Court Opinion

ID: 4004635
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:05:49.538511+00
Date Added: 2024-06-11T07:44:35.652348
License: Public Domain

I respectfully dissent from point 2 of the syllabus for reasons stated in my dissent to the former decision. Since this opinion has reopened the Sabotka incident, I repeat, for convenience, my former observations thereon.
"John Sabotka was the field agent of Finance Corporation. Cecil Highland testified, without contradiction, that in February or March of 1934, Sabotka, after obtaining information of the condition of the Highland estate and *Page 531 
of the value of the collateral on the note in question, 'assured' the witness 'that he would not embarrass the Highland estate, that all they (Finance Corporation) desired was (for Highland) to pay the interest and let the principal ride until conditions got better.' This assurance naturally caused Cecil Highland to understand that the collateral would not be suddenly sold to pay the note, and was in effect a waiver of the right to do so. That waiver was never recalled. I do not overlook a subsequent letter to Cecil Highland from Finance Corporation, dated August 29, 1934, stating that in February, he had been requested to pay the note to Sabotka, and that the letter was to advise 'that it will be satisfactory for you to make payment as indicated above, or to the receiver of the above bank (West Virginia Bank at Clarksburg).' This letter does not purport to demand payment immediate or otherwise, and there is nothing in the conduct of Finance Corporation indicating that the letter should have been taken to portend precipitate action. On the contrary, two days later, Finance Corporation filed proof of its claim (the note) against the Highland estate, before the commissioner of accounts, who had in charge the settlement of the estate. This act indicated that Finance Corporation would await the result of that settlement, at least for awhile, and lulled Cecil Highland into a deeper sense of security regarding the collateral with the note. A construction that the letter of August 29th was a demand for immediate payment, and as such terminated the understanding between Cecil Highland and Sabotka, would be so strained, I could not countenance it. That the right to sell collateral without notice may be waived by a pledgee 'either by express terms or a course of dealing', is said to be 'a well-established principle in every system of enlightened jurisprudence.' Miller  Co. v. Lyons, 113 Va. 275, 289, 290,74 S.E. 194, 200. No new or independent consideration is required to support such a waiver. United States Trust Co. v.Blundon, 42 App. (D.C.) 500; Toplitz v. Bauer, 161 N.Y. 325,55 N.E. 1059, 1061; Fletcher, supra, sec. 5662. In case of waiver a subsequent sale without notice is unauthorized. Musser
v. McCormick *Page 532  Co., 57 Utah 62, 67-8, 192 P. 1052; Fletcher, supra; 59 C. J. Pledges, sec. 255. It is therefore apparent to me that Finance Corporation could not have sold the collateral lawfully without notice to the Highland estate. 'The pledgee doubtless has the right to exact strict performance of the contract according to its terms, and, upon default in the payment of the debt at the time stipulated, he may, under a contract like this, dispose of the pledge. But if he waives the right to exact strict performance, and gives time and indulgence to the debtor, he cannot recall this waiver at his own option, without notice to the pledgor, to the end that the latter may have an opportunity of protecting the pledge. The good faith which the law exacts from a person dealing with trust property will not permit the pledgee, after having once waived the forfeiture or the right to dispose of the pledge upon default of payment at the prescribed time, to suddenly stop short and insist upon the forfeiture for the nonpayment of the debt when the other is unprepared to redeem.' Toplitz v. Bauer, supra. When Exponent purchased the Highland note it was overdue. Therefore Exponent took the note subject to Sabotka's waiver of the right to sell the collateral without notice. 'One who acquires negotiable paper after maturity takes it, in the absence of statutory modification, subject to all equities and defenses arising out of the paper itself and attaching to it, or out of the transaction with reference to which the paper was made, or of any agreement between the original parties with relation to the instrument.' Clemmer v. Bowlby, 109 W. Va. 105, 153 S.E. 311,312. The majority opinion recognizes the sequence, saying not once, but twice, that Davis 'stood in the shoes of the Reconstruction Finance Corporation.' But he and Exponent kicked off the shoes, and the opinion excuses that breach of trusteeship, seemingly because of the personal antagonism existing between them and Cecil Highland. No authority is cited and I have found none which justifies a pledgee's violation of his trust because he is at outs with the pledgor." *Page 533 
I concur in the reversal and would supplement the majority opinion in this manner. Gross inadequacy of price is a relative term. While a large sum of money may be required to constitute gross inadequacy in some instances, a small sum — a few dollars — may be sufficient in others.