Knight v. Seney

• Decision Date: 03 December 1919
• Docket Number: No. 12289.,12289.
• Citation: 290 Ill. 11,124 N.E. 813
• Parties: KNIGHT v. SENEY et al.
• Court: Illinois Supreme Court

290 Ill. 11

124 N.E. 813

KNIGHT

v.SENEY et al.

No. 12289.

Supreme Court of Illinois.

Oct. 27, 1919.

Rehearing Denied Dec. 3, 1919.

Error to Second Branch Appellate Court, First District, on Error to Municipal Court of Chicago; Hosea W. Wells, Judge.

Action of trover by James H. Knight, administrator of Adele Knight, deceased, against Edgar F. Seney and Rowland T. Rogers, partners doing business as Seney, Rogers & Co. From a judgment of Second Branch Appellate Court, First District (211 Ill. App. 324) modifying and affirming a judgment for plaintiff in the municipal court of Chicago, defendants bring error, and plaintiff assigns cross-errors. Affirmed.Adams, Crews, Bobb & Wescott, of Chicago, for plaintiffs in error.

Winston, Strawn & Shaw, of Chicago (Silas H. Strawn, Edward W. Everett, and R. S. Tuthill, Jr., all of Chicago, of counsel), for defendant in error.

PER CURIAM.

In an action of trover in the municipal court of Chicago, James H. Knight, as administrator of the estate of Adele Knight, deceased, recovered against Edgar F. Seney and Rowland T. Rogers, a partnership doing business as Seney, Rogers & Co., a judgment for $62,319.76 for the conversion of certain securities for the payment of money. Seney, Rogers & Co. prosecuted a writ of error from the Appellate Court, which found that there was no error in the record, except that the amount of the verdict was excessive, and proceeded to correct this error by deducting $24,066.53. The judgment was affirmed for the remainder, $38,253.23. The court granted a certificate of importance, and Seney, Rogers & Co. have sued out a writ of error to review the judgment of the Appellate Court. The defendant in error has assigned cross-errors.

The defendant in error, as administrator of the estate of Mrs. Knight, was in possession of certain securities which had been delivered to her by the plaintiffs in error upon an agreement which will be referred to hereafter. On July 9 and July 12, 1912, and February 7, 1913, the defendant in error delivered to the plaintiffs in error some of these securities, taking for them receipts of the first, of which the following is a copy:

‘Received in trust from Jas. H. Knight, bailor, Victoria bonds, $2,600, People's Hospital bonds, $7,400, and we hereby undertake to hold said property of the said Jas. H. Knight, and subject to his order, for the purpose of being sold or otherwise dealt with as the said bailor may direct, and when sold to pay the net proceeds to the said bailor. We hereby acknowledge ourselves to be the bailees of said property for said bailor. If for any reason whatever a sale of said property is not completed within three days we agree to return same to said bailor.

Seney, Rogers & Co.

‘Chicago, July 9, 1912.

By R. T. Rogers.'

Substantially similar receipts were given for the securities delivered on July 12, 1912, and February 7, 1913. The plaintiffs in error sold some of the securities so received for cash, pledged some for borrowed money, which they used, and exchanged some for real estate, which was conveyed to a syndicate which they owned. None of the securities were returned to the defendant in error, and none of the proceeds were delivered or paid to him, and he finally began this action against the plaintiffs in error on March 26, 1914. The cause was tried by a jury, and a verdict was rendered on March 20, 1916, finding both the defendants guilty of wrongful and fraudulent conversion and appropriationof the property of plaintiff, with the intention to cheat and defraud him and assessing the damages at $58,800, being the value of the securities converted, with interest to the date of the verdict. A motion for a new trial was made, but was not disposed of until June 1, 1917, when it was overruled, and judgment was entered for the amount of the verdict, with the addition of $3,519.76 interest accrued since the verdict was rendered. The Appellate Court held that, since the value of the securities converted was greater than the amount of the indebtedness due from the plaintiffs in error to the defendant in error for which the securities had been pledged, the verdict was too large, and should be reduced to the amount of the indebtedness, and modified the judgment accordingly. The basis for this conclusion will be considered hereafter.

The plaintiffs in error contend that there was no conversion and that trover will not lie, that improper items were included in the verdict, that there was error in the admission of testimony, and that a new trial should be awarded because of the misconduct of certain witnesses in the presence of the jury.

Trover will lie for the wrongful conversion of bills of exchange, promissory notes, bonds, or other securities for the payment of money. Any unauthorized act by which an owner is deprived of his property permanently or indefinitely, or the exercise of dominion over property inconsistent with the rights of the owner, is a conversion. The securities were delivered to the plaintiffs in error as bailees, to be sold or otherwise dealt with as the bailor might direct, or to be returned to him within the time mentioned in the receipts. They were not returned, but were otherwise disposed of. This disposition, if unauthorized by the defendant in error, was a wrongful conversion. There is a dispute in the evidence as to the purpose for which the securities were delivered to the plaintiffs in error, and as to the directions given by the defendant in error at the time of such delivery and afterwards; but this dispute cannot be taken into consideration here.

The verdict having been in favor of the plaintiff, and the Appellate Court having made no contrary finding of fact affecting the right of recovery, every disputed fact must be regarded as settled in favor of the defendant in error. We must therefore assume that the defendant in error delivered the securities to the plaintiffs in error for the purpose of being taken to Toledo, where the plaintiffs in error were engaged in a deal with a bank involving $300,000, for which they wanted to take some good securities there. The plaintiffs in error, not being able at that time to give the defendant in error a check or new securities, requested the defendant in error to let them have his securities on a trust receipt, to which the defendant in error agreed, and the securities were delivered upon the strength of the receipts which have been referred to. The securities were immediately disposed of by the plaintiffs in error. There was no deal in Toledo, and no attempt to dispose of the securities for the purpose or in the manner mentioned to the defendant in error. When neither the securities nor the proceeds from their disposition were returned to the defendant in error, he demanded the return of the securities, but was informed that the sale in Toledo has not been concluded, but would be in a few days, and other similar assurances were given him, until finally he was told that the plaintiffs in error had been obliged to use a part of the securities as collateral for their indebtedness and were unable to return them to him.

[4] The authority of a bailee is limited by the terms of the contract by which he acquired the possession of the property. Though he has the bailor's authority to use it for one purpose, this confers no right to use it for another, and if he does use it for a different purpose from that for which he was authorized, or in a different manner or for a longer time, he will be held liable for any loss, even through an unavoidable accident. Any unauthorized act which deprives an owner of his property is a conversion. An agent who, having received a bill of exchange to be discounted, procures its discount and appropriates the money to his own use, is not guilty of the conversion of the security, but a misappropriation of the proceeds; but if, instead of getting the bill discounted, he uses it for the payment of his own debt, he is guilty of a conversion. Palmer v. Jarmain, 2 M. & W. 282; Cranch v. White, 1 Bing. N. C. 414; Adkins v. Owen, 4 Ad. & E. 819.

[5] Here the plaintiffs in error received the securities as bailees for a particular purpose to be accomplished within a fixed time. That purpose was the transaction with the bank in Toledo. The securities were disposed of for an entirely different purpose, in a different manner, to a different purchaser, and at a different place. Since the securities were negotiable, the purchasers, having no notice of the limitation of the authority of the plaintiffs in error, acquired a good title to the securities; but the unauthorized sale was a conversion by the plaintiffs in error. The defendant in error had the right to limit the authority to sell to a sale at a certain place, or to a certain person, or for a certain purpose, and the sale by the bailees in disregard of such limitation of authority was a conversion. The contract of bailment was to return the securities within a designated time, if they were not sold or otherwise disposed of, as the defendant in error might direct. They were not returned, and were not so sold or disposed of, but were disposed of in an unauthorized way.

In August, 1911, Mrs. Knight, defendant in error's intestate, entered into a written agreement with the plaintiffs in error, which, after reciting that plaintiffs in error were engaged in the banking and brokerage business, and the business of loaning money and buying and selling mortgages and other securities upon commission and otherwise, contained the agreement on the part of Mrs. Knight that she should for a term of five years from August 10, 1911, invest the sum of $30,000 in the purchase from the plaintiffs in error of mortgages or trust deeds or bonds approved by James H. Knight and Paul Brown at not to exceed their par value, the notes or bonds, so purchased, to be delivered to Mrs. Knight, together with the original mortgages, trust deeds, and mortgagee's title guaranty policies and...