118 Mich. 243 | Mich. | 1898
Plaintiff sued defendants, in an action of trover, to recover the value of 20 certificates, representing 800 shares of stock in the Feige-Silsbee Furniture Manufacturing Company, claimed by him to have been unlawfully converted by defendants. The circuit judge directed a verdict in favor of defendants. Plaintiff has appealed the case to this court.
Prior to 1888 the plaintiff was one of the incorporators of the Feige-Silsbee Furniture Manufacturing Company (which name was changed, later, to the Feige Desk Company). He was a borrower of the defendant bank., November 8, 1888, he pledged to the bank the certificates of stock already mentioned, indorsing them in blank, and at the same time a paper was executed reciting the deposit of the certificates, “to be held by said bank as collateral security for any obligation which I may now have or hereafter have” in said bank. May 1, 1895, Mr. Feige gave his note to the bank in the sum of $0,650, due in three months. The defendant Burt became a stockholder in the furniture company some years ago. He was its president when this note was given, and continued to be its president from that time on. Mr. Feige was a director, and for some time had been manager, of the company. Mr. Burt was also president of the bank. It is the claim of the plaintiff that Mr. Burt and the bank conspired together to depreciate the value of the stock, and to deprive him of it without compensation, and to displace him from his position as director and manager of the company. He says on February 10, 1896, the bank, without notice to him, through its president, Mr. Burt, surrendered the 20 certificates of stock, and one certificate in lieu thereof was issued to the bank for the 800 shares, and the 20 certificates were canceled. He claims the certificate so issued was never returned to the furniture company. He says Mr. Burt, as president of the company, refused to recog
May 18, 1896, the bank obtained judgment upon the note given by Mr. Feige, and caused an execution to be issued and placed in the hands of a deputy sheriff, who served a copy of it upon the secretary of the company, who on June 10, 1896, issued the following certificate:
“C. Dingman,
“Deputy Sheriff for Saginaw County, Mich.
“Dear Sir: You are hereby notified that, as appears by the books of the Feige Desk Company, of Saginaw, Michigan, a corporation, Ernest Feige is the owner of 800 shares of the capital stock of said company, of the par value of $25 each, subject, however, to the interest therein as pledgee of the Home National Bank of East Saginaw, Michigan. Said stock is represented by certificate No. 100, issued February 10, 1896, to said Home National Bank.
“Yours truly,-
“ G. B. Burt,
“Sec. and Treas. of the Feige Desk Co.”
Where stock is pledged to secure the payment of a debt, in default of payment the pledgee may not at once convert the stock to his own use, but he may give notice to the pledgor of an intent to sell the stock, and may so sell it, without any judicial proceedings, and apply the proceeds to the payment of the debt. 1 Cook, Stock, Stockh. & Corp. Law, § 476. A sale without a notice is a' conversion of the stock; and, in the absence of any agreement, the sale must be at public auction.
It is the claim of defendants that there was no attempt, to deprive plaintiff of his stock in February, and that the pledgee of shares of stock has a right to have the stock transferred, and new shares issued in his name, and that doing so does not amount to a conversion; citing Coleb. Coll. Sec. § 288; Day v. Holmes, 103 Mass. 306; Heath v. Griswold, 18 Blatchf. 555; Heath v. Smelting Co., 39 Wis. 146; Rich v. Boyce, 39 Md. 314; 1 Cook, Stock, Stockh. & Corp. Law, § 466. These authorities sustain the position of counsel; but it is the claim of plaintiff that defendants went further than this; that they used the stock as though it was the stock of the bank, and denied that plaintiff had any right in it or in the company. Plaintiff gave testimony tending to support his claim. We think there were sufficient facts shown so the question should have been submitted to the jury.
Was there a conversion by the levy upon and sale of the stock ? A share of stock is in the nature of a chose in action, and at common law a chose in action could not be
“The officer of the company who is appointed to keep a record or account of the shares or interest of the stockholders therein shall * * * be bound to give a certificate of the number of shares or amount of the interest held by such judgment debtor.”
As we have already seen, none of the certificates of stock stood upon the books of the company in the name of Mr. Feige after February 10th. This was known to the secretary of the company, and to the bank; but, knowing this, the bank levied upon the stock as though it stood in his name, sold it, and took the avails of the sale. This sale cannot be justified as an execution sale by a creditor of Mr. Feige. Blair v. Compton, 33 Mich. 441; Van Norman v. Jackson Circuit Judge, 45 Mich. 208; Gypsum & Stucco Co. v. Kent Circuit Judge, 97 Mich. 631.
Can the sale be justified as a sale by the pledgee? We have already seen the sale. cannot be made until notice has been given to the pledgor of the intention to sell. “A sale without a notice is a conversion of the stock.” 1 Cook, Stock, Stockh. & Corp. Law, § 477. In Stearns v. Marsh, 4 Denio, 227 (47 Am. Dec. 248), it is held, if the pledgee sell the property, without calling on the pledgor to redeem, the latter may maintain an action for the value of the thing pledged, without tendering the debt, because
The sale made was an unlawful sale, and amounted to a conversion. The plaintiff was entitled to recover the value of the shares of stock, less the amount of the debt.
The judgment is reversed, and a new trial granted.