Geo. D. Horning, Inc. v. McAleenan

• Decision Date: 12 May 1945
• Docket Number: No. 5343.,5343.
• Citation: 149 F.2d 561
• Parties: GEO. D. HORNING, Inc., v. McALEENAN et al.
• Court: U.S. Court of Appeals — Fourth Circuit

149 F.2d 561 (1945)

GEO. D. HORNING, Inc., v. McALEENAN et al.

No. 5343.

Circuit Court of Appeals, Fourth Circuit.

May 12, 1945.

Frank L. Ball, of Arlington, Va., and Rudolph H. Yeatman and Joseph A. Rafferty, both of Washington, D. C., for appellant.

John Paul Jones, of Arlington, Va., James V. Connelly, of New York City, and Loring M. Black and Harvey L. Rabbitt, both of Washington, D. C., for appellees.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

This civil action was brought in the court below by the appellees, as plaintiffs, against the appellant, as defendant, to recover the sum of $17,000 loaned by the plaintiffs on July 8, 1941. There is very little dispute as to the salient facts.

Plaintiffs are co-partners engaged in the pawnbroking business in New York City. George D. Horning, Inc. (herein referred to as defendant) is engaged in the pawnbroking business in Arlington County, Virginia. Defendant is a family corporation, and at the time of the events in question its affairs were largely under the management of James B. Horning (hereinafter called Horning), assisted by Harold L. Hoffman who was "in charge when James B. Horning was not there."

In 1935 or 1936 one Margaret Boyle became a customer of defendant. Horning first became acquainted with her at that time. Mrs. Boyle was always considered by Horning and Hoffman to be a "good customer". She frequently borrowed money from defendant on pledges of jewelry. During the first six months of 1941, particularly after March, the loans increased, both in frequency and amount.

In the latter part of June, 1941, Mrs. Boyle sought further loans from the defendant, but, in accordance with a policy adopted by defendant's board of directors in the early part of June, limiting to $25,000 the loans to any one individual, Hoffman informed Mrs. Boyle that defendant was unable to grant her any further loans.

Uncontradicted testimony shows that Hoffman suggested that Mrs. Boyle go to New York to obtain a loan. She asked Hoffman to accompany her to New York but was told that he could not go without Horning's permission. At, or about, this time temporary loans, aggregating $4,200 were made by defendant to Mrs. Boyle on pledges of a diamond bracelet and clip combination piece and a star sapphire ring "to tide her over until she could get a further loan on the jewelry we did not want to take."

Horning granted Hoffman permission to go to New York and presented him with the following letter of introduction:

"July 8, 1941

"To Whom It May Concern:

"This letter will introduce, Mr. Harold L. Hoffman, who is in our employ and is authorized by us to place in pawn for one of our customers, a Mrs. M. Boyle of Washington, D. C., several pieces of diamond jewelry.

"George D. Horning, Inc. "by Jas. B. Horning."

Hoffman insured in the name of Mrs. Boyle, the bracelet and clip combination, and sapphire ring, on which defendant held a lien, and a diamond necklace which had been left with defendant by Mrs. Boyle for safekeeping, and carried all this jewelry to New York where he met Mrs. Boyle on July 8, 1941.

Hoffman and Mrs. Boyle went to a firm known as Stern Brothers and sought a loan of $20,000 on the three pieces of jewelry. They were informed that Stern Brothers were not making large loans of that character and it was suggested that they go to "McAleenans" (plaintiffs' firm name).

Later the same day, Hoffman and Mrs. Boyle went to "McAleenans" and Hoffman met H. Alvin McAleenan (hereinafter called McAleenan). Hoffman introduced Mrs. Boyle and presented McAleenan with the letter from Horning. He explained to McAleenan that the purpose of their visit was to obtain a loan of $20,000 for Mrs. Boyle and produced the pieces of jewelry. Hoffman told McAleenan that Mrs. Boyle was the owner of the jewelry, was a very prominent woman in Washington and had done business with defendant for many years. (Hoffman denied that he made any statement with reference to ownership.) McAleenan read the letter and told Hoffman that he wanted to verify the facts therein stated and McAleenan placed a person to person phone call for Horning at Arlington, Virginia. McAleenan's testimony with reference to the telephone conversation is as follows:

"I said: Mr. Horning, your manager, Mr. Hoffman, is in my office accompanied by a Mrs. M. Boyle. He has presented a letter to me and stated that he would require a loan of twenty thousand dollars. I would like to know, Mr. Horning, is Mrs. Boyle O. K.

"He assured me that she was all right; that she was a very prominent woman in Washington and that he personally had done business with her over a number of years.

* * * * *

"I thanked him for his courtesy in sending the business and hung up."

Plaintiff's appraiser estimated the loan value of the jewelry at $15,000. McAleenan, however, granted a loan of $17,000. Further, he reduced the interest rate from 18% to 14% when informed by Hoffman that defendant had never charged Mrs. Boyle more that 12% per year. A check was drawn to the order of Horning & Company but Hoffman requested that the check be drawn to Mrs. Boyle since the loan was being made to her. McAleenan testified that Hoffman turned to Mrs. Boyle and said: "It's six of one and half a dozen of the other; you can endorse the check over to us." (Hoffman vigorously denied making this statement.) Subsequently, a second check was drawn to the order of "Mrs. M. Boyle".

When the pawn ticket was prepared, Mrs. Boyle was required to sign this as pledgor, and when Hoffman stated that Mrs. Boyle might like to retrieve the articles individually, the loan was broken down on the pawn ticket, and different loan values were placed opposite the listing of each article.

After this loan was made, in accordance with a request made by Mrs. Boyle, Horning sent other jewelry that had been placed by her with defendant, to New York so that she might secure larger loans.

On July 9, 1941, Hoffman and Mrs. Boyle sought an additional loan of $15,000 from plaintiffs on jewelry sent by Horning, but when only $12,500 was offered "they asked for time to think it over." On July 11, Mrs. Boyle called McAleenan; thanked him for his courtesy and told him that she had made other arrangements and would not require the additional loan.

Hoffman took plaintiffs' check, together with the checks received from other firms for pledges and sale of jewelry, all unendorsed and returned to Arlington. On July 11, 1941, Mrs. Boyle endorsed the checks, aggregating $54,000, and turned them over to defendant who deducted the amount of loans and interest due defendant from Mrs. Boyle (including the expenses of Hoffman's trip to New York) and turned over the balance over and above these items to her in cash.

Subsequent events disclosed the fact that the jewelry pawned by Mrs. Boyle with defendant and plaintiffs had been placed in her possession on memorandum for the purpose of sale, but she, in violation of the terms of the memorandum, and without holding title, pawned the jewelry and appropriated the proceeds.

On July 18, 1941, after a telephone conversation with one Blauweiss, who had transferred the jewelry to Mrs. Boyle, Horning became suspicious, and, by telephone asked McAleenan to place a "stop" on the jewelry. On July 21, 1941, Horning again called McAleenan and asked the amount of interest due on the loan. McAleenan informed him that there would be no interest; that if he would send the $17,000 and the pawn ticket, he would surrender the jewelry. That same day Hoffman returned to New York with a check for $17,000 for plaintiffs, but when he discovered he was unable to secure the pawn ticket from Mrs. Boyle or Blauweiss, he returned to Arlington, on Horning's order.

Subsequently, a police stop order was placed on the jewelry in the hands of the plaintiffs, prohibiting its surrender to anyone. Later, pursuant to a judgment of the New York courts, plaintiffs were required to turn the jewelry over to those claiming ownership, and to pay interest charges.

Plaintiffs, through counsel, demanded return of the monies loaned and when defendant denied liability and refused to make payment, the present suit was instituted.

The amended complaint contained nine causes of action, five of which (Nos. 1, 2, 3, 4 and 7) were, basically, actions for fraud and deceit. Before submission of the case to the jury, these five were withdrawn.

The remaining four causes of action sounded in contract and were as follows:

5. For money borrowed jointly by the defendant and one Mrs. Margaret Boyle.

6. For money lent to the defendant.

8. For money paid to the defendant.

9. For money, property of the plaintiffs, had and received by the defendant.

At the close of the plaintiffs' case, defendant moved the Court to strike all of plaintiffs' testimony with reference to an alleged custom in the trade as to the meaning of the expression "O. K.", and for a directed verdict. These motions were denied. At the close of all the evidence, defendant renewed its original motions and moved for a directed verdict, severally as to the respective causes of action. These motions were denied, and the jury returned a verdict in favor of the plaintiffs. Defendant then made motions for judgment notwithstanding the verdict, and in the alternative, for a new trial.

In his charge to the jury the District Judge gave the following instructions:

"The jury are instructed that if you believe from the evidence that Mrs. Margaret Boyle was acting for the benefit or in the furtherance of the interests of George D. Horning, Inc., and obtained the loan from the plaintiffs for it as the agent of the defendant, George D. Horning, Inc., in negotiating the loan with McAleenans, and that the defendant, George D. Horning, Inc., ratified the act of the said Mrs. Margaret Boyle in negotiating the said loan by acceptance of the proceeds and benefits thereof, or otherwise, and the said loan has not been repaid by George...