241 Pa. 284 | Pa. | 1913
Opinion by
Henry Sproul & Company, stock brokers, who were engaged in business in the City of Pittsburgh, purchased for John Sloan, the appellee, in May, June and August, 1907, fifteen hundred shares of the capital stock of the United Copper Company. This stock was purchased at prices varying from $61.50 to $54 per share, and the brokers agreed to carry it for appellee on a margin of $20 per share, which he deposited with them. As this stock was purchased from time to time the brokers mingled it with other securities under their control,, and pledged them to a trust company and bankers as collateral for indebtedness of their own amounting to more than a million and a half dollars. This was without the authority or knowledge of Sloan. In April, 1908, Sproul & Company sold, at $6.25 per share, the stock which they had purchased for the appellee, but which he refused to pay for and take off their hands; and, after crediting him with the proceeds, the margins deposited and the dividends received on the stock, this suit was brought to recover the balance alleged to be due, amounting to $34,214.51, with interest from the date of the sale of the stock. A verdict was directed for the defendant, for the reason, as stated in the opinion of the court denying a new trial and judgment for the
When Sproul & Company purchased the fifteen hundred shares of stock the legal title to it vested in Sloan, subject to the payment of the balance due by him for commissions and advances made by them. He became the pledgor and they the pledgees of the stock: Learock v. Paxson, 208 Pa. 602; Barbour v. Sproul, 239 Pa. 171. Sproul & Company might have used the stock in making a specific loan for the purpose of enabling them to carry the stock for the appellee, but, when they used it for any other purpose, they made an improper use of it, and when they pledged it, with other securities under their control, for their own indebtedness, they unlawfully converted it to their own use: Douglass v. Carpenter, 17 N. Y. App. Div. 329; Strickland v. Magoun, 119 N. Y. App. Div. 113, and 190 N. Y. 545; German Savings Bank v. Renshaw, 78 Md. 475. “One to whom stock has been pledged for a loan has full power
But it is earnestly contended by learned counsel for the appellant that inasmuch as Sloan suffered no damage by the brokers’ conversion of his stock, he ought not to be permitted to defeat their claim. This begs the question, for the moment the stock was converted by the brokers to their own use, the customer was damaged, and the measure of his damages was the highest price of the stock between the date of the conversion and that of the trial of a suit brought by the customer for the unlawful conversion: Learock v. Paxson, supra. Prom this there would, of course, have to be deducted the balance of the purchase money due the brokers. “The pledgee of stock cannot legally part with the possession of the stock by a sale or repledge of it, except as he transfers the debt which the stock secures. If he does so he is guilty of a conversion. ......Even where, apparently, the pledgor would not be injured by the pledgee’s separating the stock from the debt and transferring the stock pledged as collateral- security, yet the law rigidly protects the interests of the debtor and pledgor, and will not compel him to submit to the danger of such transfers by the pledgee. There may, of course, be an express contract or understanding to the contrary”: Cook on Corporations (6th Ed.), Sec. 471.
The contract of Sproul - & Company, which the appellants, through their receiver, would enforce against Sloan, was one to hold the stock for him until he paid
The unauthorized pledging by a broker of his cus
The assignments of error are overruled and the judgment is affirmed.