Meyer Bros. Drug Co. v. Matthews

IIughjes, J., (after stating the facts). “The pledgee may assign his interest in the pledge, and the assignee will stand in his place.” Jones on Pledges (2d. Ed.), § 418. “The original contract of pledge is not put an end to by repledging the thing pledged, and therefore' the original pledgor cannot recover it without having first paid or secured the amount of his debt secured by the pledge.” Id. §§ 420, 422. That this is the law in the case of an ordinary pledge of property to secure the payment of a debt without limitation, the authorities fully maintain. The pledgee may stipulate that the pledgor shall not assign the pledge, for a special reason, and a contract to that effect between pledgor and pledgee is binding. Id. § 421. “An unauthorized sale of the pledge by the pledgee is not of itself a conversion. * * * His cause of action does not arise until he tenders payment and demands a return of the pledge, and the pledgee neglects or refuses to return it.” Id. § 671. “If a pledgee by an unauthorized sale puts it out of his power to restore the property upon payment or tender of the debt secured, he is liable for its conversion, without a demand and tender of performance by the pledgor.” Id. § 571a, and cases cited. We think that the evidence clearly shows that the note of Williams to Cramer, and indorsed by Cramer to Emeline Matthews, was her property ; that, as her agent, her husband pledged it to the Moffett-West Drug Company, as collateral to his note to them, upon the express contract and agreement that they were not to assign it; and that they were not to allow it to go out of their possession; and that, in violation of this agreement, the Moffett-West Drag Company parted with the possession of the Williams note, and turned it over to the Meyer Brothers Drug Company without authority; that this was done immediately after Matthews had made what appeared to be a satisfactory arrangement with them to settle the amount of his note to them, to which it was collateral, and without notice to Matthews. We think the evidence is sufficient to warrant the belief that Meyer Brothers Drug Company were aware of the condition of the pledge; that this unauthorized sale of the pledge resulted in placing it beyond the power of the pledgee to restore the pledge, upon payment or tender of the amount of the debt to secure which it was pledged; that it is legitimate to treat this as a conversion; and that appellee was not bound to pay or tender the amount, of his debt before suit, under the circumstances. But, though appellee could sue before payment or tender, he is not released from the payment of his debt, to secure payment of which the Williams note was pledged. We are therefore of the opinion that the judgment must be affirmed as to the Moffett-West Drug Company, with this modification, that the amount of the judgment is reduced by the amount which Matthews owned on the debt the Williams note was pledged to secure, and it is so ordered. But, as to the Meyer Brothers Drug Company, the judgment is reversed, and the cause is dismissed.