Case ID: ny_37/html/0628-01.html
Source: Caselaw Access Project
Author: {"author": "*Miller, J. Mason, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Van Blarcom v. Broadway Bank.
    
    
      Pledge.—Collateral securities.—Appeal.
    
    Where stocks, pledged as collateral security, have been assigned to a third person, subject to the lien, and subsequently sold by the pledgee, with the assent of the assignee, the former can only claim, as against 'the latter, the amount for which they were held at the time of the assignment.
    If an order of the supreme court, reversing a judgment entered upon the report of a referee, fail to show that the reversal was upon questions of fact, it must be assumed to'have been on questions of law.
    
    Van Blarcom v. Broadway Bank, 9 Bosw. 532, reversed.
    Appeal from the general term of the Superior Court of the'city of New York," where a judgment entered in favor of the plaintiffs, upon the report of a referee, had been reversed, and a new trial awarded; the plaintiffs stipulating for judgment absolute, in case of affirmance. (Reported below, 9 Bosw. 532.)
    This was an action by John A. Yan Blarcom and Oliver J. Hayes against the Broadway Bank, to recover the proceeds of certain stocks pledged to the bank by one Christopher Champlin, and subsequently assigned to the plaintiffs. Hayes died pending this appeal, .which was prosecuted by Von Blarcom, the survivor.
    On the trial of the cause, before Hamilton W. Robinson, sole referee, it appeared, that Champlin, the owner of the stocks in question, had pledged them to the Broadway Bank, as collateral security for certain notes held by the bank; that on the 6th March 1857, Champlin and his partner, Wood, made a general assignment to the plaintiffs, for the benefit of their creditors; and that the bank had sold the collaterals, with the knowledge and assent of the plaintiffs, and received the proceeds. And the only question was as to the extent of the lien of the bank upon the funds thus produced. The defendants admitted the sum of $152.13 to be due to the plaintiffs, whilst the latter claimed the sum of $10,175.46 with interest.
    The plaintiffs claimed that the stocks were only pledged to the bank to secure certain loans to Champlin, amounting to $9850, in accordance with a written agreement between the parties, which was established by the evidence. The bank, however, insisted that they were also pledged as security for a demand loan of $2750, secured by Champlin’s note, and a deposit of the note of the firm of Roberton & Dustan for $3000, as collateral ; a note of Roberton & Dustan for $3000, payable three months from date, and running to maturity at the time of the assignment, indorsed by Champlin, *and which had been discounted for him; another note of Roberton & Dustan of $2500, at three months, of the same character as that last above mentioned ; also for a draft of $3000, drawn by Champlin on Wood, of Paducah, Kentucky, which the defendant had discounted ; and an over-draft of $18.35 ; and these several amounts the bank claimed the right to retain out of the proceeds of sale.
    It appeared in evidence, that the last-mentioned liabilities were pending on the 27th February 1857, when Champlin applied to the defendant to have the proceeds of the $3000 draft, which was then unaccepted, and had previously been deposited for collection, passed to his credit as a discount. The president, Mr. Palmer, declined to do this, as it was one-name paper, unless the bank had collateral security. A conversation was had between Champlin and Palmer, and upon what then took place, depended the additional pledge, beyond the hypothecation of the stocks previously made. The referee based his decision mainly upon what had occurred at this time, and found that the following conversation took place between Champlin and Francis A. Palmer, the president of the defendant, and acting on its behalf, which conversation constituted a contract between the defendant and the said Champlin. Champlin inquired of Palmer, if the Broadway Bank had heard anything of the draft on C. E. D. Wood, lastly herein-before described; Palmer answered, “No.” Champlin then said, “ I must have the proceeds of that draft to-day, or I shall go to protest for the first time.” He then said, “You hold all my stocks; they are security for my discounts and this draft.” ' Palmer then replied, “If that is so, we will put the proceeds, of the draft to your credit.” And the defendant did, thereupon, advance to, and put to the credit of, the said Champlin, the proceeds of said draft, to wit, the amount thereof, less the discount.
    *There was some evidence as.to interviews between the assignees and the officers of the bank, in reference to the nature of the pledge, and some conflict between the testimony of Champlin and Palmer as to. the conversation in the bank, and the alleged pledge of the stocks; and according. to Champlin’s version, no additional pledge of the stock was then made.
    It also appeared, that the assignment was made on the 6th day of March 1857., before two of the notes of Roberton & Dustan were due; that it provided for the payment of the partnership debts in the first place, and embraced the stocks in question; and that the stocks were sold by the defendant, and the sum of |23,800.16 was realized, after the assignment was executed.
    The referee found, as a matter of law, that there was no issue, under the pleadings, as to the title of the plaintiffs 'to the stocks in question, subject to any valid hypothecations thereof by Champlin or the plaintiffs; that by the agreement made between Champlin and the defendant, on the 27th of February 1857, the said Champlin made a further pledge to the defendant of the stocks then in his hands, to secure the payment of the draft drawn by him on C. E. D. Wood for §3000; that the defendant was entitled to be paid the loans made to Champlin for which the stocks were pledged by a writing; the draft of,$3000; and a loan of §3000 made to the plaintiffs, after the assignment; and reported a balance in favor of the plaintiffs of §8759.61.
    The defendant’s counsel excepted to the report, and various exceptions were taken to the rulings of the referee upon the trial, which are sufficiently noticed in the opinions. Judgment was duly entered upon the report, but the same was reversed by the general term, and a new trial awarded; whereupon, the plaintiffs appealed to this court, giving the usual stipulation.
    
      Evarts, for the appellant.
    Wheeler, for the respondent.
    
      
       Also reported in 5 Trans. App. 132.
    
    
      
       See Van Wyck v. Watters, 81 N. Y. 352.
    
   *Miller, J.

I think, that it must be assumed in this case, that the assignment made by Champlin & Wood was a valid transfer of Champlin’s property, as between them and the assignees, and that the plaintiffs were entitled to maintain this action, even if it be conceded, that the validity of such an assignment might be questioned by the creditors who were in a position to contest it, in an action brought for that purpose.

By the assignment, the title to the stocks passed, and became vested in the plaintiffs, and the defendant was liable to account to the plaintiffs, the same as it would have been to Champlin, their assignor, prior to the time when the assignment was actually made and executed. In the subsequent sale and disposition of the stocks, the defendant acted by virtue of the authority, and with the assent of- the plaintiffs, and as their bailee. The accountability of the defendant was in no respect changed thereby, and the defendant had only a right to claim as a charge against the proceeds arising upon the sale of the stocks, such amount as would have been necessary for the plaintiffs to have tended on the day of the assignment, with interest and expenses, to cancel, pay up and discharge the claim of the defendant, by the pledge of the stocks, and not beyond that sum.

The stocks being thus pledged for a specific and particular purpose, by the assignors, precludes the idea of a set-off as against the assignees, and no such question arises. If any legal set-off had existed, independent of the pledge of the stocks, it would only be valid against moneys realized upon their sale, and when they were sold, the title to the moneys had passed to the plaintiffs, and the claim of the defendant was against the plaintiffs’ assignor. At the time of the assignment, no debt was due from the bank to Champlin, and it never became a debtor of Champlin. The debt was due from the defendant to the plaintiffs, and was never due to their assignor, and to the plaintiffs alone was the defendant liable to account.

The question then arises, and it is the pi’ineipal question to be determined in this case, what was the extent of the pledge of the stocks made by Champlin, *the plaintiffs’ assignor, to the defendant? The referee has found, that by the agreement between Champlin and the defendant, made on the 27th of February 1857, Champlin made a further pledge of the stocks in the defendant’s hands to secure the payment of the draft of $3000. It was entirely competent for the referee to determine, as a matter of fact, from all the evidence in the case, what further pledge, if any, was made of the stocks m question, and as the judgment of reversal does not state that the reversal was made upon questions of fact, it must not be deemed to have been reversed on questions of fact. (Code, §§ 268, 272.) We must, therefore, consider the decision of the general term, reversing the judgment of the referee, as involving a question of law alone. Regarding the finding of the referee in that aspect, I think it was not erroneous, and that it cannot be considered as error in law," that the further pledge only included the $3000 draft, unless he has found some fact inconsistent with the pledge found to have been thus made. This has not been done, and, therefore, the judgment of the referee could not be reversed upon any such ground.

It is not important to examine the question of fact presented to the referee on the trial, but looking at the evidence in the most favorable light in which it can be regarded for the defendant, there was not, in my opinion, sufficient testimony to establish a pledge of the stocks, for any amount, on the 27th of February, beyond the $3000. They had been previously hypothecated, by written instruments, for particular loans, which were specified, and any pledge of the stocks for other loans, except the draft for $3000, was not specifically made at the time last mentioned. The conversation between Champlin and the president of the bank did not specifically refer to any prior loans. And as all the other liabilities of Champlin were secured, I think, the remark of Champlin, that the stocks were security for his discounts and the draft, had reference to the loans for which they were hypothecated, and not to those which were otherwise secured, as well as to the draft then discounted. He evidently meant to refer to loans for which they were pledged, and not to those which *they did not cover. This embraced several notes, and did not include the loans made by the defendant upon the paper of Roberton & Dustan. Nor is it manifest, that it was intended to embrace the latter, from anything which passed between the parties at that time.

It may also be remarked, that Champlin only desired, at this time, a .discount of the Paducah draft, and it would have been somewhat remarkable, if he had offered to pledge the stocks for other paper, without being requested to do so, when it was not claimed, that such paper was not already secured to the defendant, and when no additional security was demanded. It would have been more singular and strange, to have made such a pledge, as the only objection made to the proposition to discount the draft in question was, that it was the rule of the bank not to take paper with a single name, without collaterals. This striking fact renders it quite clear, that no objection was made to the discount, on account of the other paper, and that the intent of the parties was, that the stocks should be pledged solely and alone, as security for the draft. The subsequent interviews between the plaintiffs and the officers of the bank, tend strongly to sustain the position that the stocks were not further pledged for anything but the draft. Although, as already stated, the question does not now arise, yet the facts to which I have adverted tend strongly to sustain the correctness of the referee’s conclusion upon the evidence presented upon the trial.

7/e have to consider the exceptions taken by the defendant upon the trial, to the exclusion of testimony offered by him. The evidence offered as to the declarations of Champlin, prior to the assignment, was to the effect, that Champlin then understood and stated, that all the notes which Roberton & Dustan had loaned to him, and which had been discounted by the defendant, were to be paid out of the collaterals held by, and which he had assigned to, the defendant, and that an agreement based upon this statement was made, by which the amount for which Roberton & Dustan were preferred in the assignment was fixed.

* Assuming, that the declarations of Champlin were competent, as against the assignees; that they were admissible, within the rule of evidence, that they were an admission against his interest, at the time when made; that they comprehended a statement of a fact, as to the form and effect of the pledge made, and not an opinion of the witness, as to the extent and nature of the security; and conceding, that these declarations could properly be introduced, without first laying the foundation, by calling Champlin’s attention to the subject, and were not affected by his subsequent examination as a witness for the plaintiff in full, on the question of fact at issue, yet, I am of the opinion, that in no aspect in which they can be considered, does the ruling of the referee, excluding the evidence, furnish occasion for a new trial. As the case was disposed of by the referee, the testimony offered was in no sense material, and could not have affected the result. And even if the declarations of Champlin, and the proof offered, can be considered as of any importance upon the question involved, the evidence was substantially disclosed afterwards upon the cross-examination of the same witness. As to their materiality, it will be noticed, that the referee’s finding was put mainly upon the testimony of Palmer, the president of the bank, which was in conflict with Champlin’s evidence, as to what took place at the time the stocks were pledged, and the construction he put upon Palmer’s statement.

The referee ignored entirely the version given by Champlin, in regard to the transaction, and considered it was insufficient to overcome the force of the distinct and positive statements of Palmer, and accepted the narration of the latter as the precise occurrence. Upon this view of the subject, and upon the basis that Palmer was entirely correct, he decides the case adversely to the defendant, as to a larger portion of the plaintiff’s claim. It is very evident, that the evidence offered could have no influence or weight upon the conclusion of the referee, as to the contract between these parties. The declarations of Champlin would have added nothing to the statement of Palmer, which the referee *decided constituted the basis of the contract, ( 7 and as no injury would have resulted from their exclusion, there is no good and sufficient ground for a new trial.

But, if the evidence was improperly excluded, I think, it was substantially introduced afterwards, and the difficulty entirely obviated by the testimony of the same witness. The witness testified, that he tried to make an estimate of the liabilities of Roberton & Rustan, outstanding before the assignment^ and $11,000 was specified, on the grounds he had stated, and- that sum was put in, upon the assumption that the firm paid all their notes; that he supposed, that he would not have to pay the notes in the Broadway bank, and it was expected, that these notes wete to be paid out of the collaterals. The witness evidently referred to the conversation between him and Champlin, and the-grounds stated were what he had previously testified, after the offer of testimony was made, and the evidence excluded, and which, on motion, was stricken out, to the effect that Champlin had told him, that the Broadway bank had sufficient collaterals to cover his indebtedness, including the discounted notes of Roberton & Dustan, and that neither the bank nor the firm could lose anything by his liabilities to the bank. The witness testified afterwards, upon the same cross-examination, that there was an open question about the Broadway bank collaterals covering all these notes, and that he did not know what the value of these collaterals were, except from Champlin’s statement. It is very evident, I think, that, upon comparison, the evidence excluded and that introduced were of the same character, and the evidence introduced covers substantially the same grounds, and was to the same effect as that embraced in the offer. In either point of view, it would seem to be a statement of Champlin’s views, and, if of any importance, it, no doubt, had its proper weight with the referee in his determination of the case.

The question put to the defendant’s cashier, whether he could have said with truth certain things which he denied saying, called for an inference and conclusion of the witness, and, I think, was properly excluded.

*The question put to the witness Dustan, “ For what indebtedness or liabilities were these col-laterals deposited with the defendant ?” was also properly excluded. The previous examination showed that the witness had no knowledge in regard to the subject inquired of, and called for his conclusion, and not for facts. It would be allowing considerable latitude of inquiry, to permit a witness to testify generally as to his knowledge of a fact, when the evidence previously given by him had shown that he was not present when the transaction took place. If the witness had any knowledge of particular facts bearing upon the question, his attention should have been called to them, and the facts proved, but without proof of any knowledge whatever, the question put was not admissible.

The question put to the defendant’s cashier, whether he had stated, in an interview with Van Blarcom, when the notes -were discounted for the assignees, anything in regard to the notes held as collateral, does not appear to have been material, as the question was, whether the witness had made the statement sworn to by Van Blarcom, and he had already denied that he had.

As no right of set-off existed, there was no error in rejecting the claim for a balance of account in favor of the defendant. There was no such variance, I think, between the assignment set forth in the complaint and the evidence, as could not be disregarded. Nor was the plaintiff entitled to the affirmative in summing up the case. I discover no error in any of the rulings of the referee, and am satisfied, after a careful examination, that the judgment of the general term of the superior court should be reversed, and that the judgment entered upon the referee’s report should be affirmed.

Mason, J.

The question of the extent of the pledge in this case, was nothing but a question of fact, to be determined by the referee, upon a conflict of parol evidence; and he found the fact against the defendant, as to the three notes which he rejected; and it is not easy for the judicial mind to perceive how the court below, in reviewing this judgment, could reverse it upon a question of law, on this very ground alone. - It certainly was a question of fact, depending entirely upon contradictory parol evidence. The fact that the referee, in his opinion, put a certain construction upon the testimony of Mr. Palmer, the president of this bank, while considering this question of fact, does not any the less make his decision of the whole question, a question of fact, and not of law. Here was a most palpable error committed by the court below, in reversing this judgment upon this ground, upon a question of law.

It is true, that in determining this question of fact, the referee went into a discussion of the construction which should be put upon certain language employed by Palmer in giving his testimony; and, because he arrived at a different construction from what the court below did, they seem to think that they could reverse his finding of the fact itself, as a question of law. As the judgment of reversal does not state that the reversal was made on a question or questions of fact, the Code declares that the judgment “shall not be deemed to have been reversed on questions of fact;” and the consequence is, that this court cannot review this question of fact, under the Code (§§ 272, 268). This judgment, therefore, must be reversed, unless some error in law was committed upon the trial.

I am satisfied, after a careful examination of the exceptions taken to the rulings of the referee, upon questions of evidence, that they furnished no grounds for the reversal of the judgment; and so the court below must have regarded it. The various offers to prove what Champlin had said in regard to the nature and extent of the pledge, could not be admitted as primary evidence, in this cause; and as no foundation was laid for the introduction of the evidence for the purpose of impeaching him, it was properly rejected. The defendant was not in a condition to impeach this assignment, as made to hinder, delay or defraud creditors ; and besides, no such defence was set up. I am not able to perceive any error committed upon the trial; and advise the reversal of the judgment of the general term of the superior court, and the affirmance of the judgment entered upon the report of the referee.

Order reversed, and juugment of the special term affirmed.