Hagan v. Continental National Bank

• Decision Date: 02 June 1904
• Citation: 81 S.W. 171,182 Mo. 319
• Parties: HAGAN v. CONTINENTAL NATIONAL BANK, Appellant
• Court: Missouri Supreme Court

81 S.W. 171

182 Mo. 319

HAGAN v. CONTINENTAL NATIONAL BANK, Appellant

Supreme Court of Missouri

June 2, 1904

Appeal from St. Louis City Circuit Court. -- Hon. S. P. Spencer Judge.

Affirmed.

Boyle Priest & Lehmann for appellant.

(1) The bill does not state facts that would entitle plaintiff to any equitable relief. A court of equity has no jurisdiction to set aside sales of personal property made under a pledge unless some such equitable ground as injunction, specific transfer, discovery or accounting is laid. No such ground is laid in the bill. 2 Story's Eq. (Redfield's Ed.), sec. 1032; Schouler's Bailments & Carrier (3 Ed.), 258; Durant v. Einstein, 35 How. Pr. 231; Lewis v. Varnum, 12 Abb. Pr. 308; Rowland v. Bank, 135 Pa. St. 598; S. C., 19 A. 951; Ambrose v. Evans, 66 Cal. 74, 4 P. 960; Greer v. Bank, 128 Mo. 559; Hewitt v. Steele, 118 Mo. 463; Richardson v. Ashby, 132 Mo. 238; Lacombe v. Forstall, 123 U.S. 570; Jones on Pledges, secs. 556, 557, 558 and 559; 2 Cook on Corp. (4 Ed.), sec. 475, note 2; Nelson v. Owen, 113 Ala. 372, 21 So. 75; Ins. Co. v. Dalrymple, 25 Md. 242; S. C., 89 Am. Dec. 789; Flowers v. Sproule, 2 A. K. Marsh. (Ky.) 54; Bryson v. Rayner, 25 Md. 424, 90 Am. Dec. 90; 22 Am. and Eng. Ency. of Law (2 Ed.), pp. 877 and 878. The reason is, the plaintiff has an adequate remedy at law. (2) The decree was not predicated upon any of the allegations of the bill, nor upon any issue made by the pleadings, and is therefore erroneous. It was charged in the bill, and admitted by the answer, that the defendant had and could produce the certificates of shares in contest. The sale (if we may call it a sale, though in fact only a method adopted by the defendant as a mode of working out to the best advantage whatever of value there was of this peculiar stock, which had no salable or market value, and which defendant could not work out for itself) to Jannopoulo was not adverted to in the bill, and was only brought out under a pretext of showing an admitted fact, and admitted under an erroneous ruling that it was competent as showing the value of the stock at the time of the previous sale at the Merchants Exchange, and could not be made the basis of the decree. Duncan v. Fisher, 18 Mo. 404; Irwin v. Childs, 28 Mo. 570; Mead v. Knox, 12 Mo. 287; Harris v. Railroad, 37 Mo. 310; Newham v. Kenton, 79 Mo. 382; Christian v. Ins. Co., 143 Mo. 496; Dougherty v. Adkins, 81 Mo. 411; 1 Beach Mod. Eq., sec. 99; Wilson v. Cobb, 28 N.J.Eq. 177; Howell v. Sebring, 14 N.J.Eq. 84; Stevens v. Church, 41 Conn. 370; Doggett v. Sims, 4 S.E. 909; Gorham v. Parsons, 119 Ill. 425; Midmer v. Midmer, 26 N.J.Eq. 299; Francis v. Bertrand, 26 N.J.Eq. 213; Kelly v. Kelly, 54 Mich. 30; S. C., 19 N.W. 580; Hunter v. Hunter, 10 W.Va. 264; Elyton, etc., Co. v. Iron City, etc., Works, 20 So. 51; Skimer v. Bailey, 7 Conn. 496; Edwards v. Brightly, 12 A. 91; Hawes v. Dobbs, 137 N.Y. 465; S. C., 33 N.E. 560. (3) Again, if a party brings an equitable action, he must maintain it upon some equitable ground. If the matter is one of legal jurisdiction, in order to maintain a bill for equitable relief he must state facts in the bill which clearly show that a judgment at law will not afford him an adequate remedy. If the plaintiff failed to make out a case of equitable cognizance in his bill, he was not entitled to any judgment at law merely because the same court administered both legal and equitable remedies. Damages only can not be awarded in an action seeking for equitable relief. R. S. 1899, secs. 691, 692; Bradley v. Aldrich, 40 N.Y. 540; S. C., 100 Am. Dec. 528; Heywood v. Buffalo, 14 N.Y. 540; Wheelock v. Lee, 74 N.Y. 495; Scott v. Billgerry, 40 Miss. 119; Sims v. McEwan, 27 Ala. 184; Dougherty v. Adkins, 81 Mo. 411; Bank v. Poynts, 60 Mo. 531; Gupton v. Gupton, 47 Mo. 37; Story's Eq. Jur., sec. 799. (4) If the plaintiff could recover under his bill damages alone, the finding and judgment is erroneous. His measure of damages was the value of the shares of the stock at the time he tendered payment and demanded the return of his stock. Greer v. Bank, 128 Mo. 559; Galigher v. Jones, 129 U.S. 193; Richardson v. Ashby, 132 Mo. 238; Chouteau v. Allen, 70 Mo. 290.

Robert L. McLaran and Hiram J. Grover for respondent.

Upon the facts presented by the record, under the last controlling decision of this court, the sale of Hagan's stock by the Continental National Bank on the Merchants Exchange, was null and void. Bank v. Richardson, Admr., 56 S.W. 1117. (1) A pledgee of collateral securities is a trustee, and in dealing with the property pledged is subject to the same limitations and restrictions as are imposed upon any other trustee in disposing of trust property. Colebrooke, Col. Sec. (1 Ed.), secs. 87, 117, 132; Stokes v. Frazier, 72 Ill. 433; Joliet, etc., v. Scioto, etc., 82 Ill. 548; 2 Perry on Trusts, secs. 602b, 602gg; Ins. Co. v. Dalrymple, 25 Md. 265; Story, Eq. Jur., 321, 322, 323; Bank v. Richardson, Admr., 56 S.W. 1117. If there is a written contract or pledge, giving the pledgee the right, upon the pledgor's default, to dispose of the property pledged, then the pledgee acts as a trustee vested with a power, and is subject to all rules pertaining to the execution of powers. He is subject also to all rules prescribing what trustees shall and shall not do with regard to trust property. Under any and all circumstances the pledgee must pursue such reasonable, honest and fair means as will insure the procurement of the best possible price for the property under that method. Colebrooke, Collateral Security, sec. 118; Jones on Pledges, secs. 610 and 636; 2 Perry on Trusts, secs. 602o, 782; Chesley v. Chesley, 49 Mo. 542; Cassidy v. Wallace, 102 Mo. 581; Harlin v. Nation, 126 Mo. 54. (2) A public sale can only be made in a public place after notice to the public. It was the duty of the bank, ostensibly making a public sale, to give notice of the sale to the public. 2 Perry on Trusts, secs. 602o; 782; Colebrooke, Col. Sec. (1 Ed.), sec. 121; Porter v. Graves, 104 U.S. 174; Routt v. Milner, 57 Mo.App. 54. A notice to the public, when given, must state the name of the pledgor, the name of the pledgee, and the name of the party exercising the power of sale. The notice must also state that the sale is being made in the execution of the power, and the power must be stated with such definiteness that the public may be able to judge of its sufficiency, inasmuch as purchasers at such auction make bids at their own peril. 2 Perry on Trusts, secs. 602g, 602q; Bank v. Richardson, Admr., 56 S.W. 1117. (3) Hagan had a right to be present at the sale. It was gross wrong on the part of the pledgee to deprive Hagan of this right by having the sale made at a place where Hagan could not be present. He was not a member of the Merchants Exchange. Colebrooke, Collateral Security (1 Ed.), secs. 123, 331; 18 Am. and Eng. Ency. Law (1 Ed.), pp. 670, 671, and note to 672; Jones on Pledges, 610. (4) The court held that the sale to Jannopoulo, on June 29, for $ 30,000, was a valid execution of the power of sale, and sufficient to convey the stock to Jannopoulo. The sale to Jannopoulo being a valid execution of the power, and in conformity to the contract, did not constitute a conversion by the bank, nor a breach of the contract, and did not give rise to an action in trover or for conversion, or for damages for breach of contract. On the other hand, the $ 30,000 received from the stock belongs to Hagan subject to the bank's claim of $ 23,340, and as the bank refused to account to Hagan for the money, equity would state the account and administer complete justice between the parties.

Henry W. Bond also for respondent.

(1) The pledgee is under the duty to exercise the utmost good faith in all his dealings with the pledge and the pledgor. Bank v. Richardson, 156 Mo. 270; Greer v. Bank, 128 Mo. 559; Chouteau v. Allen, 70 Mo. 335; Schaaf v. Fries, 90 Mo.App. 111. (2) Upon violation of any of such duties the remedy of the pledgor is either by action at law or in equity, according to the peculiar facts of each case, and the peculiar redress sought. No tender required where contract is denied. Stephenson v. Kilpatrick, 166 Mo. 262. (3) The rule distinguishing the cases in which legal and equitable remedies may be resorted to is thus stated by the text writers and the decisions: "If the stock contracted to be sold is easily obtained in the market and there are no particular reasons why the vendee should have the particular stock contracted for, he is left to his action for damages. But where the value of the stock is not easily ascertainable, or the stock is not to be obtained readily elsewhere, or there is some particular and reasonable cause for the vendee's requiring the stock contracted for to be delivered, a court of equity will decree specific performance and compel the vendee to deliver the stock." Cook on Corporations (4 Ed.), sec. 338; Jones on Pledges (2 Ed.), secs. 557, 577a; O'Neill v. Webb, 78 Mo.App. 1; Colburn v. Riley, 11 Colo.App. 184; Kraus v. Woodward, 110 Cal. 638; Realty Co. v. Iron Co., 50 N.H. 57; Merrill v. Houghton, 51 N.H. 61; Brown v. Runalls, 14 Wis. 693; Johnson v. Brock, 93 N.Y. 337; Hart v. Ten Eyck, 2 Johns. Chy. (N. Y.) 100; Adams v. Messinger, 147 Mass. 185; Bryson v. Rayner, 25 Md. 424; S. C., 29 Ind. 473; Jones v. Smith, 2 Ves. Jr. 372. (4) When the impossibility of a specific performance is disclosed at the hearing, and the suit was brought by the plaintiff in ignorance of such fact, the court will award the remedy of damages. 3 Pomeroy on Eq. Jurisprudence (2 Ed.), sec. 1410; cited and approved in Ryan v. Dunlap, 111 Mo. 620; Hamilton v. Hamilton, 59 Mo. 232. (5) There is abundant evidence in the record showing that the actual value of the block of stock (770...