Nagel v. Ham, Yearsley & Ryrie

• Decision Date: 12 November 1915
• Docket Number: 12537.
• Citation: 152 P. 520,88 Wash. 99
• Court: Washington Supreme Court
• Parties: NAGEL v. HAM, YEARSLEY & RYRIE et al.

152 P. 520

88 Wash. 99

NAGEL v. HAM, YEARSLEY & RYRIE et al.

No. 12537.

Supreme Court of Washington

November 12, 1915

Department 2. Appeal from Superior Court, Spokane County; E. H Sullivan, Judge.

Action by F. H. Nagel against Ham, Yearsley & Ryrie, a corporation and others. Judgment for plaintiff, and defendants appeal. Reversed and remanded, with direction to dismiss the action.

Voorhees & Canfield, of Spokane, for appellants.

Parker W. Kimball, of Spokane, and Ralph B. Williamson, of North Yakima, for respondent.

MAIN J.

This action was instituted against Ham, Yearsley & Ryrie, a corporation, Wilbur S. Yearsley, its vice president, and Kenneth Murry, its secretary, for the purpose of compelling the officers of the corporation to transfer to the plaintiff upon the books of the corporation 12 1/2 shares of its capital stock. After the issues were framed the cause was tried to the court without a jury, and resulted in a judgment directing that the shares of stock be transferred upon the books of the corporation to the plaintiff. From this judgment, the defendants have appealed.

The facts are as follows: On September 4, 1912, one Donald Ryrie, being indebted to one Frank A. Ross in the sum of $880, executed and delivered to Ross a promissory note for the amount of the indebtedness, due 90 days after date. As security for the payment of this note Ryrie assigned certificate of stock No. 22 for 12 1/2 shares of the capital stock of the appellant corporation. The assignment was made in the usual form which appears on the back of certificates of corporate stock, and was in the following language:

'For value received _____ hereby sell, transfer, and assign to _____ the shares of stock within mentioned, and hereby authorize _____ to make the necessary transfer on the books of the corporation. Witness _____ hand and seal this ___ day of _____, A. D. 19__.

'D. Ryrie.'

The note not being paid when due, Ross, on June 6, 1913, notified Ryrie that unless the same was paid before June 13, 1913, the 12 1/2 shares of capital stock which he held as security would be sold, and the proceeds thereof applied upon the amount due upon the note. On September 25, 1913, the note nor any part thereof having been paid, Ross notified Ryrie that he would sell the certificate of stock on September 29th at the hour of 1:30 o'clock p. m., at his office, room 1018 in the Paulsen Building, in the city of Spokane. The notice to Ryrie was by letter delivered to him personally. No public notice of the sale was given. On September 29, 1913, the shares of stock which were evidenced by the certificate were sold at the time and place mentioned in the notice.

Prior to the time the sale was held, and on the 11th day of October, 1912, Ryrie had made an assignment of all his right, title, and interest to Henry Madigan and John Pattison, as trustee for certain creditors. And on December 23, 1912, Ryrie made an assignment of the stock represented by the certificate, and other property, to Wilbur S. Yearsley, for the purpose of permitting Yearsley to manage and dispose of the property thus assigned, and out of the proceeds arising therefrom pay pro rata the obligations of Ryrie and of the appellant corporation which had been incurred by Ryrie.

At the time the sale of the shares of stock occurred Ross had notice of the assignment to Madigan and Pattison and to Yearsley. Prior to the sale Yearsley by letter had notified Ross that any sale or attempted sale held pursuant to the notice given by Ross would be invalid. At the sale the stock was purchased by the plaintiff through his agent and attorney for the sum of $100, and the certificate of stock was delivered to him. Thereafter he made a demand upon the appellant corporation that it transfer the stock to him as the owner upon the books of the corporation, which demand was refused. Thereafter the present action was brought, and resulted in a judgment directing the transfer as above stated.

Two questions are here presented: First, did title to the stock pass to the respondent by virtue of a valid sale; and second, if the sale was invalid, does the respondent, notwithstanding that fact, have the right by reason of holding the certificate assigned in blank by Ryrie with a power of attorney in blank, authorizing the transfer, to have it made.

I. There appears to be no statute in this state defining the procedure by which a pledge of personal property may be sold for the purpose of satisfying the debt which it secures. This being true, recourse must be had to the common law. The common-law rule is that, in the absence of an agreement between the parties controlling the manner of the disposition of the pledge, two remedies are open to the pledgee: He may begin an action for the foreclosure and sale of the pledge; or he may exercise his implied authority and sell the pledge at public auction after having given reasonable notice of the time and place of such sale to the pledgor. 31 Cyc. 878; Jones, Collateral Securities (3d Ed.) § 603; Fitzpatrick v. Bank of Forrest City, 95 Ark. 542, 129 S.W. 795; Sharpe v. Nat. Bank of Birmingham, 87 Ala. 644, 7 So. 106.

In the case last cited it was said:

'When the debt for which shares of stock are pledged matures and is unpaid, the pledgee may file a bill in equity for a foreclosure of the pledge and a sale under the order of the court, or he may exercise the implied power to sell without resorting to judicial proceedings. If he elects to pursue the latter remedy, the law requires, in the absence of an agreement, that the sale shall be made at public auction, and reasonable notice of the time and place given to the pledgor, that he may have opportunity to redeem the pledge.'

One of the necessary incidents of a public sale is that notice thereof shall be given to the public in order that the purchasers may advise themselves of the terms of sale and the title to the property, and be enabled to bid intelligently. Hagan v. Continental Nat. Bank, 182 Mo. 319, 81 S.W. 171; Tennent v. Union Cent. Life Ins. Co., 133 Mo.App. 345, 112 S.W. 754; Amarillo Nat. Bank v. Harrington (Tex. Civ. App.) 131 S.W. 231.

In the Hagan Case upon this question it was said:

'But a public sale also implies a notice to the public, in order that

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