Case Name: Charles Sisson, Appellant, Respondent, v. Lawrence Barnum, Respondent, Appellant, Impleaded with Carroll D. Bassett and Others
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1913-05-07
Citations: 157 A.D. 149
Docket Number: 
Parties: Charles Sisson, Appellant, Respondent, v. Lawrence Barnum, Respondent, Appellant, Impleaded with Carroll D. Bassett and Others.
Judges: 
Reporter: Appellate Division Reports
Volume: 157
Pages: 149–152

Head Matter:
Charles Sisson, Appellant, Respondent, v. Lawrence Barnum, Respondent, Appellant, Impleaded with Carroll D. Bassett and Others.
Third Department,
May 7, 1913.
Guaranty and surety — action against broker to recover collateral security or its value after sale thereof — waiver of attempted tender — lien —liability of broker as purchaser of collateral.
One B. deposited with a firm which acted as his banker and broker certain stock as collateral security for his loans and overdrafts and for future accounts and overdrafts, and on the same day drew upon said firm his check for a certain amount in favor of one Gr., which the firm certified, at his request, with the understanding that it was to be delivered to Gr. pending a determination of a certain legal question, and that it was not to be used for any other purpose. B. agreed to deposit the amount of the check in cash and take up other obligations which he owed the firm. Thereafter G., upon the refusal of the firm to pay the cheek, brought an action thereon against the only general partner of the firm. Thereafter B. called at the office of the firm, tendered the amount of money which he owed and demanded a return of the stock. The cashier told him that he would speak to the general partner of the firm, and while the cashier and the general partner of the firm were discussing the matter, B., after remaining six or seven minutes, left the office'before the cashier returned. Thereafter, the general partner after notice to B. sold the stock at public auction, subject to a lien for the amount of the check to a member of the firm, and it was thereafter transferred to an employee in the office of counsel for the firm, and by him transferred to the counsel, who subsequently transferred it to the firm, which sold it to an innocent purchaser for a greater amount.
In an action by the assignee of B. against the general partner to secure a return of the stock or payment therefor upon the theory that the latter had no hen upon the stock but was simply holding the same as bailee for B., held, that B., by leaving the defendant’s office without further demand or inquiry and before receiving a reply, waived the effect of the attempted tender;
That the firm had a lien on the stock for the amount of the cheek;
That the general partner being in effect the purchaser of the stock, is chargeable with the price which he received therefor on its subsequent sale, less the indebtedness of B. to him.
Smith, P. J., dissented.
Cross-appeals, by the plaintiff, Charles Sisson, and the defendant, Lawrence Barnum, from a judgment of the Supreme Court in favor of the plaintiff and against the defendant, Lawrence Barnum, entered in the office of the clerk of the county of Chenango on the 18th day of September, 1911, upon the decision of the court rendered after a trial at the Broome Special Term.
Fitch & Kilby [A. E. Fitch of counsel], for the plaintiff, appellant.
Pavey & Moore [H. W. Coley of counsel], for the defendant Barnum.

Opinion:
Kellogg, J.:
One Blake had an account with defendant's firm, as his banker and broker, and as collateral security for his loans and overdrafts, and such open accounts and overdrafts as might in the future exist, he transferred to the firm the stock in question, prior to August 1, 1903. On that date he drew upon said firm his check for $3,000, dated September 1, 1903, to one Gibson, which he requested the firm to certify, stating that it was to be delivered to Gibson pending the determination of a legal question which would probably require six months and possibly a year for its determination, the check not to be used for any other purpose. He agreed promptly to deposit the $3,000 in cash and hasten the taking up of the other obligations he owed said firm. June 14, 1904, Gibson caused the certified check to be presented to the firm for payment, but payment was declined upon the ground that it was payable only upon an event which it claimed had not happened, and also that Blake had not yet deposited the money, and in September, 1904, an action was brought on said check by Gibson against said Barnum, the only general partner in the firm, which action was pending at the time of the trial.
October 17, 1904, Blake called at the office of Barnum & Go. and stated to the cashier that he wanted to make a tender of $800, the amount he owed, and demanded a return of the stock to him. He produced the amount in legal tender. The cashier replied that he had no authority in the matter and would speak to Mr. Barnum. While the cashier, Mr. Barnum and counsel were discussing the matter in Barnum's private room, Blake, after remaining six or seven minutes, left the office before the cashier returned. Thereafter the defendant demanded payment of the amount due, gave notice of a sale of the stock at public auction, subject to the Hen thereon of the $3,000, and at the auction, held apparently in due form, the stock was sold to the cashier of said firm, by him transferred to an employee in the office of Mr. Pavey, counsel for the firm, and by him transferred to Mr. Pavey, who subsequently transferred it to the firm which, on the 29th of August, 1905, sold it to Ball, an innocent purchaser, for $2,769.23. The judgment appealed from holds the defendant for the amount received by him for the stock, less the sum of $834.52, the balance due from Blake to the firm aside from the $3,000 check, and holds that there was no lien so far as that check was concerned.
Clearly the cashier had the right to confer with Mr. Barnum about the tender, and having, in substance, requested Blake to wait for an answer, was entitled to a reasonable time in which to accept or reject the tender. Blake, by leaving the office without further demand or inquiry and before he received a reply, waived the effect of the tender attempted to be made. The defendant was not bound by the sale of the stock at auction, as Barnum was in effect the purchaser. Therefore, the defendant Barnum is properly chargeable with the price he received for the stock on its subsequent sale, $2,769.23, less the indebtedness of Blake to him.
We do not agree with the conclusion of the court that the firm had no lien on account of the $3,000 check. While the check has not been in fact paid, it was certified by the firm and its liability thereon is fairly secured by the stock held by it as collateral for the defendant's future accounts and overdrafts.
The judgment should be modified by directing that the $1,934.71 and interest be paid into court, to be held subject to the lien thereon of said Barnum or his firm for any liability on account of the $3,000 check, with the right to either party to apply at Special Term at any time on the foot of the judgment, or of the decision, for such determination as to the money in court as the facts may then show to be proper. Neither party to recover costs in the court below. As so modified the judgment should be affirmed, with costs of the appeal to the defendant Barnum.
The action was brought by the plaintiff as assignee of Blake upon the theory that the defendant Barnum had no lien upon the stock but was simply holding the same as bailee for Blake, and sought a return of the stock or the pay therefor, if a return could not be had. The defendant Barnum has established that the stock was left with him as security and that he had a lien upon it for about $800 and whatever the firm is required to pay on the $3,000 check.
Neither party has established his contentions upon the trial, and costs should not be granted to either party in the court below, but are granted to the defendant Barnum in this court.
All concurred, except Smith, P. J., who voted for a reversal of the judgment against the defendant Barnum and a dismissal of the complaint; Lyon, J., not sitting.
Judgment modified by directing that the $1,934.71 and interest be paid into court, to be held subject to the lien thereon of said Barnum or his firm for any liability on account of the $3,000 check. Either party may apply at Special Term at any time on the foot of the judgment or of this decision for such determination as to the money in court as the facts may then show to be proper. Neither party to recover costs in the court below. As so modified judgment is affirmed. Costs of the appeal are awarded to the defendant. The finding of fact that the defendant has no lien on the stock on account of the certified check is disapproved of as against the evidence.