National Bank of Commerce In St. Louis v. Pierce

Decision Date22 March 1920
Citation219 S.W. 578,280 Mo. 614
CourtMissouri Supreme Court

Appeal from St. Louis City Circuit Court. -- Hon. William M. Kinsey Judge.


Boyle & Priest, Judson, Green & Henry and Fordyce, Holliday & White for appellant.

(1) There was no evidence of a pledge. (a) When a note is paid the object of any pledge therefor has been performed, and the pledge contract and lien ceases to be operative, and the whole beneficial interest therein becomes vested in the hands of the pledgor. Southward v. Lamb, 82 Mo. 242; Story on Bailments, secs. 365, 364, 361, 359; Wilkinson v Misner, 158 Mo.App. 551. (b) To establish a pledge for the $ 700,000 notes, it devolves upon plaintiff to show that the owner, the Tennessee Construction Company, consented to the stock being held after the $ 500,000 note was paid; and such consent cannot be inferred from silence, unless it were shown there was knowledge and acquiescence. (c) The burden of proof is upon the plaintiff in this case to show by preponderance of the evidence that there was a valid contract of pledge duly executed, and with possession thereunder, to secure the notes in question. Cantwell v. Johnson, 236 Mo. 605; Jones v. Hubbard, 193 Mo. 147. (d) Independent of a new agreement to that effect, the pledgee cannot withhold the pledge as collateral for a debt other than that to which the pledge was originally made. Southward v. Lamb, 82 Mo. 242; Wilkinson v Misner, 158 Mo.App. 551; Taylor v. Jones, 3 N.D. 235. (e) A void pledge creates no lien and gives no right of possession. Smith v. Becker, 192 Mo.App 597. (f) "Where two constructions are equally available, that one ought not to be adopted which is most favorable to the pledgee." Dibert v. D'Arcy, 248 Mo. 644. (2) The delivery of the certificates by the bank was a surrender of any rights of pledge, if the pledge existed. (a) The admitted delivery in this case of the certificates for the Terminal stock by the bank to the alleged pledgor, the Construction Company, for it to dispose of for its own benefit, without any promise whatever of a return of the certificates, in the event of a failure to make the sale, was, in law, a surrender of any right of pledge, if any existed. Kellogg v. Thompson, 142 Mass. 76; Jones on Pledges, secs. 40, 86, 87; Casey v. Cavaroc, 96 U.S. 467, 24 L.Ed. 779; Harding v. Eldridge, 186 Mass. 39; 22 Am. & Eng. Enc. (2 Ed.) 860; 31 Cyc. 817; Thompson v. Dolliver, 132 Mass. 103. (b) The delivery by the bank to the Construction Company of the stock was in no sense a delivery for a temporary purpose within the meaning of the law. The bank officials admit that they considered the sale an absolute one and they did not expect a return of the stock. If the bank desired to protect itself in the contingency of a failure of the purchase at the end of three years' option, it could have done so by taking a receipt for the stock, as it did in the case of the bonds delivered at the same time and deposited with the Trust Company. (c) The option contract expressly provided that the Terminal stock should be redelivered to the Construction Company (pledgor) and not to the bank (pledgee); this is in sharp contrast with the provisions of the option contract which stipulate for the return of the bonds directly to the depositors of the bonds, who were given receipts by the Colonial Trust Company. Kellogg v. Thompson, 142 Mass. 76. (d) The defense of surrender is available to defendant without proof of facts showing an estoppel, or that Pierce was misled to his prejudice and without proof of any consideration for the surrender. The mere voluntary loss of possession extinguishes the pledge, for possession is an essential requirement of a valid pledge. Kellogg v. Thompson, 142 Mass. 76; Thompson v. Dolliver, 132 Mass. 103; Walker v. Staples, 5 Allen, 34; Holmes v. Crane, 2 Pick. 607; 22 Am. & Eng. Enc. (2 Ed.) 860; 31 Cyc. 817; Jones on Collateral Securities, sec. 40; Story on Bailments, sec. 364; Dobie on Bailments and Carriers, p. 239. (e) However, the bank is estopped by its conduct, contracts and long-continued acquiescence in the surrender, to deny which would be to the great prejudice of Pierce; and the mutual stipulations in the option contract on which the bank acted, and the stipulations in Pierce guaranty as to the collateral, are sufficient considerations, if any were needed. (3) Plaintiff's alleged cause of action, if any, dates more than five years prior to the filing of this suit, and the alleged cause of action is therefore barred by the Statute of Limitations. The stock was surrendered to the Construction Company in July, 1905, and then passed out of the possession of the plaintiff, actual or constructive, without any receipt therefor evidencing any right or continued control, and said stock continued under the dominion and control of the Construction Company while it was in the hands of the Trust Company. There was no change in this dominion and control during the three years from 1905 to 1908, and there was, of course, no such change of dominion and control from 1908 to 1913. The suit was filed April 12, 1913. R. S. 1909, sec. 1889. (a) The court below sought to escape this bar by dating the alleged conversion in December, 1908, but there is no warrant whatever for this distinction. The stock was in the possession of the Construction Company and under its control from the time of its delivery to Senator Bailey as its attorney and agent in July, 1905. It was deposited for the benefit of the Construction Company with the Standard Trust Company under the express undertaking to redeliver the same to the Construction Company when the purpose of the deposit was performed. (b) It is a general and fundamental rule that the Statute of Limitations may be invoked by a successor in right or title. As Pierce claims title under the alleged pledgor, the Tennessee Construction Company, the question is whether the latter first acquired posession; and it is admitted by plaintiff that this was on July 27, 1905, for on that date Senator Bailey, its attorney and representative, acquired possession of the stock and delivered it to the Trust Company in New York on behalf of the Tennessee Construction Company, and thereafter delivered the receipt therefor to the Construction Company. The test is, not when Pierce acquired possession, but when the plaintiff lost possession to defendant's predecessor in title. 25 Cyc. 1009; Wood on Limitations, sec. 41. (c) While the bar of the statute is complete on the undisputed testimony, dating from the surrender of the stock to Bailey in July, 1905, it must not be overlooked that the actual loss of lien on the stock by the bank dates back to June 24, 1904, when the $ 500,000 note, for which it was specifically pledged, was paid. Assuming that this stock remained in the possession of Van Blarcom, who occupied a dual position of officer of the bank and also of the Construction Company, in this anomalous condition the burden is clearly on the bank to show by satisfactory proof the specific pledge of the stock for the $ 700,000 debt. (4) Even if plaintiff's action can be considered one in trover, all that defendant would be liable for, if at all, would be nominal damages and under some circumstances a return of the Terminal stock. Since the Terminal stock has remained in statu quo, and since it came into the hands of Mr. Pierce, without knowledge of the interest of the plaintiff, or without willful wrong, it must be accepted by plaintiff in complete acquittal of damages, assuming that plaintiff is liable. Ward v. Moffett, 38 Mo.App. 395; Hart v. Skinner, 16 Vt. 138, 42 Am. Dec. 500; Atkins v. Gamble, 42 Cal. 86, 10 Am. Rep. 282. (5) If there should be a recovery, it should be for nominal damages, for there was an entire failure to show that this stock had any substantial value. Deck v. Feld, 38 Mo.App. 680; 4 Sutherland on Damages (4 Ed.), sec. 1113, p. 4223. It is a fundamental principle in the measure of damages in trover that long-continued acquiescence by pledgee in the pledgor's possession with a knowledge of the latter's claim of right will, in an action of trover, bar plaintiff's right to damages that would not have been suffered but for such acquiescence. 38 Cyc. 2104; Rogers v. Brittain, 39 Mich. 477. In this case, this acquiescence continued not only from 1905 to 1908, but from 1905 to 1910. (6) The memorandum claimed to have been made by Matthews was not admissible in evidence. (a) The alleged pledge is a special contract, and entries in books or records are not admissible to prove such contracts. Smith v. Blakely, L. R. 2 Q. B. 325; Lackey v. Schreiber, 17 Mo. 146; Hall v. Woolen Co., 187 Pa. 18, 52 L.R.A. 711, note 6; Jeffries v. Castleman, 68 Ala. 432; Griesheimer v. Tanebaum, 26 N.E. 957; Anchor Company v. Walsh, 108 Mo. 277; 3 Jones's Commentaries on Evidence, sec. 574. (b) Matthews had no authority from the bank either to demand additional security from the Construction Company or to enter into any agreement with the Construction Company for further security. (c) It is not the best evidence. No record of the action of the Board of Directors of the bank in regard to the pledging of the stock was in evidence, and no record of the Construction Company, authorizing the pledge, was shown. (d) The making of the memorandum was not a part of the res gestae between the parties to the action. Greisheimer v. Tanebaum, 26 N.E. 957. (e) The memorandum is purely self-serving. A party to a contract, the terms of which are in dispute, cannot give in evidence his own statements, either oral or written, made subsequent to the alleged contract, in corroboration of his version of the contract, nor can such statements be used...

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