28 Wash. 657 | Wash. | 1902
— The appellant is a building and loan association duly incorporated under the laws of the state of Oregon. On August 15, 1893, the appellant, issued to James 0. Saunders, president of the Commercial Bank -of Port Townsend, a certificate for fifty paid-up shares of its capital stock, of the par value of one hundred dollars each. The shares werei the property of the Commercial Bank. In August, 1894, the respondent loaned to the ■Commercial Bank eight thousand dollars, taking a certificate of deposit therefor, and receiving in pledge as security, with other collaterals, the certificate for the; shares of stock above mentioned, indorsed in blank by James C. Saunders as president. By the terms of its charter, the appellant was privileged, as its stock matured, to call in, pay off, and cancel the same upon its books, and in September, 1894, it .sought to exercise this privilege with reference to the stock represented by this certificate. The board of directors of the appellant ordered that the same be called in, paid off, and canceled, pursuant to which its managing officers paid the same to, the Commercial Bank, which appeared at that time upon its books to be the owner of the same, without exacting a return of the certificate. Whether it had notice that the certificate had been assigned to the respondent does not clearly appear from the record, nor does it appear1 whether it made inquiry to ascertain whether the Commercial Bank still held it. From the whole of the record, however, it can be inferred that it neither knew the one nor did the other, but that it relied upon certain provisions of its by-laws relating to transfers of its stock to protect, it against the interests of persons not, appearing upon its books to be the owners, or having interests in its outstanding stock. In September, 1896,
The appellant first contends that the respondent, having received the stock in pledge as security for a debt owing him, cannot maintain an action of damages against the corporation issuing the stock before its conversion or destruction without first acquiring title to the stock in some one of the modes, provided by law, by which a pledgee may acquire title to the thing he holds in pledge; that shares of stock are not negotiable instruments, nor to* be likened to* negotiable instruments, which become due and payable at a time, certain, but are chattels pure and simple, and are to* bei likened to other chattels which may pass by symbolical delivery; that the remedy of a holder in pledge of such chattels, when the debt owing him becomes due, is to sell the same, either by judicial sale after foreclosure*, or at public sale, without foreclo*sure, after giving* reasonable notice to* the pledgor to* redeem; and
The appellant, however, contends that it is not liable as a wrongdoer under the facts shown. It argues that
The next question is, what is the measure of the appellant’s recovery under the facts-shown? The trial court held, as we have said, that he was entitled to recover the full value of the stock, with interest at the rate the principal debt bore from July 1, 1898, up to' the date of the judgment. In this, we think the trial judge committed error. The respondent’s actual damage was the amount of the principal of his claim against his debtor remaining unpaid at the time this action was brought, with the interest accrued cand accruing thereon at the contract rate, and this, we think, is all that the respondent was entitled to recover against the appellant. Mr. Freeman, in his note to the case of Grggs v. Day, 32 Am. St. Rep. 714, states the rule to be that “where the maker has a. defense as against the original payee of a negotiable instrument transferred as collateral security, the holder is in no event entitled to- enforce such instrument, except to the amount of the debt which it was pledged to secure,” and, by analogy, the rule will apply to the case before us. Here, the appellant had a defense against any action instituted upon the certificate by the Commercial Bank, and the respondent is under no obligation to account to- it for the surplus over and above his debt.
We have not felt called upon to discuss the many objections urged by the appellant against the trial of the cause by the lower court upon its merits, nor the objections of the respondent to- a like hearing in this court-. These objec-. t-ions raise questions of practice and procedure, all of
For the error in the amount of the judgment entered, the judgment is reversed, and the cause remanded, with instructions to enter a judgment in favor of the respondent for the sum of twenty-five hundred and forty-seven dollars, .with interest thereon from the 1st day of July, 1898, at ten per centum per. annum. The appellant will recover its costs on this appeal.
Reavis, G. J., and Hadley, Anders, Dunbar and Mount, JJ., concur.