Court Opinion

ID: 6251990
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:18:06.051319+00
Date Added: 2024-06-11T08:59:26.706551
License: Public Domain

Dis&enting Opinion by
Mr. Justice Stewart ;
- Thdugh the trust company was an innocent holder of the Certificate for twenty-five shares of stock in the Cru*279cible Steel Company, the stock was nevertheless, except as distinguished by legal technicality, stolen property; and this fact was brought to the knowledge of the trust company before it undertook to convert the stock. The trust company held this stock along with a variety of other stocks as collateral to the debt owed it by John A. Wood, Jr., from whom it received the certificate. Under such circumstances, with the fact brought home to it that the Crucible Steel stock had been embezzled, that it was not the property of Wood who pledged it, but was the property of Mrs. Kirkland, did any duty attach to the trust company, as affecting the rights of the owner of the stock? I am not questioning the right of the trust company to use this stock for its own protection against loss on the loan, to Wood, and to exhaust it if necessary to that end. What I assert is that common honesty, to say nothing of decorous regard for the right of another who had been fraudulently imposed upon and defrauded, ought to have suggested to the trust company a moral obligation it was under to confine the fraudulent pledge it received to simple indemnification; that any attempt on its part to derive more would be but an effort to reap benefit or advantage from embezzlement perpetrated by another. On the same morning the trust company was notified of the embezzlement of this stock, in the office of its secretary, it auctioned off to itself, in one lot, all the stock that Wood had pledged, including the stock of Mrs. Kirkland, for a sum equal to the indebtedness of Wood to the bank. It immediately placed all of the stock that it had thus come to own, in the hands of a broker and sold it, with the result, that it realized, over and above the payment of Wood’s indebtedness, the sum of $1,500.00 profit. This profit represents the value of Mrs. Kirkland’s stock. The transaction, however it may be. regarded with respect to the stock honestly pledged by Wood, takes on a very different aspect when we come to consider Mrs. Kirkland’s relation to it. Hers was the stock, subject to the right of the trust company to in*280demnity thereout. The trust company knew it was Mrs. Kirkland’s. When it auctioned off the stock that had been pledged to it, it knew that included in the lot was the stock that had been virtually stolen from Mrs. Kirkland. It was bound by every moral and equitable consideration to distinguish the stolen stock from the others, and sell it only as the other stock proved insufficient for its indemnification. The subsequent conduct of the trust company in throwing the stock on the public market on the same day of its auction sale to itself, is to my mind persuasive evidence that the auction sale, made in the way it was, was intended as a transaction whereby the trust company might reap advantage from the stock over and above simple protection. Why the trust company sold to itself the stock in bulk rather than by the usual method, which it the same day adopted when it sold the stock as its own, is without other explanation. The maxim sic utere tuo ut alienum non laedas has a legal meaning apt to be obscured by a too literal translation of its terms. In its legal signification it means: so use your own property as not to injure the rights of another. Broom’s Legal Maxims, Sec. 328. The trust company had- a right to use this particular stock for its indemnity; but only in case it was required for that purpose. Whether it would be required could only be determined upon the sale of the other securities which it held, the ownership of which was not in dispute. It was the bounden duty of the trust company, because of the circumstances we have adverted to, notwithstanding the contract with Wood admitted of its doing what it did, to sell this stock in the usual way on the general market, and sell Mrs. Kirkland’s stock only in case the other Stocks did not realize sufficient to indemnify the company. By the sale of the stock to itself the trust company did not become an innocent purchaser for value: it bought with full notice of the fact that the stock belonged to Mrs. Kirkland, and therefore her rights remained just what they were before. With her owner*281ship admitted or established, equity, with respect to this stock, would have regarded her as but surety for Wood to that extent, and for her protection would have enjoined a sale of it until it had been made to appear that its conversion was required for the full indemnity of the trust company. Such being my view of the case, I would sustain Mrs. Kirkland’s appeal.'