Case Name: Thomas C. Durant, plaintiff and respondent, vs. Lewis Einstein et al. defendants and appellants
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1868-03
Citations: 5 Rob. 423
Docket Number: 
Parties: Thomas C. Durant, plaintiff and respondent, vs. Lewis Einstein et al. defendants and appellants.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 28
Pages: 423–444

Head Matter:
Thomas C. Durant, plaintiff and respondent, vs. Lewis Einstein et al. defendants and appellants.
1. A court of equity has no general jurisdiction of an action to redeem personal / property pawned, without some additional circumstances rendering its ihterference necessary. The remedy at law is ample, hy tender of the amount due, and a possessory action to recover the articles pledged, or damages for their detention.
2. The only ground upon which jurisdiction has ever been assumed in equity over an action for the redemption of personal property pledged, except the necessity of going there for a discovery, (or perhaps, before an assignee equld sue in his own name at law, an assignment of the pledge,) is the necessity of taking an account.
3. The account, however, on which equity bases its jurisdiction in • such a case must be really one requiring the aid of the powers of a court of equity; that is, not having merely one item on one side and a number of set-offs on the other, but a series of transactions on both sides.
4. Where the claim on the part of > the defendants, in such case, consists of but one item, to wit, their original advances for which the goods were pledged, or so much thereof as remains unpaid, and every sum paid or to be credited in that account, set out in the complaint, forms a proper subject of set off in an action at law, including even any liability of the defendants for'selling any of the property pledged below its market price—there is no necessity for equitable intervention; especially where no discovery is shown to be necessary.
5. Even assuming that a court of equity will restrain the sale of pawned personal property until an account can be taken of the amount due on the loan upon it, under the same circumstances as it would a suit at law, the mere validity of a prior sale by the pledgee of stock pledged, is not one of such circumstances.
6. If the objects of an action by a pawnor or his assignee, against pawnees, be to attack a prior sale of pledged goods, in order to make the defendants liable in damages for the conversion of those sold, they cannot, until liquidated in an action, form any part of an account. Nor is a court of equity authorized to tie up the defendants, by an injunction order, from using the authority as -pledgees bestowed on them by the plaintiff, until the amount of such damages can'bé ascertained.
7. Mere unliquidated damages for an entirely unauthorized sale of stock cannot form part of an account, so as to give to a court of equity the jurisdiction exercised by it over complicated accounts.
8. Sales of pledged stock below the market price, by the pledgees, will not alone make the latter liable for the difference, unless made with intent to injure the pledgor, beyond the mere realization of the amount due the pledgees, as in other cases of abuse of lawful authority. Something besides a mere sale below the market price is necessary to show such intent. There must be at least such recklessness shown, in the mode or time of selling, as to establish an intent to injure the pawnor, before the pawnee can be made liable for any loss.
9. Prima facie the denial, in the answers of defendants, of the equities of a complaint, entitles them to a vacation of an injunction order.
10. Although the court on appeal, at general term, cannot properly interfere with any decision made at special term founded on conflicting evidence, yet it may do so, where that on one side is mere information and belief, and that on the other, positive knowledge.
(Before Robebtsoh, Oh. J., and Moheel and 'Q-abvix, JJ.)
Heard November 19, 1867;
decided March —, 1868.
Appeal from an erder denying a motion to dissolve an injunction order.
The action was for an accounting and the redemption of a pledge; the object of the injunction was to prevent a sale of the pledge until the accounting should be had and the fact ascertained whether any thing, and if any thing, how much was due on the pledge. The property-pledged consisted of a certain -number (100) of land grant bonds of the Union Pacific Railway Company (eastern division) of $1000 each, and a certain number (66) of shares of stock of the Pacific Mail Steamship Company of a certain value each ($159 or upwards.) The defendants claimed the balance of the account to be in their favor; the plaintiff alleged that nothing was due to the defendants, but, on the contrary, the balance was against the defendants and in favor of the plaintiff.
The complaint states that the plaintiff made a contract with the defendants for an advance on a certain number (10,000) of shares of preferred stock of the Chicago and North Western Railroad Company, the advance of the defendants to be a certain sum, ($700,000,) and for such time as the -plaintiff might choose, not exceeding a certain time (sixty days.) If the stock fell below a certain price ($80) a share, so as not so leave a certain margin ($10) a share, the plaintiff was to place -in the hands of the defendants, sufficient security to make good such difference. In default of such additional collateral, the defendants might sell the preferred stock without notice of sale. That said contract was made January 11, 1867; the plaintiff immediately delivered to the defendants divers certificates of shares, with power to transfer annexed, amounting in all to a certain number (10,000) of shares, and the defendants received the same under the contract; and, the-plaintiff never waived his right as pledgor to have the stock held unsold, until he should be in default, and should be called on to pay and redeem it. That the market price of said preferred stock fell below eighty per cent on the day of the contract, and the defendants called on the plaintiff to make good the margin, and the plaintiff paid a part ($20,000) of the loan, and thereby made good the margin. Mne days after-wards (January 20th) the defendants having again represented the margin as having become insufficient called for additional security, and the plaintiff then furnished the land grant bonds in question, and they were received as a certain sum ($50,000.) Four days after that (24th January) the defendants, on like' representation, called for more security, and the plaintiff gave them 'a promissory note of the Union Pacific Bailway Company, (eastern district,) for a certain sum ($25,000,) which was received as worth par. On the same day, (January 24,) at a late hour, after hanking hours, the defendants, on like representations, having called for further margin, the plaintiff paid them a certain sum ($10,000) in cash and gave them as collateral the Pacific Mail Steamship Company’s stock in question, such stock being then worth in the market a certain sum ($10,494.) Ho further calls for security were made, and no decline requiring it happened on that day. Later on that day the plaintiff gave the defendants notice that on the next day he would pay the loan on a certain number (2000) of shares and take them up, and leave the residue of the stock and all the other collaterals as security for the residue of the .loan, and if the defendants should request it the plaintiff* would pay off the loan on a further number (3000) of shares, and leave all the security as before. By usage and custom, the plaintiff was entitled till three o’clock in the afternoon, or later of the next day, (January 25,) to make the payment and withdraw his stock according to such notice, and made arrangements and was ready in time to pay accordingly. The defendants early the next day, commenced selling the preferred stock, and before the time to which the plaintiff was entitled to pay on his notice, the defendants reported to the plaintiff that the whole of his stock was sold. After the margin was made good and satisfactory on the 24th, no call was made on the plaintiff for security, nor was any notice given to him that the margin was deficient, until after the sales, or pretended sales, were completed. The defendant rendered a pretended account of sales of a certain number (10,000) of shares, claiming that the proceeds were not sufficient to cover the loan. Afterwards the defendants collected the $25,000 note, and a large sum of interest on the land grant bonds; advertised the preferred stock for sale at auction “to satisfy a balance due under a pledge ” as expressed in their advertisement, and claimed such balance to be about $74,000. The market price of said preferred stock on the 25th of January, 1867, was above sixty per cent and averaged 63| during the day; yet none of the sales in the defendants’ account were so high as 60, and the average of them all was about 57J. Some of the shares reported by the defendant as sold on that day below 60 were in fact sold for 63J. Some of the sales so reported at below 60, were sales of other shares, not the plaintiffs. The sales made 25th January, 1867, by the defendants, were out of the usual course of business, below the market, and designed to depress the price, and did depress it. The plaintiff, therefore, sought for an investigation of the transaction under the contract, the receipts, payments and other matters, and offered to pay the balance, if any should be found against him, and redeem the land grant bonds and Pacific Mail Steamship Company stock; and demanded judgment accordingly.
Upon the complaint and affidavits tending to establish the facts contained in it, the court granted a preliminary injunction order. The defendants applied for a vacation of it on an answer and supporting affidavits, which contained allegations of a similar action for the same cause in the Supreme Court in which a similar injunction order was granted and vacated, but it is not deemed necessary to give the details, as the decision was not put upon that ground. The plaintiff furnished additional counter affidavits in support of the injunction.
The court, at special term, held that, upon giving adequate security, the plaintiff was entitled to retain the injunc tion order until the court should decide the issue between the parties, and made an order requiring an additional undertaking in $25,000 which was given.
J. Laroeque, for the appellants, defendants.
I. The orders of the special term of the Supreme Court dissolving the injunction there, and of the general term affirming that order on appeal, were made in an action between the same parties, by a court of competent jurisdiction, upon the same subject, matter directly in issue. The whole matter is therefore res adjudieata, arid those orders are a bar to the proceeding by injunction in this court. (Dwight v. St. John, 25 N. Y. Rep. 203. Demarest v. Darg, 32 id. 281. Bangs v. Strong, 4 Comst. 315. Ogsbury v. La Farge, 2 id. 123. Mercein v. The People, 25 Wend. 64.)
1. It was decided at special term upon full consideration of its merits, as presented by the pleadings and affidavits. That order, having been affirmed by the general term, remains an adjudication upon the merits, although two of the judges in hank thought, as matter of law, that the plaintiff had not made a case by his complaint for such injunction order.
2. It dobs not help the plaintiff that he afterwards discontinued his action in that court. Those orders remain in full force and effect as adjudications, notwithstanding the discontinuance.
3. Such trifling with legal process, and making the rounds of courts and judges, to find some one favorable to his suit, and obtain the credit desired by prolonging the struggle, makes the case worse for the plaintiff, and deserves, the severest reprobation at the hands of the court.
II. The additional abuse was practised, in this case, by taking possession, in another action, under procéedings for the claim and delivery of personal property of the securities, the sale of which is now sought again to be restrained of obtaining, full counter security for their return by the defendants, if return should be adjudged; and when that proceeding failed in its design, discontinuing it, in its turn, and commencing a new action, in which the defendants have again been restrained (without any fault of theirs) more than six months.
1. The plaintiff is estopped, by his claiming in the claim and delivery proceedings, that he was entitled to the immediate delivery of the property without any account or tender, and that it was wrongfully withheld from him by the defendants, 'from now alleging, that there was any embarrassment in the way of his availing himself of that proceeding. (Code, § 207.)
2. This is trifling with the solemnity of oaths, in addition to trifling with legal process.
HI. The case now made for an injunction order is no better than the former one made in the Supreme Court, adjudged to be insufficient; the grounds taken and sustained there are equally applicable here.
1. The plaintiff claims, in his present complaint, that the defendants sold his stock without right. If so, they were guilty of a conversion; and his proceedings by claim and delivery óf the securities held as margin were, therefore, the appropriate" remedy. (Scott v. Rogers, 31 N. Y. Rep. 676.)
2. His allegations as to the land grant bonds, that they have “ a’n actual and prospective value to the plaintiff much greater than the present market price thereof, and are not readily salable, nor at all salable at auction for such actual value,” make no case for an injunction order. A court of, equity does' not grant injunction orders which have the effect of a stay law preventing the collection of debts, and enable a debtor, owing a debt in presentí, to keep his property applicable to its payment, in order to take the chances of its prospective speculative value. If they have a prospective, greater than their present market value, he cam redeem them by paying his debt, or buy them in at the sale to be made by the defendants. He even had judicially approved security, in the replevin proceedings which he voluntarily discontinued, in double their market value, for their return, if a return should be adjudged at the end of that suit.
IY. All the allegations of the complaint, on which the claim to the injunction order rests, are fully and positively denied by the sworn answer of the three defendants, directly responsive, swearing to matters necessarily within their personal knowledge, and stated to be so. The defendants were, therefore, entitled to the dissolution of the injunction, in accordance with the settled rule on that subject.(Blatchford v. New Haven R. R. Co., 5 Abb. Pr. 276 Finnegan v. Lee, 18 How. Pr. 186. Gould v. Jacobsohn, Id. 158. Hoffman v. Livingston, 1 John. Ch. 211. Roberts v. Anderson, 2 id. 202. Skinner v White, (Court of Errors) 17 John. 357. Manchester v. Dey, 6 Paige, 295.)
Y. The written contract between the parties required no notice to be given before selling to make good the margin when impaired.
2. The plaintiff was bound to see to that at his own peril. The extraordinary fluctuations of the 24th and 25th of January are the best evidence of the foresight of the defendants in disembarrassing themselves of such an obligation, as they did by their contract. No demand of payment of the loan was necessary, nor could one be made as the sixty days allowed the plaintiff by the contract 'had not expired. Demands were made on the 24th and 25th repeatedly, for the increased margin to which the defendants were entitled by the terms of the contract; which was the only thing that could be demanded.
2. The judge at special term, throughout his opinion, confounds the idea of the necessity of a demand and notice of sale as preliminaries to selling the Chicago and Northwestern preferred stock with that of the necessity of such demand and notice before selling the land grant bonds and Pacific Mail Steamship Company stock. The latter have never been sold; the very object of the injunction is to restrain their sale. It is undisputed that demand of pay- merit of the balance of the account was made and notice of sale given of the latter before the commencement of this action.
VI. The appeal papers in the Supreme Court show, that the plaintiff, in that case, attempted to make out two “ customs or usages,” as applicable to his case; one, debarring • the defendants, while pledgees of his stock, from dealing on their own account in stock of the same company; the other, giving him until 2.15 p. m. of the 25th, to take up his stock. He procured the applicability of this latter usage to the contract in this case to be apparently supported by the affidavits of witnesses, which were met and controverted on the part of the defendants. In the .present complaint, however, the claim of the first usage is abandoned; but the plaintiff claims to have been entitled until 3 o’clock to take up the stock, and in connection with that, introduces affidavits of the same witnesses, who had testified in the Supreme Court, making the time 2.15 p. m; This proposition cannot be sustained; as no evidence of usage can be received, to control or vary the clear and explicit provisions of the written contract, giving the defendants a right to sell, the instant that the margin should be no longer good, The express purpose of that provision cannot be defeated, by the plaintiff when called on under it to make his margin good, by giving notice that he will take up some of his stock, and thus obtaining a delay of twenty-four hours.
VH. The defendants had a right to use the stock certificates, (with powers attached,) received by them from the plaintiff on other sales made by them, so long as they always retained 10,000 shares in any shape applicable to the plaintiff’s, claim; this they always did. The fact, therefore,, that in some instances the certificates delivered on sales made for account of others than the plaintiff, were the identical certificates received from him, amounts to nothing. (Horton v. Morgan, 19 N. Y. Rep. 170. Saltus v. Genin, 3 Bosw. 257.)
VIII. All allegations of unfairness in making the sales, and of fraud in reporting sales made on account of others as sales of the plaintiff’s stock, are fully rebutted by the answer and affidavits read on the part of the defendants.
1. The judge, in deciding this cause at special term, treats the case, as though it were enough that there is a controversy to entitle a plaintiff to the .extraordinary remedy by injunction ; the rule is directly the reverse ; he must make it appear that his equity is clear, and his necessity is urgent. This, in every aspect, as to the responsibility of the defendants, the absence of equity, the willful throwing away, of full security for the protection of all legal and equitable rights by the plaintiff, after he had placed himself in a position to exact and had obtained it, the employment by the plaintiff of the process of courts for the purpose of accomplishing other than the avowed objects is probably as far from being such a case as any ever presented.
2. The suggestion that the defendants have sufficient security, even-if true, is not calculated to avail the plaintiff. Their right is .to sell for the realization of their debt, and they are not to be deprived of it; especially when it is clear that they are abundantly responsible to make good any damage which the plaintiff may sustain. (Code, § 219. Willard’s Eq. Jur. 342. Redfield v. Middleton, 7 Bosw. 649.)
Charles Tracy, for the respondent, plaintiff.
I. The plaintiff" has a right to bring this action for an accounting, and to redeem the pledge of-land grant bonds and Pacific Mail Steamship Company stock.
1. The defendants are bound to account for their transactions in the preferred stock; for the sums advanced, received and collected, sales, prices and times of sales, and the like; and the plaintiff has a right to a judgment establishing the balance as between him and the defendants.
2. The plaintiff has a right to the aid of a court of equity to redeem his pledge. Although wheré there is no dispute about the amount due on a pledge, the pledgor may redeem by tendering the amount, or the pledgee may collect the amount by selling the property,. yet whenever there is a dispute whether any thing, or what amount is due, either party can come into equity to have the balance determined, and the redemption or payment enforced. ( Willard’s Eq. 456. Hart v. Ten Eyck, 2 John. Ch. 62, 100. 2 Story’s Eq. Jur. 1031. Curtis’ Eq. Precedents, 88. Equity Draughtsman, 171.)
3. The plaintiff is ready to pay any such sum as shall be found against him, if he is found to owe; but he denies that such a sum as the defendants claim, or any sum, is due on the pledge. The pledge is merely a security for payment, and the plaintiff is content tó leave the bonds and Pacific stock in the hands of the pledgee pending the action, and he adds further security by undertaking. It is obvious equity, that the court enjoin the defendants from selling the pledged property, at their own pleasure, while they have perfect security for any thing which may be their due, and while they do not even bring a suit to assert or enforce their demand, in which the present plaintiff could contest the claim for a balance.
II. The accounting sought in this action relates to all the transactions between the parties, on the loan in relation to the Chicago and Northwestern Railway Company stock, and includes the investigation of the defendants’ sales, which the plaintiff assails on the following grounds :
1. The defendants, as pledgees of the preferred- stock, had no right to sell it, unless the plaintiff failed to furnish margin, and the defendants, after such default and a reasonable time before selling, demanded payment from .the plaintiff, or required him to redeem the pledge. In the absence of special stipulations,not only demand of payment- or redemption would be necessary, but also notice of the time and place of sale. By the present contract, notice of sale was waived, but not demand. The defendants had no right to sell without first demanding that the plaintiff pay and redeem the pledge. (Cortelyou v. Lansing, 2 Caines’ Cases, 200. Wilson v. Little, 2 N. Y. Rep. 443, 448, affirming S. C.1 Sandf. 351. Lewis v. Varnum, 12 Abb. 305. Genet v. Howland, 45 Barb. 560. Milliken v. Dehon, 27 N. Y. Rep. 364. Andrews v. Clerke, 3 Bosw. 585. Merwin v. Hamilton, 6 Duer, 244.)
2. The defendants hastily sold the plaintiff’s stock, without any demand on him to redeem, or giving him any time to do so after the alleged fall of price, which' required further security to keep up the margin. Eo communication of any sort came to the plaintiff from the defendants, after the alleged fall of price,' until the report was made of sales of the whole. The plaintiff was not bound to anticipate a fall of price, nor was he bound to increase his margin until a fall actually had occurred, and until he, after such occurrence, had been called on to make the necessary increase of margin, or pay off the loans and redeem the stock. (Andrews v. Clerke, 3 Bosw. 585.)
3. The plaintiff complied with every duty on his part under the contract, and at all times kept up the required margin of $10 a share.
4. The plaintiff, having informed the defendants late in the day, that he would- the next day take a part of the pledged stock and pay off a corresponding part of the loan, was entitled to a reasonable time to do so. The defendants, by making no objection at the time, assented to the arrangement for the next day for the 2000 shares. If there should be a fall, requiring the taking of the additional. 3000 shares, by the terms of the arrangement the defendants were bound to let the plaintiff know their wishes and option.
5. The usage and custom gave the plaintiff most of the next day to perform the operation; and long before the time elapsed he was informed by the defendants of their sales being completed. The custom is well established.
6. The contract required additional security only when the ££ marhet price ” should decline so as to reduce the margin below ten per. cent. Such ££ market price ” is not determined by a few hurried sales made out of regular sales on calls of the recognized boards, or at public auction. In this case no auction price is shown, and the “market price," by such sales, did not go so low on that day as to entitle the defendants to any more margin; there was no such a fall of price before the defendants began to sell under the pledge.
7. The defendants’ report of sales was below the market price throughout. Many of the sales (so reported) were not of the plaintiff’s shares, but of others. Some of the former sold for more than is reported.
8. The plaintiff did not transfer his shares to the defendants on the company’s books, but lodged his certificate with powers of sale annexed in the defendants’ hands,- and thus retained his property in the identical shares and certificates, and was entitled to a return of the same on the discharge of the loan, The defendants had no authority to mingle such certificates with, or exchange them for, others; if the defendants would enforce the pledge by sale, they must sell the plaintiff’s certificates; if' they made a sale of other certificates, it cannot be reported as a sale of the plaintiff’s pledge. The case may be different where the shares of many proprietors are posted into one account on the stock ledger, and the broker has no means of distinguishing the shares of different customers; in the present there was no confusion of shares, but a clear and precise certainty of certificates. (Saltus v. Genin, 3 Bosw. 250-257. Horton v. Morgan, 6 Duer, 56. Allen v. Dykers, 3 Hill, 593. Nourse v. Prime, 4 John. Ch. 490.)
HI. The fact that in another action for different relief, based upon a statement of facts similar in many respects, the Supreme Court dissolved .an injunction order, is no bar or defense to the proceedings now pending.
1. That suit has been discontinued.'
2. The determination, of a motion within the discretion of a court, never controls the rights of parties when they appear in a different action or court.
3. The erroneous decision of the motion by the Supreme. Court grew out of the practice there established, of refusing to hear affidavits in support of an injunction, when the defendant moves to dissolve it on a verified answer, without other affidavits. This court holds the contrary rule. (Fowler v. Burns, 7 Bosw. 637. Hoffmans Pro. Rem. 351, 360, 361.) The practice of this court prevails in all the districts of the Supreme Court except the first. (4 Abb. 282. 8 Barb. 17. 1 Code Rep. 114. 4 How. 225. 5 id. 265.) The Code clearly treats the sworn answer as an affidavit, because, if it were not so considered, it could not be used as ground of the motion. (Code, §§ 220, 222, 226.)
TV". It being impracticable in the present ease to decide, on a non-enumerated motion, upon affidavits, all the issues joined by the pleadings; and the court at chambers, on full hearing, having increased the security and continued the injunction until trial; and the dissolution of the injunction being fatal in the right of the plaintiff to reclaim his shares if he succeeds on the trial, and the cause being already referred for trial; the order appealed from should be affirmed. (Carpenter v. Danforth, 19 Abb. 225.)

Opinion:
By the Court, Robertson, Ch. J.
The professed object of this action is, to redeem certain securities in the hands of the defendants, upon paying the amount due thereon, and' as incidental thereto, to obtain an order restraining the defendants from selling such securities, until an account can be taken of the amount due the defendants. It is essentially, therefore, an equitable action, and must be governed by the well settled rules of equity jurisdiction; and if it cannot be maintained under those rules, the injunction order appealed from cannot stand.
A court of equity has no general jurisdiction over actions to redeem personal property pawned, without some other circumstances rendering its interference necessary. (Glennie v. Imri, 3 You. & Coll. 436. Hirst v. Pierce, 4 Pine, 339. Jones v. Smith, 2 Vesey Jr. 372. Demenbray v. Metcalf, 1 Vern. 698.) The remedy at law is ample, by tender of the amount due, and a possessory action to recover the articles pledged, or damages for their detention. (2 Story's Eq. Jur. § 1032.) It is true, as laid down in Kart v. Ten Eyck, (2 John. Ch. 100,) bills to redeem pawned personal property have been sustained, but o'nly in cases where either no objection has been made or an equity arose out of other circumstances, and all the eases cited in the last case as authority, are of that kind. (Kemp v. Westbrook, 1 Ves. 278. Demenbray v. Metcalf, Prec, in Ch. 194. S. C. 2 Vern. 698. Vanderzee v. Willis, 3 Bro. 21.) Certainly such an action would not spring out of any of the great sources of equitable jurisdiction. The only ground of equitable jurisdiction over an action for the redemption of personal property pledged, besides the necessity of a discovery, and perhaps an assignment of the pledge, is the necessity of taking an account. (2 Story's Eq. Jur. § 1032, and cases cited in note.) It is, of course, not necessary to discuss how far the union of both legal and equitable jurisdictions in one court, and the right conferred on either party to an action to examine the other party as a. witness, (Code of Procedure, § 389,) has taken away a jurisdiction dependent solely on the right of discovery, as there is no pretense, in the complaint or elsewhere, of the necessity of any such discovery. There remains, therefore, in this case but the ground of some necessity of an account being taken, as in a court of equity, to enable the plaintiff to sustain his action.
It is fully settled that the account on which equity bases its jurisdiction must be really one, that is, not having only one item on one side, and a number of set-offs on the other, but a series of transactions on both sides. (1 Story's Eq. Jur. § 458, 459. Porter v. Spencer, 2 John. Ch. 171. Moses v, Lewis, 12 Price, 502. King v. Rossett, 2 Y. & Jerv. 33. Dinwiddie v. Bailey, 6 Vesey, 136; and Wells v. Cooper, cited therein. Padwick v. Hurst, 10 Beav. 575. Phillips v. Phillips, 9 Hare, 471.) In this case the claim on the part of the defendants can only consist of one item, to wit, the original advances by them, or so much of them as remains- unpaid. Every sum paid or to be credited in that account, set out in the complaint, forms a subject of set-off in an action at law, including even any liability of the defendants for selling any of the originally pledged stock below its market price. For that is a subject of counter-claim in an action for the loan, under the first subdivision of section 150 of the Code of Procedure, as either arising out of the contract or tranaction, which would be the foundation of such action, or connected with the subject of the action, and as available in this court acting as a court of law, as in one of equity. There is, perhaps, .still less reason at this, time, for preserving or rather extending jurisdiction to give affirmative relief to a debtor in such a case of a one sided account, since the enlargement by the Code of the cases, in which references of all the issues may be ordered wherever a long account is concerned, the increase of the power of all courts to order the production of books and papers summarily, and the conferring on every suitor the right of examining the adverse party as a'witness, whatever the case may be..
So far from any discovery by the defendants being shown to be required, the plaintiff sets forth in his 'complaint, various defects in the sale of the stock originally pledged, not merely as derived, from the information of-others, but as matters of his own knowledge, although he escapes all responsibility for the statements, by not verifying them under his own oath. They consist of an entire failure to sell some shares of stock represented by the defendants in their report to the plaintiff of sales to have been sold, and sales of some at less than the market rate, and of others at higher prices than those stated in such report. He does not, however,' (as he was bound to do in order to render his complaint sufficiently definite and certain,) state the number of such unsold shares, or of those sold too low, or those whose prices are not properly accounted for. In the affidavits, however, presented on Ms behalf, he establishes what he -considers to be such amount, without the aid of any discovery from the defendants in regard to them.
Even assuming, however, that a court of equity will restrain the sale of pawned, personal property until an account can be taken of the amount due on the loan upon it, under the same circumstances as it would a suit at law, the validity of the sale by the defendants of the stock in this case originally pledged, is not one of such circumstances. If the sale was valid, the amount to be taken is reduced to the original loan on one side, and on the other the payment of two sums of $20,000 and $10,000 before, and the receipt of interest on the land grant bonds collected, (less the government tax, $33.25, and amount of a note for $25,000,) since the commencement of this action. To ascertain the amount due would, in such case, be a matter of mere clerical computation. If, however, one of the objects of this action be to attack such sale and endeavor to make the defendants liable in damages for the conversion of such, stock without authority, they could not, until liquidated in an action, form any part of an account such as is prayed for in this case. Nor would this court be authorized to tie up the defendants from using their legal authority as pledgees, bestowed on them by the plaintiff, until the amount of such damages could be ascertained. I shall, therefore, dismiss from consideration all the allegations in- the complaint, and all the evidence before us tending to establish any invalidity in such sale, as wholly superfluous and irrelevant, if not suicidal, in determining whether this action-can be maintained upon such a basis as to warrant an injunction. The complaint does not clearly and distinctly either avow or disavow such sales as being made by authority, although it apparently does the former, by claiming that in the account, which the plaintiff professes therein his readiness to have taken, the defendants shall be charged with the market price of the stock sold, and the full amount received by them therefor, and not allowed the benefit of any pretended sales of stock; notwithstanding it also prays that the defendants may be charged, in an accounting, with all loss suffered by the plaintiff by the unlawful disposition of such stock. It might, with equal propriety, have sought that damages for selling any other stock without authority, should enter into such account. Indeed the only grounds suggested for attacking the validity of such sales, were, that the market had not fall,en so as to create the contingency on which the right of sale arose, and that no demand was made for further margin. In regard to the first, the evidence as to a fall on the 25th of January, the day of sale, is not conflicting, and, in regard to the last, the contract before us does not require such demand to be made as was required by that in Milliken v. Dehon, (27 N. Y. Rep. 364,) which case, in fact, rather' holds a demand for the amount' due not to be necessary, when a right is given to sell either at public or private sale, which a fortiori is applicable to this case, where a right of notice is expressly waived. The reasoning of Justices Wright and Marvin, in the case last referred to, (Milliken v. Dehon, 370, 374,) in regard to the impracticability of notice of time and place of sale, of articles of such rapidly fluctuating value as stocks, is equally applicable to a demand of payment or more security, which seems to have been purposely omitted in this contract. At all events, unliquidated damages for an entirely unauthorized sale, can form no part of an account to give jurisdiction to a i court of equity.
Of course, the plaintiff is entitled to the benefit of any originally pledged stock,. which remains unsold notwithstanding the written report of the defendants to him to the contrary. But I am at a loss to know, how any failure to sell it would aid him, in a mere accounting between him and the defendants to be had in this action. Such an account would not be affected, except by the receipt by the defendants of some sum as the proceeds of an authorized sale of shares of stock. If they were not sold, the debt of the plaintiff would be so much the larger. A mere representation by an account of sales, that stock had been sold, when it was not, would by itself furnish no ground of equitable interference. The plaintiff claims to have detected the falsehood, and furnished in the affidavits before us the evidence of it, without the necessity of an examination of the defendants. That evidence, if important, would be equally available in a trial at law, and no mere discovery would ever have been necessary.
Sales of the stock below the market price, when duly authorized, would not make the defendants liable for the difference, unless made with intent to injure the plaintiff beyond the mere realization of the amount due the defendants, as in other cases of abuse of lawful authority. (King v. Parks, 19 John. 375. Butts v. Edwards, 2 Denio, 164. Baldwin v. Weed, 17 Wend. 224.) But something besides a mere sale below the market price is necessary to show such intent. The-defendants, as mere pawnees, were not bound to use even the same diligence as an agent to obtain the best price. The latter would not be held liable except for extraordinary negligence, which must be proved, not presumed. There must, at least, be such recklessness shown in the mode or time of selling as to establish an intent to injure the pawnors, before the pawnees can be made liable for any loss. The complaint, indeed, avers that the sales below the market price were made by the defendants, " out of the usual course of business, and in a manner designed and intended to depress the price and produce less than the marleet value, and which tended to and did produce that result." But the only verification that allegation has, is an affidavit by the agent' of the plaintiff (Crane) that he believes such matters to be true, from having seen reports of sales at the Stock Exchange and board of brokers of that day, and been informed by persons named as purchasers in the report of sales rendered by the defendants, of prices paid by them, and the numbers on the certificates of stock received by them. This, certainly, is not sufficient to establish a design to obtain a less price than the market value, either to injure the plaintiff by such sales, or for any other purpose. Such allegations in the complaint are fully denied by the defendants in their answer, verified by their oath, and there is no other evidence before us of any such intent, or its result in such sales. On the contrary, the agents of the defendants, in selling, deny it. Consequently such allegations in the complaint, so verified and denied, furnish no ground for continuing the order of injunction in this case.
The remaining objection in the complaint to the account rendered by the' defendants of the sales by them of the originally pledged stock, of the receipt of larger sums, as the prices of some of them, than those stated in such account, the plaintiff claims to have discovered by other means, and sustained by ample evidence before us, without any discovery from the defendants. If so, the details are all given in the affidavits furnished on his part, and there would be no difficulty in establishing the set-off by way of' defense in an action at law, to the full extent of the sums kept back.
The whole account between the parties to be taken in this case, upon the plaintiff's own showing, will be reduced to the original advance by the defendants on one side, and on the other cash payments made, by the plaintiff, interest on the land grant bonds and amount of the Pacific Company's note received by the defendants, and the price of the shares of the originally pledged stock actually sold by them; omitting from such account, for reasons already given, all excess of the market value beyond such price, and also all sums pretended by the defendants to have been received by them in any of the sales claimed by the plaintiff to be fictitious, if there were any such. So simple an account, requiring mere computation of figures, is not of such a character as to require the aid of the equitable powers of the court to unravel it. Nor should the defendants be delayed in'using the means placed in their hands by the plaintiff to collect the amount due them, according to the plaintiff's contract, until this action is reached on the calendar to be tried, or a referee can be called in to make the computations, and a decree be made for redemption, which the plaintiff may perform or not as he pleases.
Were it necessary, in order to justify a vacation of the injunction order in this case, beyond the question of the jurisdiction of this court to sustain this as an equitable action, and the incompatibility of the nature of the account to be had, under any state of facts shown by the plaintiff, with any necessity'warranting the exercise, of such jurisdiction, a further justification would be found in the denial in the answer of the' equities of the complaint, and in the affidavits of the brokers of the defendants, who actually sold the preferred stock, as opposed to that of the plaintiff's agent, (Crane,) who testifies solely to information derived from the purchaser's. Prima facie the denial in the answers of the defendants of the equities of the complaint ought to entitle them to a vacation of an injunction order, (Blatchford v. N. H. R. R. Co., 5 Abb. 276;) but the affidavits on the part of the plaintiff being admitted, those on the part of the defendants rebutted their effect. The plaintiff was undoubtedly bound to make out his case affirmatively, and although this court on appeal, at general term, cannot properly interfere with any decision at special term, founded on conflicting evidence, it yet may do so, where that on one side is mere information and belief, and that on the other positive knowledge. The apparent discrepancies of the affidavits of some of the witnesses on the part of the defendants when made -in the action in the Supreme Court, seem to be explained by them. There is also some discrepancy in the testimony of the witnesses as to the market value of the stock in question on the day it was sold, but that may originate in their knowledge of different sales/ and is not sufficient to warrant the conclusion of an undue sacrifice of it by the defendants for sinister purposes. The testimony of the defendants' brokers, (Towars, Kohn, Minzesheimer Mllery,) is positive as to the sales of stock by the direction of the defendants, and the prices obtained therefor, which corresponds with the account rendered by the latter to the plaintiff. The defendants swear that all sales made of such stock, by such brokers, for thenq before a quarter before twelve o'clock, noon, were not made on behalf of the plain tiff, and the plaintiff 's agent (Crane) is unable to testify whether some of the sales made at a higher rate than was reported by the defendants was of the plaintiff's stock. Upon such evidence the plaintiff has hardly made out a clear case of sales at higher prices, or of any design by the defendants to lower the market value, and the mere fact of reporting fictitious sales is not sufficient to sustain the injunction order.
I am inclined to think, if material in this case, that the plaintiff is not bound in it by the decision of the case in another couH between the same parties upon a similar state of facts. In that th.e plaintiff claimed an illegal sale of the stock, and demanded its restoration in specie, by way of an equitable substitute for the remedies formerly known as actions of trover, detinue or replevin. An injunction was, of course, properly refused in it. The plaintiff subsequently discontinued that action, and attempted one of claim and delivery upon the same ground of an illegal sale, and finally abandoning that ground, has chosen this one in its present form for an accounting, recognizing all the sales actually made as valid, but claiming, more as to the sales of some, than the defendants are willing to admit. By this action he has succeeded, by giving security instead of making a tender and paying the money into court, or bringing a possessory action, in obtaining delay by an injunction order. It may possibly be a hardship upon the plaintiff to be driven to actions for damages or for his stock, although it certainly seems more convenient for him to obtain the delay of a suit, before paying the amount due on the original loan. But that should have been considered when he made so stringent a contract, giving the defendants so much authority. .The individual hardship, however, is not to be weighed against the danger of the abandonment of well settled legal principles as to the only cases, in which relief from such a species of hardship can be given.
The order appealed from must be reversed, and the order enjoining the defendants vacated, with $10 costs of the motion to vacate it. No costs.are given on the appeal.