneys on this question and taken under further advisement, the result of which is that the court is of opinion that the collaterals to secure the $24,400' note were, under the contract which is a part of that note, a further security for the payment of the stock purchase obligation, and these assignments, numbers 5, 6, 8, and 9, are therefore overruled.

The views of the court touching this proposition are elaborated and treated in an opinion prepared by Mr. Justice Caldwell, and which is filed herewith.

The seventh assignment of error is that the chancellor failed to hold and decree that complainant bank was estopped from claiming against defendant Stahl-man, as indorser for Morton-Scott-Robertson Company, any more than the sum of $3,851.24, rendered by complainant to defendant on July 29, 1911, as the balance of said debt in response to defendant’s request for a statement, including interest to July 31, 1911, of all indebtedness to the bank for -which it claimed the right to hold the collaterals mentioned in his note for $24,400, and in failing to credit on said balance of $3,851.24 after Jnly 31,1911, the collections, thereafter made by complainant bank from said principal debtor on February 14,1914, of $1,649.07.

In reality this assignment as to the Morton-Seott-Robertson Company debt involves nothing more than a question of estoppel. The credit of $1,649.07 referred to in the assignment of error was allowed in the decree of the chancellor, and there is no ground for objection on that item. The bank had rendered a statement to Major Stahlman which erroneously omitted an item of interest, and the tender made thereupon was only for the amount stated by the bank. While this was a good tender so far as the amount was concerned, it was not an estoppel against the bank that will preclude it.. The mistake will be corrected, as no one has been prejudiced by the statement and no element of estoppel can arise.

As regards the legality of the tender made, it was not a valid and binding tender, because it did not include the stock purchase debt, and thus did not release the securities held by the bank, but under all the circumstances of the case, in view of the dispute as to the legal effect of the stock purchase contract, we think the offer of Major Stahlman to pay the $24,400 note was sufficient to exonerate him from having to pay the bank’s attorney’s fees, as stipulated in this note. There was in reality no litigation as.to this item, and, the main fight being over the stock purchase contract, we think, in equity, the chancellor met the merits when he refused to allow attorney’s fees on this note. The assignment by the bank on this point will therefore be overruled.

The debt of the Banner Publishing Company was paid prior to the bringing of these suits. The suit against the Banner Publishing Company does not now involve any live isue. It was originally to have the Banner Publishing Company stock transferred to the bank in order that it might collect the dividends. Evidently the chancellor’s decree omitted any action on that phase of the litigation because it had become immaterial at that time.

The final decree found the total indebtedness of defendant to the complainant on June 1, 1914, to be $98,745.67, to be credited with the sum paid into court January 9, 1912, which was $28.,336'.64, and the accumulated interest thereon, leaving the amount to be recovered and for which the collaterals are liable, $66,-407.15. He ordered the collaterals to be sold unless the amount recovered, including costs, should be paid by September 1,1914, giving three months within which to pay.

The decree of the chancellor is, in all things, affirmed, and the case will be remanded in order that the decree may be carried out.