Summary
In Treadwell v. Davis, 34 Cal. 605, 94 Am. Dec. 770, a pledge of property by one who had no right to do so was held to be ratified by the owner's saying, when informed of it, that "he was glad the arrangement had been made."
Summary of this case from Hill v. FiniganOpinion
[Syllabus Material] Appeal from the District Court, Twelfth Judicial District, City and County of San Francisco.
This was an action for the seizure and conversion by the defendant, who at the time was Sheriff of the City and County of San Francisco, of certain goods from the possession of plaintiff, and to recover their value. The defendant admitted the taking, but justified under a lawful writ of attachment against the property of one Thompson, issued out in the suit of one Martin et al. v. Thompson, claiming that the goods so seized were and continued to be the property of Thompson, and as such subject to execution against him. On the trial it appeared from the evidence that, prior to the said suit of Martin et al. v. Thompson, the latter was indebted to one Templeton in the sum of one thousand dollars, to the plaintiff Treadwell in the sum of three hundred and seventy-five dollars, and to one Toland in the sum of six hundred and forty dollars; that for the purpose of securing to Templeton the payment of his debt, Thompson pledged said goods, which at the time were stored in a warehouse, to Templeton, by assigning and delivering to him the warehouse receipts therefor; and it was further agreed between Templeton and Thompson, coupled with the assent of Toland thereto, that Templeton should apply the proceeds of the goods in excess of his demand to the payment of Toland's debt. Subsequently, and with the assent of Toland, plaintiff guaranteed the payment of Templeton's debt, and Templeton assigned and delivered said goods in pledge to plaintiff, as security for the payment of the debts of both Templeton and plaintiff, and for the application of their proceeds, in excess of said debts, to the payment of Toland's debt. Contemporaneously with this last transaction, Thompson became insolvent. Thompson was not a party to this arrangement between Templeton and plaintiff, but soon after, when informed of it, expressed his gratification at its accomplishment. Plaintiff afterwards, and before this suit, paid the Templeton debt. Shortly after this transaction between Templeton and plaintiff, and while under it the goods were still in plaintiff's possession, they were seized by defendant under said writ of attachment. The value of the goods was considerably in excess of the debts of both plaintiff and Templeton, and in the Court below plaintiff had judgment for their full value. Defendant appealed from the judgment upon the judgment roll, accompanied by a statement containing the facts.
COUNSEL:
The goods in controversy were subject to the levy of the Sheriff as the property of Thompson, but were not liable, in the hands of Treadwell, to the Templeton debt.
Where goods are pledged for the payment of a debt, the lien may be lost in a variety of ways, as: First--Where possession is lost. (26 Wend. 472.) Second--Where the pledgee parts voluntarily with the pledge. (Edw. on Bail. 210.) Third--By discharge of the original obligation. (Edw. on Bail. 194, 212.) Fourth--Which is the case at bar, by severing the debt from the security--the principal from the incident. (Edw. on Bail. 210, 211; Polhemus v. Trainer , 30 Cal. 685.)
Treadwell then received the goods free from any lien for the Templeton debt. But having gotten possession of them, he cannot now hold them, subject to that debt, or to his own, or to that of Toland, because: First--At the time this transaction occurred Thompsonwas insolvent. Second--Thompson was not a party to any of these transactions. Harpending does not show that he was acting by any authorization of Thompson, and no one but Thompson had a right to make any agreement or contract for him in relation to his own property. Third--Thompson was at the time an insolvent debtor, and by law could neither make an assignment of this character, nor could he authorize any one to do so for him, nor could he approve of any such arrangement after it was made. (1 Hitt. Stat. 558, Sec. 39; Cheever v. Hayes , 3 Cal. 476; Groschen v. Page , 6 Cal. 138; Dana v. Stanford , 10 Cal. 277; Wellington v. Sedgwick , 12 Cal. 475.)
McRhae & Rhodes, for Appellant.
Cope & Daingerfield for Respondent.
JUDGES: Crockett, J.
OPINION
CROCKETT, Judge
The record in this case presents only the following questions which we deem it necessary to consider, to wit:
First--Can the errors complained of be properly brought before this Court by a statement on appeal, or could this have been accomplished only by a motion for new trial, supported by a proper statement?
Second--Was the lien which Templeton held upon the goods pledged to him by Thompson lost or destroyed, and if so, did the plaintiff acquire a new and valid lien by virtue of the arrangement entered into between him, Templeton and Harpending?
Third--Was the agreement by Templeton, and subsequently by the plaintiff, to hold the surplus for the benefit of Toland, void, as being an assignment for the benefit of creditors, in contravention of the insolvent laws of this State, and if so, did this bar the plaintiff's right of recovery?
Fourth--If the plaintiff was entitled to recover, what was the proper measure of damages? Was he entitled to recover the value of the whole property, or only the value of his special interest in it?
In respect to the first point, we think the errors sought to be reviewed are properly presented by a statement on appeal, and there was no need for a motion for new trial. As we understand the record, there is no controversy as to any material fact, and the action of the Court below is sought to be reviewed on questions of law alone. In such cases a statement on appeal is not only a proper method, but is often the most convenient, expeditious and economical mode of bringing the alleged errors before this Court. (Hutton v. Reed , 25 Cal. 478; Estate of Boyd , 25 Cal. 511; Harper v. Minor , 27 Cal. 107.)
On the second point the proposition of the counsel for the defendant is, that when Templeton transferred the warehouse receipts to the plaintiff, but retained the debt against Thompson, he thereby voluntarily parted with the possession of the pledge, which became severed from the debt, and the lien was thus extinguished. This is doubtless true in respect to Templeton. After surrendering the receipts to the plaintiff, and taking from him a written guaranty of the debt, he lost his lien on the goods. But did the plaintiff acquire a new lien, not only for the security of his own debt, but as an indemnity against the liability which he incurred to Templeton? This must depend upon the fact whether Thompson consented to the transaction when it was made, or ratified it afterward. Nothing could be plainer than that the plaintiff acquired a valid lien, provided it was mutually agreed between himself, Templeton and Thompson that the plaintiff should guaranty the debt to Templeton, and should hold the goods for his indemnity and as a security for his own debt. It appears that Thompson was not present at the transaction between the plaintiff and Templeton. But on being informed of it by Harpending, the next day, he said he " was glad the arrangement had been made." This was a sufficient ratification, and made the transaction as valid as if Thompson had been present in person, consenting to it at the time. The plaintiff, therefore, acquired a valid lien on the goods.
The third point presents more difficulty, so far as regards the surplus, which the plaintiff agreed to hold for Toland. But, in our view of the case, the decision of that question does not affect the right of the plaintiff to maintain this action. For, if the plaintiff's agreement to hold the surplus for Toland was conceded to be void, as in contravention of the Insolvent Laws, it would not invalidate the plaintiff's lien. The contract consisted of two distinct parts, readily severable. They were not so united that they must stand or fall together. In such cases the rule is well settled that the Court will enforce that part of the contract which is valid. We have seen that the plaintiff acquired a valid lien for his own protection, which entitled him to the possession of the property; and if that part of the contract which related to the surplus be void, the other was not thereby invalidated. Being entitled to the possession, he could rightfully maintain an action against the defendant for seizing the goods.
The remaining point to be considered is whether the plaintiff, being only a pledgee of the goods, is entitled to recover their full value or only the value of his special interest in them.
The rule appears to be well settled that in an action by the pledgee against a stranger for the conversion of goods, the plaintiff is entitled to recover the full value of the goods, because he is answerable over to the pledgor for the surplus. But if the goods be converted by the owner or by any one acting in privity with him, the pledgee can recover only the value of his special interest in the pledge. (Story on Bail. Sec. 352; Lyle v. Barker, 5 Bin. 457; Heydon & Smith's Case, 7 Coke, 67; Ingersoll v. Van Bokkelen, 7 Cow. 670; Pomeroy v. Smith, 17 Pick. 85.)
If the defendant is to be regarded as a stranger, he is liable for the full value of the goods. But, on the other hand, if he is to be treated as acting in privity with Thompson, the pledgor, he is responsible only for the value of the plaintiff's special interest in the goods. The solution of this question will depend upon the fact whether the defendant pursued the law in making the seizure as he did; for if Thompson had an interest in the property which was subject to execution, and if the defendant was authorized, as Sheriff, to seize the property in order to subject Thompson's interest in it to sale under the execution, then he is to be deemed as acting in privity with Thompson, and would be liable, if at all, only for the value of the plaintiff's special interest in the goods. On the contrary, if Thompson had no interest which was subject to the execution, or if the defendant exceeded his duty in seizing the goods, he was only a trespasser, and must be treated as a stranger. It becomes material, therefore, to inquire whether Thompson had an interest in the property which was subject to seizure and sale under the execution, and whether the defendant exceeded his duty.
The Practice Act, section two hundred and seventeen, provides that " all goods, chattels, moneys and other property, both real and personal, or any interest therein of the judgment debtor not exempt by law," shall be liable to execution. The same section provides that " shares and interests in any corporation or company, and debts and credits, and all other property, both real and personal, or any interest in real or personal property, and all other property not capable of manual delivery, may be attached on execution in like manner as upon writs of attachment."
Section one hundred and twenty-five points out the method to be pursued in order to reach such interests of the judgment debtor as are not capable of manual delivery, to wit: by serving a notice of garnishment on the person having the possession or control of the property. Sections one hundred and twenty-seven and one hundred and twenty-eight prescribe how the property is to be reached in the hands of the garnishee and his liability enforced; and one of the provisions is that the garnishee may be examined touching the property; and the Court may " order personal property capable of manual delivery to be delivered to the Sheriff on such terms as may be just, having reference to any liens thereon or claims against the same."
Whilst the interest of the pledgor may therefore be reached under an execution, it can only be done by serving a garnishment on the pledgee, and not by a seizure of the pledge. The law wisely provides that the pledgee shall not be disturbed in his possession unless it be by an order of the Court made after examination, " on such terms as may be just, having reference to any liens thereon or claims against the same." In this method the rights of all parties may be protected; and it is the only method by which the interest of the pledgor can be subjected to an execution. The defendant therefore violated the law in seizing the goods pledged to the plaintiff, and must be deemed thereafter a trespasser acting without privity with Thompson, and is therefore liable for the entire value of the goods. (Pomeroy v. Smith, 17 Pick. 85.)
Judgment affirmed.