#### Brown vs. Runals.

A court of equity may compel a specific delivery to the pledgor, of a note or mortgage held by the pledgee, after the payment of the debt to secure which such note or mortgage was pledged, on the ground that the retention of them by the pledgee was in violation of a trust.

*694The action to compel such delivery, and in the meantime to restrain the negotiation of the securities, is such an action as was formerly denominated equitable.

Under the constitution of this state (Sec. 19, Art. YII), a party to an action such as was formerly denominated equitable, is entitled to have the testimony in the case taken in open court, subject to the same exceptions as are allowed by law in actions such as were formerly denominated legal.

APPEAL from the Circuit Court for *Bane*County.

The complaint in this action (which was commenced on the 2d of June, 1859), alleged in substance that on the 25th of August, 1858, the plaintiff made his promissory note for $200, payable with interest October 25th, 1858; that after-wards, as collateral security for the payment of said note, then held' by the defendant, he deposited with said defendant five notes for $200 each, made by one Spaids, and a mortgage executed by Spaids to secure six notes, including the five so deposited; that subsequently the plaintiff borrowed of the defendant $50, and deposited with him as collateral security therefor, the remaining note so secured by said mortgage, which was also for $200 ; that on the 24th of May, 1859, the plaintiff was notified that the defendant would, on the 80th of that month, sell said notes at ¡3ublic auction; that previous to the hour fixed for such sale, the plaintiff tendered to the defendant the principal sums due him as aforesaid, together with the interest then due thereon, and demanded said collateral securities, but the defendant, after taking the money, refused to deliver them, but postponed the sale to the 2d of June, 1859 and threatened to sell them on that day. Prayer, that the defendant be enjoined from selling said notes and mortgage, and be required to deliver up to the plaintiff the note so made by him, and also said collateral securities, &c.

The answer alleged in substance, that the securities mentioned in the complaint were deposited with the plaintiff by the defendant to secure the payment of a sum exceeding $2,900, and that less than $1,900 of said sum had been paid. When the case was called for trial, the circuit court decided that it should be tried without a jury, for the reason that it was a chancery case, and made an order, of its own motion, directing the testimony to be taken by a referee, to *695which the defendant excepted. The testimony so taken tended to show, among other things, that on the 22d of her, 1858, the defendant advanced to the plaintiff $65, for which, by the agreement of the parties, the notes and mortgage of Spaids, mentioned in the complaint, were to be held as security, as well as for the $250 therein mentioned; and that the whole amount so secured, including said $65 with interest thereon, had been paid to the defendant before the commencement of this action. On the coming in of the referee’s report, the court found the facts substantially as alleged in the complaint, and rendered judgment in accordance with the prayer thereof.

*J. J. Pettit,*for appellant.

*Goon fy*Gotton, for respondent.

December 30.

*By the*Court,

Cole, J.

This action was brought for the purpose of enjoining the appellant from selling certain collateral securities, consisting of several promissory notes and a mortgage on real estate, which had been deposited with him by the respondent to secure the payment of two other promissory notes mentioned in the complaint. The respondent claimed that the latter notes were paid ; and asked that the collateral securities should be given up to him. It appears that the appellant was about to proceed to sell at auction the collaterals, when the respondent made a tender and payment of the amount for which he insisted they had been pledged.

When the object of the action and nature of the relief asked in the complaint, are considered, there can be no doubt that the proceeding is one in equity. The circuit court held it to be an equity case ; and the counsel on both sides fully agree that this is a correct view of the cause.

At first we had some doubt as to whether the remedial powers of a court in equity could be invoked to compel a specific delivery of these securities, even though the respondent showed that he had a clear right to their possession.— “ Ordinarily,” says Justice Story, “ in case of chattels, courts of equity will not interfere to decree a specific delivery, because by a suit at law a full compensation may be obtained *696in damages, although the thing itself cannot be specifically obtained; and where such a remedy at law is perfectly adequate and effectual to redress the injury, there is no reason why courts of equity should afford any aid to the party.” 2 Eq. Jur., § 708. In the next section, however, he adds, that “ there are cases of personal goods and chattels, in which the remedy at law by damages would be utterly inadequate, and leave the injured party in a state of irremediable loss. In all such cases courts of equity will interfere and grant full relief by requiring a specific delivery of the thing which is wrongfully withheld." A number of cases are cited in the note in illustration of this doctrine, which show that this jurisdiction has generally been exercised to compel the delivery of a thing of some peculiar value, as a family relic, or ornament, or heir-loom, the loss of which could not be fully compensated in damages, when withheld from the owner. See also cases cited in Willard’s Eq. Jur., 858, et seq. But we are of the opinion that this action is maintainable on another ground. Where a party obtains possession of chattels through some trust or fiduciary relation to the owner, and then attempts to hold the possession wrongfully, a court of equity may entertain a suit for the specific delivery of the thing withheld. The subject of trusts is a matter peculiarly of equitable cognizance, and we suppose a pledge of personal property creates a trust in respect to such property. The pledgee has a right to retain and hold the property pledged until his debt is paid, and then he is bound to restore it to the pledgor. Thus a fiduciary relation is created between the parties in respect to the pledge, from which arise various obligations and duties. In *Wood vs.*Rowcliffe, 2 Phillips (22 Eng. Ch. R.), 381, the Lord Chancellor said: “ Where a fiduciary relation subsists between the parties, whether it be the case of an agent or a trustee, or a broker, or whether the subject matter be stock, or cargoes, or chattels of whatever description, the court will interfere to prevent a sale, either by the party entrusted with the goods, or by persons claiming under him through an alleged abuse of power.” Same case in 3 Hare (25 Eng. Ch. R), 303; *Cowles vs.*Whitman, 10 Conn., 121. Within the *697doctrine of these cases it may well be beld, tbat a court of equity would not remit tbe respondent to bis remedy at law for a conversion of tbe collaterals, but would order the appellant to deliver them up if be has no longer tbe right to retain possession of them. And that tbe debt for which tbe particular securities in controversy were pledged, bad been discharged, there does not seem to be much room for doubt. For to our minds tbe proof is clear and satisfactory tbat tbe appellant could only bold tbe Spaids notes and mortgage as security for the payment of tbe $200 note given the Keno-sha County Bank by tbe respondent, and tbe interest thereon — tbe $50 note given tbe appellant, and interest — and tbe $65 advanced in November, 1858. And when tbe amount of these several items of indebtedness was tendered to tbe appellant, bis right longer to bold tbe above named collateral securities ceased and determined. It is claimed and insisted tbat tbe appellant bad a right to bold on to these collateral securities until tbe respondent’s entire indebtedness to him was discharged. But we do not think tbe evidence in tbe case sustains tbe position. On tbe contrary it shows tbat tbe specific indebtedness for tbe payment of which tbe Spaids notes and mortgage were pledged, was at most tbe amount of tbe three items above stated and none other. So tbat we should have no difficulty whatever in affirming tbe judgment of tbe circuit court upon tbe merits as disclosed by tbe testimony, were it not for an objection which we will proceed to notice.

As before stated, this is undoubtedly a suit in equity. When tbe cause was called for trial, tbe circuit court proceeded to bear tbe testimony and reduce it to writing; but it appearing tbat tbe evidence 'would be voluminous and consume too much time, to tbe detriment of other business, tbe court ordered tbat all tbe evidence be taken before a referee or special commissioner, and be reported to tbe court. To this order tbe appellant objected at tbe time it was made. He afterwards objected to tbe admission on tbe trial of tbe evidence which was taken before tbe commissioner, on tbe ground tbat it bad been taken without authority, and tbat under tbe constitution be bad a right to have tbe witnesses *698i produced and sworn in open court. And tbe question which we have to consider is, Does not the constitution secure to a party in a chancery suit the right to have the witnesses examined in open court, subject to those exceptions provided for in cases at law ? If it does, we cannot see but that the judgment in this case must be reversed, because the appellant was deprived of this right claimed by him on the hearing of the cause. The provision of the constitution upon which he -relies in support of this position, is section nineteen, Article seven, which reads as follows : “ The testimony in causes in -equity shall be taken in like manner as in cases at law ; and the office of master in chancery is hereby-prohibited.”

It is not difficult'to arrive at the meaning and intent of this •provision of the constitution. The idea conveyed is clear, and'can’hardly be conveyed in fewer words than are here - employed. 11 *The testimony in causes in equity shall be taken ■in like manner as in cases at*law.” How is testimony taken •in actions at law ? With few exceptions, it is taken by the examination of witnesses on the trial before the court and jury. This is the almost universal -practice of taking testimony in common law cases. And the advantages of this •method of investigating facts, where the witnesses are orally 'examined, and where their appearance, manner and conduct in giving their testimony can be seen by the court and jury, -aretoo obvious to need comment. This method of trying •causes and taking testimony-is extolled by all writers as constituting one of the most valuable and excellent features of •our common law practice. And it is unquestionably the safest •and most satisfactory method of investigating facts, and affords the greatest protection to the'rights and liberties of the • citizen. It was the bendfit'of this ; system of taking testimony which, -the framers of the constitution intended to secure to:the parties in equity cases. It was therefore declared in that'instrument, that'the testimony in'equity cases should be taken'in like manner as 'at law. Thfe object was to have -the witnesses examined before the judge - who is to decide -the tíause. It is well known that under thfe old chancery -system the practice was to take-all the testimony out of court, before an examiner, master, or some other officer appointed *699for that purpose. The ease was then tried by the chancellor altogether on written proofs. But the abuses of this tem became great and crying. The examination of witnesses was oftentimes needlessly protracted, and the expense became enormous, the fees for taking testimony frequently amounting to thousands of dollars. It was evidently this evil that the constitutional provision was intended to guard against in giving parties in equity cases the right to have the witnesses orally examined in court. It was undoubtedly supposed that when the office of master in chancery, or examiner, &c., was abolished, and testimony taken before the court which tried the cause, a great mass of the irrelevant matter which generally finds its way, and certainly has in this case found its way, into the written depositions, would be rejected. It is suggested that it would be inconvenient, if not impracticable, for the court to sit and take the testimony in equity cases. But perhaps the time required to take the evidence before the court in a chancery case, will be to a great extent compensated by the time saved in not having to review and examine a mass of written testimony of an irrelevant character. However this may be, if the constitution really secures to a party in a chancery suit the right to have the witnesses examined in open court on the trial — as we are of the opinion it does — then the provision must have effect, whatever inconvenience may attend the practice. In this case, it seems, the circuit court commenced taking the testimony, but, supposing it would be voluminous, refused to proceed, and ordered it to be taken before a special commissioner. If the parties had consented to this method of taking the evidence, of course there could be no objection to it. But the appellant claimed the right to have the witnesses examined in open court, and this he was entitled to if he insisted upon it. We cannot give the above provision of the constitution any other rational construction. In *Noonan vs. Orton, 5*Wis., 60, this court had occasion to examine this provision of the constitution, although it did not become necessary, in disposing of that case, to put an authoritative construction upon it. The court, however, says upon this point: “We have no doubt that each party to a suit in chancery is, under our *700co:QS^tut’'on) entitled to have bis witnesses examined in open subject of course to tbe occasional exceptions provided for jn cases at law.” And it is clearly intimated in tbe opinion, that a party may be entitled, if be demands it, to bave tbe witnesses of tbe adverse party so examined, subject to tbe like occasional exceptions.

We fully concur in tbe correctness oftbis view of tbe constitutional provision, and tbink it settles tbe question of practice in this case conclusively in favor of tbe appellant. We must therefore reverse tbe judgment of tbe circuit court, and send tbe case back for a new trial.