(after stating the facts as above). [1] Section 1753 of the Wisconsin Statutes reads as follows, viz.:
“No corporation, stall issue any stock or certificate of stock except in consideration of money or labor or property estimated at its true money value, actually received by it, equal to tbe par value thereof, nor any bonds or other evidences of indebtedness except for money or for labor or property estimated at its true money value, actually received by it, equal to seventy-five per cent, of the par value thereof, and all stocks and bonds issued contrary to the provisions of law and all fictitious increase of the capital stock of any corporation shall be void.”
If the bonds in question were issued at all, it must have been at the time they were delivered to appellant as security for the $15,000 loan. It was held by the court in Pfister v. Ry. Co., 83 Wis. 86, 53 N. W. 27, that “when a corporation puts its bonds beyond its control by hypothe-cating them as security for loans, or for any other purpose, or in any other manner, it issues them, within the meaning and intention of the statute.” That case further holds that if the bonds are so hypothecated, without stipulating “that they shall be accounted for at not less than seventy-five cents on the dollar of their par value, it violates the statute, and the bonds thus issued are void.” Tliht the bonds in question were issued in the statutory sense seems to have been conceded in the present case. That being so, and $15,000 of bonds having been hypoth-ecated as security for the payment of the $15,000 loan, there seems to be little room for the proposition that the bonds were issued for a consideration less than 75 per cent, of their face.
[2] The basic contention here seems to be that there was at the time of the issue and delivery of the bonds, no stipulation requiring the appellant to account for the same at not less than 75 per cent, of their face value. It is manifest that the bonds were not taken with any intention of defeating the rights of the bankrupt under section 1753. The president of appellant refused to make the loan on the strength of the bonds, and required .the director who was negotiating the loan to guara'ntee the same, which the latter, having full confidence in the bonds, readily did. Again, the bonds were hypothecated at their par value. This action serves to strengthen the claim that the bonds were hypothecated with the requirement of the statute in view. The appellant was a banker engaged in the making of loans, and as such must be presumed to have been familiar with what was necessary in protecting itself in- such a situation. The statute had been before the courts on numerous prior occasions so prominently that to presume ignorance or willful conduct on the part of the bank challenges one’s credulity. The statute says nothing about the taking of a stipulation from the pledgee or purchaser agreeing to account for the collateral bonds at not less than 75 per cent, of their par value. Nor does the Wisconsin court require that a stipulation of that character be reduced to writing or specifically declared. In our judgment the facts suffice to raise the implication of an agreement that the bonds should be so dealt with as would make them valid securities; that is, that if sold they must be accounted for.at not less than 75 per cent, of their face value. This construction was placed by us on a similar state of facts in First Savings & Trust Co. v. Waukesha Canning Co., 211 Fed. 927, 128 C. C. A. 305; *341and by the Circuit Court of Appeals for the Second Circuit in In re Waterloo Organ Company, 134 Fed. 345, 67 C. C. A. 327. It is but confirmed by the fact that the bank never parted with or tried to dispose of any part of said bonds contrary to the statute; that, so far as the record discloses, it gave no thought to its possession of the bonds until after bankruptcy was instituted; that the bankrupt does not appear to have made any inquiry as to the surplus of bonds the bank held; and that even after the note was due, when the bankrupt failed to place milk invoices with it as agreed on, there seems to have been no suggestion that the bonds would be resorted to. The whole situation seems to indicate a condition of friendliness for the bankrupt which precludes any suspicion of an intention to take any advantage of its possession of the bonds.
We therefore hold that the bonds in question were issued in full compliance with the terms of said section 1753 and are- valid in the hands of the bank, at least to the amount of the balance due upon said $15,-000 loan, estimated at not less than 75 per cent, of their par value. This being so, it becomes unnecessary to pass upon the other matters raised in the record and briefs of counsel.
The judgment of the District Court is reversed, with direction to proceed further in accordance herewith.