No. 31 | 2d Cir. | Nov 16, 1921
The facts of this as pleaded, admitted, or proven beyond any doubt, are in our judgment sufficient to dispose of the litigation. We shall therefore state their substance, leaving without comment several matters of law much argued at bar.
The gist of complaint is that plaintiff (Weidenfeld) was in 1893 the liquidating partner of his firm, and in respect of the transactions producing this litigation may be spoken of as the sole actor, although it had been the firm that had long dealt with defendant. He had deposited with defendant (Pacific Company) in or before 1893 various securities, including “over 300” bonds of a railroad company, as collateral to his indebtedness to Pacific Company. Of these bonds 208 had previously been delivered by the railroad company to plaintiff as security for advances made to that company by him. While the said 208 bonds and others of same issue (to wit, the above-mentioned “over 300”) were in possession of Pacific Company, and hypothecated for plaintiff’s debt, as above set forth, it is alleged as agreed (necessarily between plaintiff, defendant, and the railroad company) that the railroad should make its promissory note to Weidenfeld for the amount of his advances to it, formally pledging these same 208 bonds (already pledged by Weidenfeld to Pacific Company and in the latter’s possession) as security ; Weidenfeld would then indorse such note to Pacific Company, which would then “collect the said note from (the railroad company) for account of the plaintiff, and credit his personal account with the said amount.” When and if the note was paid, the 208 bonds were to be turned over to the railroad company.
The complaint further avers, that when (long before the note incident) Pacific Company received the 208 bonds from Weidenfeld, it had “due notice” that they “were the property of the” railroad company, and that when the note was given and indorsed Pacific Company agreed “to release the said 208 bonds from any lien” created by Wei
As next alleged a note for $74,746.87 was given in 1897 (specifying the 208 bonds as collateral therefor) by railroad company to Weidenfeld, and was duly indorsed by the latter to Pacific Company, all in pursuance of the agreement above outlined. The gravamen of action as pleaded is that railroad company never paid the note, that Pacific Company still has both note and the 208 bonds, and refuses to return either to plaintiff, wherefore Weidenfeld has suffered damage in the sum of $459,466.67; and he sues for that amount, apparently the face of the note and interest, plus the assumed value of the bonds.
Of this complaint it may be noted that it states no facts entitling plaintiff to the judgment prayed for. He might have been entitled to the redelivery of the note and collateral; but the damages for failure to redeliver could never exceed what he would lose by any failure to collect and “credit his personal account.” The trial evidence showed without contradiction that in or before 1893 Weidenfeld hypothecated as a small part of the collateral to his debt to Pacific Company of about $4,000,000, 333 bonds of said railroad company; that company complained to defendant that as to the 208 above mentioned (or some of them) he had no lawful right to use them as collateral to his own debt. The railroad was actually indebted to Weidenfeld, and the note scheme as pleaded was carried out, with the important exception that there was not the least evidence that upon due consideration the Pacific Company ever released the 208 bonds from the lien created by Weidenfeld’s pledge of 1893.
Whatever may have been the true relation between Weidenfeld and the railroad as to these 208 bonds, no attack was ever made upon the rights of Pacific Company as pledgee. The railroad bonds were evidently of doubtful value, at least for purposes of sale in open marketand the intent and effect of the transaction incompletely set forth in complaint, was that, if railroad company paid to Pacific Company what it owed Weidenfeld, the latter company would hand back to the railroad the bonds, and credit Weidenfeld’s indebtedness with the note proceeds; and it may be'noted that the complaint nowhere claims that defendant was to collect the amount of the note, and hand the cash over to Weidenfeld. He was to get credit for this comparatively small sum on a debt of millions; in effect, the arrangement was but one way of possibly realizing on some very poor collateral.
The railroad company did not pay the note, nor did plaintiff pay defendant $4,000,000; whereupon in 1897, on due notice, the collateral to the indebtedness of Weidenfeld to Pacific Company, including the 208 bonds, was lawfully sold. That the sale included these bonds is so clearly proved that we do not discuss the matter. The collateral was insufficient to extinguish Weidenfeld’s indebtedness by over $800,000, and in that sum he has remained indebted to defendant ever since.
The jury was permitted to give verdict, practically for the amount of the note and interest. But the note had. been satisfied out of the collateral, even according to the tenor of the complaint, and if the railroad, which (according to plaintiff) owned that collateral, had any cause of complaint, this plaintiff certainly had none. So far as we know the railroad has remained satisfied for over 20 years.
Judgment reversed, with costs, and a new trial ordered.