Treadwell v. Clark

• Decision Date: 19 November 1907
• Citation: 190 N.Y. 51,82 N.E. 505
• Parties: TREADWELL v. CLARK et al.
• Court: New York Court of Appeals Court of Appeals

190 N.Y. 51

82 N.E. 505

TREADWELL

v.CLARK et al.

Court of Appeals of New York.

Nov. 19, 1907.

Appeal from Supreme Court, Appellate Division, First Department.

Action by George A. Treadwell against William A. Clark and others. From a judgment of the Appellate Division (114 App. Div. 493,100 N. Y. Supp. 1), affirming a judgment for plaintiff, defendants appeal. Affirmed.

Edward T. Bartlett, J., dissenting.

A. B. Cruikshank, for appellants.

Charles M. Demond, for respondent.

GRAY, J.

This action was brought to redeem from the defendants' possession 100 shares of the capital stock of the United Verde Copper Company, which the plaintiff had pledged to secure an indebtedness, and which, having been lost by, or taken from the pledgee, eventually, was purchased by the defendant Clark. The plaintiff had judgment, entitling him to redeem the certificate for the shares upon payment of the amount of the indebtedness for which it was pledged, and upon further making good to Clark the amount that he had paid for it. The judgment requires Clark to return, with the certificate, the dividends received upon the stock, with interest, and, in default thereof, gives the plaintiff the value of the stock at the time of the trial.

The facts, as they are conclusively established for this court by the unanimous affirmance of the judgment entered upon the findings, may, sufficiently for the questions to be considered, be stated as follows: The plaintiff, while residing in London, England, became indebted to Bennett, a grocer, for provisions and, in 1888, ‘as a pledge for the payment of’ his then indebtedness and for that which he might thereafter incur, ‘and for no other purpose,’ delivered to Bennett's manager 100 shares of stock in question. Upon delivering the certificate, which stood in his name, the plaintiff worte his name upon the back thereof; but the finding is that he ‘did not execute, or subscribe, any written assignmentthereof, or any power of attorney in blank, or otherwise, authorizing any other person to assign said certificate.’ Thereafter Bennett's manager, in whose possession he had left the certificate, left him; took, without his employer's knowledge, the certificate to this country, and then, in January, 1893, sold it to Burgess from whom Clark acquired it, in June of the same year, for the price of $300. No proceedings had ever been taken by, or for, Bennett to realize upon the pledged stock by a foreclosure of the lien, or by sale with notice, or otherwise. The amount of that indebtedness was in dispute at the time of the deposit of the stock by the plaintiff, and it remained in dispute until the trial of this action. The plaintiff, in his complaint, made a tender to Bennett of the amount he, plaintiff, alleged to be due upon his account, and also of any larger sum which might be found to be due from him. In June, 1893, the plaintiff first became aware that Clark had possession of his stock through a request to him to execute an assignment of the certificate. Bennett's manager and his vendee, Burgess, whose indorsements upon the certificate were insufficient and irregular, at Clark's request, had executed formal assignments. When the request came to plaintiff from Clark, it was his first knowledge that Bennett had parted with the pledged stock, and he notified Clark, personally and in writing, of the facts relating to his ownership and to the pledge. He demanded of him the certificate, and, further, notified the copper company of his ownership of the stock. When Clark had purchased the stock, he observed that there had been no regular, or formal, transfer, or assignment, of the certificate. In subsequent interviews, after the plaintiff knew that Clark had his stock, the facts were fully disclosed to Clark or his agent, concerning plaintiff's title and his grounds for claiming its return to him. The trial court found that Clark, prior to his acquisition of the stock, had no knowledge that it had been pledged by the plaintiff to Bennett, or how it had come into the possession of Bennett's manager; but the court expressly refused to find, upon Clark's request, that Clark ‘purchased said stock in good faity, believing Burgess had the title thereto and a right to dispose thereof.’ For this refusal, there was warrant in the evidence of the circumstances surrounding Clark's transaction of purchase. The inforences were certainly sufficiently strong for the court to refuse to find good faith and to limit its statement of fact to the one that Clark, prior to his acquisition of the stock, had no actual knowledge or information of the defendant's pledge of the stock. The plaintiff, some time after Clark's refusal to deliver up the stock to him, in 1899, commenced this action. He joined as parties defendants all who had been, or might be, interested in the issues, including the public administrator of the county of New York, who, upon Bennett's death pending the action, had received letters of administration upon Bennett's estate, and the directors of the copper company, who, by reason of proceedings for the dissolution of the corporation, had become vested with its property and rights under our statutes. Of the many objections which the appellants, who are Clark, the company, and its directors, have made to the plaintiff's recovery, there are but a few which I deem it important to consider.

His right to maintain an equitable action is questioned, and it is argued that his remedy was at law, by a possessory action, or by an action for damages for conversion. This defense was not pleaded in the answer; but, assuming that he could assert it upon the trial by his motion to dismiss upon the pleadings, it is untenable. The plaintiff's right to the stock had never been foreclosed, or divested, by any proceedings on the part of Bennett, who held the title to it as pledgee. It is true that, as a general rule, an action in equity will not lie to redeem property pledged for a debt; but this case falls...