129 Wash. 451 | Wash. | 1924
This is an action in equity to foreclose an alleged pledge, made by defendant Frank Water-house & Company to the plaintiffs, of all of the capital stock of the Seattle Taxicab Company to secure an indebtedness of $25,000, and interest, to the International Stevedoring Company; and an indebtedness of $31,000, and interest, to the Seattle & Globe Investment Company.
From a decree granting the relief prayed for, the defendant William T. Laube, as trustee in bankruptcy of Frank Waterhouse and Company, has appealed.
Appellant here presents and relies upon but two questions: (1) That the adverse interest of Mr. Water-house made the contract of pledge void; and (2) that the purported pledge was invalid for want of delivery. We shall consider these points in the order mentioned, setting forth such facts only as are pertinent.
(1) Frank Waterhouse was the organizer of, and at all times the controlling head of, Frank Waterhouse & Company, a corporation. He personally owned a substantial portion of its capital stock, and about three-fourths of its stock was owned and held by the
This is the background and basis upon which appellant’s first contention rests, and it is sufficient to demand careful scrutiny of the transaction. As was said in Westland v. Post Land Co., 115 Wash. 329, 197 Pac. 44, speaking of a similar situation:
*454 “While the courts will closely scrutinize a transaction of this kind and may even suspect fraud and overreaching, yet in this state there is no insurmountable legal obstacle standing in the way of thus doing business.” (Citing cases.)
This same principle is recognized in Olympia Box & Package Co. v. Pacific Veneer Co., 123 Wash. 533, 213 Pac. 24, where it is further held that the burden of establishing the good faith of a transaction so consummated rests upon the party asserting it. Was the good faith of this transaction so established? The trial court so found, and after careful consideration we can find no. basis of fact for a contrary view. Without attempting to set out all the evidence, or deal with each separate point which appellant presents as in his view indicating want of good faith, it will be sufficient to say that we are convinced that, at the time the loans were made, a fair and honest agreement to pledge collateral security was entered into and that the prior agreement was fairly and honestly carried out by the corporate acts of Prank Waterhouse & Company on January 3, 1921, when it was a solvent and going concern. To invalidate that act would be to condemn all and every transaction between corporations having interlocking directorates for that one reason alone, which is not the law of this state. Sacajawea Lumber (& Shingle Co. v. Skookum Lumber Co.,, 116 Wash. 75, 198 Pac. 1112, upon which appellant largely relies, touches only the familiar principle that a director of a corporation is disqualified by personal interest adverse to that of the corporation which he represents, from voting on matters involving that interest, and his vote, if so cast, will be disregarded in determining whether such a proposition has been adopted or rejected. So here, the vote of Mr. Waterhouse, and even that of his son, might be disregarded without changing the re-
(2) Was the pledge delivered? It clearly appears that Mr. Smalley, who was the treasurer of each of the allied Waterhouse corporations, kept a safe in his office in which were different boxes or compartments assigned to the use of the different companies; that when the resolution to pledge, and the directions to him to endorse and hold the stock as trustee for the pledgees, were made effective, he took the certificates of stock from the Frank Waterhouse & Company compartment of the safe, or from the place where he had kept them as treasurer of Frank Waterhouse & Company, endorsed them as directed, and put them in the iron box of the Seattle & Gflobe Investment Company, which was then returned to the same safe and there they remained, no one else having any access to them whatever, until he had the stock reissued to himself as trustee for the pledgees. This was an actual and sufficient delivery, complying with what was designated as the correct rule in Hastings v. Lincoln Trust Co., 115 Wash. 492, 197 Pac. 627, 18 A. L. R. 583, and like cases upon which appellant relies. Again, the law is as appellant asserts, but the facts in this case do not bring him within the rule which he thinks should apply. A constructive or symbolic delivery was recognized in the Eastings case, but here was actual delivery of the thing pledged to the trustee for the pledgees. The mere
“In order to perfect the contract of pledge the delivery need not be made to the creditor himself, but it will be sufficient if the thing pledged is placed in the hands of a third person chosen by debtor and creditor to hold for the creditor, provided such third person knows of the trust and accepts the obligation it imposes. The codes of' some states have defined the rights and liabilities of such third person, whom it designates as the pledge holder, and have closely adhered to the provisions of the French law on this subject. Under such provisions, the pledgor and pledgee may agree upon a third person with whom to deposit the property pledged, and if he accepts the undertaking, and receives compensation for so doing, he cannot exonerate himself. A gratuitous pledge holder may exonerate himself from the undertaking, by giving reasonable notice to the pledgor and pledgee to appoint a new pledge holder, and in case of their failure to agree, by depositing the property pledged with some impartial person, who will then be entitled to a reasonable compensation for his care of the same. He must enforce all the rights of the pledgee, unless authorized by him to waive them. If his undertaking is gratuitous, he assumes the duties and liabilities of a gratuitous depositary; if compensated, he assumes the duties and liabilities of a depositary for reward. The specific pledge or appropriation of goods, with intent that they shall be a security or payment, vests the property in them, as soon as deposited with a bailee, in the person to whom they are to be delivered, and the authorities seem to agree unanimously that the validity of a pledge is not affected by the fact that an agent of the pledgor is made the custodian of the property if the parties agree to such cause and he is in fact placed in possession.” 21 R. C. L., p. 647, § 13.
This rule has been approved by the Federal supreme court (Casey v. Cavaroc, 97 U. S. 467, 24 Law Ed. 779)
The judgment of the trial court must he and it is affirmed.
Main, C. J., Holcomb, Bridges, and Mitchell, JJ., concur.