Neukom

This action was brought by Central Hanover Bank, as trustee for bondholders, to foreclose a mortgage securing $595,-000 worth of bonds issued by defendant North Butte Mining Company, a corporation of Minnesota. By various pleadings and stipulations, it was made to appear that plaintiff trustee had sufficient moneys paid it by defendant to satisfy all bondholders in full; and the issue narrowed to the validity of eight North Butte bonds in the face amount of $1,000 each. These bonds had been in the possession of John W. Neukom, formerly an officer and director, and later receiver of the defendant company. Defendant in its answer claimed that the bonds were invalid, never having been lawfully issued to Neukom. Nan Neukom, the party in whose interest the suit was brought, received whatever interest her husband, John W. Neukom, held in the bonds, by way of gift.

The First & American National Bank of Duluth filed a complaint in intervention, alleging that the eight bonds in question had been pledged to it by John W. Neukom; that to the extent of the pledge it was a holder in due course.

On the issues thus framed, the cause came on for trial. The District Judge found that the eight…