Lem v. Wilson

SHAW, J.

This is an appeal by defendants from a judgment rendered in favor of plaintiff, prosecuted upon the judgment-roll accompanied by a bill of exceptions.

The action grew out of a sale made by defendant Wilson of corporate stock pledged by plaintiff to defendant Traders Bank of Los Angeles, of which Wilson was president, as security for.the payment of promissory notes made by plaintiff to the bank, which notes were on March 28, 1913, due and unpaid. Pursuant to instructions of the bank to collect the notes the stock, consisting of fifteen shares of the capital stock of said bank, without any demand having ever been

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made upon plaintiff for payment, was by Wilson, in the lobby of the bank, immediately upon the opening thereof at 10 o ’clock a. m., March 28, 1913, and without any advertisement thereof or other notice of sale, or notice given to plaintiff of his intention to sell the same, sold to one J. M. Best, who happened at the time to be in the bank, for the sum of one hundred and ten dollars per share and the proceeds thereof paid to the bank and applied in payment of plaintiff’s notes.

The only authority that Wilson had for selling the stock in the manner mentioned was a written instrument executed and delivered to him by plaintiff, at the time of depositing the collateral, as follows: “I hereby authorize Philip L. Wilson or assigns to sell and in my name indorse and transfer my stock in the Traders Bank of Los Angeles, and to apply the proceeds of the same to the payment of indebtedness, present or future, to said bank. (Signed) Geo. C. Lem.” Plaintiff’s cause of action is based upon the alleged fact that the stock at the time was reasonably worth two hundred dollars per share and that the act of Wilson in making the sale, without notice thereof or notice to plaintiff, at an early hour, in the bank, instead of at the stock exchange, which was the usual place for making such sales, was as to him wrongful and negligent to his damage in the sum of ninety dollars per share. The court sustained plaintiff’s contention, except that it found the value of the stock to be one hundred and seventy-five dollars per share, and gave judgment accordingly.

While the bank might itself have sold the stock in accordance with the provisions of law authorizing the pledgee to sell pledged property, it also had the legal right to demand a sale of the pledged property by Wilson, whose relation to the parties, since he was acting for both, was in the nature of a trustee. The bank as pledgee did not sell the stock, and neither the evidence nor findings made by the court disclose any illegal or wrongful act on the part of the bank; hence the judgment rendered against the bank is unwarranted and must therefore be reversed.