Case ID: ny-st-rep_6/html/0611-01.html
Source: Caselaw Access Project
Author: {"author": "Daniels, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George M. Birdsall, App’lt, v. James B. Davenport, Resp’t.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 2, 1887.)
    
    1. Conversion—Property loaned to a partnership and appropriated TO HIS OWN USE BY ONE OE THE PARTNERS.
    When a loan is made to a firm to be used by that firm temporarily, and one of the partners without authority appropriates the same to his own use, which use is outside of and beyond the object for which the loan was made, it is a conversion. The misappropriation or unlawful use of another’s is a conversion.
    2. Same—Assignee’s right op action.
    Where the title to property already loaned is transferred to another, although after the conversion has taken place and though the transfer be made without specifically assigning the right of action, yet the assignment itself carries with it the right of action for the unlawful conversion.
    Appeal from a judgment recovered at the circuit, on the dismissal of the plaintiff’s complaint.
    
      Arthur O. Brown, for app’lt; Putney and Bishop, for resp’t.
   Daniels, J.

The action was to recover the value of two bonds, for the sum of $1,000 each, loaned by Thomas Davenport, as the executor of the estate of B. L. Johnson, to the firm of Davenport, Johnson & Company. The bonds were loaned under a receipt, or agreement, subscribed by the firm, in the following form:

“New York, 21st July, 1882.
“Received from Thomas Davenport, executor of the estate of B. L. Johnson, one bond for $1,000, No. 4,408, of the C. & N. W. R. R. Co., and one bond, same amount, No. 4,764, of the Grand Rapids & Ind. R. R. Co., which bonds we agree to return to him when called for, as they are loaned to us to use temporarily—coupons, 1st August and February, and 1st October and April.
“DAVENPORT, JOHNSON & CO.”

And they were delivered under this receipt to the defendant, but they were not used by the firm of Davenport, Johnson & Go.; but it was admitted on the trial that James B. Davenport, the defendant, had given his individual note to Wells, Fargo & Company for $1,250, and deposited these bonds with them as collateral security for the payment of that note, on the day of-the date of the receipt. And this deposit was relied upon by the plaintiff as the assignee of Thomas Davenport, executor, as establishing a conversion of the bonds by the defendant.

No authority was given to the defendant in the receipt, or agreement, permitting him to use these bonds as security for his own indebtedness or upon a loan of money to himself, but they were loaned to the firm to be used by that firm temporarily. They do not appear, however, to have been passed over to the firm by the defendant, but he took the bonds and appropriated them to his own use, and as this was done wholly without authority, and outside of, and beyond, the object for which the bonds were delivered to him, it was, under the authorities, a conversion. For any misappropriation or unlawful use of another’s property is a conversion. McMorris v. Simson (21 Wend., 610), where it was held that an entire departure from the authority given for the disposition of the property would be a conversion of it. Id., 615. And this principle was followed in Scott v. Rogers (31 N. Y., 676), and in Bank of Rochester v. Jones (4 Com., 497, 503-4).

This use of the bonds was made before the assignment executed by Thomas Davenport, as executor, and delivered to the plaintiff. That was made on the 6th of November, 1884, and it sold and transferred the bonds to the plaintiff without specifically assigning to him this right of action for their conversion. But that was not necessary to enable the plaintiff to take advantage of this unlawful hypothecation of the bonds, for the assignment of the bonds themselves carried with it the right of action against the defendant for this unauthorized and unlawful appropriation of them. Sherman v. Elder, 24 N. Y., 381, 384; Oneida Bank v. Ontario Bank, 21 id., 490, 497-9; “ McKeage v. Hanover Fire Ins. Co., 81 id., 38, 42.”

And the rule in this manner acted upon in no way conflicts with anything that was said in Hall v. Bobinson (2 Com., 293). And these cases are entitled to be accepted as authority, although they may differ in the application of the law from those cited in support of the ruling at the trial. The judgment should be reversed and a new trial ordered, with costs to abide the event.

Van Brunt, P. J., and Bartlett, J., concur.