8224 Writ of error dismissed by Supreme Court.
(after stating the facts as above). The trial court, though of the opinion that the sale of plaintiff's stock to C.J. Loe was invalid, concluded that plaintiff could ask nothing further than to be restored to the position the parties would have occupied had no such sale been made, and had suit been brought on the $1,000 note, with prayer for foreclosure of the lien upon the collateral. If this was a suit to recover the stock itself, in view of the absence of evidence showing a depreciation in value of such stock, or evidence of damage because of its depreciation, it could be said that even though a conversion had taken place no injury was suffered; but in this case plaintiff sued to recover the value of the stock at the time of the alleged conversion, and if a conversion took place. And he is entitled to recover such value and cannot be required to accept the stock tendered back, then the inquiry whether the stock was worth more or less than at the time of the sale to Loe became immaterial.
It is well settled that upon conversion by the pledgee of the property pledged the pledgor may sue either for the property itself, or for its proceeds if sold, or may maintain an action for damages for breach of the contract to keep the property safely and restore it to the pledgor upon payment of the debt. 31 Cyc. p. 844; Hale on Bailments Carriers, p. 160. Where plaintiff sued only for damages for conversion, he is not entitled to a judgment for the property itself. Harris v. Staples, 89 S.W. 801.
Again, when a conversion takes place, the person whose property has been taken is not required to take the property back if the wrongdoer tenders the same to him, and such a tender constitutes no defense to the suit for damages for the conversion of the property. Weaver v. Ashcroft,50 Tex. 427; Crawford v. Thomason, 53 Tex. Civ. App. 567, 117 S.W. 184; Hofschulte v. Hardware Co., 50 S.W. 608; Bitterman v. Hearn, 32 S.W. 341; Baldwin v. Davidson Co., 127 S.W. 562.
As the wrongdoer cannot require the person whose property he converted to his use to take back the property, the court is without authority to accomplish that end by a judgment setting aside the unauthorized sale and directing that, unless the property is redeemed by payment of the debt, the same shall be sold in satisfaction of such judgment. Such a judgment reinstates the plaintiff as owner of the property and deprives him of his legal right to recover the value thereof at the time of the conversion, which right is not affected by either an increase or decrease in its value subsequent to the conversion.
If in this case, viewing the evidence from the plaintiff's standpoint, a case of conversion is made out, the issues should have been submitted to the jury. The pledgee, though having the power by contract to sell the collateral at private sale without notice to the pledgor, cannot escape the duty resting upon him as a trustee to conduct the sale fairly and in good faith, and in such a way as to subserve not only the rights he has, but also the interest of the pledgor. Colebrook on Collateral Securities, p. 215; 31 Cyc. p. 877(6); King v. D. Sullivan Co., 92 S.W. 51; Uncle Sam's Loan Office v. Emery, 49 Tex. Civ. App. 236,107 S.W. 1157; Oriental Bank v. Western Bank Trust Co.,143 S.W. 1176; Gillet v. Bank, 160 N.Y. 549, 55 N.E. 292; Bank v. Richardson, 156 Mo. 270, 56 S.W. 1117, 79 Am.St.Rep. 528.
It is well established that the wrongful sale of the pledged property by the pledgee, so as to put it out of his power to redeliver it on payment of the debt, constitutes a conversion, and it has also been frequently announced by text-book writers and courts that an unauthorized sale by the pledgee to himself does not change the relations of the parties, and therefore does not constitute conversion. It appears clear that, when the pledgor elects to assert that the relation still exists, the pledgee cannot be heard to say that it has ceased, and the pledgor is entitled to redeem the pledge.
It is also clear that when a sale is authorized, but the purchase by the pledgee is unauthorized, and he purchases in good faith, making the highest bid, such purchase would not constitute a conversion. But if such purchase be a nullity it can confer no rights upon the pledgee exempting him from being charged with conversion if he thereafter exercises a dominion over the pledge inconsistent with his relations thereto as pledgee and with the pledgor's rights. When the sale is made in hostility to the rights of the pledgor, that is, in bad faith, in disregard of the pledgee's duties as trustee, and the pledgee purchases at such sale and makes a claim of absolute ownership of the pledge, or claims the right to hold it as security for other debts than those for which it was pledged, it appears that he can, at the election of the pledgor, be charged with conversion of the pledge. Payne v. Lindsley, 126 S.W. 331; Luckett v. Townsend, 3 Tex. 119, 49 Am.Dec. 723; Watts v. Johnson, 4 Tex. 317; Soell v. Hadden, 85 Tex. 188, 19 S.W. 1087; Oriental Bank v. Western Bank
Trust Co., 143 S.W. 1178.
Proof of tender by the pledgor of the amount due by him to the pledgee and of the latter's refusal to accept such tender and return the collateral evidences a conversion.
But a tender is not required where the pledgee asserts absolute ownership of the pledge in himself, or an intention to hold the same as security for the payment of debts for which it cannot under the contract of pledge be held as security. See the cases above cited and the following: Roberts v. Yarboro, 41 Tex. 453; Gillet v. Bank, 160 N.Y. 549, 55 N, E. 292; Uncle Sam's Loan Office v. Emery, 49 Tex. Civ. App. 236, 107 S.W. 1156; Gaw v. Bingham, 107 S.W. 931; Memphis City Bank v. Smith, 110 Tenn. 337,75 S.W. 1065; Hagan v. Bank, 182 Mo. 319, 81 S.W. 171; Dibert v. D'Arcy (Mo.) 154 S.W. 1116. Such a declaration is equivalent to a refusal to accept if tendered, and the pledgee cannot be heard to say that the pledgor should be deprived of any rights for taking him at his word. Where a wrongful sale of the pledge is made to a stranger, no tender need be made by the pledgor before filing suit. Mullen v. Quinlan Co.,195 N.Y. 109, 87 N.E. 1078, 24 L.R.A. (N.S.) 511.
Applying the foregoing principles to this case, we will consider whether the evidence was sufficient to go to the jury on the issue of conversion of plaintiff's stock.
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8224 Writ of error dismissed by Supreme Court.
(after stating the facts as above). The trial court, though of the opinion that the sale of plaintiff's stock to C.J. Loe was invalid, concluded that plaintiff could ask nothing further than to be restored to the position the parties would have occupied had no such sale been made, and had suit been brought on the $1,000 note, with prayer for foreclosure of the lien upon the collateral. If this was a suit to recover the stock itself, in view of the absence of evidence showing a depreciation in value of such stock, or evidence of damage because of its depreciation, it could be said that even though a conversion had taken place no injury was suffered; but in this case plaintiff sued to recover the value of the stock at the time of the alleged conversion, and if a conversion took place. And he is entitled to recover such value and cannot be required to accept the stock tendered back, then the inquiry whether the stock was worth more or less than at the time of the sale to Loe became immaterial.
It is well settled that upon conversion by the pledgee of the property pledged the pledgor may sue either for the property itself, or for its proceeds if sold, or may maintain an action for damages for breach of the contract to keep the property safely and restore it to the pledgor upon payment of the debt. 31 Cyc. p. 844; Hale on Bailments Carriers, p. 160. Where plaintiff sued only for damages for conversion, he is not entitled to a judgment for the property itself. Harris v. Staples, 89 S.W. 801.
Again, when a conversion takes place, the person whose property has been taken is not required to take the property back if the wrongdoer tenders the same to him, and such a tender constitutes no defense to the suit for damages for the conversion of the property. Weaver v. Ashcroft,50 Tex. 427; Crawford v. Thomason, 53 Tex. Civ. App. 567, 117 S.W. 184; Hofschulte v. Hardware Co., 50 S.W. 608; Bitterman v. Hearn, 32 S.W. 341; Baldwin v. Davidson Co., 127 S.W. 562.
As the wrongdoer cannot require the person whose property he converted to his use to take back the property, the court is without authority to accomplish that end by a judgment setting aside the unauthorized sale and directing that, unless the property is redeemed by payment of the debt, the same shall be sold in satisfaction of such judgment. Such a judgment reinstates the plaintiff as owner of the property and deprives him of his legal right to recover the value thereof at the time of the conversion, which right is not affected by either an increase or decrease in its value subsequent to the conversion.
If in this case, viewing the evidence from the plaintiff's standpoint, a case of conversion is made out, the issues should have been submitted to the jury. The pledgee, though having the power by contract to sell the collateral at private sale without notice to the pledgor, cannot escape the duty resting upon him as a trustee to conduct the sale fairly and in good faith, and in such a way as to subserve not only the rights he has, but also the interest of the pledgor. Colebrook on Collateral Securities, p. 215; 31 Cyc. p. 877(6); King v. D. Sullivan Co., 92 S.W. 51; Uncle Sam's Loan Office v. Emery, 49 Tex. Civ. App. 236,107 S.W. 1157; Oriental Bank v. Western Bank Trust Co.,143 S.W. 1176; Gillet v. Bank, 160 N.Y. 549, 55 N.E. 292; Bank v. Richardson, 156 Mo. 270, 56 S.W. 1117, 79 Am.St.Rep. 528.
It is well established that the wrongful sale of the pledged property by the pledgee, so as to put it out of his power to redeliver it on payment of the debt, constitutes a conversion, and it has also been frequently announced by text-book writers and courts that an unauthorized sale by the pledgee to himself does not change the relations of the parties, and therefore does not constitute conversion. It appears clear that, when the pledgor elects to assert that the relation still exists, the pledgee cannot be heard to say that it has ceased, and the pledgor is entitled to redeem the pledge.
It is also clear that when a sale is authorized, but the purchase by the pledgee is unauthorized, and he purchases in good faith, making the highest bid, such purchase would not constitute a conversion. But if such purchase be a nullity it can confer no rights upon the pledgee exempting him from being charged with conversion if he thereafter exercises a dominion over the pledge inconsistent with his relations thereto as pledgee and with the pledgor's rights. When the sale is made in hostility to the rights of the pledgor, that is, in bad faith, in disregard of the pledgee's duties as trustee, and the pledgee purchases at such sale and makes a claim of absolute ownership of the pledge, or claims the right to hold it as security for other debts than those for which it was pledged, it appears that he can, at the election of the pledgor, be charged with conversion of the pledge. Payne v. Lindsley, 126 S.W. 331; Luckett v. Townsend, 3 Tex. 119, 49 Am.Dec. 723; Watts v. Johnson, 4 Tex. 317; Soell v. Hadden, 85 Tex. 188, 19 S.W. 1087; Oriental Bank v. Western Bank
Trust Co., 143 S.W. 1178.
Proof of tender by the pledgor of the amount due by him to the pledgee and of the latter's refusal to accept such tender and return the collateral evidences a conversion.
But a tender is not required where the pledgee asserts absolute ownership of the pledge in himself, or an intention to hold the same as security for the payment of debts for which it cannot under the contract of pledge be held as security. See the cases above cited and the following: Roberts v. Yarboro, 41 Tex. 453; Gillet v. Bank, 160 N.Y. 549, 55 N, E. 292; Uncle Sam's Loan Office v. Emery, 49 Tex. Civ. App. 236, 107 S.W. 1156; Gaw v. Bingham, 107 S.W. 931; Memphis City Bank v. Smith, 110 Tenn. 337,75 S.W. 1065; Hagan v. Bank, 182 Mo. 319, 81 S.W. 171; Dibert v. D'Arcy (Mo.) 154 S.W. 1116. Such a declaration is equivalent to a refusal to accept if tendered, and the pledgee cannot be heard to say that the pledgor should be deprived of any rights for taking him at his word. Where a wrongful sale of the pledge is made to a stranger, no tender need be made by the pledgor before filing suit. Mullen v. Quinlan Co.,195 N.Y. 109, 87 N.E. 1078, 24 L.R.A. (N.S.) 511.
Applying the foregoing principles to this case, we will consider whether the evidence was sufficient to go to the jury on the issue of conversion of plaintiff's stock. Viewing the evidence from the plaintiff's standpoint, it shows that the bank made the sale upon the very day that plaintiff was permitted by the president of the bank to believe that he would be given a few days' time in which to pay his debt; that the sale was made for a grossly inadequate price; that no notice was given plaintiff of the sale; that it was made by the president of the bank, in his official capacity, to himself individually, without making any effort to sell the same to any one else, though having on that very day come in contact with directors of the company whose stock constituted the pledge. We think the evidence was sufficient to authorize a finding that the sale was not made in good faith and with that regard for plaintiff's interests which the law requires. The question next arising is whether the sale was made to the pledgee itself or to a stranger. Any sale of the stock as between the bank and its president, if unauthorized by the directors, is void (article 530, Revised Statutes of 1911), and, even if authority had been conferred to sell the same, the sale to himself for a grossly inadequate price could be set aside by the bank. But, whether the sale as between said parties was void or voidable, the fact remains that by the acts of its officer, for which it is responsible, dominion was exercised over plaintiff's property inconsistent with his rights thereto, in that said president claimed to own the same individually and notified plaintiff that he could not repossess himself thereof, except upon payment of sums of money for which such stock was not pledged, which he described as "the money that I am spending in settling up accounts of the company within the next 15 days." Appellees say that, in fact, at the time when the suit was brought, no such accounts had been paid by C.J. Loe, and therefore plaintiff was only called upon to pay what was due by him. We do not think that plaintiff was called upon to investigate the matter. No offer was made to let him have his stock if he paid the amount due by him before any of such accounts were paid off, and Loe having asserted that he was the owner of the property, and having announced his intention of holding the same for the payment of other debts, neither he nor the bank can be heard to assert that he did not claim to be the owner, and that, if plaintiff had upon receipt of the letter offered to pay the amount due by him, his stock would have been returned.
The record further discloses that the witness Calrow testified to a conversation had by him with Loe, in which the latter attached still other conditions to be performed before plaintiff could repossess himself of his stock. Then taking this testimony as true, which we must do for the purposes of this appeal, we find that at both times dominion was claimed over the stock inconsistent with plaintiff's rights.
We are also of the opinion that the transaction should be construed as a sale to a stranger; but, if it can be said that the bank had any possession or control of the stock after the transfer to C.J. Loe, then justice demands that it should be answerable for the conditions imposed by him as a prerequisite to plaintiff's repossessing himself of his stock. Plaintiff could have brought his suit without any tender, but on March 11, 1912, he went to the bank, during business hours, and made a tender to the assistant cashiers of the amount due on his note and demanded that his note and stock be delivered to him. Appellees say this tender was made in bad faith because plaintiff knew that C.J. Loe was out of town. Such a conclusion is not necessarily deduced from the evidence. While Loe testified that he transferred the note to himself for a check for $900, at the same time that he bought the stock for $100 and credited such amount on the note, yet in the letters written to plaintiff he was not informed of the transfer of the note to Loe, nor have we noticed any evidence that he received any such notice prior to the tender made by him. It also appears that such note was in the bank, and readily found by the assistant cashiers, but the stock was not accessible. One of the assistant cashiers testified that he told plaintiff, at the time of the tender, the note had been transferred to C.J. Loe. No assurance was given him that his tender would ever be accepted upon the conditions named by him, namely, the delivery to him of his note and stock.
If the refusal of this tender, under the circumstances, be said not to furnish any evidence of conversion, then the fact that it was made and not kept up should not alter
the positions of the parties. It should certainly not be given the effect of releasing the defendants from the consequences of a conversion, if they were at that time chargeable therewith, nor of requiring plaintiff to forego his action for damages upon an offer thereafter made to restore to him his property upon payment by him of his note. He lost no rights by his refusal of the offer to restore to him his property upon payment of his debt, whether such offer was made before or after suit was filed. A person dealing with another's property so as to render himself guilty of conversion cannot, when he decides he was wrong, or when he sees trouble brewing, restore the property unless the person wronged is willing to receive the same. The option, whether to demand and receive the property, or to demand its value at the time of the conversion, rests with the person wronged, and the wrongdoer is not permitted to decide what remedy shall be chosen by the person wronged.
We sustain the first four assignments, all of which complain of the action of the court in peremptorily instructing the jury as to the verdict to be returned, also those complaining of the charge of the court and the judgment rendered.
An offer by a person guilty of conversion to return the property converted constitutes no defense to an action for damages for conversion, as has been hereinbefore fully shown, and the assertion of such an offer should not be permitted to be pleaded nor proved when only actual damages are sued for; but when exemplary damages are prayed for, as was done in this case, such evidence is admissible in mitigation of such damages, and the offer may be pleaded and proved. Bitterman v. Hearn, 32 S.W. 341. Assignments 5, 7, and 8 are overruled.
Assignment No. 6 is sustained.
The judgment is reversed, and the cause remanded.
TALIAFERRO, J., did not sit in this case.