Feige v. Burt

• Citation: 118 Mich. 243,77 N.W. 928
• Court: Michigan Supreme Court
• Decision Date: 27 September 1898
• Parties: FEIGE v. BURT ET AL. [1]

77 N.W. 928

118 Mich. 243

FEIGE v. BURT ET AL. ^[1]

Supreme Court of Michigan

September 27, 1898

Error to circuit court, Saginaw county; Byron A. Snow, Judge.

Trover by Ernest Feige against Wellington R. Burt and another. There was a judgment for defendants, and plaintiff brings error. Reversed.

Weadock & Purcell, for appellant.

Humphrey & Grant, for appellees.

MOORE J.

Plaintiff sued defendants, in an action of trover, to recover the value of 20 certificates, representing 800 shares of stock in the Feige-Silsbee Furniture Manufacturing Company, claimed by him to have been unlawfully converted by defendants. The circuit judge directed a verdict in favor of defendants. Plaintiff has appealed the case to this court.

Prior to 1888 the plaintiff was one of the incorporators of the Feige-Silsbee Furniture Manufacturing Company. He was a borrower of the defendant bank. November 8, 1888, he pledged to the bank the certificates of stock already mentioned, he indorsed them in blank, and at the same time a paper was executed reciting the deposit of the certificates "to be held by said bank as collateral security for any obligation which I may now have or hereafter have" in said bank. May 1, 1895, Mr. Feige gave his note to the bank in the sum of $6,650, due in three months. The defendant Burt became a stockholder in the furniture company some years ago. He was its president when this note was given, and continued to be its president from that time on. Mr. Feige was a director and for some time had been manager, of the company. Mr. Burt was also president of the bank. It is the claim of the plaintiff that Mr. Burt and the bank conspired together to depreciate the value of the stock, and to deprive him of it without compensation, and to displace him from his position as director and manager of the company. He says on February 10, 1896, the bank, without notice to him, through its president, Mr. Burt, surrendered the 20 certificates of stock, and 1 certificate in lieu thereof was issued to the bank for the 800 shares, and the 20 certificates were canceled. He claims the certificate so issued was never returned to the furniture company. He says Mr. Burt, as president of the company, refused to recognize him as a stockholder at the meeting of the stockholders of the company, in February 1896; that he was then displaced as director and manager; that he was refused access to the books of the company; and that the secretary of the company and Mr. Burt declared he had no interest as a stockholder or otherwise in its affairs. He further claims that, in the annual report made to the secretary of state, it was reported the 800 shares of stock which had been previously represented as held by him were owned by the bank. He claims that what was done was done, not for the purpose of collecting the debt, but for the purpose of depriving him of his stock. It is the claim of Mr. Burt and of the bank that what they did was done in good faith; that, for the purpose of making the bank secure against possible levies by creditors, the bank had a right to surrender the certificates, and have one issued in its name; and that it did not claim to be the absolute owner of the stock as against plaintiff, but always recognized his right to it upon his payment of the debt to secure which it was turned out. May 18, 1896, the bank obtained judgment upon the note given by Mr. Feige, and caused an execution to be issued and placed in the hands of a deputy sheriff, who served a copy of it upon the secretary of the company, who on June 10, 1896 issued the following certificate: "C. Dingman, Deputy Sheriff for Saginaw County, Mich.-Dear Sir: You are hereby notified that, as appears by the books of the Feige Desk Company, of Saginaw, Michigan, a corporation, Ernest Feige is the owner of eight hundred shares of the capital stock of said company, of the par value of twenty-five dollars each, subject, however, to the interest therein as pledgee of the Home National Bank of East Saginaw, Michigan. Said stock is represented by certificate No. 100, issued February 10th, 1896, to said Home National Bank. Yours, truly, G. R. Burt, Sec. and Treas. of the Feige Desk Co." As a matter of fact, the stock at this time stood upon the books of the company in the name of the bank. The stock was advertised and sold by the sheriff for $400, and this amount was paid over to the bank. Before suit was brought, no tender was made of the debt and no demand made for the stock. It is the claim of plaintiff that what occurred in February amounted to a conversion of the stock, and that the court erred in refusing to submit to the jury the question of whether there had been a conversion or not.

Where stock is pledged to secure the payment of a debt, in default of payment the pledgee may not at once convert the stock to his own use, but he may give...