Hill v. Finigan

Boss, J.: There was some testimony tending to show that the plaintiff not only consented that the defendant might purchase the property at the sale, but requested him to do so, and some testimony tending to show a ratification of the sale by the defendant, if it admitted of ratification. Sections 3001 et seq. of the Civil Code provide for the sale of pledged property at public auction, and by Section 3010 it is declared: “A pledgee or pledge-holder can not purchase the property pledged, except by direct dealing with the pledgor.” The Court below instructed the jury: “ That means by something subsequent to the sale, not sub—not subsequent to the sale, but it must be something that changes the form of the original contract, and it must be for a consideration.” In effect, the Court told the jury that the “ direct dealing” mentioned in the statute must precede the sale, must be something that changes the form of the original contract, and must have a consideration to support it. In each particular the instruction is erroneous. In the first place it entirely excludes the question of ratification. There can be no doubt that a sale made by a pledgee in contravention of the provisions of the statute may be ratified by the pledgor; and it has been expressly so decided by this Court, in the case of Child v. Hugg, 41 Cal. 519. In the second place the instruction exacts proof of the elements necessary to make a new contract. Obviously, such is not the meaning of the statute. The section was undoubtedly enacted for the protection of the pledgor, to the end that no unfair advantage be taken of him. It prohibits a pledgee or pledge-holder from purchasing the property pledged, “except by direct dealing with the pledgor.” By such dealing with the pledgor, the pledgee may purchase it. Why should it be held that by this is meant that the pledgee or pledge-holder can only purchase by taking a direct transfer from the pledgor ? The statute docs not say so, and the reason of the prohibition suggests the contrary. If the pledgor chooses to do so, we see no reason why he may not consent that the pledgee [440] may buy at the public sale. In some cases it may be to his interest that this be done. Such consent may be given either at the time of making the pledge, or at any subsequent time, without changing “the form of the original contract,” and without consideration. The Court below also erred—particularly in view of the circumstances appearing in this case—in instructing the jury as follows: “The object of the law is for the purpose of guarding against the greed and rapacity of money-lenders and those who deal in securities of this character.” And again: “There are many reasons why this law is a wholesome one, independent of the rapacity and greed of creditors.” This was manifestly improper. No one can measure the extent of the influence upon the jury of such instructions coming from the Court. The defendant was entitled to a fair trial. He did not have it in the Court below, and we can not permit the judgment to stand. Judgment and order reversed, and cause remanded for a a new trial. Morrison, C.- J., and Myrick, J., concurred.