Franklin Sav. Inst. v. Preetorius

• Citation: 6 Mo.App. 470
• Parties: FRANKLIN SAVINGS INSTITUTION, Appellant, v. EMIL PREETORIUS, Respondent.
• Decision Date: 28 January 1879
• Court: Missouri Court of Appeals

6 Mo.App. 470

FRANKLIN SAVINGS INSTITUTION, Appellant,

v.EMIL PREETORIUS, Respondent.

St. Louis Court of Appeals, Missouri.

Jan. 28, 1879.

Where it is agreed that shares of stock pledged as collateral security for a note may be sold by the pledgee at his discretion, and without notice to the pledgeor, the former is not bound to sell the stock at the request of the latter, immediately upon default; his refusal to do so may or may not be negligent. The pledgee may exercise his own judgment as to the sale of the stock, and is liable only for negligence.

APPEAL from St. Louis Circuit Court.

Reversed and remanded.

BROADHEAD, SLAYBACK & HAEUSSLER, for appellant, cited: Edw. on Bail. 251; Thornton v. Pigg, 24 Mo. 251.

KEHR & TITTMANN, for respondent, cited: Richardson v. Insurance Co., 27 Gratt. 753; Barrow v. Rhinelander, 3 Johns. Ch. 614; Goodall v. Richardson, 14 N. H. 572; Slevin v. Morrow, 4 Ind. 425.

HAYDEN, J., delivered the opinion of the court.

This is a suit on a negotiable promissory note payable to the plaintiff, and given to it for $500, money borrowed of the plaintiff by the respondent. At the time he gave the note, the defendant pledged to the plaintiff twelve shares of stock which he owned in the plaintiff's bank. The answer pleads payment of the note, and, as a counter-claim, that the defendant, before the note matured, instructed the plaintiff to sell the stock and apply the proceeds to pay the note; which the plaintiff refused to do, but sold the shares afterwards and when they had depreciated, by which the defendant lost $751.10, for which he asked judgment. The reply denied any instructions to sell the stock.

The note is for $500; was dated December 23, 1875, payable sixty days after date, and was a renewal. The defendant testified that before the note became due he asked the cashier of the bank to sell the stock when the note would be due; that he told the cashier to sell the stock, and so told the messenger; that the cashier told the defendant that unless the note was renewed the stock would be sold; that the defendant told the cashier that he (the defendant) wanted the stock sold, and did not want the note renewed. There was testimony tending to show that the reasonable market value of the stock during February and March, 1876, was $30 a share. The plaintiff sold the stock in March, 1878, for about $28. The agreement of pledge showed that the defendant, in default of payment of the note at maturity, authorized the bank to sell the collateral by public or private sale, or otherwise at its option, without notice to the defendant, and to apply the proceeds to the payment of the note and expenses, etc.; and the agreement stated that in case the proceeds of the sale, etc., were not sufficient, the defendant would pay the balance on demand, etc. The court assessed the damages of the plaintiff at $171.50, and found for the plaintiff on the defendant's counter-claim. The plaintiff appealed.

The court below refused the plaintiff's instructions, and gave the following at the request of the defendant: “If the court, sitting as a jury, believe from the evidence that, before the maturity of the note on which this suit is brought, defendant requested or notified plaintiff's cashier to sell the stock pledged with said note as collateral security, upon the maturity of said note, then it was plaintiff's duty so to do upon the maturity of the note, or within a reasonable time thereafter.

“And if the court, sitting as a jury, believe from the evidence that plaintiff nevertheless neglected to sell such stock until the sixth day of March, 1878, and that during the interval between the maturity of said note, or a reasonable time thereafter, and said sixth day of March, 1878, said stock depreciated in value, then the loss by reason of such depreciation must be borne by the plaintiff.”

The present is a case of shares of stock which had a market value, and which had been pledged by the defendant and received by the plaintiff as collateral for the payment of the note. The cases, not of pawn or pledge, but of other kinds of...