Daniel v. Post

• Decision Date: 14 October 1936
• Docket Number: 14360.
• Citation: 187 S.E. 915,181 S.C. 468
• Parties: DANIEL v. POST et al.
• Court: South Carolina Supreme Court

187 S.E. 915

181 S.C. 468

DANIEL v. POST et al.

No. 14360.

Supreme Court of South Carolina

October 14, 1936

Appeal from Common Pleas Circuit Court of Greenville County; A. L Gaston, Judge.

Action by Charles E. Daniel against George B. Post and others, partners as Post & Flagg, and another. From an order overruling in part a motion to strike certain allegations of the complaint, a demurrer to the complaint and a motion to make the complaint more definite and certain the defendants appeal. From an order striking a portion of the complaint, the plaintiff appeals.

Orders affirmed as modified, and case remanded.

BONHAM J., dissenting.

The amended complaint of January 13, 1936, follows:

The plaintiff herein, complaining of the defendants herein, respectfully shows to the court:

(1) That the plaintiff is now, and was at the times hereinafter referred to, a resident of Anderson county, state of South Carolina; that the defendants George B. Post, Arthur Turnbull, Benson B. Sloan, Oliver D. Filley, Walter H. Sykes, Jr., W. Allston Flagg, Philip B. Weld, Alfred L. Dennis, John T. Pratt, Jr., John Bell Huhn, and George B. Post, Jr., are now, and were at the times hereinafter referred to, residents of the state of New York, with their principal office and headquarters at 49 Broad street, in the city and state of New York, doing business as a partnership under the firm name of Post & Flagg (and hereinafter in these pleadings said defendants will be referred to as Post & Flagg, and when so used will have reference to all of the partners comprising Post & Flagg), owning property in, and maintaining offices, agents, and employees, and transacting business in the city of Greenville, county of Greenville, state of South Carolina; that the defendant A. S. Thomas is now, and was at the times hereinafter referred to, a resident of the county of Greenville, state of South Carolina.

(2) That the defendants Post & Flagg are members of the New York Stock Exchange, have adopted the constitution, rules, and by-laws of said Exchange, as their own, and are governed and controlled thereby, which said constitution, rules, and by-laws were known to and relied upon by the plaintiff in the transactions hereinafter referred to, and, contrary to such rules and regulations, the defendants Post & Flagg occupied offices and used joint employees with the defendant Thomas & Walker, said offices and employees being used jointly by all of the parties-defendant hereto.

(3) That at the times hereinafter referred to, and for a long time prior thereto, the defendants Post & Flagg operated a branch office in the city of Greenville, state aforesaid, conducting a stock brokerage business, occupying joint offices and using joint employees with the defendant Thomas, the said Thomas acting generally as agent of and for the defendants Post & Flagg.

(4) That prior to June 12, 1933, the plaintiff purchased from the defendants various stocks, paying a portion of the purchase price in cash, and leaving said stock with the defendants as collateral for the balance due thereon.

(5) That upon information and belief the defendants, without plaintiff's knowledge, conspired together to defraud this plaintiff, and at some time unknown to this plaintiff, fraudulently, wantonly, and unlawfully took plaintiff's stock, when they either knew, or should have known, that it was plaintiff's stock, and used it as collateral to the indebtedness of the defendant Thomas with the defendants Post & Flagg, thus converting plaintiff's stock to their own use.

(6) That on June 15, 1933, the plaintiff had on deposit with the defendants 600 shares A. F. W. and 200 shares of C. V., or the cash value of plaintiff's equity in said stocks, viz., $6,518.59, after deducting all commissions, based on the market value of said stocks as of June 12, 1933, on which date plaintiff had ordered defendants to sell his said stocks, and to remit to him his equity therein.

(7) That at some time unknown to this plaintiff the defendants Post & Flagg sold the said stock, and, although the plaintiff had fully complied with the terms and conditions of his contract with defendants, the defendants have failed and refused, and still fail and refuse, to turn the proceeds of the sale of the stock over to the plaintiff, and to pay him his equity therein, in spite of repeated demands made therefor, and, instead of accounting to this plaintiff, the defendants Post & Flagg have carried out their fraudulent agreement made with the defendant Thomas, when they well knew, or should have known, that the plaintiff owned the stocks and had an equity therein, and fraudulently, wantonly, and unlawfully confiscated the same, and, after selling the stock, used the proceeds to apply on the individual indebtedness of the defendant Thomas, in accordance with the collateral assignment agreement, which had been fraudulently entered into between the defendants, in order to secure the indebtedness of the defendant Thomas to the defendants Post & Flagg; all to plaintiff's damage, actual and punitive, in the sum of $16,518.59.

Wherefore, plaintiff prays for judgment against the defendants for the sum of $6,518.59, and interest thereon at 7 per centum per annum from June 15, 1933, until paid, as actual damages, and for the sum of $10,000, as punitive damages.

W. G. Sirrine, of Greenville, for appellants.

R. N. Ward and Hicks & Johnston, all of Greenville, for respondent.

BAKER Justice.

This is an appeal from order of Hon. A. L. Gaston, circuit judge, overruling in part motion of defendants-appellants, Post & Flagg, to strike out certain allegations of the complaint; overruling demurrer to the complaint on the ground that two alleged causes of action were improperly united; and overruling motion to make complaint more definite and certain. The plaintiff-respondent, Daniel, has also appealed from order of Judge Gaston striking out a portion of the complaint.

Pleadings should be construed liberally as against the moving party, and we will first consider the nature of this action. A careful reading of the complaint, which will be reported, shows that it is an action in tort for conversion, and not an action on contract as it has been treated throughout by defendants-appellants. It is true that plaintiff-respondent could have brought an action on contract, but he has elected to bring it in tort. The defendants-appellants have not the right to elect.

It is true that the expletives "fraudulently," "wantonly," and like words add nothing to the complaint, but, freed of all unnecessary verbiage, the complaint alleges that respondent bought through one A. S. Thomas, who acted generally as the agent of Post & Flagg, his codefendants, various stocks, paying a portion of the purchase price in cash, and leaving with the defendants said stocks as collateral for the balance due thereon, and that at some time unknown to plaintiff, and without his knowledge or consent, defendants converted plaintiff's stocks to their own use, specifically setting forth that the stocks converted consisted of 600 shares A. F. W. and 200 shares of C. V.

In Sullivan v. Calhoun et al., 117 S.C. 137, 108 S.E. 189, Mr. Chief Justice Gary, writing the opinion of the court, said: "It is not necessary to allege fraud in direct terms; it being sufficient if the facts are stated from which it is necessarily implied."

And in the same case there is quoted with approval from 12 R.C.L. 229, the following: "Fraud assumes so many hues and forms, that courts are compelled to content themselves with comparatively few general rules for its discovery and defeat, and allow the facts and circumstances peculiar to each case to bear heavily upon the conscience and judgment of the court or jury in determining its presence or absence. While it has often been said that fraud cannot be precisely defined, the books contain many definitions, such as unfair dealing; the unlawful appropriation of another's property by design."

To maintain trover against a pledgee, bailee, or trustee, the agreement must be such that the property is to be kept in its original form as the identical property of the owner. See Randolph & Co. v. Walker, 78 S.C. 157, 59 S.E. 856.

Where personal property has been converted and sold, and action lies either for damages for the conversion or for the recovery of the proceeds of sale, the first being trover and the second assumpsit for money had and received. Warren v. Lagrone, 12 S.C. 45.

It is well settled law in this state that trover lies for conversion of stock. See Connor v. Hillier, 11 Rich. (45 S.C.L.) 193, 73 Am.Dec. 105; Equitable Trust Co. v. Columbia National Bank, 145 S.C. 91, 126, 142 S.E. 811.

Unauthorized disposition of pledged property is a conversion, 49 C.J. 950.

The cases cited by appellants correctly state the law as a general rule, but this case is governed by the law as stated in Tolbert v. Fouche, 129 S.C. 338, 123 S.E. 859, syllabus 2 of said case, which is fully warranted by the opinion, being as follows:

" 2. Pledges-When Disposition of Pledged Property Amounts to Conversion, Stated.

Wrongful, unauthorized disposition of pledged property, so as to put it out of pledgee's power to redeliver on payment of debt which it secures, is a conversion for which an action will lie."

Defendants-appellants have assumed that this is an action on contract and that the allegations of the complaint are insufficient to raise the issue of punitive damages. And have further assumed that it was a margin transaction.

A liberal construction of the complaint shows it to be an action in tort for conversion, and sufficient facts have been alleged to evidence a fraudulent conversion, for which punitive damages would be recoverable. It would also...