Hansel v. Hartford-conn. Trust Co.

• Decision Date: 24 October 1946
• Citation: Hansel v. Hartford-conn. Trust Co., 133 Conn. 181, 49 A.2d 666 (Conn. 1946)
• Court: Connecticut Supreme Court
• Parties: HANSEL v. HARTFORD-CONNECTICUT TRUST CO.

133 Conn. 181

49 A.2d 666

HANSEL

v.HARTFORD-CONNECTICUT TRUST CO.

Supreme Court of Errors of Connecticut.

Oct. 24, 1946.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Appeal from Superior Court, Hartford County; Quinlan, Judge.

Action by Lawrence H. Hansel against the Hartford-Connecticut Trust Company to recover damages for the alleged wrongful release by defendant of securities held by it as collateral for a loan.The superior court in Hartford county referred the matter to the Hon. George E. Hinman, state referee.From a judgment for plaintiff on the referee's report, the defendant appeals.

Error was new trial ordered.

Lawrence A. Howard and George H. Cohen, both of Hartford (Naaman Cohen, of Hartford, on the brief), for appellant(defendant).

John Buckley, of Hartford, for appellee(plaintiff).

Before MALTBIE, C. J., and BROWN, JENNINGS, ELLS, and DICKENSON, JJ.

MALTBIE, Chief Justice.

In this action, the plaintiff claims damages from the defendant bank on the ground that in redelivering to Robert D. Hastings certain stock he had deposited with it as collateral security for loans it had made to him it disregarded certain rights as regards that stock acquired by the plaintiff by an assignment from the trustees under the will of Harriet D. Hansel of which the defendant had notice.From judgment for the plaintiffthe defendant has appealed.

Mrs. Hansel, in her will, gave all the residue of her estate to trustees with direction to divide it into four equal parts, one of which was to be held for the benefit of each of her sons, two of whom were Robert D. Hastings and the plaintiff; she further provided that the value of such of her securities as had been delivered to any of her sons during her life should be included in determining his share, that those securities should be deemed to have been transferred to him in absolute title and that, should this result in any son receiving more than his share, he should be held indebted to the extent of the excess in value to the other three trusts in equal proportions; and she appointed, as trustees, Hastings and the Hartford National Bank and Trust Company, hereafter referred to as the Hartford bank.The testatrix, before her death, had delivered to Hastings certain shares of stock and he had deposited them with the defendant as collateral for a loan.As provided in the will, these stocks were distributed to him in absolute title.Other property was also distributed to him and the result was that he received $98,640.18 more than his share.The testatrix, before her death, had delivered to another son certain shares of stock which he had deposited in a bank as collateral for a loan; under the provisions of the will, these were distributed to him in absolute title; and their value almost equalled the amount of his fourth share of the residue.Consequently, there was distributed to the trustees for the benefit of each of the testatrix's other two sons, one of whom is the plaintiff, one half of the amount due from Hastings on account of the excess in value of the property distributed to him above his proper share.

The distribution was dated February 24, 1937.Hastings signed two other instruments bearing the same date.One was addressed to the trustees as representing the interest of the plaintiff and of the other son for whose benefit the indebtedness was distributed to them; it acknowledged that Hastings had received property in excess of his share to the amount stated in the distribution, that he was indebted to each of the trusts to the extent of one-half of that amount, and that the securities earned a certain rate of income; and the instrument contained an agreement by Hastings to pay interest at that rate on the indebtedness or any amount to which it might be reduced for a period of one and one-half years.The other instrument, which is in evidence as exhibit E, and which is quoted in the footnote, ¹ stated in part: ‘I, Robert Day Hastings hereby assign’ to the trustees ‘my equity (meaning thereby the value of the securities in excess of the amount due’ the defendant‘or any funds received from the sale of such securities after payment in full of the indebtedness to’the defendant)‘in the collateral pledged to secure my loan’ from the defendant.‘This assignment is in all ways subject to the prior lien of’the defendant, ‘but I agree hereby that up to the limit of my indebtedness to the two trust funds ($98,640.18)the Trustees have a second lien on the securities bequeathed to me under the will of my mother and pledged for my indebtedness to’the defendant.The instrument went on to provide that Hastings reserved the right to sell any of the securities in order to use the proceeds to reduce the loan or to reinvest them, subject to the approval of the defendant and the Hartford bank, ‘such reinvestment to be subject to the original pledge to’the defendant‘and to the pledge of the equity therein to the trust funds as aforesaid’; and the document concluded with an agreement by Hastings not do withdraw the securities pledged as collateral for his loan or any cash resulting from their sale for his ‘individual use’ until his indebtedness to the two trust funds had been paid in full.A copy of exhibit E was filed with the defendant on March 19, 1937.

While not found by the referee, it is alleged in the complaint, not denied in the answer and apparently assumed by both parties, that on June 16, 1937, the trustees assigned to the plaintiff all their right, title and interest in or to the amount due from Hastings to them as trustees for the plaintiff.Under date of July 7, 1938, an agreement, exhibit F, was made by the plaintiff, Hastings and the trustees which stated that the ‘Assignment of Equity,’ a copy of which was attached, ‘shall be construed and interpreted in such manner as to permit’ Hastings ‘to increase his bank loan’ with the defendant from time to time for certain purposes specified in the succeeding paragraphs until his indebtedness as it appeared in ‘the Statement’ signed by him on February 24, 1937, a copy of which was also attached, should be paid in full, and that none of the uses specified should be considered to be for the ‘individual use’ of Hastings as that phrase was used in the ‘Assignment of Equity’; and the instrument proceeded with an agreement that the ‘time of expiration’ mentioned in the acknowledgment of the indebtedness should be extended from August 24, 1938, to August 24, 1940, that interest was to be paid at the rate specified in the acknowledgment and that, except with the approval of the Hartford bank and the defendant, Hastings' loans from the defendant should not be increased by the uses permitted beyond a certain named sum plus the amount by which the loans might be reduced by funds received from an outside source, except that, if the loans were reduced by the sale of collateral securing them, Hastings could borrow sums from the defendant with which to purchase other security to be used ‘as further collateral for his indebtedness to’the defendant, the plaintiff and the trustees as representing the interest of the other son to the trust for whom Hastings was indebted.The defendant had no knowledge of this agreement.

The complaint is specifically based upon the ground that the defendant unlawfully redelivered to Hastings some of the stock it held as collateral when exhibit E was executed.Absolute title to that stock had been vested in him by the distribution.Such rights to it as the plaintiff can claim must rest upon the provisions of exhibit E.That instrument begins with a purported assignment of the equity in the stock and, had it stopped there, it may well be that the effect would have been to transfer all the rights Hastings had as to it;Tracy v. G. H. Hammond Co., 5 App.Div. 39, 40 N.Y.S. 30; and one of these rights would be to have the stock returned to him when the indebtedness for which it was held as collateral had been satisfied.Dime Savings Bank of Hartford v. Bragaw, 125 Conn. 281, 285, 4 A.2d 924.The instrument, however, goes on to define the word ‘equity’ as used in it, stating its meaning to be either ‘the value of the securities in excess of the amount due’the defendant or any funds received on their sale after the payment in full of that indebtedness.The first portion of this definition does not purport to assign all Hastings' interest in the stock and it cannot be construed as an assignment of an interest in it equal to the excess of its value above Hastings' debt.An assignment to be effective must transfer some chose in action or thing which actually or potentially exists as a specific entity or some definite part thereof.AEtna Trust & Savings Co. v. Nackenhorst, 188 Ind. 621, 630, 122 N.E. 421, 123 N.E. 353, 125 N.E. 213;First National Bank of Wellsburg v. Kimberlands, 16 W.Va. 555, 588;6 C.J.S., Assignments, § 9, p. 1054;and seeBarker Piano Co. v. Commercial Security Co., 93 Conn. 129, 137, 105 A. 328;Bassett v. City Bank & Trust Co., 116 Conn. 617, 631, 165 A. 557.The defendant had the right to hold all the stock until Hastings' indebtedness to it was satisfied or the stock was disposed of in some authorized manner.The purported assignment of the ‘value’ of the stock in excess of the indebtedness could not be held to transfer a present right to recover that excess for no right of that kind existed; and any potential right to recover the excess would depend upon the realization by the sale of the stock of an amount more than sufficient to satisfy the indebtedness, a contingency which never occurred.SeeWinslow v. Fletcher, 53 Conn. 390, 394, 4 A. 250, 55 Am.Rep. 122.Indeed it could not have been the intention of the parties to transfer such a right, for that situation is expressly covered by the second portion of the definition.The excess value of the stock above the indebtedness which the first portion of the definition purported to assign was not such an...