Court Opinion

ID: 8797384
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:16:38.945156+00
Date Added: 2024-06-11T17:03:42.543217
License: Public Domain

On Petition for Rehearing.
The motion for rehearing complains of our opinion and conclusions as to two matters, viz.; First, the dividend of $125,000 declared on the ten thousand shares of common stock on the 23rd day of December, 1908, and, second, the five dividends ($56,000) declared on the preferred shares, both of which we held appellee was entitled to receive.
1. As to the first. — The claim is that appellant was entitled to retain the $125,000 dividend on the common stock by reason of the fact that on December 12, 1908, eleven days before that dividend was declared, Perry appeared at the office of the trust company in New York and made the arrangement by which it was agreed that there should be an exchange of collateral; and therefore it is insisted *536that dividends declared after that date could not be recovered by appellee. But the exchange was not made at that time, as we pointed out. Perry returned to St. Louis. The ten thousand shares were held by the trust company in' New York as a pledge on the Nicholson note until December 26th, three days after the declaration of the dividend. The trust company waited until it received the preferred stock before it surrendered its pledge in the common stock. The preferred shares were forwarded from St. Louis on December 23rd through the mails and by due course reached the trust company at New York prior to' its surrender of the ten thousand common shares. On December 26th the trust company sent certificates for the common shares to the bank, and it received them on the 28th of that month.
We also undertook to point out that the right of the pledgee as such in the pledge continues until a surrender of the pledge, and thus we felt there was a secure basis on which the right of appellee to that dividend was rested. We are still of that mind and are not' impressed with the relevancy of authorities cited in the brief to the motion, which deal with the relations between vendor and vendee.
2. As to the second. — It is true that arguments and briefs did not direct specific attention to the right of appellee to recover the five dividends declared on the preferred shares while it held them in pledge; and if we now had any impression that appellant seriously denied that these five dividends, or any of them, came into its hands, and stood ready to establish the denial by proof, we would be compelled to say that it is entitled to an opportunity to establish that fact. But we gain no such impression from the motion, brief and argument. Indeed, the position in that respect is evasive. We quote from page 21 of the argument:
“If these preferred dividends were not paid to and appropriated by appellant, it is not the intention of this Honorable Court to require the appellant to account therefor to appellee. * * * We believe that upon an accounting for this purpose appellant can make clear that it did not receive and appropriate these dividends, certainly not all of them, and but few, if any.”
The element of appropriation, as here used, upon which the contention rests, is immaterial. The evident purpose is to inject, as an element of liability, the inquiry whether appellant applied to its own use all of these dividends; whereas it was and is our view that liability, under the authorities cited, turns on the question: Did appellant receive these dividends with knowledge of the rights of the pledgee? At the time all of these dividends were declared, and for a long time theretofore, appellant, through a board of directors selected at its dictation and consisting of its officers and employés (except a small minority), had control of and managed the cement companies, had extended them large credits, had further extended its credit to Nicholson, had these preferred shares as collateral, with other of his’ stocks, on his indebtedness to it, and -had on its book an account, under the requirements of the contract of January, 1907, entitled “George E. Nicholson Trustee Account,” into which the dividends on the common shares were required to be put, with *537power in Perry or his successor in trust representing the bank to check them out. In short, the bank had absorbed the whole venture and Nicholson had drifted to the position of a mere puppet. It had had these preferred shares up to the time of the exchange as collateral on Nicholson’s indebtedness to it, and as the dividends thereafter declared on these preferred shares while the trust company held them were not paid over to the trust company by the cement company, it is not possible to conceive, in the light of the facts, that anyone else than either Nicholson or the bank received them from the cement company. And as it is not claimed that the cement company paid them to Nicholson, we felt, and still feel, that the only possible and reasonable inference is that they went into the hands of the .’bank; and when it took them, it, of course, did so with full knowledge of the rights of the trust company to have them. It was then liable to the trust company and could not relieve itself from that liability bypassing them over to someone else. So that in the light of the record we reached the conclusion \hat appellant should account for mese dividends, and that conclusion has not been shaken by the arguments presented on the motion for rehearing, but rather confirmed.
The motion is therefore overruled.