Varney v. Curtis

• Decision Date: 28 January 1913
• Citation: 100 N.E. 650,213 Mass. 309
• Parties: VARNEY v. CURTIS et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

213 Mass. 309

100 N.E. 650

VARNEY v. CURTIS et al.

Supreme Judicial Court of Massachusetts, Middlesex.

January 28, 1913

Jan 28, 1913.

COUNSEL

H. N Allin, of Boston, for plaintff.

Whipple Sears & Ogden, Hugh W. Ogden, Edwd. N. Goding, and Henry H. Bond, all of Boston, for defendants.

OPINION

LORING J.

This is an action for the conversion of six Northern Pacific-Great Northern joint bonds (registered and non-negotiable), one Union Pacific bond (registered and nonnegotiable), two Wolfeborough water bonds (negotiable coupon bonds) and one bond of the town of Wolfeborough (negotiable coupon bond), all, with the exception of the last (which was for $200), being bonds for $1,000. The case was tried by Justice Schofield without a jury. He found for the plaintiff, and the case is here on his refusal to give seven rulings asked for by the defendant.

So far as now material the facts found by the judge were as follows: The plaintiff's husband died in February, 1902. Some of the securities here in question came to her under her husband's will and some of them had been owned by her before his death. Soon after her husband's death these bonds were delivered by the plaintiff to her son-in-law, Symonds by name, a stockbroker, to be kept by him for her in his safe deposit box. In April, 1902, the son-in-law opened an account with the defendants for the purchase and sale of stocks and bonds on margin and delivered to them as security for that account, inter alia, four of the plaintiff's Northern Pacific-Great Northern joint bonds with forged indorsements. The last of January, 1904, Symonds directed the defendants to transfer this account to Colton & Co. Pursuant to that direction the defendants, on February 1, 1904, delivered to Colton & Co. all the stocks and bonds which they were then carrying on margin for Symonds, and the bonds held by them as security for that margin account (including these four bonds), on receiving from Colton & Co. $10,515.54, the amount due to them from Symonds. In this connection the judge made the following finding and ruling: 'The defendants in making delivery to E. S. Colton & Co. knew that the bonds previously held by them as collateral would be held by Colton & Co. as collateral, and intended that result. The court, in so far as it is a question of fact, finds as a fact, and in so far as it is a question of law, rules as matter of law, that such a delivery by defendants was more than a mere transfer of physical possession of the bonds to Colton & Co., by order of Symonds. It was a transfer of possession of bonds which they held as collateral with the intention that the transferees should also hold them as collateral. The court also finds as a fact that the defendants were not obliged to make such a delivery in the performance of any duty which they owed to Symonds by contract as bailees or pledgees under him. They did it voluntarily in pursuance of his instructions and as the means of obtaining payment of the debt he owed to them. They had no knowledge or notice that the plaintiff was the true owner of the bonds, but the court rules that the act of delivery to Colton & Co. with the intention above stated was an exercise of ownership, in exclusion of the rights of the true owner, an act of dominion, and a conversion.'

On March 14, 1904, Symonds opened another margin account with the defendants and deposited as security for that account another Northern Pacific-Great Northern joint registered bond belonging to the plaintiff, with a forged indorsement. A month and one-half later, to wit, on April 30th, he deposited two registered bonds with forged indorsements (the Union Pacific bond and a Northern Pacific-Great Northern) and two coupon bonds (one Wolfeborough water bond, and one Wolfeborough town bond for $200), and on May 2d he deposited with the defendants another Wolfeborough water bond (a coupon bond), all the property of the plaintiff. The judge found that by reason of what happened between March 14th, when this account was opened, and April 30th, on or after which day the securities last mentioned were deposited, the defendants took with notice all the bonds deposited as security for the second account except the non-negotiable Northern Pacific-Great Northern bond deposited on March 14th, and were not purchasers of those bonds in good faith.

On May 7th or 9th, at Symond's request, the defendants delivered to Berry & Co. the securities then being carried by them in the second margin account and the bonds held as security for that account, and received from Berry & Co. a check for $11,237.13, the balance due from Symonds on that account. The judge ruled 'that the act of the defendants in taking the bonds into their possession from Symonds with notice, intending to hold them as pledgees, was in itself an exercise of dominion over them in denial of the rights of the true owner, and a conversion,' and made 'the same findings of fact and rulings of law in regard to the two transfers of account.' The judge found that Berry & Co. became bankrupt and that the bonds received by Colton & Co. were sold by them and no part of the proceeds came to the plaintiff. He found for the plaintiff for the sum of $7,022.94, the value of the ten bonds after deducting the value of four bonds recovered from the assignees of Berry & Co. The only exceptions taken by the defendants were to the refusal of the judge to give seven rulings asked for by them.

1. The first ruling asked for could not have been given because the judge found as a fact that all the bonds (except one) deposited with the defendants as security for the second account were taken by them with notice. ^[1] There can be no question but that the judge was right in ruling 'that the act of the defendants in taking the bonds into their possession from Symonds with notice, intending to hold them as pledgees, was in itself an exercise of dominion over them in denial of the rights of the true owner, and a conversion.' There was evidence which amply warranted the judge in making the finding of fact that the defendant took these bonds with notice. Indeed the defendants have not argued that there was not. The exception to the refusal to give this ruling must be overruled.

2. The sixteenth ruling asked for was rightly refused because (first) as matter of law the judge was not bound to find (if indeed he could have found) that the plaintiff was careless in entrusting her bonds to Symonds for safe keeping; and (secondly) even if she was careless in so doing she would not have been negligent. ^[2] She owed no duty to the defendants to keep her securities carefully, and so as against them she was not negligent if she kept them carelessly. An owner who keeps his securities in a careless manner does not lose his property in them nor his rights of action founded thereon. That was decided in Shepard & Morse Lumber Co. v. Eldredge, 171 Mass. 516, 51 N.E. 9, 41 L. R. A. 617, 68 Am. St. Rep. 446. It is to be borne in mind that these bonds were not indorsed by the plaintiff, as was the case in Scollans v. Rollins, 173 Mass. 275, 53 N.E. 863, 73 Am. St. Rep. 284; s. c., 179 Mass. 346, 60 N.E. 983, 88 Am. St. Rep. 386. Had the plaintiff entrusted these bonds to Symonds indorsed by her a different question would have been presented.

3. The twenty-first and twenty-second rulings asked for are based on Loring v. Mulcahy, 3 Allen, 575, and Leonard v. Tidd, 3 Metc. 6, and the contention is that this case comes within those decisions. ^[3]

It is settled that where a bailee receives on deposit goods from one in possession but without title to them, and afterwards restores them to the possession of the bailor in ignorance of the rights of the true owner, he is not guily of a conversion. Loring v. Mulcahy, 3 Allen, 575; Hill v. Hayes, 38 Conn. 532; Steele v. Marsicano, 102 Cal. 666, 36 P. 920; Nelson v. Iverson, 17 Ala. 216; Frome v. Dennis, 45 N. J. Law, 515. For other cases where the temporary use of the property of another made by a defendant acting in good faith under a mistake of fact has been held or said not to be a conversion, see Strickland v. Barrett, 20 Pick. 415; Wellington v. Wentworth, 8 Metc. 548; Spooner v. Manchester, 133 Mass. 270, 43 Am. Rep. 514; Shea v. Milford, 145 Mass. 525, 14 N.E. 769; Gurley v. Armstead, 148 Mass. 267, 19 N.E. 389, 2 L. R. A. 80, 12 Am. St. Rep. 555.

It is pointed out in Pollock on Torts, 374, in connection with this rule, that a bailee under those circumstances is estopped to deny the title of the bailor. That means that in returning the goods to the bailor the bailee does no more than perform the duty he owes to the bailor. He cannot be guilty of a conversion for doing that.

In Leonard v. Tidd, 3 Metc. 6, this principle was applied in a case where the defendants acting in good faith received as security for a debt due to them from the pledgor a gun, the property of the plaintiff which was in the possession of the pledgor, and returned the property pledged to the wrongful pledgor upon payment of the debt due them from him. For a similar decision see Spackman v. Foster, 11 Q. B. D. 99. The reasoning on which the decision in Spackman v. Foster went was that although the pledgee in such a case claims to hold the property as against the wrongful pledgor until the debt due him from the wrongful pledgor is paid, so far as appears he does not claim to hold the property pledged as against the true owner. The same reasoning was adopted in Loring v. Mulcahy, ubi supra. That is to say, in such a case, so far as the true owner is concerned the pledgee is in possession under one to whom the true owner had given possession, and by returning the pledged property to the wrongful pledgor the pledgee does nothing more than perform the duty he...