York County Bank of Pa. v. Stein

• Decision Date: 11 April 1866
• Citation: 24 Md. 447
• Parties: THE YORK COUNTY BANK OF PENNSYLVANIA v. MEYER STEIN and others.
• Court: Maryland Court of Appeals

24 Md. 447

THE YORK COUNTY BANK OF PENNSYLVANIA v. MEYER STEIN and others.

Court of Appeals of Maryland

April 11, 1866

Appeal from the Court of Common Pleas for Baltimore City.

This was an action instituted by the appellant to recover a balance due on a loan of $3,000 made by it to the appellees on the 11th of March, 1861, payable in 90 days.

Exception.--At the trial of the cause, the plaintiff, to maintain the issues on its part joined, proved by George Small, a competent witness, that a few days before the transactions out of which this case arose, the president of the plaintiff who was the father of the witness, and who lived in York, Pennsylvania being then in the City of Baltimore, called, at the suggestion of the witness at the office of several brokers in company with the witness, and among others, at that of J R. McGinn, and stated that the plaintiff had money to lend on good collateral security, and inquired if said broker knew of any one who wished to borrow, and that said McGinn, in reply to the inquiry made of him, said that one of his customers then present, would take said loan, and in the presence of said customer named the collaterals which he had to offer and that the president replied that he was not authorized to make said loan on said collaterals without the authority of his board, and promised on his return home to telegraph the witness, Small, on the subject; that he did so telegraph said witness, and that said loan was not made; that said McGinn, in a few days after, called on the witness and inquired whether or not the plaintiff still had any of said money to lend, and stated that one of his, the said McGinn's customers, desired to borrow $3,000 thereof, on $5,000 of Virginia bonds as collateral security; that said witness communicated said proposition to the president of the plaintiff, and in reply received a letter, which he had diligently searched for, but was unable to find, authorizing him to accept said proposition, and enclosing him for that purpose a check for the amount of the loan after deducting the discount; that when witness received the check and the authority of the bank to make the loan, he notified McGinn, and closed the transaction he thinks in McGinn's office; that the loan was of $3,000, for 90 days on the security of $5,000 Virginia bonds; that witness handed McGinn the check and received from him the bonds.

The plaintiff then produced the paper marked A, which is as follows:

"We have this day received of Mr. George Small the sum of three thousand dollars ($3,000) returnable on 11th day of June next. And we have deposited in their hands, as collateral security for the payment of the same, the following securities, viz: $5,000 Virginia bonds, viz: No. 11,297, $1,000; No. 11,296, $1,000; No. 11,298, $1,000; No. 11,303, $1,000; No. 11,302, $1,000; with the understanding that if the said loan is not promptly paid, according to agreement, they are authorized, without further notice, to sell the said collaterals for the purpose of satisfying the same, any excess or deficiency to be paid or received by us, as the case may be. We also agree that a satisfactory margin shall be kept up.

J. R. MCGINN & CO."

Baltimore, March 11, 1861.

The witness then stated that the paper produced was the agreement entered into between him and McGinn; that the words "we also agree that a satisfactory margin shall be kept up," were not then in said paper, but were, several days after, added thereto at the request of the witness; that witness went to McGinn and asked him to add those words, saying that witness had made same agreement in other cases; that McGinn at once consented, and added them; that nothing had been said between them about margins when the agreement was originally made and signed; and that on the 11th of March, 1861, at the time of receiving said check, the said McGinn also delivered to the witness, Small, the Virginia bonds described in the paper marked "A."

And the said witness further testified that after the troubles of the 19th of April, said bonds began to decline, and said witness called on McGinn for a margin, and again, a few days after, for another margin, and in response to said calls received from him $500 on the 22nd of April, and that he never received from him any other sum; that the $500 received by McGinn was sent by witness to the bank soon after its receipt, (communication with York having been interrupted for some days after the 19th of April,) and that when sent, witness informed the bank that it was the amount of a margin he had called for on the loan in question, and it was credited by the bank; that as soon as he heard that McGinn had failed, the witness fearing that inasmuch as he had called for two margins and received only one, McGinn might have obtained from his principal more than he had paid over to the witness, went to the office of McGinn to inquire who the principal was, and learned from McGinn's clerk that the defendants were the principals; that this was after the receipt of the $500; that up to that time the witness knew that McGinn was acting as a broker for some one else, but did not know for whom he was so acting; that witness then went to the counting-room of the defendants, and asked if said bonds were theirs, and if said loan was effected for them; to both of said inquiries they replied "yes;" that witness asked how many margins they paid, and they replied, "two;" that witness informed them that he had received but one; and that he notified the defendants when the loan became due, and they tendered him $2,000.

The correspondence between the parties preliminary to the sale of the bonds was then read in evidence, and the defendants' counsel admitted that said bonds were sold at the stock board in the customary and most advantageous way, for the amount indicated in the account sales thereof, which account was offered in evidence.

On cross-examination the witness proved that he had known McGinn for some considerable time; they were neighbors, and had known him three or four years as a stock, note and bill broker, and had never known him in any other capacity; that he had had a good many transactions with him, and had given him stocks to buy and sell, and had bought paper of him; but had never had any other transaction with him in which the plaintiff was concerned; that the witness had, once or twice before, bought paper and lent money on collaterals for the plaintiff; that he had bought the paper from Messrs. Wm. Fisher & Son, brokers; that witness called on McGinn for the first margin, probably for the second, before the 19th of April--he was not certain about the date; that he called first for $500, and it was paid on the 22nd; that about the 19th, he called for the second margin, but did not receive anything from McGinn on account of the second call; that the witness called on McGinn to go to his (McGinn's) principals, and make the demand for the margins; that witness did not then know or inquire who the principals were; that McGinn requested the witness to make the demand in writing, and he complied; that witness's impression was, he told McGinn to go to his (McGinn's) customers or principals, and make the demand; that witness's understanding was, that McGinn was to bring the money to him; that about the 26th of April, he went to McGinn's office to learn why the money had not been put up (this was the day after McGinn's failure); that he then asked for McGinn's principal (this was the first time he made the inquiry, and the first information he had who were his principals); that the net proceeds of the sales of the bonds were credited by the bank, and also the $500 received from McGinn; and that he thinks he mentioned to the president of the bank that he had added the words authorizing him to call for a margin.

On being recalled, the witness said that he gave McGinn no authority to make said loan, nor any other authority in connection therewith, but himself acted as agent of the bank; that the $500 received by McGinn was sent by witness to the bank soon after its receipt, (communication with York having been interrupted for some days after the 19th April,) and that when sent, witness informed the bank that it was the amount of a margin he had called for on the loan in question, and it was credited by the bank; that witness had been in the habit, from time to time, of doing business for the bank in Baltimore; that he recollects buying notes for them, and is under the impression that he made another loan on collaterals for them; that when he wrote to his father about this transaction, he told him a broker had offered to borrow $3,000 on $5,000 Virginia bonds, and asked him if he would make the loan, and in reply he received the check, and the bank's authority to lend it.

The defendants' counsel then produced, and showed to the witness the following papers:

"Messrs. J. R. McGinn & Co.:

Gents:--I hereby call a margin of 10 per cent. on the $5,000 North Carolina 6s, on which I loaned you $3,000, March 11th.

GEO. SMALL.

Baltimore, April 17th, 1861."

"Messrs. J. R. McGinn & Co.:

Gents:--Please pay 20 per cent. on the $3,000 loan on Virginia 6s; this is additional to the 10 per cent. already called.

Oblige. GEO. SMALL.

Baltimore, April 20th, 1861."

And the witness identified the said papers as those he had written and delivered to said McGinn, and said that the words North Carolina bonds, mentioned in one of them, were used by mistake for the Virginia bonds, about which he had been testifying.

The defendants then, to maintain the issues on their part joined proved by J. R. McGinn, a competent witness, that he was, throughout the year 1861, a broker, engaged, in the name of J. R. McGinn & Co., in negotiating...