Covert v. Townsend — 15 N.Y. St. Rep. 898

Majority

p. 898

Kate Covert, Resp’t, v. Williemene B. Townsend, App’lt.

(Supreme Court, General Term, Second Department,

Filed May 14, 1888.)

Headnote

Evidence—What is hearsay—Hearsay evidence inadmissible.

This action was brought to recover damages for the conversion of cer

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tain stock by the defendant. It was alleged that the stock was deposited with the defendant’s former husband to secure the payment of certain notes held by the plaintiff, and that the defendant, being appointed administratrix of her husband’s estate, surrendered the possession of the stock to the maker of the notes. The deposition of the. maker of the notes, taken on his examination in supplementary proceedings, was introduced in evidence. Held, that the deposition was hearsay, and its reception as evidence was erroneous.

Appeal from a judgment entered upon a verdict rendered at a circuit in Kings county, and from an order denying a hew trial on the minutes.

Thornton, Earl & Kiendl, for app’lt; Edgar Bergen, for resp’t.

—This is an action for the wrongful conversion of eighty shares of the stock of the National Ice Company of New York, based upon the following facts:

On the third day of January, 1880, the plaintiff made a loan to one Alfred Nelson of $2,000, for which she received his promissory note, payable on demand to her own order, dated January 3, 1880. On the 11th day of March, 1880, Margaret E. Covert, the sister of the plaintiff, loaned to Alfred Nelson the sum of $200, for which she received his promissory note, payable in three months, to her own order, dated March 11, 1880.

On the 17th day of April, 1880, Margaret E. Covert made another loan to Alfred Nelson of $100, for which she received his promissory note, dated April 17, 1880, payable to her order three months after date.

These loans were all procured for Nelson by Blaize Li Harsell, who was his lawyer and personal friend.

On the 6th day of January, 1880, Blaize L. Harsell wrote a letter to the plaintiff, which was received by her, of which the following is a copy:

“January 6, 1880.

" Miss Kate Covert:

“ Please find Mr.Nelson’s note enclosed for $2,000, at six per cent interest. While such note is good without any indorsement, I do not hesitate in adding my name to it.

“ BLAIZE L. HARSELL.”

On the 25th day of April, 1880, Blazie L. Harsell also wrote a letter to Margaret E. Covert, which was received by her, of which the following is a copy:

'‘April 25, 1880.

“ To Margaret E. Covert:

“Please find inclosed notes of my friend Mr. Nelson for the sum of $300.

“ BLAIZE L. HARSELL,

“PRINCE & HARSELL.”

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Blaize L. Harsell was the husband of the defendant, and he died in June, 1882, and he and the defendant were the executors of the last will and testament of Letitia A. Blackwell-, deceased, and at various times between September, 1878, and October. 1880, Blazie L. Harsell loaned various sums _ of money to Alfred Nelson, for which he took the promissory notes of Nelson, payable to himself or order.

After his death there was found among his effects a box marked “ Estate of Letitia A. Blackwell,” and within a week after his death, the box was opened by Charles De Kay Townsend, then the counsel and now the husband of the defendant, and he found in the box several promissory notes and due bills, amounting, in the aggregate, to $7,300, and four certificates of stock of the National Ice Company for two hundred and twenty shares.

There was a receipt for a temporary loan of $8,000, October 8, 1880, and in an envelope marked “ Collateral for loan of October 8, 1880,” there was one certificate for one hundred shares of the. ice stock, with'another certificate for twenty shares was a due bill for $3,000, and with the two other certificates of fifty shares each, there was a note for $2,500, a note for $1,000, a note for $500, and a note for $500, and a due bill for $300, all made by Nelson, and payable to his own order or to the order of Harsell. One hundred and twenty shares of the ice stock was pledged by Nelson to Harsell for a note of $3,000, in October, 1880.

The following paper was also found in the same box:

“New York, October 24, 1879.

“Alfred Nelson, Esq.:

“Dear Sir—Your notes to me for money loaned you, and which notes are now over due, I should like to have paid. If, however, it should be inconvenient for you to pay the same, two points we want distinctly understood and agreed upon. 1st. That the note of interest be and that the same remain at seven per cent, until the notes are paid. 2d. That when it suits your convenience to pay the money, i. e., the notes, you shall wait until, should that time not be convenient, we can otherwise satisfactorily invest the money, the interest to remain still at seven per cent. Please let me have your answer in writing.

“Yours, very truly,

“B. L. HARSELL.”

“I accept the above arrangement.

“ALFRED NELSON.”

The letter of Harsell was also found in the Blackwell letter copy.

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There was no claim that more than two hundred and twenty shares of the ice stock was ever left with Harsell.

Nothing was found in the box or in the safe of Harsell, or among his papers, in relation to the loan of the plaintiff or her sister, or to indicate that any of the ice stock had ever been pledged or held as security for the payment of their notes; and there were no notes of Alfred Nelson among the papers of Harsell, except those found in the tin box.

On the 4th day of October, 1880, Nelson wrote to Harsell, as follows:

New York, October 4, 1880.

'' To Dear Blaize:—I have a $3,000 note to take up 8th inst., and have been relying on you to let me have the money. Security will be 120 shares $50 each, of ice stock, same as now, with note which was disct. for me at six per cent, by Lea bk. 120 $50 ea. $6,000. Ice company have no . debts and $100,000 in bank (entre nous). I hope to see you to-morrow.

ALFRED.”

And on the same day Nelson received the $3,000 from Harsell, and pledged the 120 shares as security for its payment.

The two notes of Margaret E. Covert were transferred to the plaintiff, and she recovered a judgment upon them with : her own note against Nelson, and he was examined in proceedings supplementary to execution, and signed his de-. position.

After the death of Harsell, Nelson claimed the right to redress the ice stock by the payment of his indebtedness to ’ the Blackwell estate without an intimation that any portion of it was held as security for his indebtedness of the plaint-' iff or her sister. He commenced negotiations with Townsend for the redemption of the stock in December, 1882, and paid him $2,500 on the Blackwell indebtedness, and received back his note for that amount, and fifty shares of ice stock, and in January, 1883, he paid $2,500, and received-back some notes and fifty shares of the ice stock, and in May, 1883, the final settlement was made, when all the old notes and 120 shares of the ice stock were delivered to Nel-' son, and he gave a new note for the balance of his indebtedness to the Blackwell estate to the defendant for $2,400, and upwards, and re-delivered to her sixty shares of the ice stock as security for the payment of that note. That delivery of the ice stock to Nelson is the conversion complained of in this actioti:

The foregoing facts are disclosed by the record before us and are entirely undisputed.

On the trial of the action at the circuit before a jury the deposition of Nelson on his examination in the supplemen

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tary proceedings already mentioned was offered in evidence by the plaintiff and received over the objection and exception of the defendant, and its reception was erroneous. Against the defendant it was hearsay and secondary, Nelson occupied no relation to the defendant which would render his declarations and admissions obligatory or binding upon her. He was a perfectly competent witness in the case, and if a pledge or conversion of the stock was to be established against the defendant it was her legal right to have it proved by common law evidence. The same rule will condemn the admission in evidence of the subsequent declaration of Nelson to the plaintiff and her sister.

Nelson was subsequently called as a witness for the plaintiff and his testimony failed entirely to come up to the declarations he made in his deposition. On the contrary he sustained well the theory of the defendant.

The plaintiff and her sister both testified on the trial that they saw among Harsell’s papers both before and after his death a bond and mortgage of Margaret E. Covert and a note for $100, placed with ice stock, with a paper wrapped around the bundle marked: “For Miss Covert’s securities $4,000,” but neither of these papers were found among Harsell’s papers or in his safe, and the bond and mortgage were found at the residence of Judge Prince.

At the time the plaintiff claims to have seen these papers she had received her own large note from Harsell unaccompanied by any stock or any memorandum to indicate the pledge of any stock as security, but accompanied by a letter which indicated plainly that there was no security and no necessity for any but that Harsell was willing to endorse the paper.

So far as the testimony of the plaintiff and her sister tends to show a pledge of the ice stock as security for the payment of their notes it is at war with the established and undisputed facts in the case which prove beyond question that all of the 120 shares of the ice stock delivered by Nelson to Harsell were hypothecated and held as security for the payment of the indebtedness of Nelson to the Blackwell estate. Under that state of facts therefore, Townsend as the agent of the defendant, was compelled to deliver the stock to Nelson upon the payment of the Blackwell debt, and such delivery was not wrongful.

The verdict of the jury was therefore against the evidence, and the judgment and order appealed from should be reversed and a new trial granted, with costs to abide the event.

Barnard, P. J., concurs; Pratt, J., not sitting.