118 F.2d 969 (6th Cir. 1941), 8418, Holland Furnace Co. v. Allen

Docket Nº:8418.
Citation:118 F.2d 969
Case Date:April 08, 1941
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 969

118 F.2d 969 (6th Cir. 1941)




No. 8418.

United States Court of Appeals, Sixth Circuit.

April 8, 1941

Page 970

E. D. Alexander, of Grand Rapids, Mich. (Alexander, McCaslin & Cholette, of Grand Rapids, Mich., on the brief), for appellant.

George S. Norcross, of Grand Rapids, Mich. (Warner, Norcross & Judd, of Grand Rapids, Mich., on the brief), for appellee.

Before HICKS, SIMONS, and ALLEN, Circuit Judges.

HICKS, Circuit Judge.

Suit for conversion of 300 shares of common stock of appellant, Holland Furnace Company. The court hearing the case without a jury awarded damages in the sum of $8,524.48 and interest.

Appellee, Allen, was continuously employed in the sales department of the Company from November, 1926, to December, 1937, with the exception of a lay-off from January, 1933, to April, 1935. .

In February, 1931, appellee purchased through the Company (it having advanced the money), 200 shares of its common stock at $31 per share, transferring to it as collateral 100 shares which he owned. His obligation to the Company, including brokerage charges, was $6,230. Up to August 1, 1933, he was credited with $1,350 but no further payments were made.

About September 27, 1935, the Company sold the 300 shares without notice to appellee, receiving $18 a share on 200 shares and $18 1/8 a share for the remainder. It applied the proceeds on appellee's account and cancelled the deficit.

The court held that the sale, being without notice, violated Sections 9561-9563 of the Compiled Laws of Michigan, 1929. We quote Sec. 9561: '9561 Sale of personal property collateral; notice. Section 1. When stock, bonds, or other personal property is pledged as collateral security for the payment of money or the performance of any obligation, and there has been a default in such payment or performance, such stock, bonds or other personal property may

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be sold to satisfy said debt or obligation at public sale, or at private sale where the contract of pledge authorizes a private sale; but before a sale, ten (10) days' notice in writing thereof shall first (1st) be served on the pledgor or his legal representative, either personally or by mail addressed to said pledgor or his legal representative at his last place of residence.'

Appellee's purchase was made following the issuance by appellant over the signature of Landwehr, its sales manager, of Sales Department Bulletin No. 12, dated February 19, 1931. The bulletin was addressed to 'Holland Furnace Company Employees' and outlined three plans for the purchase of stock. Deferred payment Plan No. 2 under which appellee applied for the 200 shares is as follows: 'For every share of our stock now owned by you which you assign to us, we will buy two shares of our stock for you at the market, plus the brokerage charge to us. You are to pay us 1/3 of amount invested in stock purchased for you under this plan on or before June 1, 1932; 1/3 on or before June 1, 1934. Interest, at six per cent per annum, is to be deducted quarterly out of dividends received on your stock, and balance of dividends is to be credited to your stock purchase account. Title to the stock deposited under this plan, as well as to stock purchased hereunder, shall remain in the Holland Furnace Company and/or its nominee until it is paid for in full or until it has been sold.'

We quote two other paragraphs...

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