Heinicke Instruments Company, a Corporation v. Republic Corporation, a Corporation, and Samuel N. Bergman

The contest in this interpleader action is between an attaching creditor and the assignee-pledgee of 28,985 shares of stock. The district court held that the assigneepledgee had perfected his security interest in the stock before the attachment because, under Oregon Revised Statutes § 79.3050, U.C.C. § 9-305 , the issuing corporation was the bailee of the pledgee-assignee. We conclude that the district court misapplied U.C.C. § 9-305. No bailment existed, and the judgment must be reversed.

In March, 1970, Block purchased 28,985 shares of Heinicke Instruments Company (“Heinicke”) stock for $249,995.60, to be issued as a part of a private offering of common stock. Block was then president and a director of Heinicke. In May, 1970, Block assigned all of the stock to Bergman as security for Bergman’s loan to Block. Bergman instructed Heinicke to forward the securities to him as soon as they were issued. American Stock Exchange’s approval of the stock issuance was delayed. As of November 31, 1970, when Block’s presidency and directorship of Heinicke was ended, approval had still not been obtained. Meanwhile Bergman assigned the stock to Exchange National Bank of Chicago (“Bank”) as…