Reed v. Kellerman
| Decision Date | 30 July 1941 |
| Docket Number | No. 396.,396. |
| Parties | REED et al. v. KELLERMAN. |
| Court | U.S. District Court — Western District of Pennsylvania |
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Thomas J. Minnick, Jr., of Philadelphia, Pa., for plaintiffs.
Wm. C. Schwebel, J. George Lipsius, and Charles Roisman, all of Philadelphia, Pa., for defendant.
The issues having been brought to trial before me on amended complaint and answer (amended at trial), and having heard the testimony of witnesses and argument of counsel, I make the following findings of fact:
1. That W. B. Ward was an officer of the United States of America, having been appointed receiver of the Northwestern National Bank and Trust Company of Philadelphia by the Comptroller of the Currency of the United States of America on June 25, 1934.
2. That L. M. Reed was appointed receiver of the said Northwestern National Bank and Trust Company of Philadelphia as of the close of business October 25, 1939, to succeed W. B. Ward, and he is now the duly appointed, qualified and acting receiver of the said bank, by authority of the Comptroller of the Currency of the United States of America.
3. That for some time prior to February 28, 1933, George H. Kellerman, husband of Matilda Kellerman, the defendant, was a depositor in the Northwestern National Bank and Trust Company of Philadelphia.
4. That among other notes executed by George H. Kellerman, in favor of the Northwestern National Bank and Trust Company of Philadelphia, the latter did, on February 28, 1933, make and execute a renewal collateral note, hereinafter called "note", payable to the order of the Northwestern National Bank and Trust Company of Philadelphia. According to the terms of the said note, George H. Kellerman promised to pay to the order of the Northwestern National Bank and Trust Company of Philadelphia the sum of $9,245.92 on April 28, 1933.
5. As collateral security for the payment of the said note, George H. Kellerman delivered eleven trust certificates, hereinafter called "certificates", in the face amount or value of $1,000 each, of Electric and Peoples Traction Company, a corporation, with the right on the part of the holder thereof, in case of default in payment, to sell the said securities at any broker's board, or, at public or private sale, at the option of the holder, and with the right on the part of the holder to become purchaser thereof at such sale. The said certificates are Nos. A5110, A27581, A27582, A27196, A27054, A26257, A25333, A25332, A25331, A25330, A22037.
6. The aforesaid certificates were then owned by Matilda Kellerman, the defendant herein, wife of the said George H. Kellerman, and were pledged by him to the Northwestern National Bank and Trust Company of Philadelphia, with the consent of the said Matilda Kellerman to the above pledge. The consent of the said Matilda Kellerman to the above pledge was in writing, as follows:
7. The aforesaid note was presented for payment on April 28, 1933, at the office of the Northwestern National Bank and Trust Company, during regular business hours, but the said George H. Kellerman failed and refused to pay the same.
8. That, in accordance with the terms, conditions, agreements and the authority contained in "note", the plaintiff did offer, at private sale, "certificates" on December 6, 1937, at the offices of the plaintiff, 3650 North Broad Street, Philadelphia, and at such private sale, did purchase the "certificates" for the sum of $500, which sum was given and applied as a credit to George H. Kellerman on his indebtedness to the Northwestern National Bank and Trust Company of Philadelphia, as above stated.
9. The plaintiff has requested and demanded of the said Matilda Kellerman that she assign and transfer the said "certificates" to the plaintiff, which request and demand have been refused by her.
10. That dividends were paid to the said Matilda Kellerman on said "certificates" after the execution of the aforementioned "note", as follows:
The action here is in equity to recognize and enforce an implied trust. The defense is twofold: (1) that the defendant Mrs. Kellerman did not sign the Consent to Pledge in the presence of Batten, the attesting witness (Paragraph 6, Findings of Fact); and (2) that the plaintiff is guilty of laches such as to bar him from bringing this action.
At this point it must be stated that in her Answer to the amended complaint, the defendant denied that she ever executed the consent to pledge. At the trial, however, she admitted that she did sign the Consent to Pledge, but that the paper which she signed was then in blank form and that Batten was not present nor did he witness her signature. Decision was reserved at trial on the defendant's request to amend her Answer.
There is no doubt that under Rule 15(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, that such amendment is permissible. Rule 15(b), "Amendments to Conform to the Evidence", provides: "* * * If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. * * *"
As to amendments of pleadings during trial, see Caldwell et al. v. Sears-Roebuck & Co., D.C., 31 F.Supp. 888; Low v. Davidson Mfg. Co., 7 Cir., 113 F.2d 364; Lientz v. Wheeler, 8 Cir., 113 F.2d 767; In re Kantor's Delicatessen, Inc., D.C.E.D. N.Y. 1940, 34 F.Supp. 898; Holland v. Majestic Radio & Television Corp. et al., D.C., 27 F.Supp. 990.
As was stated by James A. Pike, Esq., in his admirable discussion, "Some Current Trends in the Construction of the Federal Rules", 9 George Washington Law Review 26: "With respect to issue-formulation, pleadings are growing increasingly less effective because of the trend toward liberality of amendment during the course of trial where objection to the introduction of evidence is made on the ground of `variance', and toward the implied amendment of pleadings to conform to evidence without objection."
The permitted amendment raises the simple fact question as to whether or not Batten witnessed Mrs. Kellerman's signature, as is contended by the plaintiff, or whether or not she signed the Consent to Pledge in blank and his signature as witness was subsequently placed on the Consent so as to constitute an "alteration" of the instrument, thus making it invalid according to defendant.
I find as a fact from the testimony that Mrs. Kellerman signed the Consent to Pledge with full knowledge of its contents; that Batten was present when she signed the Consent, and that he affixed his signature as "witness" at the time of her signing the instrument.
Mrs. Kellerman testified that she can read; that she in fact read the Consent before she signed it; that she had on numerous occasions signed other papers relating to stock and bond transactions, powers of attorney, etc.; that she understood the meaning of the word "consent", and that she also understood the meaning of the word "pledge". In this connection it must be kept in mind that the Consent contained in its printed portion the words "I hereby declare that ____ has my full consent to pledge," etc.
Mrs. Kellerman's testimony that when she signed the Consent she thought "it was a legal paper for exchanging bonds" (P. 78, N.T.) is incredible.
Mrs. Kellerman is, of course, bound by the provisions of the Consent. It is well settled that a person who, before signing a contract, fails to read its contents; or, if he is unable to read, fails to demand that it be read and explained to him, is bound by the provisions of the contract. See Commonwealth, to Use v. Gudaitis et al., 323 Pa. 110, 186 A. 82. The following quotation from the case just cited is especially pertinent (323 Pa. page 111, 186 A. page 83): ...
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