Conyngham's Appeal

• Decision Date: 27 March 1868
• Citation: 57 Pa. 474
• Parties: Conyngham's Appeal.
• Court: Pennsylvania Supreme Court

57 Pa. 474

Conyngham's Appeal.

Supreme Court of Pennsylvania.

March 20, 1868.

March 27, 1868.

March 20th 1868.

Before STRONG, AGNEW and SHARSWOOD, JJ. THOMPSON, C. J., at Nisi Prius. READ, J., absent.

Appeal from the Court of Common Pleas of Northampton county: In Equity: Of January Term 1868.

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H. Green, for appellant.—The case involves mutual accounts, discovery and a matter of trust. Chancery has therefore jurisdiction: 1 Story's Eq. §§ 67-74, 442-459; 3 Bl. Com. 437; Post v. Kimberly, 9 Johns. 469; Carlisle v. Wilson, 13 Ves. 278; Harrison v. Rowan, 4 W. C. C. R. 205; Bright. Eq. Juris. §§ 123, 124; Koons v. Bute, 2 Phil. 570; Gloninger v. Hazard, 6 Wright 401; Armstrong v. Gilchrist, 2 Johns. Cas. 424; N. Y. Insurance Co. v. Rowlet, 24 Wend. 505; Kirkpatrick v. McDonald, 1 Jones 392; Edwards on Bailment 212, 213; 2 Story's Eq. § 1032; Jones v. Smith, 2 Ves. Jr. 372; Kemp v. Westbrook, 1 Ves. Sr. 278; Tucker v. Wilson, 1 P. Wms. 261; Demainbray v. Metcalf, 2 Vern. 691; Vanderzee v. Willis, 3 Bro. Ch. R. 21; Hart v. Ten Eyck, 2 Johns. Ch. 117; Diller v. Brubaker, 2 P. F. Smith 498; Wesley Ch. v. Moore, 10 Barr 274; King v. Baldwin, 17 Johns. 388.

The averments in the answer as to the verbal authority, if to be treated as positive allegations, are not evidence, because they are new allegations: Bright. Eq. 519, § 721; Eberly v. Groff, 9 Harris 256; Pusey v. Wright, 7 Casey 387.

After the transfer, the bank held the stock in trust, as they had done before: Wilson v. Little, 2 Comst. 443; Allen v. Dykers, 3 Hill 593; Edw. on Bailments 251, 252, 260; Langdon v. Buell, 9 Wend. 80; Cortelyou v. Lansing, 2 Caine's Cas. 200; Middle-sex Bank v. Minot, 4 Metc. 325; Denny v. Lyon, 2 Wright 98; Act of May 21st 1861, § 1, Pamph. L. 771.

Michler should have had notice to redeem: 2 Kent Com. 582, 583; Garlick v. James, 12 Johns. 146; Sitgreaves v. Bank, 13 Wright 363; De Lisle v. Priestman, 1 P. A. Browne 176; Davis v. Funk, 3 Wright 243; Diller v. Brubaker, 2 P. F. Smith 498; Wheeler v. Newbold, 16 N. Y. Rep. 392 (2 Sm.); Rankin v. McCullough, 12 Barb. 103; Dykers v. Allen, 7 Hill 497; Costello v. City Bank, 1 N. Y. Leg. Obs. 25; Edw. on Bailm. 248, 259; 2 Story's Eq. §§ 1008, 1033; Lewis v. Graham, 5 Am. L. Reg. 368; Stearns v. Marsh, 4 Denio 227.

As to the rule by which the bank must account: Edw. on Bailm. 259, 260; Shepherd v. Johnson, 2 East 211; Vaughan v. Wood, 1 My. & K. 403; Montgomery Bank v. Reese, 2 Casey 143; Musgrave v. Beckendorf, 3 P. F. Smith 310; Hart v. Ten Eyck, Davis v. Funk, Diller v. Brubaker, supra.

H. D. Maxwell and W. H. Armstrong (of Easton), for appellees. —A defendant may at any stage of a cause take advantage of the want of equity in the bill on the ground that the plaintiff has a remedy at law: Baker v. Biddle, 1 Bald. 416; 1 Smith's Ch. Pr. 201; 1 Harrison Ch. Pr. 282; Willes Eq. Pl. 434, 443; Brightly's Eq. §§ 459, 460, 609; Skilton v. Webster, Brightly R. 233; Patterson v. Lane, 11 Casey 275; Updegraff v. Crans, 11 Wright 103; Thomas v. Patrick, 4 Watts 414; Strasburg Railroad v. Echternacht, 9 Harris 220; Sitgreaves v. Farmers' & Mechanics' Bank, 13 Wright 359; 2 Story's Eq., §§ 794, 798; Wiswardle v. McGowen, 2 Barb. 270; Stevens v. March, 4 Denio 227; McLean v. Walker, 10 Johns. 472; Bath v. Collins, 13 Wend. 139; Shepherd v. Johnson, 2 East 210; Rankin v. McCullough, 2 Barb. 103; Dyken v. Allen, 7 Hill 497; 2 Comstock on Actions at Law, Case; Davis v. Funk, 3 Wright 243; Biddle v. Bayard, 1 Harris 150; Ramsey v. Westmoreland Bank, 2 Penna. R. 203; Bank of Montgomery v. Reese, 2 Casey 143; 2 Story's Eq., §§ 1263, 1495.

The answer is responsive: 2 Daniels' Ch. Pr. 840; Brightly's Eq. Jur. § 720; Pusey v. Wright, 7 Casey 387.

Michler's position in the bank dispensed with notice: West Branch Bank v. Fulmer, 3 Barr 399; Harrisburg Bank v. Forster, 8 Watts 12; Edw. on Bailm. 248, 255; Story's Eq., § 1264; 2 Fonblanque Eq., b. 2, ch. 5, § 5, note (6); Brown v. Smith, 2 Ch. Cas. 124; s. c. 1 Ver. 84; Com. Dig. Chancery; 4 Watts 25; Davis v. Funk, 3 Wright 250.

As to the measure of damages in this proceeding: 2 Parsons on Cont. 140, 141; 1 Am. Lead. Cas. 276, 294; Iredell's Eq. 42.

The opinion of the court was delivered, March 27th 1868, by SHARSWOOD, J.

The demurrer to the bill was properly overruled by the court below. It may be that in the case of a simple pledge of merchandise, stock or securities for an existing debt, or an advance made upon them at the time, the remedy of the pledgor at law is full, complete and adequate: 2 Story's Eq., § 1032. But when the pledge is, as in this case, collateral security for the payment of all claims, liabilities and demands, which the pledgee then held or might thereafter hold against the pledgor, and these claims and liabilities are alleged to consist of a large number of items of moneys loaned, notes discounted on the endorsements of others for his accommodation, and endorsements by him for the accommodation of others, it is evident that the case comes within the jurisdiction of a court of equity under the head of account. Besides that, we have here the additional circumstance that the stock pledged became in the hands of the pledgee entitled not only to dividends in money, but to accretions by the distribution of new stock in the shape of stock dividends. Judge Story has accurately stated the received doctrine on this subject: 1 Eq. Jur., § 506: "Liens also give rise to matters of account. . . . . . As no suit is maintainable at law for the property of the owner, until the lien is discharged, and as the nature and amount of the lien often are involved in great uncertainty, a resort to a court of equity to ascertain and adjust the account seems, in many cases, absolutely indispensable for the purposes of justice. . . Cases of pledges present a similar illustration, whenever they involve indefinite and unascertained charges and accounts." It is clear that without an account, as well of the items of charge as of the dividends received in money and stock, the pledgor could not know what amount to tender, and this is an indispensable condition to his right to maintain any action at law. There are many precedents in the equity reports of bills to redeem the pledge and for an account under similar circumstances: Tucker v. Wilson, 1 P. Wms. 261; Demambray v. Metcalf, 2 Vern. 691, 698; Kemp v. Westbrook, 1 Ves. Sr. 278; Vanderzee v. Willis, 3 Brown's Ch. Rep. 21; Jones v. Smith, 2 Ves. Jr. 372; Hart v. Ten Eyck, 2 Johns. Ch. R. 100; Diller v. Brubaker, 2 P. F. Smith 498. In none of these cases indeed was the question of jurisdiction raised, but it was assumed both by bench and bar as incontrovertible.

But we are of opinion that upon the answer and proofs the complainant below is entitled to a decree for an account, and that the court was in error in dismissing the bill upon the merits. It is to be remarked that no opinion was given, nor was the case referred to a master. The consequence is that the full examination of the pleadings and proofs has been devolved upon us, just as if it had been a case of original jurisdiction. We must be allowed to express our decided disapprobation of such a course. On what ground the decree below was made we are left to conjecture as we best can. We need not, indeed, in this case, go beyond the answer itself to justify the result at which we have arrived. It admits distinctly that as additional security, the complainant did deposit with the defendants certificates for sixty shares of the Thomas Iron Company, and forty-nine shares of the capital stock of the corporation defendants themselves, and at the same time delivered to them the necessary powers of attorney authorizing the transfer and sale of the said shares, and executed and delivered to them a declaration, a copy of which is annexed to the answer, that such deposit was intended "as collateral security for all claims, liabilities and demands of any nature whatsoever, that said bank (the defendants) may now or hereafter have against the undersigned (the complainant) for notes drawn or endorsed by him, or for any other claims, demands or liabilities that said bank may now or hereafter have against the undersigned." It is true that they set up that by these powers the complainant gave to defendants full control and authority over the stocks pledged, whenever it should become necessary to use them to protect themselves from loss, and they admit that, it having so become necessary, they were subsequently sold without notice to the complainant. But this is a matter of law in which they are clearly wrong. It is sufficient to cite the case of Diller v. Brubaker, 2 P. F. Smith, in which it was ruled by this court that a holder of collateral security cannot appropriate it in satisfaction of the debt at his own option, unless especially authorized to do so by the terms of the bailment. Nor can he sell it without first giving notice to the pledgor of his intention to do so, in order that he may have an opportunity to redeem it if he desires. The sale must be public when it is made, and the notice must specify both time and place. "That this is the law of this species of bailment," says the present Chief Justice, in that case, "admits of no doubt." Even the amended answer does not distinctly aver that the complainant had given any express authority to sell without notice, but even...