Woodfield v. Wells Fargo Bank & Union Trust Co.

SPENCE, J.

Plaintiff sought to recover damages from defendant for the alleged conversion of certain shares of stock. At the close of plaintiff’s ease, defendant’s motion for nonsuit was granted. From the judgment thereupon entered in favor of defendant, plaintiff appeals.

This controversy arose out of the alleged wrongful action of defendant as pledge-holder in selling certain stock of plaintiff during the memorable stock market flurry of June 11, 1928. In March of that year plaintiff arranged to borrow

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the sum of $141,750 from L. T. Edwards, giving as security certain stock of the market value of $236,000. A promissory note due one year after date and a collateral agreement were executed by plaintiff in favor of Edwards. After the parties had their documents prepared the defendant bank, which had been named by the parties as pledge-holder in their agreement, was requested to act as such. It accepted the “escrow” and was compensated for its services. The stock was deposited with defendant and the money was paid over by Edwards to plaintiff through the defendant bank. The collateral agreement contained the following provision: “The San Francisco market value of said stock at the date hereof is $236,000. Should said market value, together with the value of any additional stock that may be deposited by Wm. TI. Woodfield, Jr., together with any additional stock that may be issued by said corporation aforesaid as a stock dividend on account of said shares of stock aforesaid, decline so that the total aggregate value of all of said stack deposited hereunder is less than $190,000, then said note shall become immediately due and payable thereupon, notwithstanding the due date of said note, in which event, I hereby irrevocably authorize and empower said Wells Fargo Bank & Union Trust Company to sell said stock aforesaid ... at public or private sale, with or without previous notice to us of such sale ...” On June 11, 1928, -the market value of said stock suddenly declined' below the figure named and defendant caused the stock to be sold upon the San Francisco Stock Exchange at the prevailing market prices. It is conceded in plaintiff’s amended complaint that the contingency referred to in the collateral agreement had occurred. It is there alleged that “on the 11th day of June, 1928, the San Francisco market value of said 612 shares of the capital stock of said Bancitaly Corporation and said 435 shares of the capital stock of said Bank of America suddenly declined so that the total aggregate market value of all of said shares was at said time less than $190,000”.