291 P. 684 | Cal. Ct. App. | 1930
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *225
This is a civil action growing out of the same state of facts involved in People v. Schumann-Heink,
[1] Objections are made to portions of the findings. The court found:
"That it is not true that said stock was deposited by said Wilfred M. Clare without the knowledge or consent of the plaintiff, but it is true that said stock was deposited with defendant with the full knowledge and consent of the president and secretary-treasurer of plaintiff." The sentence quoted is merely the last in a long finding detailing the circumstances of the pledge. The court on the evidence before it could not have found otherwise than that both Schumann-Heink, the president, and Clare, the secretary-treasurer, consented to the pledge, that Clare, making it himself, necessarily knew of it at the very time it was being made, and that Schumann-Heink knew it was about to be made and directed that it be made. Appellant says, however, that since in the act of pledging it, both Schumann-Heink and Clare violated their duties as corporate officers and acted in their own interests alone, their knowledge of what was done is not to be imputed to the corporation (citing McDonald v.Randall,
Appellant objects to a finding that respondent did not convert the stock in question to its own use, and claims that this finding is but a conclusion of law (citing Niles v. Edwards,
Objection is also made to a finding that appellant authorized and permitted Schumann-Heink and Clare to have access to its safe, and that it is estopped from here contending that the stock was wrongfully pledged with respondent or converted by it and is estopped from claiming damages for such conversion. These determinations, which are, in the objection, coupled together, are, again, only part of a long finding which undertakes to summarize, as a basis for declaring the estoppel, the relation of Schumann-Heink and Clare to the corporation, that the former exercised general supervision and management of its affairs, and the latter was its manager in San Diego, and by implication, the virtual dictation between them of what was, during the time involved, done at its San Diego office, and the practice of the corporation of permitting its officers to carry its securities in their own names. So far as the access to the safe is involved, the finding is sufficiently supported by the evidence, for not only does that show that Schumann-Heink was enabled to get the stock to take with him to Los Angeles, but it shows, as we saw, that so far as the San Diego office, which must include the safe therein located, was concerned, Clare was in charge, and, therefore, controlled what was done by the two or three employees, that is the cashier and the stenographer, who, with himself, made up the office force there. What, however, is principally objected to in this finding, is the determination that appellant is estopped to raise the contentions on which it relies, a matter which, again, can only be determined on a consideration of the whole case.
So far as respondent bank's bona fides in receiving the pledge is concerned, there is sufficient evidence in the record *230 to support the court's findings on the subject and indeed on that portion of the findings there is no attack.
In our view, when what is really incidental is eliminated, there are two questions and only two to be here decided, first whether, taking the case as a whole, appellant's conduct has been such as to subordinate its rights in the stock to those of abona fide pledgee in the ordinary course of business, without notice of its claims, and for value; and second, whether respondent was such a holder for value.
[2] It is, of course, the rule, with certain exceptions that do not here concern us, that a mere thief can pass no title to that which he has stolen. The same thing is not necessarily true where he who wrongfully undertakes to deal with property has been, by the act or neglect of the true owner, clothed with theindicia of ownership. The law is, generally, that "when one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened must be the sufferer." (Civ. Code, sec.
"The qualification of the rule, as not applying when the instrument is stolen, is not based upon the name of the agent's crime, but upon the fact that, in the ordinary and typical case of theft, the owner has not intrusted the agent with the document, and therefore is not considered to have done enough to be estopped as against a purchaser in good faith. He certainly has not done enough if the estoppel is based upon the principle that, when one of two innocent persons is to suffer, the sufferer should be the one whose confidence put into the hands of the wrongdoer the means of doing the wrong. But in the case like the present the agent has been intrusted with the converted property, and it is totally immaterial whether, by a stretch which extends largely beyond the true field of trespass, his wrong has been brought within the criminal law or not. The ground of the estoppel is present, and the estoppel arises. The distinction is not new. On the one side are cases like Knox v. Eden MuseeAmerican Co.,
This language was quoted and approved in Kohn v. SacramentoElec. Gas Ry. Co.,
"Hewlett had not only actual possession of the bonds, but had actual authority to dispose of them. It is the fact of actual authority and not the knowledge of the fact on the part of the pledgees and transferees which is the controlling factor." (Citing Fairmont Creamery Co. v. Los Angeles Ice ColdStorage Co.,
Indeed, it frequently happens that an estoppel arises, though the recipient of the property pledged or disposed of by the wrongdoing agent had no knowledge of the principal's existence. The very point in many of the cases is that the agent has been clothed with the indicia of ownership and thereby enabled to deceive the public by causing it to believe him the only one interested. (Arnold v. Johnson,
[7] There remains only the question whether respondent can be said to have become a holder for value. Appellant has directed our attention to Fairmont C. Co. v. Los Angeles etc. *234 Co., supra, where the court, in holding one to whom an agent entrusted with property for the purposes of transfer had wrongfully pledged it, entitled to retain the pledge as against the owner, held the pledge valid only as security for advances made at the time of the transaction or thereafter, saying as to a pre-existing indebtedness which the pledge also purported to cover, that as to this it was not a pledge "for value". We are unable to take that view of the matter, in consequence of section
"The law in this state on this question is well settled to the effect that not only does an antecedent indebtedness constitute a valuable consideration for a transfer in satisfaction and discharge of said indebtedness, but it is also a valuable consideration, within the protection of the equitable doctrine ofbona fide purchase, for a transfer merely as security for a pre-existing debt. (2 Pomeroy's Equity Jurisprudence, 4th ed., sec. 749.) The earliest cases in this state held that an antecedent indebtedness was a valuable consideration to support the transfer of commercial paper as security and rendered the pledgee thereof free from equities between the original parties. (Payne v. Bensley,
The judgment is affirmed.
Cary, P.J., and Barnard, J., concurred.
A petition for a rehearing of this cause was denied by the District Court of Appeal on October 3, 1930, and the following opinion then rendered thereon:
THE COURT.
Appellant asks our reconsideration of this case with respect to one point only, that is, whether respondent should be considered a holder for "value" of the securities pledged to it. In deciding it to be a holder for value we declined to follow the apparently contrary ruling in Fairmont C. Co. v. Los Angeles etc. Co.,
It is true that in 2 Pomeroy's Equity Jurisprudence, fourth edition, section 749, it is said that: "A conveyance of real or personal property as security for an antecedent debt does not, upon principle, render the transferee a bona fide purchaser, since the creditor parts with no value, surrenders no right, and places himself in no worse legal position than before," and that: "The rule has been settled, therefore, in very many of the states that such a transfer is not made upon a valuable consideration within the meaning of the doctrine of bona fide purchase."
The author says further, however, that: "In some states, on the contrary, even the securing of a preexisting debt is held to be a valuable consideration."
It is with reference specifically to the passages above quoted from Prof. Pomeroy's work that the Supreme Court in the passage from Smitton v. McCullough, supra, quoted in our original opinion, said: "The law in this state on this question is well settled to the effect that not only does an antecedent indebtedness constitute a valuable consideration for a transfer in satisfaction and discharge of such indebtedness but it isalso a valuable consideration within the *236 protection of the equitable doctrine of a bona fide purchase fora transfer merely as security for a preexisting debt." (Italics ours.)
While, therefore, were the question a new one, it might be open to argument whether the rule to which preference is given in Prof. Pomeroy's text and which is followed in many decisions from other jurisdictions cited in the petition for rehearing ought not to prevail, we must hold that the law in this state is settled to the contrary. It is true that in California forbearance to sue on an obligation, unaccompanied by any agreement to forbear, is held not in itself to constitute a consideration, at least for an executory promise. But that is not the same thing as to hold that the original obligation is not consideration for a subsequent pledge made to secure it.
[8] Section
[9] Appellant urges, further, that the doctrine that a pre-existing debt is a sufficient consideration for a contract of pledge, without any new consideration, has no application where the pledgor is a stranger to the debt. (Citing Bynum MercantileCo. v. First Nat. Bank of Anniston,
The petition for rehearing is denied. *237
A petition to have the cause heard in the Supreme Court after judgment in the District Court of Appeal, was denied by the Supreme Court on November 10, 1930.