Thomson v. Gortner

• Decision Date: 20 February 1891
• Citation: 21 A. 371,73 Md. 474
• Parties: THOMSON v. GORTNER, (TWO CASES.)
• Court: Maryland Court of Appeals

21 A. 371

73 Md. 474

THOMSON v. GORTNER, (TWO CASES.)

Court of Appeals of Maryland

February 20, 1891

Appeal from superior court of Baltimore city.

Edgar H. Gans and B. Howard Haman, for appellant.

Thos. M. Lanahan and Frank Gosnell, for appellee.

MILLER J.

In this record there are two appeals,--one in an action of trover for the value of two promissory notes, which the declaration alleges the defendants converted to their own use; and the other in an action of assumpsit for canned corn bargained and sold by the plaintiff to the defendants. Both suits were between the same parties,--Gortner as plaintiff and E. B. Mallory & Co. as defendants,--and were both tried together, as against Thomson, one of the partners of that firm. The trials were had before the court without the intervention of a jury. In such cases the finding of facts by the court is not a subject of review here. Those findings are conclusive upon us, and all that this court can do is to determine whether the law has been correctly applied by the court below to the facts thus found.

We shall dispose of the trover case first. The two notes alleged to be converted are: One for $825.16, dated July 8, 1889 signed by Gortner, and payable to the order of Mallory & Co. 90 days after date; and the other is one of the same description for $654.09. These notes were given in the course of a business transaction between the parties. Gortner was a packer of canned corn at Selin's Grove, Pa., and on the 13th of April, 1888, by written contract, bought a large number of cans from Mallory & Co., which were to be delivered as fast as ready, and notes given for each shipment, renewable July 1, 1888. Mallory & Co. purchased the cans under this contract, and notes were duly given by Gortner, some of which were paid. But Gortner, finding himself unable to pay his notes in cash, agreed to sell to Mallory & Co. 16,000 cases of his corn, and any additional quantity that might be necessary to cover what he owed them. This contract was in writing, and was made on the 26th of October of the same year. Shortly afterwards Gortner commenced to ship and deliver corn under this contract, and continued to do so from time to time; the last delivery, of 1,230 cases, being made in May, 1889. In the mean time a controversy arose between the parties; Gortner contending that he had delivered corn more than enough to pay for the cans, and Mallory & Co. complaining that the quality of the corn did not come up to samples furnished. Pending this dispute, the two notes in question were given by Gortner, at the request of Mallory & Co., in renewal of a note of his due July 12, 1889. This is a general outline of the case, without reference to the particular evidence given at the trial. The learned judge below, as we understand his ruling on this point, found from the evidence before him as matter of fact that Gortner had paid and overpaid Mallory & Co. for the cans, and that these notes represented no value between the parties; that Mallory & Co had had them discounted at bank, and had not protected them at maturity; that they are causing Gortner to be sued upon them in the name of innocent third parties, against whom he has no defense; that they discounted the notes with the intent of using the names of innocent holders without notice, for the purpose of realizing thereon for their own benefit, and to the prejudice of Gortner. These facts, he decided, constituted a conversion of the notes, for which trover will lie. Was he right in the legal conclusion? That is the only question before us. It is well-settled law that trover will lie for the conversion of a promissory note or other negotiable instrument, as well as for any other article of personal property. Winner v. Penniman, 35 Md. 163; Brown v. Bokee, 53 Md. 170. It may be difficult in some cases to determine what acts will amount to a conversion where there has been no demand and refusal to deliver. The cancellation or destruction of a note to the possession of which a party is entitled will undoubtedly amount to a conversion of it, and so will other dealings with the note by the party in actual possession to the prejudice of the party entitled to its possession. Here, upon the facts found, the notes at the time they were given represented no value as between the maker and payees. Gortner had then paid and overpaid all that was due by him to Mallory & Co., and was under no obligation to give them these notes. In honesty and fair dealing it was the duty of Mallory & Co. to keep the notes under their control, so that they could deliver them up to Gortner at any time he demanded them. If they had them discounted, they were justly and morally bound to protect them at maturity. Gortner was not a mere accommodation indorser or maker in the commercial sense of that term, nor were the notes given for any purpose of accommodating Mallory & Co. They were given because Mallory & Co. wrongfully insisted that Gortner was then still in debt to them for their bill for cans. Now, what did they do with these notes? They had them discounted attwo different banks, and, instead of paying them at maturity, as they were in law and morals bound and able to do, they caused the banks, as innocent third parties, to bring suits upon them against Gortner. To these suits Gortner has no defense, and must pay the judgments recovered thereon. The facts found also show that Mallory & Co. had these notes discounted with the intent of using them and inducing the banks, who were innocent holders without notice, to bring suits thereon against Gortner, and that they did this for the purpose of benefiting themselves and injuring Gortner. A stronger case of the fraudulent use of notes wrongfully obtained can hardly be presented, and we thoroughly agree with the court below that it amounts to a conversion of them as against Gortner, and that he can maintain the action of trover. If authority for this conclusion be needed, we refer to the case of Decker v. Matthews, 12 N.Y. 313, (decided by the court of appeals of New York,) where it was held that the maker of a negotiable promissory note could maintain trover for its conversion against one...