Court Opinion

ID: 3407614
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:23:59.541323+00
Date Added: 2024-06-11T13:48:23.859233
License: Public Domain

I cannot agree that the hypothecation card (the form of which is quoted at length in the majority opinion) is capable of interpretation in all its essentials as applied to this case as though it presented only a pure question of law; and I dissent from the view that its provisions may be construed as a matter of law by the court as an unlimited authorization to Williamson 
Buttolph or either of them to hypothecate with any bank or banker the signer's certificates therein named as security for Williamson  Buttolph's firm or individual indebtedness to the bank.
Standing alone a signed authorization to Williamson  Buttolph to hypothecate certain named securities with any bank or banker is at most but a power of attorney. It conveys no title in the securities named to the donee of the power; and the authorization, in the view herein expressed, must be interpreted to be an authorization to the donee to act for the donor and for his benefit. Thus it has been held that a power of attorney authorizing the donee to sell, convey, mortgage and hypothecate property of the donor upon such terms and conditions and under such conveyances *Page 333 
as the donee shall think fit, does not authorize a gift of the subject matter or a conveyance of the same without consideration. See Brown v. Laird (Ore.), 291 P. 352, 73 A.L.R. 877;Hanrick v. Patrick, 119 U.S. 156. It has further been held that an attorney in fact acting under a power of attorney for the sale of corporation stock has no authority to sell the stock in part or in full payment and satisfaction of his individual indebtedness without the knowledge, precedent authority or subsequent ratification of his principal. See Wilson v.Wilson-Rogers, 181 Pa. 80, 37 A. 117, cited in the case notes of 73 A.L.R. 891. To the same effect are Hewes v. Doddridge,
1 Rob. (Va.) 143, and Frink v. Roe, 70 Cal. 296, 11 P. 820, cited in the same case notes.
In construing a power of attorney the intention of the donor is said to be the controlling factor. If the language of the instrument itself does not clearly and without ambiguity express that intention, and extrinsic evidence is necessary and proper in the premises, then questions of fact presented by such evidence are for the jury to determine under proper instructions. "When a written instrument cannot be construed without the aid of parol evidence or the reference to facts outside the writing itself or when its construction involves questions of fact, the instrument should be submitted to the jury rather than to the judge to find the facts." Jones, Ev., Civ. Cas. (3d Ed.), § 175, p. 235. In the instant case extrinsic evidence was introduced to show that Williamson  Buttolph were stockbrokers; that they or one of them had been employed for many years past to purchase mainland stocks on margin for plaintiff's account; that prior to June, 1930, they, and after Mr. Williamson's death in November, 1928, the survivor, Mr. Buttolph, had taken plaintiff's notes for his balances secured by pledges of his Hawaiian stocks owned wholly by him; that such notes and stocks had been repledged *Page 334 
by Williamson  Buttolph or G.H. Buttolph to the bank on account of their or his own indebtedness to the bank, and had been entered in the books, receipts and accounts of the bank with notations under a key system of identification; that at some time prior to June 30, 1930, a new system was inaugurated by the bank whereby the original pledgors' notes were returned to the brokers and hypothecation cards in the language quoted in the majority opinion were substituted therefor; that the card forms, dictated by an officer of the bank, were prepared and sent by the brokers to their customers and were returned by the latter to the brokers executed as herein shown, and were then sent by the brokers to the bank; that under this system the plaintiff executed and delivered four cards dated respectively June 30, 1930, May 26, 1931, October 13, 1931, and April 9, 1932, for the following named stocks respectively: Certificate B346 for 50 shares Bishop Trust Company, Limited; certificate 1728 for 30 shares Oahu Railway  Land Company; certificate 998 for 3 shares The Bank of Hawaii, Limited, and certificate 1097 for 11 shares Bank of Hawaii. According to the evidence these shares were then pledged to the bank as security for Williamson  Buttolph's or Buttolph's general account. Mainland securities theretofore purchased by Williamson  Buttolph for plaintiff's account were sold by the brokers and the proceeds credited to plaintiff's account on June 4, 1932. On June 8, 1932, Mr. Buttolph left the Territory. At that time the indebtedness of plaintiff to Williamson  Buttolph, or Buttolph, was approximately $1500. The value of his Hawaiian securities pledged as aforesaid was then in excess of $5500. The general indebtedness of Williamson  Buttolph, or Buttolph, to the bank then amounted approximately to $160,000. Thereafter, in June or July, 1932, the plaintiff learned for the first time that his stocks had been repledged by Williamson  Buttolph, or Buttolph, *Page 335 
with the defendant bank which had transferred the same to its own name. Thereupon plaintiff offered to pay the full amount of his indebtedness to Williamson  Buttolph, together with interest thereon to the defendant bank, which offer was refused by the latter's manager, who asserted that the bank had the right to hold said securities for said general indebtedness of Williamson Buttolph. Thereafter certain of said stocks were sold by the bank and the proceeds applied to the brokers' general account. The rest are still held by the bank on said account. This evidence was considered by the circuit judge. Much of it was recited in the oral opinion upon which his order for a directed verdict was based. Thus considered, in this minority view, it does not aid the construction which the court placed upon the written instrument.
There are, however, cogent reasons why the evidence should not have been taken from the jury. In the view that the instrument operated neither as a transfer of title nor as an unlimited power to hypothecate the stocks for the benefit of the donee there remained to be considered the question of apparent authority. The brokers had been pledgees of the plaintiff's Hawaiian stocks without the additional interest in them that a broker is said to have in stocks purchased and held by him for a customer through the use of the broker's own cash or credit. The Hawaiian stocks before being pledged were the exclusive property of the customer and were pledged by him to secure his notes or account as in any ordinary case. The endorsement in blank of the customer's stocks and the delivery of them to the broker did not release or convey the customer's equities therein. He still had a right to redeem his stocks by paying his indebtedness to the pledgee. And the pledgee's interest in said stock was all that the pledgee acting for himself could legally hypothecate. Quoting from the syllabus of Okada v. Akahoshi, 29 Haw. 719, 720: "Knowledge *Page 336 
that stock is the property of the pledgor and that it is in the hands of the pledgee as collateral security for a loan is sufficient to put a purchaser upon inquiry and to charge him with notice of the amount of said loan, the payments made thereon and the conditions upon which said stock may be redeemed." The same rule of notice applies to a sub-pledgee of such stock as to a purchaser; and a sub-pledgee with notice, actual or constructive, of a pledgor's equities takes no better title than that of the original pledgee. There was evidence of facts showing defendant's knowledge of plaintiff's ownership of the Hawaiian stocks herein described and that they were held by the brokers as collateral only. I refer to evidence of plaintiff's notes in the first instance, to the recitals in the certificates of stock, and to the hypothecation cards themselves and to the identifying notations in the bank's receipts, books and accounts as above narrated. Evidence of facts showing knowledge or notice is peculiarly within the province of the jury to consider. Two assignments of error were based upon the court's refusal to submit such evidence to the jury for findings of fact in connection with the questions of actual and constructive notice in the premises. In this minority opinion they are both well taken.
For the reasons above set forth I think that the judgment of the trial court should be reversed. *Page 337