Upham v. Barbour

• Decision Date: 30 June 1896
• Citation: 65 Minn. 364,68 N.W. 42
• Parties: UPHAM v BARBOUR.
• Court: Minnesota Supreme Court

65 Minn. 364

68 N.W. 42

UPHAMvBARBOUR.

Supreme Court of Minnesota.

June 30, 1896.

(Syllabus by the Court.)

1. Where the pledgee of stock put it out of his control, by canceling the certificates and re-issuing the stock to a third party to hold as security for the completion or consummation of another and different contract, without the pledgor's consent, held, such pledgee was guilty of conversion.

2. The pledgee had an option to purchase the stock at a specified price. Held, the pledgor might elect to consider the conversion as an exercise of the option, and sue to recover such price.

Appeal from district court, St. Louis county; J. D. Ensign, Judge.

Action by John H. Upham against Henry P. Barbour on a note. From a judgment for plaintiff, defendant appeals. Reversed.

R. R. Briggs, for appellant.

Cash, Williams & Chester, for respondent.

CANTY, J.

The principal question involved in this case is whether plaintiff is guilty of converting to his own use defendant's stock. On March 18, 1893, the defendant was the owner and holder of 4,000 shares of the capital stock of the Standard Ore Company, a corporation. On that day he borrowed of plaintiff the sum of $2,000, for which he executed to the latter his promissory note for that amount, and at the same time, and as collateral security for the loan, indorsed all of the certificates of said stock in blank, and delivered them to plaintiff. Plaintiff held these certificates until November 10, 1893, at which time the note was past due. On that day, plaintiff, as he testifies, “loaned this stock” to one Bates, the secretary of the corporation, and delivered the same to him for the purpose of having the certificates canceled and the stock reissued to one Fackenthall, who was the agent of the Thompson Iron Company, a foreign corporation. At this time the two corporations were making a contract whereby the ore company agreed to sell certain iron ore to the iron company, and give the latter an option to take an assignment of the lease of the iron mine of the former; and in consideration thereof the latter had loaned or advanced to the former some money, and agreed to advance it some more. The parties deemed it necessary that this contract should be ratified at a meeting of the stockholders, which could not be called on less than 10 days' notice. In order to insure the iron company that the agreement would be so ratified a majority of all the stock of the ore company was, by a number of those holding such stock, transferred to Fackenthall, under an agreement that he should hold and vote the same at such meeting; and accordingly such a meeting was called, and he, by proxy, voted all of this stock in favor of a ratification of such contract, which was accordingly ratified. Plaintiff, as a part of this arrangement, transferred defendant's stock to Bates as aforesaid, and a large number of other shares of his own, and the certificates were all canceled, and new certificates issued to Fackenthall accordingly; p...