The real inquiry is, was there a “debt due” from Leggett to the bank, within the meaning of the articles of association, at the time the transfer of the stock was demanded. It is not the question, whether, at the time the plaintiff became the equitable owner of the stock, by a secret, undisclosed sale, the shareholder was such debtor; nor whether the indorser of a.promissory note, whose liability has not been fixed, falls within the class of debtors in respect to whom the lien was intended to attach. It may be conceded that it must be a fixed liability of the shareholder himself. The referee finds, and the case discloses the facts, that, in January, 1854, Leggett was the indorser on certain notes made by one Thompson and discounted by the bank, which had not then matured. Thompson died before the notes matured, and after their maturity Leggett reduced the amount of such notes by payments. On the 9th April, 1855, there was the sum of one thousand nine hundred dollars remaining due, for which amount Leggett made a note, payable at the defendant’s bank on the 1st August; 1855, to his own order, and indorsed by himself The note was signed “ W. E. Leggett, Ex.” Leggett thus undoubtedly became a debtor to the bank. If his contingent ' liability as indorser had not been fixed previously, he undertook then to become personally responsible for one thousand nine hundred dollars of the indebtedness. Affixing the letters “Ex.” to his signature could not alter his personal liability or bind the estate of Thompson. This was the view taken by the referee and the Supreme Court. If Leggett was not a debtor of the bank, within the meaning of the articles of association, prior to the 9th April, 1855, he unquestionably assumed the relation at that time.
*286 But the' referee placed, his decision, not on the- ground that Leggett was not indebted to the bank when the transfer of the stock was refused, but on what I deem to be an erroneous construction of the provision of the articles of association touching the question. The phrase, “all debts due by him or her to the association,” was held to mean only debts presently payable, and that, although a stockholder may have borrowed on his own note the money of the bank and put it in his-pocket, unless such note had matured, no lien attached, and the association could not lawfully refuse a transfer of his stock. This cannot be a correct interpretation of the sense in which the associates used the words, “all debts due,” or designed .that they should be understood. The provision was intended to embrace all debts which the stockholder owed the association, whether payable presently or in the future. Its purpose was, not to facilitate stockjobbing, but to promote the legitimate business of banking, and to benefit the bank by strengthening its securities; and it is in this light that the provision is to be construed. There is a much stronger reason for inferring an intention to embrace debts payable in the future rather than presently, growing out of the fact that most of the debts-created with a banking institution are through the medium of discounted paper, where the credit of the borrower is extended. As was said in Grant v. The Mechanics' Bank of Philadelphia (11 Serg. & Rawle, 143), of what benefit would it. be if the stockholder had the unrestrained right of transfer at any time before his note fell due ? The time of making the loan is that at which the directors must look for security. To construe" the provision to embrace only debts presently payable, would be to limit it for the benefit of the borrower, and not the association. The whole provision, taken together, shows that the object of making the stock not transferable was to “coyer and secure” the amount owing by the stockholder to the association, whether due and payable in presentí or in futuro. The restraint is upon transferring the stock, “ unless the shareholder shall previously discharge all debts due by him to said associa,: tian, or shall have remaining capital stock untransferred suffi *287 eient to cover and secure the amount that he may owe to said association.” The expression, “ the amount that he may owe,” is evidently intended as the equivalent of the previous phrase, “debts due;” each being used to denote the indebtedness which the stock was to “cover and secure.” The apt and explicit words used by the associates in the succeeding section of the fifth article, to limit the right of sale to cases of actual default, shows that they had no difficulty of discriminating, when that was their purpose, and excludes the idea that the general words of the previous section were used in the same restricted sense.
When, therefore, the bank was first notified that the stock had been assigned to the plaintiff, and the latter demanded that it should be transferred to him, Leggett, the shareholder, was a debtor to the bank, and on that ground, I think, such transfer was rightly refused. It can make no difference with the question if it should be conceded that, in January, 1854, when the plaintiff became the equitable owner of the stock, Leggett was not a debtor to the bank, and that then, had a transfer been1 demanded, it could not have been legally refused. Nor is it important to determine what would have been the rights of the plaintiff and the bank, had the plaintiff, upon becoming the equitable owner of the stock, notified the bank that he was such owner. Nothing of the kind was done. The case is presented of the plaintiff, unknown to the bank, in January, 1854, purchasing a shareholder’s stock, and taking an assignment of a certificate expressing on its face that the shareholder’s title was, subject to all conditions and stipulations in the defendant’s articles of association, transferable only on the books of their banking-house, by him or his attorney, on delivery of such certificate; and that, although knowing that the articles of association gave the bank a lien on such stock for any debts due from the shareholder at the time the transfer was demanded, neither notifying the bank that he was such owner, or demanding a transfer, until sixteen months after the alleged secret purchase, and after the shareholder, if not a debtor to the bank at the time ctf sale, had subsequently become such debtor. *288 The lien unquestionably attaches in respect to the shareholder’s debts existing when the bank is asked to transfer the legal title; and one becoming the owner of stock, subject to a provision in the articles of association giving the bank such lien, and of which he has knowledge, but who omits to give the bank notice of his ownership, and thereby enables his vendor to have credit on the faith of his being a stockholder, has no superior' equity to be enforced.
The judgment of the Supreme Court should be reversed, and a new trial ordered, with costs to abide the event.
Dehio, Davies, Gould and Smith, Js., concurred.