Miller v. Miles

fused to account to this plaintiff for the said stock, or the proceeds thereof, and that he holds the same to plaintiff’s use. The complaint also contained a count charging the misappropriation and conversion of the moneys received for and on account of the stock, and avers that the defendant has fraudulently, and in violation of the trust and confidence reposed in him, neglected and refused to pay over the moneys which he has received to plaintiff’s use. The defendant by answer denied the averments of the complaint, and for an affirmative defense alleged a purchase of the said shares of stock for a valuable consideration prior to its deposit with the trust company, and that he was thereafter the owner and holder thereof for value. The evidence upon the trial tended fully to sustain the averments of the complaint. At the time the stock was delivered, the railway company was in the hands of a receiver. A plan of reorganization had been perfected, which required that the stock should be deposited with the trust company, and a payment made thereon of $5 a share. None of the stockholders desired to make this payment, and it is quite evident that they regarded the stock as possessed of little value. But they were seeking to perfect some scheme of reorganization by which the road might become the subject of local control, in which event it was doubtless supposed that the stock would appreciate in value. At this juncture the plaintiff was requested to meet the defendant and others for a conference, and did so. It was then stated that it had been arranged in New York that the stock, for reorganization purposes, might be deposited with the payment of 10 per centum of the $5 per share, and that, if the stockholders would go in and deliver their stock to the defendant, that he would take and deposit the same, and make the 10 per cent, payment, and thereby the stockholders would be enabled to control in the reorganization of the road, and they could afterwards take the stock back. In pursuance of this arrangement, the plaintiff procured and delivered certificates of his shares of stock to the defendant. There was some proof given tending to show that a paper was drawn at this time showing the arrangement under which the stock was delivered, but it was never signed, and the rights of the parties are to be determined upon the circumstances and what transpired at the time the stock was agreed to be delivered and the subsequent acts of the parties. It is quite evident from these circumstances that the plaintiff, when he delivered his stock, did not intend to make a gift of the same to the defendant. The latter does not pretend, except in his answer, that he paid anything for the stock, or parted with anything of valué as a consideration for its delivery. He testifies that the holders of the stock were anxious to retain local control, as they were apprehensive that, if the control went to New York, the bondholders’ interests would be sacrificed. It does not appear, however, that the plaintiff was interested in the bonds except by the general statement of the defendant that all were interested therein, while it does appear, and from it the jury were authorized to find, that the defendant took the stock under an agreement that he would pay the assessments, and that the plaintiff could take it back afterwards.

The effect of this arrangement did not deprive the plaintiff of all interest in his stock. It simply constituted the defendant his agent or trustee to take title thereto for delivery to the trust company. So far as he made the contemplated- advance, he acquired a right therein which he doubtless became entitled to enforce, and the plaintiff could not repossess himself of the stock until he had made such payment, nor could he, by the exercise of any right possessed by him, defeat the use of the stock for purposes of reorganization. Beyond this, however, the defendant obtained no right to the stock or its proceeds as against the plaintiff. It appeared that after the stock was deposited a sale of the railroad was made to Cleveland parties, from which sale the defendant received for the stock which he held, including the plaintiff’s, after deducting all payments made by him thereunder for assessments, the sum of $71,840. The only payment which the defendant made upon the stock was the 10 per cent. It is true that he gave a check for the additional sum of $á.50 per share, but this check was never delivered to the trust company, and was never, in fact, paid in- cash. After the sale was perfected, and the defendant had received the money, the plaintiff made a demand upon the defendant for a certificate of the new company represented by his stock, and at the same time tendered the amount of the assessment and interest thereon. The defendant refused to deliver the same, claiming that it was not enough, but should be $8,250, and said if that sum were tendered he would then tell him the amount to which he was entitled. It is quite evident from this transaction that the defendant assumed that the plaintiff was not entitled to receive anything for his stock, and that he had determined to retain as his own the whole of the proceeds represented by it. There existed no right in the defendant to retain more than the sum represented by the assessment which he had paid and the interest thereon. If he possessed a greater right, it is not made to appear upon this record. At the close of the plaintiff’s case, the defendant moved to dismiss the complaint upon the ground that the cause of action was unproved in its entire scope and meaning. After a colloquy between the counsel and the court, the count for fraud and conversion contained in the complaint was stricken out, and the court denied the motion to dismiss. The defendant took no exception to the ruling, and at once entered upon his defense. We are unable to see why this count of the complaint was stricken out, as we think that it was quite an appropriate averment, and consistent with the evidence as given. Indeed, we think it properly characterized the transaction-. The defendant had received stock belonging to the plaintiff, for which he paid nothing, under an agreement to return the same or its equivalent in certificates of the reorganized company, and, failing in this, the law implied an agreement to return the proceeds of the sale of the stock in cash. Upon receiving the proceeds of a sale of the property represented by the stock, he pockets the proceeds, and refuses return of anything. If this does not constitute á conversion, and is not a fraud upon the person entitled to the property or money, then we have always failed to correctly understand these

terms. The defendant occupied the relation of a trustee to the plaintiff, and became bound to account for the property or its proceeds, and when he refused so to account, and pocketed the proceeds, he became guilty of a conversion, and his act was in fraud of the rights of the plaintiff. At the close of the proof the defendant renewed his motion to dismiss upon various grounds, none of which we think is tenable.

The court submitted the case to the jury in a charge to which no exception was taken and no fault found. It is not printed in the record, and it must therefore be presumed to have fully protected the rights of the parties. No error is made to appear in the record, and the verdict of the jury is abundantly sustained by the testimony. The judgment and order should therefore be affirmed, with costs. All concur, except VAN BRUNT, P. J., who dissents.