Court Opinion

ID: 6514480
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:25:21.786544+00
Date Added: 2024-06-11T15:54:58.743751
License: Public Domain

COLEMAN, J.
— The assignments of error present no question which brings before us for consideration any ruling of the court .upon the pleadings. The contention that the note sued upon was without consideration, or that it was given with the privilege to cancel the same within ninety days, is without merit. The proof shows that the Edison Electric Illuminating Company received from the bank the money for which the note was given, and in consideration thereof fifty shares of its stock was issued in the name of the defendant, E. J. Terry, and numbered 26' and 27, each for 25 shares. The first note was made in June, 1887, renewed and extended with the interest added, in September, 1887, and again in October, 1887, again in January, 1888, and again in April, and again in May, 1888, at which time the note sued upon was executed. The *606certificates of stock were indorsed by R. J. Terry in blank, were attached to and pledged to the bank as collateral to secure the payment of the note, and afterwards other collaterals were pledged to further secure the payment of the note. In July, 1888, R. J. Terry in writing constituted and appointed R. D. Johnston, who was the president of the bank, his attorney, to sell through any stock-broker he might select on the Stock Exchange the fifty shares of stock pledged, the proceeds to be applied to the note. A mere statement of the facts is a sufficient answer to these two grounds of contention.
It is next contended that the pledgee was guilty of a conversion of the stock pledged. The pledgee, without notice to the pledgor, sold the stock hypothecated, and Frank S. White ■was reported as the purchaser. The original certificates, Nos. 26 and 27, were surrendered, and new certificates issued in the name of Frank S. White, numbered 89 and 90. These certificates were indorsed in blank by White, and remained in the possession of the bank. The proof showed that White never paid anything for the certificates, or claimed them; that his name was merely used by the bank as a convenience, in order to effect a sale of the stock, and that the bank was the real purchaser. After this sale the pledgee, learning that a sale of the pledge could not be legally made without notice to the pledgor, notified R. J. Terry in writing of the intention to sell the stock. The proof shows that the bank held the certificates of stock all the time they were in the name of White, and during this time it was in the power of the bank to return the stock to the pledgor, upon the payment of the note to secure which the stock was hypothecated.
In the case of Day v. Holmes, 103 Mass. 306, it was held, that where there was no contract of sale of the stock, no money or other consideration paid or agreed to be paid therefor by the transferree, and the stock was taken back by indorsement in blank from the transferree, so that the stock remained under the control of the pledgee, ready for delivery to the pledgor on payment of the note, there was no conversion; and the same rule was declared in Fay v. Gray., 124 Mass. 500. To constitute a conversion, there must be a tortious detention of the property from- the owner, or its destruction, or the exclusion or defiance of the owner’s right; or a withholding of the possession under a claim of title inconsistent with that of the owner.— Conner & Johnson v. Allen, 33 Ala. 516; Thweatt v. Stamps, 67 Ala. 98; Penny v. State, 88 Ala. 106.
The evidence shows that the pledgee recognized the "stock to be that of Terry, subject to the hypothecation, although the *607certificates were issued in the name of White. The notice given of the intended sale of the stock on the Stock Exchange was a recognition of the right of the pledgor. Whether these facts were proven or not, was properly left to the jury. The dealings of the bank in regard to the hypothecated certificates of stock, the credits entered on the note, were entered on the books of the.bank. The evidence shows that the pledgor was a stockholder in the bank, a member of the Finance Committee, and a director at the time, and tor some time after the hypothecation of the stock. We must presume he had access to the boobs, and knew the condition of his note and collaterals, at least so long as hé held I his relation to the bank.
There is no difficulty in .tracing the stock originally issued by the Edison Electric Light Company in the name of R J. Terry, to its present holder, Jas. H. Little. The stock-book of the company shows that numbers 26 and 27, of 25 shares each, were issued to R J. Terry. The stock-book further shows that the certificates representing these numbers were returned and cancelled, and the same stock was re-issued to White as Nos. 89 and 90; that these were returned and can-celled, and re-issued as 101 and 102 to E. W. Rucker, and 101 and .102 cancelled, and re-issued to Jas. IT. Little, the present holder, as 106 and 107.
The evidence tended to show that, between the hypothecation of the stock and the trial, the value of the stock varied from thirty cents to par, and defendant claimed as a set-off the highest market value. As evidence tending to show that the stock was sold on the Stock Exchange as directed by the power of attorney of the. pledgor, and the date of the sale, and the price at which the stock was sold, the plaintiff introduced in evidence the books of the Stock Exchange, in which was recorded the sales. It was shown that Louis Frierson was the secretary of the company; that the entries were in his handwriting, and that he was alive and in the city; and no showing was made to account for his absence.’ It was testified that the book was the regular stock-book of sales; that it was correctly kept, and the entries in the handwriting of the secretary. Upon this proof, the books were admitted as evidence, against the objection of the defendant. The exception presents for decision the question of the admissibility of the books of a private corporation, as original evidence against third persons, upon such preliminary proof as was made in this case.
It has been declared that an exception to the general rule that the best evidence must be produced obtains in the case of public writings, as it would be improper to permit them to *608be transported from place to place. The Bank of the State of Alabama and its branches are the property of the public, and there can be no doubt that its books are public writings, and are within the rule.— Crawford v. Branch Bank, 8 Ala. 80. Mr. Wharton says, bank-books are admissible as showing a prima facie case against the bank by whom the entries are made, and a party dealing with the bank, so far as he has made the person making the entries his agent. Entries made by strangers, however, without the knowledge of the litigants, can not be received as against either of the litigants. . Ordinarily, bank-books are not evidence in suits to which the bank is not a party, without proving such books by the clerk who made the entry, if within process, or proving his handwriting, if he is outside of process. — 2 Wharton’s Law. Ev. § 1131. At common law, the admissibility of the books of the corporation depended upon the nature of the acts recorded. If they were obviously of a public character, and the entries made by a proper officer, they will be received in evidence for or against the corporation. — 2 Taylor on Ev.,§ 1781. But the author does not extend the rule to acts of a private character, where the corporation is not a party. In Morawetz on Private Corporations, § 40, it is said that the books of a corporation are admissible against the company and its members, only on the principle that they are admissions; they are not evidence against strangers. The same author declares that it is well settled that the stock-books are admissible as independent evidence to show who are the stockholders of a company ; although he adds, “it is difficult to support it by any principle of common law.” — lb. §§ 75, 76. The “Stock Exchange” is á private corporation, and the weight of authority and the better rule is that the entries in its books, as independent evidence against third persons, must stand upon the same footing as entries made in the books of companies, partnerships and individuals.
In the case of the Union Bank v. Knapp, reported in 15 Amer. Dec., after reviewing many authorities, in a note on p. 195 the conclusion reached was declared to be, that original entries, made in the regular course of the business by a third person, and in some jurisdictions by the party in interest himself, are admissible in evidence, after his death, insanity, or absence from the State, upon proof of his handwriting. If the person who made the entries is alive, and within reach of the process of the court, he must be called to authenticate them. In the case of Elliott v. Dycke, 78 Ala. 157, it was held that, “when a witness is shown to be dead, or beyond the jurisdiction of the court, written entries and memorials of a transac*609tion entered in the usual course of business, and which are shown to be in the handwriting of the absent or deceased witness, and purport or are shown to have been made at or about the time of such alleged transaction, are admissible in evidence, in any issue involving the transaction to which they relate.” The case of Hancock v. Kelly, 81 Ala. 378, is to the same effect.
It is insisted that Id. J. Terry-directed that the “Stock Exchange” should sell the stock, and for this purpose the “Stock Exchange” was his agent. The power of attorne}*- of the pledgor, in which he directed that the stock should be sold by the “Stock Exchange,” for the purposes of a sale, made the “Stock Exchange” liis agent, and it is argued that Terry is bound by the entries in the stock-book, as admissions made by an agent. The only ground upon which the entries could be admissible as the declarations and admissions of an agent binding upon the principal is,- that they were explanatory of some contemporaneous act within the scope of his authority, forming part of the res gestee. It is well settled that the admissions of an agent, as to bygone transactions, do not bind his principal. — Bradford v. Haggerty, 11 Ala. 701; Ala. Gt. So. R. R. v. Hawks, 72 Ala. 117; 3 Brick. Dig. p. 25, §§ 107, 108; Western Union Tel. Co. v. Way, 83 Ala. 554. The declarations and admissions themselves are not competent as independent evidence, to prove they were made contemporaneously with the act, or to show they were res gestee. This must be proven by evidence aliunde. The witness Embrey, by whom the preliminary proof in regard to the books was made, did not pretend to testify that he saw the entries made, or knew when they were made. Ilis evidence on this point was, that he did not keep the books, but that Louis Frierson, the secretary, kept them. The proof showed that Louis Frierson was alive, and within the jurisdiction of the court, and his absence was not accounted for. The admission of the book was clearly erroneous.
The charge of the court in regard to the measure of damages is fully sustained by the authorities. — Linam v. Reeves, 68 Ala. 89; Burke v. Hubbard, 69 Ala. 384.
The rulings of the court as to the consideration and validity of the note, and the conversion of the stock by plaintiff, as embodied in the charges given and refused, applicable to the evidence before the jury, are in accord with the principles of law herein declared.
For the error in admitting in evidence the book of sales of the Stock Exchange Company, without first laying a sufficient-predicate, the cause must be reversed.
^Reversed and remanded.