Casey v. Kastel

• Decision Date: 15 January 1924
• Citation: Casey v. Kastel, 237 N.Y. 305, 142 N.E. 671 (N.Y. 1924)
• Parties: CASEY v. KASTEL et al.
• Court: New York Court of Appeals Court of Appeals

237 N.Y. 305

142 N.E. 671

CASEY

v.KASTEL et al.

Court of Appeals of New York.

Jan. 15, 1924.

Action by Elizabeth Browne Casey against Philip F. Kastel, the United States Steel Corporation, and others.From a judgment of the Appellate Division of the Supreme Court for the First Department(206 App. Div. 793,200 N. Y. Supp. 790) affirming a judgment of the Trial Term (jury waived) for plaintiff(119 Misc. Rep. 116,195 N. Y. Supp. 848), certain defendants appeal.

Judgment reversed, and complaint dismissed as to the United States Steel Corporation, and otherwise affirmed.Appeal from Supreme Court, Appellate Division, First Department.

Wm. Averell Brown and Kenneth B. Halstead, both of New York City, for appellantUnited States Steel Corporation.

Ellery O. Anderson and F. K. Pendleton, both of New York City, for appellants Johnson and Wood.

Henry L. Sherman, Paul M. Herzog and Lionel S. Popkin, all of New York City, for respondent.

POUND, J.

Plaintiff, an infant when the action was begun, sued to recover damages for conversion of her stock in defendantUnited States Steel Corporation.The learned trial court found, in substance, that plaintiff left the stock certificate with defendant Kastel, with an assignment executed in blank; that he sold it, acting as her agent or broker, for $11,000, without authority; that she afterwards ratified the sale, but now disaffirms it.The appellants are brokers doing business as the firm of Johnson & Wood, who, it is claimed, were parties to the conversion, because they, acting for Kastel, sold the stock and guaranteed the signature of the infant, and the steel corporation, which is made a party because it transferred the stock on its books, canceled plaintiff's certificate, and issued a new certificate to the purchaser.No claim is made against the ultimate purchaser.

[1][2] An infant may disaffirm a sale of chattels before majority.Stafford v. Roof, 9 Cow. 626.If the sale is void, no disaffirmance before suit is necessary.

[3] The first question is whether the sale of the stock by Kastel as plaintiff's agent was voidable or void.The court below proceeded on the theory that it is the law of this state that an infant's appointment of an agent is void, and that it follows that an infant cannot, during minority, ratify the act of one who assumes to act as her agent.The rule is stated, but by way of dictum only in Ely v. Ehle, 3 N. Y. 506, 508, as follows:

‘If an infant give or sell his goods and delivers them with his own hands, the act is voidable only; but if he give or sell goods, and the donee or vendee take them, by force of the gift or sale, the act is void, and the infant may bring trespass.’

It is more definitely stated in Bool v. Mix, 17 Wend. 199, 131(31 Am. Dec. 285), as follows:

‘The rule seems to be universal, that all deeds or instruments under seal, executed by an infant, are voidable only, with the single exception of those which delegate a naked authority, which are void.And even in relation to a power of attorney, Parker, C. J., considered it a point of strict law, somewhat incongruous with the general rules affecting the contracts of infants, and that no satisfactory reason could be assigned for the exception.’

Williston on Contracts (vol. 1, p. 444), states the rule as follows:

‘It has been asserted often and decided sometimes that an infant's power of attorney or agreement to make another his agent is void; and especially a power or warrant of attorney by an infant for the confession of judgment against him has been held void, as has any authority given by the infant to an attorney to represent him in court.Probably courts would still hold an infant unable to authorize a confession of judgment or to appoint an attorney for judicial proceedings; but there seems no reason except the antiquity of the rulings to that effect which can support the broad proposition that an infant's power of attorney or appointment of an agent is void; and generally, in recent cases, courts have been disposed to treat the creation of an agency by an infant, like other agreements made by him, as merely voidable.A ratification by an infant of an act done on his behalf, but without his authority, stands logically on the same ground as an act originally authorized by an infant principal, and has been held binding.’

Notwithstanding numerous general statements in the books, sound principles compel the conclusion that no satisfactory distinction can be drawn between a sale and delivery by the infant and a sale and delivery by an agent for him.The sale of the stock by Kastel was voidable only and not void.Dicta and general statements to the contrary are no longer respectable authority.Coursolle v. Weyerhauser, 69 Minn. 328, 332, 72 N. W. 697.

[4][5][6] When the sale of an infant's property is voidable, no tort is committed until after avoidance.The infant may then treat the refusal to deliver back the property or the proceeds as a conversion by those who have kept it intentionally or so intermeddled with it as to interfere with the infant's dominion over it, except: ‘Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title’(Personal Property Law [Cons. Laws, c. 41]§ 105); and, in particular, the rescission of the transfer of a certificate of stock does not invalidate even a subsequent transfer by the the transferee in possession to a purchaser for value, in good faith, and without notice (Personal Property Law, § 169).

[7] But the conversion does not relate back so as to make the entire transaction void ab initio.This the distinction between void and voidable as applied to infants' contracts forbids.The transfer of plaintiff's certificate by Kastel was valid when made (Personal Property Law, § 162), and is not made void ab initio by rescission.Until the disaffirmance by the infant the authorized acts of the parties were not wrongful.The fiction of relation whereby, to prevent injustice, an act done at one time is considered to have been done at some antecedent period should not be utilized to make those who deal with an infant's property tort-feasors as of a time when they did no wrong.The disaffirmance is retroactive only to the extent that thereafter the parties who have taken or intermeddled the infant's property are placed in the same position as if the transaction had not been authorized.They are guilty of conversion if they then refuse or fail to make restitution.

[8][9] The infant transferred title when she authorized or ratified the delivery of the certificate indorsed in blank (Personal Property Law, § 162), but the right of an infant to disaffirm a transfer of stock is expressly reserved by Personal Property Law (section 163).Kastel, after disaffirmance, was bound to account to the plaintiff for the conversion of her stock to the extent, at least, of the unpaid portion of the purchase price which was the value of the stock which he retained.Johnson & Wood are also liable.They are held, not for a conversion growing out of a retention of the shares after notice of disaffirmance, but for an act of wrongdoing in meddling with and selling the property of another; for an interference with the dominion and right of property of the plaintiff, depriving her permanently of all her rights therein.Plaintiff made no binding representations to them, and has not estopped herself from asserting a conversion against them.An infant arrived at years of discretion may be guilty of constructive fraud, but plaintiff did not cheat defendant.No fraud in her was found by the trial justice, but freedom from fraud was found.Nor was she guilty of negligence in indorsing the certificate to Kastel.Her signature to the assignment in blank of the certificate was nothing more than a voidable consent to the sale, contractual in its nature rather than tortious.Union Trust Co. of Rochester v. Oliver, 214 N. Y. 517, 523,108 N. E. 809, although it holds that the owner is estopped in such cases, does not hold that an infant is thus estopped from asserting her title to a stock certificate.It deals merely with the attributes of stock certificates in general.They sold her shares and guaranteed her...