Bennett v. Tucker & Pennington

• Decision Date: 25 April 1924
• Docket Number: 15235.
• Citation: 123 S.E. 165,32 Ga.App. 288
• Parties: BENNETT, SUPERINTENDENT OF BANKS, v. TUCKER & PENNINGTON.
• Court: Georgia Court of Appeals

123 S.E. 165

32 Ga.App. 288

BENNETT, SUPERINTENDENT OF BANKS, v. TUCKER & PENNINGTON.

No. 15235.

Court of Appeals of Georgia, Second Division

April 25, 1924

Syllabus by the Court.

Where in a suit upon a note, the defendant recoups for the conversion of property pledged to secure the debt, the measure of his damages for the conversion, in the absence of a special contract, is the actual value of the property at the time of the conversion, which the jury, or the judge sitting as sole trior may, in their or his discretion augment by the addition of legal interest thereto from the date of the conversion. The defendant pledgor, in such a case, is not entitled to recover the highest proved value between the date of the conversion and the trial, as in trover, and the court in this case erred in allowing that measure of damage.

Error from Superior Court, Putnam County; Jas. B. Park, Judge.

Action by T. R. Bennett, Superintendent of Banks, for the use of the Bank of Eatonton, for the use of the Farmers' Bank of Palmetto, against Tucker & Pennington. Judgment for defendants, and plaintiff brings error. Reversed.

Callaway & De Jarnette, of Eatonton, for plaintiff in error.

Stubbs & Duke, of Eatonton, for defendants in error.

BELL J.

The amended action in this case was a suit upon a note by "T. R. Bennett, superintendent of banks, for the use of the Bank of Eatonton, for the use of the Farmers' Bank of Palmetto," against Tucker & Pennington. The defendants pleaded a conversion by the Bank of Eatonton of certain cotton which they had pledged with it as security for the debt, and prayed to recoup for its highest proved value between the date of the conversion and the trial. The case was submitted to the judge for determination without a jury upon an agreed statement of facts. It is undisputed that the cotton was sold by the bank without a compliance with section 3530 of the Civil Code, providing that--

"The pawnee may sell the property received in pledge after the debt becomes due and remains unpaid; but he must always give notice for thirty days to the pawner of his intention to sell, and the sale must be in public, fairly conducted, and to the highest bidder, unless otherwise provided by contract."

It does not appear that there was any special contract between the defendants and the bank.

The sole question between the parties in the court below was whether the measure of the defendants' recoupment was the actual value of the property at the time of the conversion or the highest proved value between the date of the conversion and the trial. The judge decided this question in favor of the defendants, and, after allowing a credit for the highest value shown in the agreed statement of facts, rendered judgment against Tucker for the balance due. Pennington pending the cause had been discharged in bankruptcy. The plaintiff, contending that the credit should have been allowed only for the actual value of the property at the time of the conversion, excepted to the judgment and brought the case here for review.

Inasmuch as it has been insisted by some of the counsel in this case and in two other cases before us at the same time, wherein the briefs discussed the same question, that there is confusion, if not conflict, in the decisions relating thereto, we have given more than ordinary thought and study to its solution. See Hall v. Vann (No. 15359) 123 S.E. 172, and Vann v. Kimbrel (No. 15339) 123 S.E. 168, this day decided.

The measure of damage for the conversion of property will vary according to the remedy which the injured party adopts. Milltown Lumber Co. v. Carter, 5 Ga.App. 344 (2), 63 S.E. 270. In each of those cases in which the aggrieved party has been allowed to recover the highest proved value between the date of the conversion and the trial the action was either in tort (trover being an action ex delicto; Southern Railway Co. v. Born Steel Range Co., 122 Ga. 658 [2], 50 S.E. 488), or, the claim, if ex contractu, was based upon the breach of a special contract. In the latter case he may recover such damages as he may have sustained, even up to the highest proved value between the conversion and the trial, depending upon the particular nature of the agreement. Gray Bedell & Hughes v. Bass, 42 Ga. 271 (3); Wood v. Jones, 10 Ga.App. 735 (1), 73 S.E. 1099; Park v. Swann, 20 Ga.App. 39 (3), 92 S.E. 398; Campbell v. Redwine Bros., 22 Ga.App. 455 (1), 96 S.E. 347; Roberts v. Bank of La Grange, 25 Ga.App. 343 (2), 103 S.E. 176; Planters' Warehouse Co. v. Hardin, 30 Ga.App. 459 (3), 118 S.E. 441. If there is a special contract, "then of course the parties would be bound by its terms." Whigham v. Fountain, 132 Ga. 277 (1), 279, 63 S.E. 1115, 1116; Pilcher & Dillon v. Smith, 31 Ga.App. 606, 121 S.E. 701.

Where one who is sued upon a debt which is secured by a pledge pleads a conversion of the security, the cross-action which he makes, unless in equity and based upon special grounds, must of necessity be ex contractu.

"Tort cannot be set off against contract." McKleroy v. Sewell, 73 Ga. 657 (1); McLendon Bros. v. Finch, 2 Ga.App. 421 (2b), 58 S.E. 690.

In such a case, unless he pleads some special contract entitling him to a higher measure of damages, he cannot recoup by that exceptional measure which would be allowable if he were suing in trover. Waring v. Gaskill, 95 Ga. 731 (2), 22 S.E. 659; Harrell v. Citizens' Banking Co., 111 Ga. 846 (1) (2), 36 S.E. 460; Turner v. Commercial Savings Bank, 17 Ga.App. 631 (1), 87 S.E. 918; Campbell v. Redwine Bros., 22 Ga.App. 455 (3), 96 S.E. 347; Kennedy v. Buckeye Cotton Oil Co., 29 Ga.App. 167 (2), 114 S.E. 79; Whigham v. Fountain, supra.

"Ordinarily the measure of damages where property has been converted is its market value at the time of the conversion." Park v. Swann, 20 Ga.App. 39 (3), 92 S.E. 398.

Meeting the plaintiff's action ex contractu by a cross-action necessarily of the same kind, he must thus be content to accept a measure of damages applicable in an action ex contractu. The recoupment proceeds upon the theory of a breach of the obligations of the pledgee implied by the law in the pledge contract (Civil Code of 1910, §§ 3531, 3532, 3535, 3536; Turner v. Commercial Savings Bank, 17 Ga.App. 631 [1], 87 S.E. 918; Glidden v. Mechanics' National Bank, 53 Ohio St. 588, 42 N.E. 995, 43 L.R.A. 737, 749), considering that and the loan contract as one (see, on recoupment, Civil Code of 1910, §§ 4350, 4353), and damages recoverable for a breach of contract are only "such as arise naturally and according to the usual course of things from such breach, and such as the parties contemplated, when the contract was made, as the probable result of its breach" (Civil Code 1910, § 4395). "Exemplary damages can never be allowed in cases arising on contracts." Civil Code 1910, § 4393.

It cannot be said that the parties in making the contract contemplated that either would, instead of complying therewith, take advantage of it to commit a tort, as to which the measure of damages might be higher.

"A very definite difference is generally recognized between consequential damages which may be recovered for the breach of a contract and similar damages recoverable for a tort." Southwestern R. Co. v. Vellines, 14 Ga.App. 674 (2), 683, 82 S.E. 166, 169; City & Suburban Railway v. Brauss, 70 Ga. 368 (1) (2); State Mutual Association v. Baldwin, 116 Ga. 855 (2) (3), 43 S.E. 262; Carr v. Southern Railway Co., 12 Ga.App. 830 (1), 79 S.E. 41; Civil Code 1910, §§ 5929, 5930.

The pledgor in such a case is not obliged to await the action of the pledgee and then adopt the remedy of recoupment. He may take the initiative, pay the debt, and sue the pledgee in trover. This he may do without paying or tendering the debt, if the pledgee by an unauthorized sale has put it out of his power to return the property upon such payment or tender. Whigham v. Fountain, supra; Halliday v. Bank of Stewart County, 112 Ga. 461, 37 S.E. 721. It was said by the Supreme Court in Van Arsdale v. Joiner, 44 Ga. 173 (4), that under the latter circumstances the measure of the pledgor's damage would be the value of the property less the amount of the debt; but whether the court by "value" in that case meant the highest proved value (at the plaintiff's election) between the conversion and the trial it did not say. The question does not appear to have been involved, and, although that case was cited as authority for the ruling in Waring v. Gaskill, supra, it would seem that the true reason for the measure of damages applied in the last-mentioned case was not that the property had been pledged, but that the claim for the conversion was made ex contractu. The question was expressly left open in the Halliday Case. It is not really involved in the present case except in so far as its consideration may be pertinent to an analysis of the decisions upon the point presented for decision and kindred subjects. The decisions in other jurisdictions are not altogether harmonious on the question. See 21 R.C.L. 676, 678, §§ 38, 40; 43 L.R.A. 768, note.

We see no reason, however, why, if the pledgor does so take the initiative and bring a trover action, he might not as in other cases of trover recover the highest proved value between the conversion and the trial, less any amount of his debt remaining unpaid. If he is entitled to bring trover, we think he is entitled also to all the benefits of that character of action, Civil Code 1910,§§ 4514, 5929, 5930. This was practically held by this court in Bank of La Grange v. Guinn, 26 Ga.App. 411 (1), 106 S.E. 308. See also, Tuller v. Carter, 59 Ga. 395 (1) (2); O'Neill Mfg. Co. v. Woodley, 118 Ga. 114 (1), 44 S.E. 980; Bank of Blakely v. Cobb, 5 Ga.App. 289, 63 S.E. 24; Smith v. Duke, 6 Ga.App. 75 (2), 64...