98 N.Y.S. 56 | N.Y. App. Div. | 1906
This is an action for the conversion of ten shares of the capital stock of the Crocker-Wheeler Electric Company. One Alfred W. Law owned the stock and had pledged the same to Henry Marquand & Co., stockbrokers, as collateral security to his account as their customer speculating-in stocks on margins. The. brokers made a general assignment for the benefit of creditors to the defendant. Their books showed that Law was indebted to them in the stun of . $4,120.28. The defendant as such assignee duly advertised and sold the claim at public auction. It was purchased for $10 by one Hunter, a lawyer, and the next day the defendant executed and ‘ delivered to him an assignment thereof, with a statement of the account annexed, assigning all defendant’s “ right, title, and interest in and to any and all sum or sums of money now, due, or to grow due, upon the annexed account, which said account was duly assigned to me by the firm of Henry Marquand & Company.” The stock came into the possession of defendant as assignee, but the books did not show, and' he was not aware, that' it was held as collateral to Law’s account until seven days after the sale, when Hunter demanded it upon the ground that it passed to him as incidental to the account. The defendant declined to deliver it and offered to return the ten dollars purchase price of the account, which was refused.
Heither the account itself nor the advertisement or assignment thereof contained any reference to this stock or indication that any ' security had been put up or held as margin. Within two months after the sale of the account the defendant sold the.stock for $1,120, which was apparently its fair market value then and also at the time of the sale of the account.
Hunter subsequently assigned to plaintiff the claim against Law on the account, all his right to the stock and Ids claim against defendant for refusing to deliver it,
It clearly appeared that the defendant did not intend to sell any right or interest in the stock, and if this evidence had been received, it might have conclusively appeared that Hunter did not intend to buy any .right or interest therein. (Brown v. Lamphear, 35 Vt. 252.) This evidence, With that already in, might have shown a mutual mistake concerning a material fact which would have required a rescission at the instance of the party prejudiced. It is
However, the action is not defended on that theory, and there are 'other grounds upon which this unjust judgment may be reversed. The defendant knew that he was selling the account, which he had inventoried as valueless and which brought ten dollars; but he had no knowledge as to the existence of the stock as collateral, and he did not intend to sell for ten dollars a secured debt worth more than one hundred times that sum. Hothing. was done to lead the plaintiff’s assignor to believe that he was to receive the collateral, and he could only have known of the existence thereof through Law. The defendant could not have intended to part with any interest in the securities, since he did not know that he held them as collateral. If, as already observed, plaintiff’s assignor was equally unaware of the fact that the stock was held as security, he could not have intended to purchase the right to the security. In these circumstances, even if the form of the sale would in law carry the securities to the plaintiff, it is clearly a case for rescission on the ground that the minds of the parties never met as to the property and property rights.
Moreover, the defendant merely asks a rescission of the contract, not a reformation. He does not ask to retain the purchase price and have the- contract so amended as to except the stock. He offers to return the consideration and to restore the plaintiff’s
Bo reply was: served to defendant’s counterclaim for rescission The counterclaim was good. The facts- pleaded constituted- not only a defense to the action for conversion,, but ground for .affirmative relief to have the sale of the account rescinded. At the commencement of-the trial the defendant moved for judgment, pn the. counterclaim, which was denied, and he excepted.' We think this was error also; but since defendant did not rest on- his exception, but offered proof of the facts, we think that we should not direct final judgment on the counterclaim/
It- follows that the judgment and order should be reversed and a new trial granted, with costs to appellant to' abide the event. ' -
O’Bkíeñ, P. J., and Ltgbaham, J,, .concurred-; McLaughlin and. Houghton, J J, concurred in result.
Judgment and order-reversed, new trial ordered, costs to appellant ■to abide event. Order filed.