De Cordova v. Barnum — 30 N.Y. St. Rep. 415

Majority

p. 415

Alfred De Cordova, Resp’t, v. Stephen C. Barnum, App’lt.

(Supreme Court, General Term, First Department,

Filed March 14, 1890.)

Headnote

1. Bbokebs—Stocks—Collateral.

Defendant deposited certain stocks with plaintiff as collateral for certain transactions in stocks. Held, that in the absence of any contract to. sell the collaterals or return them before suit brought for a balance on such transactions there was no such obligation, the relation of the parties, being that of pledgor and pledgee.

2. Same—Evidence.

In such case evidence of the custom among brokers to sell collaterals and credit the amount is not admissible,nor is evidence of the value of the collateral material.

Appeal from judgment entered in favor of the plaintiff upon a verdict directed by the court.

W. Bomer, for app’lt; T. Q. Shearman, for resp’t

The plaintiff is a stock broker and the action was brought to recover a balance of account representing losses upon the purchase ■ and sale of stocks made by the plaintiff at the defendant’s request The answer contained a general denial and

p. 416

pleaded payment, and for a further defense alleged that fourteen shares of stock of the Arms Palace & Horse Car Company were deposited with the plaintiff as collateral security for the result of any transactions, and upon the understanding and agreement that if any sum should become and remain due to the plaintiff, the latter should sell the collaterals upon notice to the defendant before proceeding to collect the amount due. And it was averred as a counterclaim that the fourteen shares were converted by the plaintiff to his own use to the defendant’s damage.

It is conceded that the plaintiff held the fourteen shares of stock mentioned and was in possession of them at the time of the trial. And it is objected thereupon that the plaintiff, without attempting to realize upon these collaterals, by selling them for the market price, and -crediting the defendant with the proceeds, according to the custom in vogue amongst stock brokers, and without offering to return the collaterals, brought this action.

Whether the plaintiff was bound to sell or return the collaterals is really the only question upon this appeal. In the absence of any contract to sell the collaterals or to return them before suit brought there was no such obligation, the relation of the parties being that of pledgor and pledgee. When that is the case the pledgee can enforce the payment of the debt without returning or offering to return the pledge. Jones on Pledges, §§ 590-592; Butterworth v. Kennedy, 5 Bosw., 143 .

The evidence to prove the custom suggested was, therefore, objectionable and properly excluded for the reason that it was an attempt to vary the legal relations existing between the parties. Wneeler v. Newbould, 16 N. Y., 392 ; Markham v. Jaudon, 41 id., 235; Lawrence v. Maxwell, 53 id., 19.

It follows from these views that the offer to show the value of the collateral securities, the plaintiff being under no obligation to return them, was wholly immaterial, and. therefore properly excluded.

The duty imposed upon the defendant if he desired to avail himself of the superior value of the collaterals was to pay the debt and release the pledge, which, if his assertions were true, there would be no difficulty in accomplishing.

For these reasons the judgment should be affirmed.

Van Brunt, P. J., and Daniels, J., concur.