Morris v. Wood

• Decision Date: 15 February 1896
• Citation: 35 S.W. 1013
• Parties: MORRIS v. WOOD et al.
• Court: Tennessee Supreme Court

35 S.W. 1013

MORRIS v. WOOD et al.

Court of Chancery Appeals of Tennessee.

February 15, 1896.

Appeal from chancery court, Wayne county; A. J. Abernathy, Chancellor.

Bill brought by Jonathan Morris against W. J. Wood and W. B. Wood for settlement and accounting. From a decree modifying the master's report, both parties appeal. Modified and affirmed.

Pitts & Meeks, for complainant. G. T. Hughes, for defendants.

NEIL, J.

The bill in this case was filed to settle a partnership in certain land dealings, and to sell the lands on hand for division among the owners. The cause was referred to the master by the chancellor, and a report was made, and, after certain modifications, was confirmed, and a decree was entered directing the unsold lands to be sold for division. To the sale of these lands no objection is offered. The controversies in the cause arise over certain points in the report of the master and the decree of the chancellor thereon.

The first controversy arises over what is styled in the record the "Newcomb Tract," of 3,200 acres. Upon this subject the master reported as follows: "As to said 3,200-acre tract, he finds, and so reports, that the same was sold and transferred by W. B. and W. J. Wood to Florence Land, Mining & Manufacturing Company, by deed of June 27, 1887, the consideration therefor being 225 shares of $100 each of the capital stock of said Florence Land, Mining & Manufacturing Company, the certificates of which were issued to the said W. B. and W. J. Wood, each receiving 112½ shares. * * * The undersigned further finds, and so reports, from the proof, that the market price or value of said capital stock, at the date of the execution of said deed, was 15 cents on the dollar, making the money value of said consideration for 3,200 acres of land $3,375." The master therefore allowed to the complainant one-third of said value in making up the account between the parties. To this the complainant excepted; also, the defendants. The complainant's exception was as follows: "Defendants W. J. and W. B. Wood should have been charged for the stock received by them for the Newcomb land, on the basis of the highest value of the same between their conversion of complainant's one-third of same and the commencement of this suit, which was 25¼ cents on the dollar. Complainant's one-third of said stock was converted by them, and they are liable for its highest intermediate value, and the accounts should have been so stated by the clerk and master on that basis." The defendants' exception upon this subject is as follows: "Because the master reports that the land known as the Newcomb land or tract was sold to the Florence Land, Mining & Manufacturing Company on the 27th of June, 1887, for 225 shares of stock of said company, valued at 15 cents on the dollar, when said sale was not in fact completed until the 19th day of September, 1887, when H. W. Sample conveyed the property and the stock was delivered, and said stock was then worth only 11 cents on the dollar, and the value of said stock should have been reported at $2,475, instead of $3,375." Upon the questions so raised the chancellor decreed as follows: "That the first and second exceptions of defendants be sustained, to the extent of modifying the report of the clerk and master so as to charge defendant W. J. Wood and the estate of W. B. Wood, deceased, with the stock received by them for the Newcomb lands as of September 19, 1887, instead of June 27, 1887, and at the rate of 12 cents on the dollar, instead of 15 cents." The result of this was to overrule complainant's exception.

We think the chancellor was correct in fixing the date of the sale as of September 19th instead of June 27th. An attempt was made to sell the property on June 27th, by deed from W. B. and W. J. Wood to the Florence Land, Mining & Manufacturing Company, but this proved abortive, because the title was not in them, but in one H. W. Sample. On this fact being discovered, a deed was made by Sample September 19th. It is true that, at the date of the deed by W. B. and W. J. Wood to the company, the 225 shares of stock were credited to them on the company's books; but it does not appear that these shares were actually used until after the Sample deed, and in fact the bill fixes September 19th as the date on which liability began against defendants on account of said land and stock transaction as relating to said Newcomb tract. On the whole, we think September 19th the true date. We do not think complainant's contention is well grounded, to the effect that, in cases of this kind, the party guilty of conversion shall be charged with the highest value of the property converted between the date of the conversion and the commencement of the suit; but, as will be seen, the result is the same under the true rule. To sustain the contention, we are referred to Mayberry v. Cliffe, 7 Cold. 117; Galigher v. Jones, 129 U. S. 200, 202, 9 Sup. Ct. 335; Bank v. Trenholm, 12 Heisk. 521; Romaine v. Van Allen, 26 N. Y. 309. The first-mentioned case is so specifically concerned with the construction of the language of our statutes upon the subject of replevin that we do not think it is applicable to the present inquiry. Bank v. Trenholm, 12 Heisk. 521, was an action of trover against the Merchants' National Bank of Memphis for the conversion of 50 bales of bagging. In the latter part of 1869 Trenholm & Son consigned the goods to Trout & Son, factors and commission merchants, of Memphis, for sale upon commission. Trout & Son pledged these goods to the bank for their own debt, and they were subsequently sold by the bank to pay the debt. The court say: "The proof shows that the value of the goods at the time of the conversion was $100 per bale, or $5,000, and that this continued to be their value until the fall of 1870, but that, at the time they were actually sold, the price had declined, so that the bank did not realize so much. The plaintiff, had the right to the value of the goods at the date of the conversion, or, according to some authorities, the highest value at any time between the date of their conversion and the end of the trial. Romaine v. Van Allen, 26 N. Y. 309." We do not understand this as an adoption of the New York case cited. And the supreme court of the United States, in discussing the liability of a broker for selling the stock of his principal without the direction of the latter, took occasion, in the case of Galigher v. Jones, 129 U. S. 200, 202, 9 Sup. Ct. 335, to cite and dissent from the New York case above cited. The court said: "Perhaps more transactions of this kind arise in the state of New York than in all other parts of the country. The rule of highest intermediate value up to the time of trial formerly prevailed in that state, and may be found laid down in Romaine v. Van Allen, 26 N. Y. 309, and Markham v. Jaudon, 41 N. Y. 235, and other cases, although the rigid application of the rule was deprecated by the New York superior court in an able opinion by Judge Duer, in Suydam v. Jenkins, 3 Sandf. 614. The hardship which arose from estimating the damages by the highest price up to the time of trial, which might be years after the transaction occurred, was often so great that the court of appeals of New York was constrained to introduce a material modification in the form of the rule, and to hold the true and just measure of damages in these cases to be the highest intermediate value of the stock between the time of its conversion and a reasonable time after the owner has received notice of it to enable him to replace the stock. This modification of the rule was very ably enforced in an opinion of the court of appeals delivered by Judge Rapallo in the case of Baker v. Drake, 53 N. Y. 211, which was subsequently followed in the same case in 66 N. Y. 518, and in Gruman v. Smith, 81 N. Y. 25, Colt v. Owens, 90 N. Y. 368, and Wright v. Bank, 110 N. Y. 237, 18 N. E. 79. It would be an herculean task to review all the various and conflicting opinions that have been delivered on this subject. On the whole, it seems to us that the New York rule, as finally settled by the court of appeals, has the most reasons in its favor, and we adopt it as a correct view of the law."

It does not appear that complainant had knowledge of the sale of the Newcomb land, and the disposition of the stock received therefor, prior to March 1, 1890, at which time he received a statement from the secretary of the company giving the facts. Between September 19, 1887, and March 1, 1890, the highest price reached by the stock was 25¼ cents on the dollar. This was likewise the highest intermediate value between March 1, 1890, and June 29, 1890, the latest quotation of prices shown in the proof. So that, whether the rule be as insisted by the complainant, or whether we adopt the rule as laid down by the supreme court of the United States in Galigher v. Jones, supra, the result is the same in the present case. We think, however, in a question of this kind, in laying down the rule, it is safest and wisest to follow the concurrent views of the court of appeals of New York and the supreme court of the United States, considering the fact, not to mention the other weighty reasons, that, as stated by the court in Galigher v. Jones, supra, there are perhaps more transactions of this kind—that is, in stocks—in the state of New York than in all other parts of the country. Our own supreme court not having declared itself upon the subject, we are at liberty to adopt the above-mentioned rule. But, to mark the difference between this and conversion of other kinds of property, we will again quote from Galigher v. Jones, as follows: "It has been assumed, in the consideration of the case, that the measure of damages in stock transactions of this kind, is the highest intermediate value reached by the stock between the time of the wrongful act complained of and a reasonable time thereafter, to be allowed to the party...