Durant v. Einstein

By the court, Robertson, Ch. J. The professed object of this action is to redeem certain securities in the hands of the defendants, upon paying the amount due thereon, and as incidental thereto, to obtain an order restraining the defendants from selling such securities until an account can be taken of the amount due the defendants. It is essentially, therefore, an equitable action, and must be governed by the well settled rules of equity jurisdiction; and if it cannot be maintained under those rules, the injunction order appealed from cannot stand. A court of equity has no general jurisdiction over actions to redeem personal property pawned, without some other circumstances rendering its interference necessary. (Glennie agt. Irwin, 3 You. & Coll. 436; Hirst agt. Peirse, 4 Price, 339; Jones agt. Smith, 2 Ves. Jr. 272; Demenbray agt. Metcalf, 1 Vern. 698.) The remedy at law is ample, by tender of the amount due and a possessory action to recover the articles pledged, or damages for their detention. (2 Story Eg. Jur. § 1032.) It is true, as laid down in Hart agt. Ten Eyck (2 Johns. Ch. R. 100), that bills to redeem pawned personal property have been sustained, but only in cases where either no objection has been made, or an equity arose out of other circumstances, — 241 — and all the cases cited in the -last case as authority are of that kind. (Kemp agt. Westbrook, 1 Ves. 278; Demenbray agt. Metcalf, Prec. in Ch. 194; S. C. 2 Vern. 698; Van Derzee agt. Willis, 3 Bro. 21. Certainly such an action would not spring out of any of the great sources of equitable jurisdiction. The only ground of equitable jurisdiction over an action for the redemption of personal property pledged, besides the necessity of a discovery, and perhaps an assignment of the pledge, is the necessity of taking an account. (2 Story Eg. 1032, and cases cited in note.) It is of course not necessary to discuss how far the union of both legal and equitable jurisdictions in one court, and the right conferred on either party to an action to examine the other party as a witness (Code of Procedure, § 389), has taken away a jurisdiction dependent solely on the right of discovery, as there is no pretence in the complaint or elsewhere of the necessity of any such discovery. There remains, therefore, in this case, but the ground of some necessity of an account being taken, as in a court of equity, to enable the plaintiff to sustain his action. It is fully settled that the account on whbih equity bases its jurisdiction must be really one; that is, not having only one item on one side and. a number of set offs on the other, but a series of transactions on both sides. (1 Story Eg. Jur. §§ 458, 459; Porter agt. Spencer, 2 Johns. Ch. R. 171; Moses agt. Lewis, 12 Price R. 502; King agt. Rossett, 2 Y. & Jer. 33; Dinwiddie agt. Bailey, 6 Ves. 136, and Wills agt. Cooper, cited therein; Padwick agt. Hurst, 16 Beav. 575; Phillips agt. Phillips, 9 How. 471.) In this case, the claim on the part of the defendants can only consist of one item, to wit., the original advances by them, or so much of it as remains unpaid. Every sum paid or to be credited in that account, set out in the complaint, forms a subject of set oft in an action at law, including even any liability of the defendants for selling any of the originally pledged stock — 242 — below its market price; for that is a subject of counter claim, in an action for the loan, under the first' subdivision of section 150 of the Code of Procedure, as either arising out of the contract or transaction which would be the foundation of such action, or connected with the subject of the action, and as available in the court acting as a court of law as one of equity. There is perhaps still less reason at this time for preserving, or rather extending, jurisdiction, to give affirmative relief to a debtor in such a case of a one sided account, since the enlargement by the Code of the cases in which references of all the'issues may be ordered, wherever a long account is concerned, the increase of the power of all courts to order the production of books and papers summarily, and the conferring upon every suitor of the right of examining the adverse party as a witness, whatever the case may be. So far from any discovery by the defendants being shown to be required, the plaintiff sets forth in his complaint various defects in the sale of the stock originally pledged, not merely as derived from the information of others, but as matters of his own knowledge, although he escapes all responsibility for the statements by not verifying them under his own oath. They are as follows: An entire failure to sell some shares of stock represented by the defendants in their report to the plaintiff of sales to have been sold, and sales of some at less than the market rate, and of others at higher prices than those stated in such report. He does not, however, as he was bound to do, in order to render his complaint sufficiently definite and certain,, state the numbers of such unsold shares, or of those sold too low, or those whose prices are not properly accounted for. In the affidavits, however, presented on his behalf, he establishes what he considers to be such amounts, without the aid of any discovery from the defendants in regard to them. Even assuming, however,' that a court of equity will restrain the sale of pawned personal property until an — 243 — account can be taken of the amount due on the loan upon them, under the same circumstances as' it would a suit at law, the validity of the sale by the defendants of the stock in this case originally pledged is not one of such circumstances. If the sale was valid, the account to be taken is reduced to the original loan on one side, and on the other, the payment of two sums of $20,000, and $10,000 before, and the receipt of interest on the land grant bonds collected, less the government tax ($33.25), and the amount of a note for $25,000, since the commencement of this action. To ascertain the amount due would in such case be a matter of mere clerical computation. If, however, one of the objects of this action be to attack such sale, and endeavor to make the defendants liable in damages for the conversion of such stock without authority, they could not, until liquidated in an- action, form any -part of an account, such as is prayed for in this case. Nor would the court be authorized to tie up the defendants from using their legal authority as pledgees, bestowed on them by the plaintiff, until the amount of such damages could be ascertained. I shall therefore dismiss from consideration all the allegations in the complaint, and all the evidence before us, tending to establish any invalidity in such sale, as wholly superfluous and irrelevant, if not suicidal, in determining whether this action can be maintained upon such a basis as to warrant an injunction. ‘ The complaint does not clearly and distinctly either avow or disavow such sales as being made by authority, although it apparently does the former by claiming that, in the account which the plaintiff professes therein his readiness to have taken, that the defendants shall be eharged with the market price of the stock sold, and the full amount received by them therefbr, and not allowed the benefit of any pretended sales of stock; notwithstanding it also prays that the defendants may be charged in an accounting with all loss suffered by the plaintiff by the unlawful disposition of such stock. It might with equal propriety have ■ — 244 — sought that damages for selling any other stock without authority should enter into such account. Indeed, the only grounds suggested for attacking the validity of such sales were that the market had not so fallen as to create the contingency on which the right of sale arose, and that no demand was made' for further margin. In regard to the first, the evidence as to a fall on the 25th of January, the day of sale, is not conflicting; and in regard to the last, the contract before us does not require such demand to be made as was required by that in Milliken agt. Dehon (27 N. Y. R. 364), 'which case in fact rather holds a demand for the amount due not to be necessary, when a right is given to sell either at public or private sale, which a fortiori is applicable to this case, where a right of notice is expressly waived. The reasoning of Justices Weight and Maevin, in the case last referred to (Milliken agt. Dehon, pp. 370, 374), in regard to the impracticability of notice of time and place of sale of articles of such rapidly fluctuating value as stocks, is equally applicable to a demand of payment or more security, -which seems to have been purposely omitted in this contract. At all events, unliquidated damages for an entirely unauthorized sale can form no part of an account to give jurisdiction to a court of equity. Of course, the plaintiff is entitled to the benefit of any originally pledged stock which remains unsold, notwithstanding the written report of the defendants to him to the contrary. But I am at a loss to know how any. failure to sell it would aid him in a mere accounting between him and the defendants to be had in this action. Such an account would not be affected except by the receipt by the defendants of some sum as the proceeds of an authorized sale of shares of stock. If they were not sold, the debt of the plaintiff would be so much the larger. A mere representation by an account of sales, that stock had been sold, when it was not, would by itself furnish no ground of equitable interference. The plaintiff claims to have — 245 — detected the falsehood, and furnished in the affidavits before us evidence oí it, without the necessity of an examination of the defendants. That evidence, if important, would be equally available in a trial at law, and no mere discovery would ever have been necessary. Sales of the stock below the market price, when duly authorized, would not make the defendants liable for the difference, unless made with intent to injure the plaintiff beyond the mere realization of the amount due the defendants, as in other cases of abuse of lawful authority. (King agt. Parks, 19 J. R. 375; Butts agt. Edwards, 2 Denio, 164; Baldwin agt. Weed, 17 Wend. 224.) But something besides a mere sale below the market price is necessary to show such intent. The defendants are mere pawnees, were not bound to use even the same diligence as an agent to obtain the best price. The latter would not be held liable except for extraordinary negligence, which must be proved, not presumed. There must, at least, be such recklessness shown in the mode or time of selling as to establish an intent to injure the pawnors, before the pawnees can be made liable for any loss. The complaint, indeed, avers that the sales below the market price were made by the defendants u out of the usual course of business, and in a manner designed and intended to depress tlie price and produce less than the market valué, and which tended to and did produce that result.” But the only verification that allegatian has is an affidavit by the agent of the plaintiff {Grane), that he believes such matters to be true, from having seen reports of sales at the stock exchange and board of brokers of that day, and been informed by persons named as purchasers in the report of sales rendered by defendants of prices paid by them, and the numbers on the certificates of stock received by them. This certainly is not sufficient to establish a design to obtain a less price than the market value, either to injure the plaintiff by such sales or for any other purpose. Such allegations in the complaint — 246 — are fully denied by the defendants in their answer, verified by their oath; and there is no other evidence before us of any such intent or its result in such sales. On the contrary, the agents of the defendants in selling deny it. Consequently such allegations in the complaint, so verified and denied, furnish no ground for continuing the order of injunction in this case. The remaining objection in.the complaint to the account rendered by the defendants of the sales by them of the originally pledged stock, of the receipt of larger sums as the pnces of some of them than those stated in such account, the plaintiff claims to have discovered by other means and sustained by ample evidence before us, without any discovery from the defendants. If so, the details are all given in the affidavits furnished on his part, and there would be no difficulty in establishing the set off by way of defense, in an action at law, to the full extent of the sums kept back. The whole account between the parties, to be taken in this case, upon the plaintiff’s own showing, will be reduced to the original advance by the defendants on one side, and on the other cash payments made by the plaintiff, interest on the land grant bonds and amount of the Pacific Company’s note, received by the defendants, and the price of the shares of the originally pledged stock actually sold by them, omitting from such account (for reasons already given) all excess of the market value beyond such price, and all sums pretended by the defendants to have been received by them in any of the sales claimed by the plaintiff to be fictitious (if there were any such). So simple an account, requiring mere computation of figures, is not of such a character as to require the aid of the equitable powers of the court to unravel it. Nor should the defendants be delayed in using the means placed in their hands by the plaintiff to collect the amount due them, according to the plaintiff’s contract, until this action is reached on the calendar, to be tried, or a referee can be called in to make the computation, and a — 247 — decree made.for redemption, which the plaintiff may perform or not, as he pleases. Were it necessary, in order to justify a vacation of the injunction order in this case, to go beyond the questions of the jurisdiction of this court to sustain this as an equitable action, and the incompatability of the nature of the account to be had under any state of facts shown by the plaintiff) with any necessity warranting the exereise of such jurisdiction, a further justification would be found in the denial in the answer of the equities of the complaint, and in the affidavits of the brokers of the defendants, who actually sold the preferred stock, as opposed to that of the plaintiff’s agent (Crane), who testifies solely to information derived from the purchasers. Prima facie, the denial in the answers of the defendants of the equities of the complaint ought to entitle them to a vacation of an injunction order (Blatchford agt. N. H. R. R. Co. 5 Abb. 276); but the affidavits on the part of the plaintiff being admitted, those on the part of the defendants rebutted their effect. The plaintiff was undoubtedly bound to make out Ms case affirmatively, and although this court on appeal at general term cannot properly interfere with any decision at special term, founded on conflicting evidence, it yet may do so where that on one side is mere information and belief, and that on the other positive knowledge. The apparent discrepancies of the affidavits of some of the witnesses on the part of the defendants, when made in the action m the supreme court, seems to be explained by them. There is also some' discrepancy in the testimony of the witnesses as .to the market value of the stock in question on the day it was sold, but that may originate in their knowledge of different sales, and is not sufficient to warrant the conclusion of an undue sacrifice of it by the defendants for sinister purposes. The testimony of. the defendants’ brokers (Towars, Kohn, Minzesheimer and Ellery) is positive as to the sales of stock by the direction of the defendants, and the prices obtained therefor, which correspond with the account — 248 — rendered by the latter to the plaintiff. The defendants swear that all sales made of such stock by such brokers for them, before a quarter before twelve o’clock, noon, were not made on behalf of the plaintiff; and the plaintiff’s agent (Crane) is made to testify whether some of the sales made at a higher rate than was reported by the defendants was of the plaintiff’s stock. Upon such evidence, the plaintiff has hardly made out a clear case of sales at higher prices, or of any design by the defendants to lower the market value; and the mere fact of reporting fictitious sales is not sufficient to sustain the injunction order. I am inclined to think, if material in this case, that the plaintiff is not bound in it by the decision of the case in another court between the same parties, upon a similar state of facts. In that, the plaintiff claimed an illegal sale of the stock, and demanded its restoration in specie, by way of an equitable substitute for the remedies formerly known as actions of trover, detinue or replevin., An injunction was of course properly refused in it. The plaintiff subsequently discontinued that action, and attempted one of claim and delivery upon the same ground of an illegal sale, and finally abandoning that ground, has chosen this one in its-present form for an accounting, recognizing all the sales actually made as valid, but claiming more as to the sales of some than the defendants are willing to admit. By this action he has succeeded, by giving security instead of making a tendel', and paying the money into court, or bringing a " possessory action, in obtaining delay by an injunction order. It may possibly be hard upon the plaintiff to be driven to an action for damages, or for his stock, or, perhaps, rather more convenient, to abide the delay of* a suit, before paying the amount due on the original loan; but that should have been considered when he made so stringent a contract, giving the defendants so much authority. The individual hardship, however, is not to be weighed against the danger of the — 249 — abandonment of well settled, legal principles, as to the only cases in which such hardship can be relieved from. The order appealed from should be reversed, and the order enjoining the defendants vacated, with $10 as costs of the motion to vacate it. No costs are given on the appeal.