| N.Y. Sup. Ct. | Nov 1, 1869
If this case is to be decided upon the same principle of law as if it was depending between the plaintiff and the firm of Goodyear Brothers & Durand, its determination is simple and easy. Between those parties, the stock in question was given by the former and held by the latter as a pledge, for a contingent liability as to amount, and a pledge, in its nature, to whatever might be the amount of liability,» differing in
Goodyear & Co. had no authority, in fact or in law, to sell the stock until they had first demanded payment of the plaintiff of the sum due on account of the liability from him to them. (Wilson v. Little, 2 N. Y. Rep. 443.) As I understand the contract between the plaintiff and Goodyear & Co., and as it appears from the evidence and the report of the referee, it is obvious that no absolute sale of the bank stock was ever intended between them. . Goodyear & Oo., as brokers, were carrying for the plaintiff 200 shares of Worth Western railroad stock upon a declining market. This railroad stock, itself, .failed to be sufficient security to his brokers, and the plaintiff was called upon by them for more margin. This, we understand, means, in the broker’s lexicon, additional collateral security against loss to.the broker, while he is so. carrying stock for his employer. The bank stock in question was furnished as such margin.- What then were the legal relations between the plaintiff and his brokers in relation to this bank stock ? There was no sale of it to the brokers. That is not so cl aim eel. It is only claimed that there was a power of sale. This was necessary in order to make this margin of any security. It. is not even argued that, as between those parties, this power of sale was intended to be abso-' lute, and without the usual rights and incidents belonging to a pledge—that of notice to the plaintiff, and his right of redemption. If it was a pledge, there was at law this right of redemption, and before a sale could be made by the pledgee, the pledgor was entitled to reasonable notice, and demand of payment of his liability, and default of such payment on his part. While the pledge remained as such, unaffected by any demand, notice and default, the legal title of the stock (as a general rule) remained in the pledgor; but when the certificate of legal title to the stock is actuallv intended to be transferred, and the transaction
As between the plaintiff and Goodyear & Co., it is clear, then, that the latter had no legal right secretly, or without the knowledge of, or notice to, the plaintiffj to sell his stock to Butterfield & Co., or to the defendants, the Tenth national Bank of Hew York, because it was a pledge. (Dykers v. Van Allen, supra, 501.) It must be remembered that it was not the stock itself, but the evidence of title to the stock. It was the pledge of a chose in action. This presents the plaintiff’s point.
But the defendants, the Tenth national Bank of the city of Yew York, claim that the transaction in question between the plaintiff and Goodyear & Co., was a case of agency of the latter for the former; that the plaintiff having voluntarily parted with the evidence of title to, or external indicia of ownership of, the shares of stock in question, ought not to be allowed to turn over to an inno
It is not difficult to distinguish that case from the present. Here there was never any title in the brokers; here no agency to make absolute sale, without first giving notice and making demand, was ever created; no consent to its use to borrow money upon was ever given. The use of the certificate of stock in this case by Goodyear & Co. beyond the mere purpose of pledge, or margin, was tortious, if not felonious. In Crocker v. Crocker its use was known and authorized; in this case it was unknown and unauthorized by the plaintiff, and we think the transfer conferred no title to a third person as purchaser, though he paid a valuable consideration therefor, and though the scrip had a blank power of attorney attached, and even
This kind of chose in action, though greatly used by way of security, and exceedingly convenient for such use in commercial transactions, have not yet been recognized by the courts as another exception to the rule, and as holding equal rank in this regard with bills of exchange and promissory notes. In the case of Bush v. Lathrop, (reported in 22 N. Y. Rep. 535,) is found a most thorough, critical and able review of the conflicts in the cases reported, and of the final settlement of a rule in this respect, to the effect that we have stated. In that case Judge Denio gave the history and progress of the conflicts in the opinions of distinguished jurists, and the adjudications in regard to this question in the courts of England, and in our own country, with that depth of research, learning and fidelity which ever distinguishes the opinions of that able judge; and although three other learned and able members of that court dissented from his conclusions, they were adopted by the court as the law of this State. It would not be becoming in us here to criticise that review of the case, and as little becoming to question, or refuse to follow that authority. It settles the law in that regard. We have only then to see if this case is brought within it.
I have been furnished also with a manuscript opinion in another case recently decided in the Court of Appeals, Ballard v. Burgett, in which the general rule is repeated, “ that a purchaser of personal property, other than commercial paper, acquires no better title than that of his vendor.” In that case is a review of a large number of cases cited, which had been supposed to be exceptions, and apparently holding to a different rule, and among them the case of Wait v. Green, (36 N. Y. Rep. 556;) but
If we are right in the view we have taken of the law upon the points we have discussed, we need not examine the points raised, that the subscription of the witness to the power of attorney was a forgery, or, that the revenue stamp was added without authority. The finding of the referee that the Tenth National Bank, at the time they received the said stock-scrip, had no knowledge of the transaction between Goodyear Brothers & Durand, or of the plaintiff’s interest in the said scrip, is not, in the view we have taken of the law, controlling in favor of said defendants. They might be bona fide purchasers of a chose in action, and yet their vendor, having no title in himself, could convey none to them.
The result of these views is, that the judgment must be affirmed.
Rosekraans, Potter and Bockes, Justices.]