Court Opinion

ID: 5438323
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:57:49.858392+00
Date Added: 2024-06-11T08:31:55.350020
License: Public Domain

By the Court, Crockett, J., on petition for a rehearing.
A rehearing is asked on the ground that by the uncontradicted testimony of Bewcomb, when -Sime & Co. received the stocks, and particularly those pledged to Livingstone, Sime had express notice that they. belonged to King. The jury found otherwise; and it is insisted that the verdict on this point is not only wholly unsupported by any evidence in the cause, but is directly con*115trary to the testimony of Newcomb. It is to be observed, however, that Sime died pending the action, and his testimony was not obtained. The only evidence of express notice to Sime is to be found in the testimony of Newcomb, relating to a conversation between them, at which no one else was present. The conversation occurred on the day of the failure of Tilden & Breed, and amidst the confusion and excitement naturally attending such an event. It was a conversation between a clerk of the bankrupt firm and one of its creditors -for a, large sum, eagerly in search of information as to its assets. Evidence of a conversation, resting only in the memory of a single witness, is ordinarily the most unsatisfactory of all evidence. Conversations are so easily misunderstood, particularly under circumstances of excitement, and the human 'memory is so treacherous, that testimony of this character is held by all courts to be the weakest of all evidence. Moreover, Newcomb was contradicted by Hastings in respect to some of the circumstances attending the giving of the check to redeem the stocks from Livingstone, and on his cross-examination he testified that Sime & Co. “knew from me that the stocks in Livingstone’s possession belonged to King, or a portion of them, anyway; but I don’t testify, and I have not testified that I told them in so many words that they were King’s stocks.” Under these circumstances, while there is nothing to impeach his integrity, we cannot say that the jury was not authorized to distrust the accuracy of Newcomb’s recollection of the conversation. It was incumbent on the plaintiff to prove notice to Sime & Co. of King’s equities; and, under the circumstances already stated, it was for the jury to determine whether the evidence on this point was sufficiently satisfactory to establish affirmatively the fact of the notice. Their finding being in the negative, we would not be justified in setting aside the verdict on the ground that it is unsupported by the evidence. But, waiving this question, we think the judgment ought to be affirmed on another ground. There can be no doubt that Tilden & Breed were entitled to hold, the stocks as collateral security for King’s note. The note *116itself, and the stocks as collateral security for its payment, were delivered to Sime & Co.-, as ¡collateral security for the indebtedness of Tilden &■ • Breed. It cannot -be doubted that Tilden & Breed, the holders of King’s note, had the right to pledge it to Sime & Co., and to deliver to them, as collateral" security for the note, the stocks held in pledge to secure its payment. Though this transaction was held to be a fraud on-the Bankrupt Law as against the creditors of Tilden & Breed, and void as against them, it was nevertheless, valid as against King., As to him, Sime & Co. became the lawful holders of. the note, and of the stocks, as collateral security for it. As pledgee of the stocks, .holding them for the security for King’s- note, it would not have been incumbent on them, upon a redemption of the pledge, to return to the pledgor the same identical certificates which they had received, but it would have been a sufficient- discharge of their duty as pledgees to have kept on hand, and to have been ready at ail times, on a redemption of the pledge, to restore to the pledgor certificates of stock corresponding to those received of the pledgor. (Atkins v. Gamble, 42 Cal. 86; and cases there cited.) The mere fact, therefore, that Sime & Co. had sold these particular certificates, did not of itself render them liable as for a conversion of the, pledge. If they had continued to be the holders of King’s note, he could not have put them in default, except by a tender of payment and a demand for the stocks; and they would not have been in default, if upon such tender and demand they had offered to restore to them other similar certificates, and had shown that they had at all times been ready to do so. But he could not have maintained the action without a tender and demand. It appears, however, the District Court of the United States held the transaction between Sime & Co., and Tilden & Breed, to be void as, against the creditors of the latter, and compelled Sime & Co. not only to surrender the note, but to account for the value of the stocks. The effect of this decree was to adjudge that as between the asr signee of Tilden & Breed and Sime & Co. there had been no valid pledge of King’s note, and the stocks as collateral *117security for its payment, ‘ In other words, it restored the note to the assignee with the same rights as though Tilden & Breed had never attempted to pledge it to Sime & Co. But in the meantime, Sime & Co. had disposed of the stocks and converted the proceeds to their own use. In whom was the right of action for the conversion? Was it in King, or in the assignee of Tilden & Breed as the holder of King’s note, and as pledgee of the stocks to secure its payment? In Treadioell v. Davis, 34 Cal. 606, we had occasion to consider the question, whether the pledgee, in an action against a stranger for a conversion- of the pledge, was entitled to recover the value of the pledge, or only the value of his special interest in it. We say, “the rule appears to be well settled that in an action by the pledgee against a stranger for the conversion of goods, the plaintiff is entitled to recover the full value of the goods, because he is answerable over to the pledgor for the surplus. But if the goods be converted by the owner, or by any one acting in privity with him, the pledgee can recover only the value of his special interest in the pledge;” and we cite in support of this proposition, Story on Bailment, Sec. 352; Lyle v. Barber, 5 Bin. 457; Heyden & Smith's Case, 6 Coke, 486; Ingersoll v. Van Bokkelen, 7 Cow. 670; Pomeroy v. Smith, 17 Pick. 85, to which many other authorities might be added. Assuming this to be the correct rule (of which we have no doubt), the assignee of Tilden & Breed, as pledgee of the stocks, was entitled to_recover their full value from Sime & Co., who, on the plaintiff’s theory, were strangers to King, and not acting in privity with him. The complaint charges them to be naked wrong doers, who wrongfully and fraudulently obtained possession of the stocks, without the knowledge or consent either of King or Tilden & Breed; and the plaintiff now contends that they wrongfully and unlawfully obtained possession of the stocks, and converted them to their own use, with full notice of King’s rights. If this be so, they were wrong doers, and could not have acted in privity with King. In an action against them, the assignee of Tilden & Breed, as pledgee of the stocks, was therefore entitled to recover their full *118value, as he appears to have clone. The effect of this recovery and the satisfaction of it by Sime & Co., was to vest in them a title to the stocks or their proceeds. In any event, it cannot be doubted that the assignee of Tilden & Breed, as pledgee of the stocks, was entitled to recover the value of his special interest in them; and it appears that the stocks, at the time of their conversion, were worth much less than the debt for which they were pledged to Tilden & Breed. This value was ascertained By the judgment of,the Court, and was paid by Sime & Co. to the assignee of Tilden & Breed. No interest was left in King on which he or his assignee could maintain an action against Sime & Go. The point is made that the proceedings in the Bankruptcy Court were not admissible in evidence under the pleadings; but we are of a contrary opinion.
The petition for a rehearing is denied.
Mr. Justice McKinstry did not express an opinion on the application for a rehearing.
Mr. Chief Justice Wallace, being disqualified, did not participate in the decision of this case.