National Bank of Deposit v. Sardy

By way of security for a loan of $3,000 obtained from the plaintiff, the firm of Sardy, Coles & Co. delivered to the former their promissory note, which recited the delivery to the plaintiff of •certain goods, and the establishment of a lien upon them for the amount of the loan, and at the same time delivering a further instrument' which acknowledged the redelivery of the goods to the firm (the borrowers) for the stated purpose of their being held in trust for the ¡plaintiff, and as its property; Sardy, Coles & Co. agreeing to sell' such .goods for the plaintiff’s account, and hand over the proceeds for application upon the loan. As a matter of fact, the goods were not delivered to the plaintiff, or redelivered to Sardy, Coles & Co., as recited ■'in these papers, since the latter had neither possession of, nor legal title tp, them at the time of the transaction,—the goods then being : stored in bond, awaiting the payment of duties, under a bill of lading •made out to other parties, and in their possession; and the recitals as •to possession and delivery were apparently resorted to in an endeavor •to secure to the plaintiff a valid lien upon the goods, notwithstanding •the fact that manual delivery was impossible. The goods had indeed ¡been purchased or ordered from the foreign consignors by Sardy, Coles •& Co., and the nominal consignees had no interest in them, other than to secure the payment of the duties; and, these duties having been paid out of the proceeds of the plaintiff’s loan, the firm obtained possession of, and title to, the goods, in due course. Having possession, they then proceeded to make a general assignment of all their-property to "Nathaniel P. Bogers; and thereupon the plaintiff commenced this action, in the usual form of an action for replevin, claiming the right to immediate possession of the goods in accordance with the provisions ®£ the instruments held by it, and obtained possession of the greater part of the goods which were the subject of the purported pledge, by causing the sheriff to replevy such goods, and by furnishing the undertaking called for by section 1699 of the Code. Plaintiff then sold the goods thus received by it, and still retains the proceeds of the sale. Thereafter the action went to trial, which resulted in a judgment- 'for- the- plaintiff; but upon appeal the judgment was reversed

Upon the facts, I am well satisfied to hold that there was an actual agreement to pledge these very goods; that the firm of Sardy, Coles & Co., when they received the goods, became possessed of them as trustees for the plaintiff, so far as there was any indebtedness upon the loan of $3,000; and that as to any of the goods which were the subject of the agreement to pledge, and which came into the hands of Rogers as assignee, and remain unaccounted for to the plaintiff, the latter is entitled to an accounting by the defendants, by virtue of the equitable lien which existed at the date of the assignment, and to which the assignee’s possession was subject. 13 Am. & Eng. Enc. Law, p. 608; Pom. Eq. Jur. § 1235. The case falls within the well-recognized equitable principle that, where there is an agreement to give as security property not at the time in the ownership of the contracting party, a lien in equity attaches to the property when subsequently acquired (Pom. Eq. Jur. § 1236); and while the lien is good, as against a general assignee, without notice, here express notice was given at the time of the assignment.

A somewhat different question arises, however, with regard to the goods which were replevied at the plaintiff’s direction, and sold by it upon its own responsibility, since here the lien might be said to have been foreclosed, and the court is asked to approve the plaintiff’s seizure and possession of the goods by virtue of the lien. It is insisted by the -defendants .that the plaintiff has all that it could get by judgment, in that it has the proceeds of the goods in its hands, and that, at best, it ha.s only an equitable defense, to be asserted when its right to possession is attacked, but not an equitable cause of action; in other words, that it has a shield, not a sword. Should this argument be accepted as sound, the court could make no finding upon the plaintiff’s original right to a lien upon these particular goods, and the result would be that the bond given in this action at the time of the- plaintiff’s obtaining possession would become fully enforceable. Thus, it is apparent that the plaintiff’s possession of the fund is by no means absolute until attacked, since that possession has been made contingent upon the affirmative establishment of the right to hold the goods, in this very action; and while a radical change has been made in the theory of the

As to the motions for dismissal of the complaint based upon the absence of allegations that the loan of $3,000 to Sardy, Coles & Co. was unpaid, and that such firm in fact obtained possession of the goods at some time after the date of the transaction with the plaintiff, I have no hesitation in granting the plaintiff’s motion to conform the pleadings to the proof, or to insert the necessary allegations in this regard; there being no claim of surprise, and no possibility of prejudice, in view of the condition of this litigation. There is sufficient evidence to show that the whole of the $3,000 loan was paid over by the plaintiff to the firm of Sardy, Coles & Co., with the exception of some small amount, the testimony being to the effect that at the time of the giving of the note and written agreement by Sardy, Coles & Co., the plaintiff had credited their account with the sum of $3,000, and that at the subsequent period when the goods were seized in replevin their account showed but a small credit, which was applied upon the indebtedness. This evidence I take to be sufficient to establish the fact of the loan, in the absence of any actual dispute upon the point.

I am not impressed with the force of the contention that John Bard Bogers, a member of the firm of Sardy, Coles & Co., is an essential party to the action.' There may be no doubt that he would have been a proper party had these defendants insisted upon his joinder, but, .no question of defect of parties having been raised by answer or demurrer, the defect is waived, and the nonjoinder cannot affect the questions before me, unless it is to be held that no determination can be. had without the court’s first adjudicating upon this individual’s, tights. Code, § 452; McMahon v. Allen, 12 How. Prac. 39. Here-the plaintiff’s claim of a lien upon the goods identified, and for an ac; counting as to the goods not found, but covered by the lien, is based upon the fact that such goods were received by Nathaniel Bogers, the assignee, subject to- the lien, and the sole question is whether the plaintiff has a right of possession as against such assignee, or his representatives, these defendants, the holders of the absolute legal title.

There should be judgment for the plaintiff as indicated, with costs.

Judgment for plaintiff, with costs.