Court Opinion

ID: 5428960
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:48:44.974632+00
Date Added: 2024-06-11T08:31:33.264570
License: Public Domain

Eder, J.
(dissenting). With respect to Provident Loan my dissent is placed upon the ground that it, as a bailee, did not use that degree of care, before delivering the pledged article to Goldman, as a, reasonably prudent person should have done, in the circumstances.
A pawnbroker is a bailee and is subject to the rules of law applicable to such a status and relationship.
In addition to the statutes, the common law regulates the duties of pawnbrokers and as there are many instances where statute law is silent, the common law provides rules governing the obligations of a contract of pawn and fixing .the duties imposed upon the parties.
The obligation and duty of a bailee is to deliver the property bailed to the bailor or other person rightfully entitled to its return. A pawnbroker must use care and diligence in respect of the property pawned as an ordinarily prudent person would usually bestow on property of a like nature under similar circumstances (Stich v. Samek, 19 Misc. 534). A bailee is liable not only for losses occasioned by his negligence but for those which arise from innocent mistakes in the delivery of the bailed property to persons not entitled thereto (Bank of Oswego v. Doyle, 91 N. Y. 32, 42).
Provident Loan is a pawnbroker. Under the statute (General Business Law, § 44) every pawnbroker is required, at the time *911of loan, to deliver to the pawnor, a memorandum or note signed hy him, containing an account and description of the article pawned, the sum loaned thereon, the date of pledge, the rate of interest and the name and address of the pawnor (General Business Law, § 43).
This memorandum or note js what is commonly known as a pawn ticket. The holder thereof, is by the terms of the statute, presumed to be the person entitled to redeem the pledged property and the pawnbroker is required, upon payment of the principal and interest, to deliver the property to the person presenting the pawn ticket.
If the pawn ticket be lost or mislaid the pledgor may apply to the pawnbroker for the issuance of a “ second ” or “ stop ticket ” (General Business Law, § 44); the pledgor is required to examine the books of the pawnbroker and find the entry for the pawned article and to give a proper description of it; failure to comply with these requisites authorizes the pawnbroker to deliver the pledge to any person producing the pawn ticket for the redemption thereof (General Business Law, § 44).
In the case at bar, Goldman, who was entrusted by Diamond (plaintiff’s agent) to pawn the articles, did not ask for the issuance of a “ second ” ticket — ■ which term I take it means a duplicate of the original pawn ticket — but received and accepted a “ stop ticket ”. The- stop ticket is not accepted as evidence of ownership and Provident’s practice was not to release the collateral upon presentation thereof; the stop ticket is treated only as a warning not to surrender the collateral to anyone presenting the original ticket and its manifest object is to enable the pawnbroker to require the parties to satisfy him as to who is entitled to the delivery of the pawn before he surrenders it. In so acting, in such circumstances, he is, at least, prima facie, acting as an ordinarily prudent person would be expected to and would act. If he be still in doubt as to ownership and as to whom delivery should be made, ordinary prudence would require him to refuse delivery to either until ownership of the pawned article is determined by a court of competent jurisdiction.
The major opinion states (p. 902): “ Once a stop is placed on an article, only the pledgor of record may redeem it by proving his ownership. ’ ’
This necessarily and at once puts the pawnbroker on notice that there may be a claim of ownership of the pawned property by someone other than the original pledgor of record and thus imposes upon the pawnee, as a bailee, the duty to exercise *912due care and diligence, in the circumstances, before delivering the article to the original pledgor or to anyone else claiming the property, and if he acts heedlessly, negligently, carelessly or with indifference and delivers the property to a nonholder of the original pawn ticket he acts at his peril for a pawn ticket is negotiable and may be sold, transferred or assigned; and though it is not a negotiable instrument in the sense that that term is used in mercantile law or in statutes like the Negotiable Instruments Law, it is, nonetheless, a negotiable instrument, perhaps more correctly styled a nonstatutory negotiable instrument.
“ Negotiable ” as commonly applied to paper is a term of classification and does not necessarily imply anything more than that the paper has the negotiable quality, i.e., that which may be sold, transferred or assigned, when it is capable of transfer from one person to another in such manner as to constitute the transferee the holder thereof (Robinson v. Wilkinson, 38 Mich. 299).
In addition to its negotiable quality a pawn ticket possesses other qualities. It is not a mere receipt; it is something more than that; it is an.indicia of ownership of the pledged property; it is also a voucher or warrant for the delivery to the holder thereof of the property represented by it, and as the statute itself declares - (General Business Law, § 44) the holder of a patón ticket is the presumptive owner of the pledge and entitled to redeem it and the pawnbroker is required to deliver the article to the person presenting the pawn ticket, unless, of course, he knows the contra^ to be the fact or is put upon notice.
Provident, as a pawnbroker, knew, of course, that the pawn ticket was negotiable, the subject of sale, transfer or assignment; it recognized that fact for it did not issue to Goldman, the pledgor of record, a “ second ” or duplicate pawn ticket but only a “ stop ticket ”, expressly reciting that: “ The issuance of this ticket confers no rights on the holder. ’ ’
Provident was thus clearly put upon notice that the original pawn ticket might have been negotiated by Goldman and be in the possession of some other person who might present the same for redemption of the pledge and claim ownership thereof.
Possessed of this notice and knowledge, it' is my view that Provident was negligent, and failed, as a bailee, to exercise a proper degree of care in delivering the pawned article to Goldman without exacting from him some form of indemnity to run for a reasonable time to make certain of the return of *913the article or payment of its value to a possible purchaser and holder of the pawn ticket who might later appear and demand the return of the pawn, and that an ordinarily prudent person, in such a situation, would have done so. Whether Provident so acted, was, I think, a question for the jury, under all the circumstances.
In this connection the majority of the court takes the position that section 44 of the General Business Law imposes no duty on the pawnee to require an indemnification bond before surrendering the article in a case where the pledgor of record is unable to produce the original pawn ticket and that it would cause hardship to such pledgors who were unable to obtain a bond.
I am constrained to disagree. If hardship results it has not been occasioned by any act of the bailee but is solely due to the conduct of the pawnor, who, in all fairness and justice, should bear it. The mere fact that the statute imposes no requirement on either the pawnor or pledgee to furnish or demand indemnity, does not, in my opinion, relieve the bailee of the duty to exercise a proper degree of care.
The major opinion cites Freudenheim v. Gutter (201 N. Y. 94, supra) and Mann v. Simpson & Co. (286 N. Y. 450, supra) as decisive that upon the facts in the instant case Provident cannot be held liable to plaintiff, but I think they are inapplicable here as they did not involve a comparable situation; they' deal, primarily, with the question of apparent ownership at the time of pawn; they did not involve either the negotiable quality of a pawn ticket and its effect, or the particular feature of a lost or mislaid original pawn ticket, or the duty of the pawnee in such a situation, or the degree of care required of him before delivering the pawn to the original pledgor of record. None of the othjer cases cited in the prevailing opinion herein involve a like or comparable factual situation. Hence, I am of opinion that none of those cases are of aid in the solution of the particular question before us.
I am also unable to see that sections 43 and 44 of the General Business Law or subdivisions 1 and 3 of section 43 of the Personal Property Law (Factors’ Act) absolved Provident as pawn broker, in the mentioned situation, from liability for a wrongful return of the pledge merely because Goldman was the presumptive owner at the time of pawn.
At the time of redemption a different situation is present. It is not the presumptive owner at the time of pawn who is deemed by the statute to be the person who is entitled to redeem *914the pledge, but the holder of the paiun ticket at the time of redemption, and delivery of the property is required to be made to him.
As I comprehend these provisions they do not grant to the pawnbroker, in the situation here described, exemption or immunity from liability as the prevailing opinion imputes.
“ Every bailee is bound, at his peril, to know that the person to whom he delivers the chattel is the proper person to receive it, and if he delivers it to the wrong person, though acting in perfect good faith, he is nevertheless liable for its conversion,” (3 Am. & Eng. Encyc. Law [2d ed.], pp. 754-755.)
It is my conclusion that in view of the negotiable quality of the pawn ticket, and the situation disclosed, that Provident did not, as a bailee, exercise a proper degree of care in delivering the pledge to Goldman, or act as an ordinarily prudent person would and should have acted, and that it thus manifested a culpable indifference to the safety of thé property delivered to its care. Whether it did or not, in my opinion, was a question for the jury, in any event.
Upon the record presented I am unable to agree that Provident, as a matter of law, is exonerated from liability to plaintiff, either by statute or by decisional law, and I accordingly dissent.
As to defendant Scholar, its title to the property was derived from Goldman and if he had none he could give no title to it; a thief can give no title to stolen property. Nothing plaintiff did ratified the acts of Goldman.
Scholar contends that an estoppel should be declared against plaintiff inasmuch as he could have prevented the loss if he had, in due time, notified Provident that he was the holder of the pawn ticket, and that, as between it and plaintiff he should shoulder the loss; that Scholar was an innocent purchaser for value and that the rule should be applied that as between two innocent victims of a fraud the one who by his conduct or neglect made the fraud possible should suffer the loss.
The rule is inapplicable where property is stolen or otherwise feloniously obtained. Plaintiff was under no duty to notify Provident that he owned the property and held the pawn ticket. An owner of a pawn ticket need not assume that someone will indulge in fraud or crime or may do so to obtain possession of the pawned article; he has a right to assume the contrary.
The fact that Scholar purchased in good faith is immaterial; a wrongful intent is not essential to a conversion, it being sufficient that the owner has been deprived of his property by *915another’s unauthorized assumption over it, so that evidence of good faith is inadmissible (Douglass v. Scott, 130 App. Div. 322, 470).
I do not see that subdivision 1 of section 104 of the Personal Property Law vests Scholar with good title to the property sold to it by Goldman. The effect of that provision is to preclude the owner from denying the seller’s authority to sell even though he acquired possession feloniously, by trick or device, if the owner has done' an affirmative act which put it in the power of the seller to defraud the purchaser.
It is stated in the controlling opinion that upon this record plaintiff can be said to have put it in Goldman’s power, by an affirmative act, to obtain Scholar’s money to pay for the article. I disagree. I find no evidence to support such a conclusion or to warrant a finding to that effect.
The governing opinion determines that as to Provident the judgment dismissing the complaint should be affirmed and that the action must be severed and the judgment dismissing the complaint against defendant Scholar must be reversed and a new trial granted.
In respect of the disposition thus made I am in accord that the judgment dismissing the complaint as to Scholar must be reversed and a new trial granted but I dissent from the determination made as to the defendant Provident and that the action should be severed as to defendant Scholar.
The judgment should be reversed and a new trial ordered as to both defendants.
Shientag, J., concurs with Hecht, J., in memorandum; Eder, J., dissents in opinion.
Judgment affirmed, etc.