Iron City National Bank v. Du Puy

Opinion by Mr. Justice Fell, The testimony presented at the trial on which the nonsuit was entered furnishes no basis for the argument that the defendants by misrepresentations induced the plaintiff to loan money for their benefit, or that the transaction was in effect a sale by the defendants to the bank of their claim against a third party secured by the pledge of fraudulent certificates of stock. The defendants loaned money to one Tyler on his note to his own order, with fifty shares of stock of the Diebold Safe and Lock Company as collateral. Before the loan matured they learned that the issue of stock was unauthorized, and they refused to renew. Tyler then applied to the bank for a loan of $3,100, and offered this stock, which he told the cashier was held by the defendants as collateral. Having arranged with the bank, he applied to the defendants for the stock, and they sent a clerk with it to the bank. The clerk was asked either what he wanted for the certificates or what amount was due the defendants, and upon his stating the amount of the note with interest and costs of protest he was handed a check for $2,983.42, and he delivered the certificates to the cashier and the note to Tyler. The balance of the loan of $3,100 was paid by the cashier to Tyler. This was the whole transaction. The defendants had no communication, directly or indirectly, with the bank except through their clerk, and that was limited to the mere statement by him of the amount due. The sending of a clerk with the note and certificates was in accordancé with the usual business custom in such matters. There was neither misrepresentation, express or implied, nor active concealment of any fact, and there was no relation of trust or confidence to give rise to a duty. There is no foundation what [210] ever for the contention that the transaction was a sale by the defendants of their claim on the note and collateral. It was not, either in form or in substance, a sale, and none of the parties so regarded it at the time. It was merely the borrowing of one party to pay an overdue note held by another, and nothing more can be made of it. The defendants were not then liable unless they were under a duty to speak to one who had made no inquiry of them, who had reposed no confidence in them, who was hot influenced or misled by their conduct, and with whom they had nothing whatever to do. Rigid and exacting as is the law in holding silence to be a fraud when there, is a duty to speak, it recognizes no such obligation as this. The judgment is affirmed.