Morton v. Preston

18 Mich. 60

• Court: Michigan Supreme Court
• Decided: January 11, 1869
• Status: Published

Opinion

Graves J.

The plaintiff in error brought trover in the Court below against Preston, to recover damages for the alleged conversion by him of a certificate for fifty shares of stock of the Buffalo and Detroit Transportation Company, and which certificate, and the stock represented by it, Mrs. Morton claimed to have belonged to the estate of her late husband.

It appeared in evidence on the trial, that Mr. Morton died intestate in this State, in February, 1865, leaving his widow, the plaintiff, and three children; namely, J. Sterling Morton, William D. Morton, and Emma Morton, all of full age, him surviving. It further appeared that after the death of Mr. Morton, the certificate in question was found among his papers and taken possession of by his family. The estate not appearing to be indebted, no step was taken to administer upon it at the time, and the children mutually agreed that Mrs. Morton and her daughter Emma should occupy the homestead and receive and use the income of the estate for their support, so far as necessary, and preserve the property; and that upon the death of Mrs. Morton the estate should be divided among the children. It having been subsequently thought advisable to convert the stock in question into money in order to invest the proceeds’in real estate security, the widow and children, to effectuate that object, in August or September, 1865, placed their names upon the certificate, and caused their indorsements to be attested by two witnesses. The certificate thus written upon, was placed in the hands of William D. Morton, one of the children, with express instructions to send it to one Armstrong, at Buffalo, to be by him sold and converted into cash. ' Young Morton then transmitted the certificate to one Gridley at Buffalo, to be by him handed over to Armstrong if the latter could sell it, but it was not sold. About the first of November, 1865, the defendant Preston, who was a Banker at Detroit, held a note for $4,200 made by one Wilkins and endorsed for the accommodation of the latter by said William D. Morton, which had matured and was unpaid. Preston urged young Morton to pay the note, and threatened to institute legal proceedings against him if the matter was not satisfactorily arranged.

Morton was then expecting to be elected cashier of a new bank about to be organized in Detroit, and was apprehensive that a suit against him on the Wilkins’ note would impair, if not destroy his chance for an election. He thereupon offered to take up the Wilkins’ note by substituting his own, but Preston declined to arrange the matter on that basis unless Morton would give additional security. Morton then proposed to give the stock as security, but informed Preston that the certificate was issued to the father. Julius D.; that it had been endorsed by Mrs. Morton, and the heirs, and was- then in Buffalo to be sold. ’Preston acceded to this proposal, and young Morton thereupon gave his own note for the amount of the Wilkins’ note and an order on the custodian of the stock at Buffalo for the delivery of the certificate, and Preston surrendered the Wilkins’ note to Morton. In this negotiation between William D. Morton and Preston, the former talked about the stock 'as though it belonged to him; but the latter did not ask him whether he owned it or not.

At 'this time, young Morton was cashier of the Farmers and Mechanics Bank of Detroit, and the transaction referred to, occurred at the office of Preston in the same city. After acquiring the order from Morton, Preston, by means of it, obtained possession of the certificate.

This disposition of the certificate by William D. Morton was wholly- unauthorized by Mrs. Morton, and the brother and sister of William, and was unknown to them until some time in the following spring, when Preston, on being applied to by one of the heirs, and before he had obtained actual possession on the order, refused to give up the stock. On the 29th of December, 1866, the stock was sold by Preston for $4,750, and on the 12th of November, 1867, Mrs. Morton was appointed administratrix of the estate; and thereupon she caused a demand to be made upon Preston for the delivery of the certificate, and at the same time offered to return the Wilkins’ note.

The sum for which the stock was sold, together with the interest from the time of sale, amounted to $5,217 18. The defendant Preston, testified, among other things, that when he made the arrangement with young Morton, he had no knowledge that the latter was not acting in good faith in making the transfer, and supposed that he was the owner 'of the stock. He further testified, that it was customary for bankers to loan money on certificates for stock, endorsed in blank; and that when he received the order for the stock from Morton, the latter stated that the stock was -in Buffalo for sale, and that he could pay him, Preston, when the sale should be made.

He also testified, that on receiving the order, he sent to Buffalo and had the stock held subject to his order.

It likewise appeared in evidence, that the balance due from Preston, after deducting the amount of the notes of William D. Morton, had been tendered, and that it was agreed that such balance should not be considered in the case.

The errors assigned are quite numerous, but we think that some of them are not material to the decision of the case, and that the others do not require to be separately considered.

It may be doubted whether upon .the theory of the defense the plaintiff’s right to maintain the action could be resisted. The stock belonged to the estate, and no administrator had been appointed. The family wished to sell, but had no design to pledge the stock as security for the debt of any person. The certificate was placed in the hands of W. D. Morton for the sole purpose of being sent to Armstrong, who was to sell it if he could, and who was alone confided in by the family to make the sale. It was not at the time of the arrangement with Preston in the hands of young Morton, but was in Buffalo, where it had been sent according to the design of the family. These facts were not disputed. If, as a matter of fact, Preston was led to believe by or without any representation on the subject on the part of young Morton that the latter was the owner, it is difficult to conceive how any such belief, under the actual circumstances, could avail him as a defense against the claim of the true owner.-

It appears that at the very time of the arrangement, • Morton had not the evidence of ownership sometimes implied by possession; and it is manifest that the instrument was not so endorsed for the purpose of transfer as to answer the requirements of the law merchant regulating the mode of transfer of commercial paper. The certificate was issued to Julius D. Morton, but the indorsements consisted only of the names of his widow and children. If it be admitted, therefore, that the certificate, had the same negotiable qualities which belong to commercial paper, and required no greater or other formalities to work a change of'title, which is the utmost that has been claimed for it, it is evident, I think, that the endorsement in question was not such, as thereupon to make the legal title pass by delivery.

The form and nature of the indorsement were apparently insufficient to work a technical transfer of the legal title, and to see this, was, in legal contemplation, to know it.

It seems to me, therefore, that the circumstance that young Morton never in fact possessed any authority to sell, or pledge the certificate, and neither had possession nor the right to it, and the additional circumstance that the indorsement, as it stood upon the paper, was prima facie, insufficent to pass the legal title, completely answer the claim set up by the defense.

Whatever -may be thought, however, of this view of the present case, the Court are of opinion that the ease of Cullen v. O'Hara, 4 Mich. 132, which was decided upon much consideration, and from which we see no reason to depart, is decisive of the most material questions presented by this record.

In that case, O’Hara, as administrator of Ann O’Brien, brought trover against Cullen to recover for the conversion of gold coin amounting to $585.

The substantial facts were that the plaintiff’s intestate died in November, 1848, in possession of the coin, and without having made any will; that during her last sickness she stated to her attendant, one Catharine Vaughan, that the principal part of the property in her possession belonged to the estate of her brother, one James O’Brien, who had died inestate some time before in New York, leaving an infant child named Ann O’Brien, his next of kin and sole heir, for whom Oullen was guardian, and that upon the death of Ann O’Brien, the elder, her attendant, Catherine, delivered to Oullen the coin in question. It was also proved that in September, 1849, when O’Hara and Oullen were aware of all the facts and of the claims of each, the former, in his individual capacity, borrowed of the latter $200 of the coin in dispute, and gave his bond and mortgage to secure its repayment, and that the mortgage had been foreclosed when the trover suit was tried. O’Hara, as administrator, demanded the coin of Cullen, who refused to deliver it. It did not appear that any administrator had been appointed on the estate of James O’Brien.

On the trial, Cullen requested the Court to charge the jury that the plaintiff, by loaning the $200 from Cullen, and giving his bond and mortgage therefor, was estopped from maintaining the action; and that if the jury believed that any part of the money was in the .plaintiff’s possession, at the commencement of the action, the plaintiff was not entitled in any event to their verdict for such portion.

The Court refused to charge as requested, but stated to the jury in substance, among other things, that if the money belonged to the estate of James O’Brien and was taken possession of and held by Ann O’Brien in opp'osition to the rights of the heir, her right to possession passed to the plaintiff as her administrator, and that the latter could be held accountable only to an administrator of James O’Brien, and not to his heir.

The case having been brought here, it was deliberately determined by this Court that the loan of $200 of the money in controversy having been made by O’Hara in his individual capacity, did not estop him from asserting his right to the money as administrator; that the possession of the $200 obtained by the loan in no manner impaired his right to maintain trover for it, in his representative character, against the defendant; and that the loan itself was as much a conversion as if it had been made to a third person.

It was likewise held that, under our law, when one dies •intestate, the title to his personal property does not go to the next of kin, but remains in abeyance úntil administration granted, and then vests in the administrator, as of the time of the death of the intestate, and that the next of kin becomes entitled only after administration, and then simply to the surplus remaining after the debts of the intestate and expenses of administration are paid.

It was also decided that when, in consequence of the death of the owner, another is clothed with the possession of personal property, and assumes control of it, such casual possessor becomes responsible for the property, and may maintain the ordinary legal remedies, trover included, to defend it and for self protection; and further, that the administrator of such possessor may sue in trover for a conversion done after the death of the latter, and before the appointment of the former.

As we are satisfied that the principles, thus asserted, afford a perfect answer to the leading points presented by the defense, and accepted by the Court below, we do not deem it necessary to quote the reasoning stated in the report. If, as decided in O’Hara’s case, his intestate could have maintained trover on her possession, and he, as her administrator, was entitled to the same remedy for a conversion after her death, and before his appointment, it must be admitted that the right of Mrs. Morton, as administratrix of the estate owning the certificate and stock, to maintain trover, cannot be doubted.

Hpon the argument before us the defendant submitted a point not yet noticed, but which we think may be disposed of in a few words. He maintained that if the transfer by young Morton to Preston -was void, it followed that the certificate only, and not the stock represented by it, was converted, and that consequently the damages could only be nominal.

It is quite certain that _ both parties always before the trial, and thereat, and the court below in the charge, treated the certificate as a muniment of title possessing substantial value; and that the facts clearly show that by means of it the defendant in'error realized in cash the full value of the stock; and we think it cannot be maintained that it had no other value than such as the paper gave it. It was legally the subject of the form of action adopted in this case, and a judgment against Preston for the conversion would have the effect to confirm the title obtained and passed by him, to the stock.

The judgment of the court below is reversed, with costs, and a new trial ordered.

The other Justices concurred.