The Yamato v. Bank of Southern California (1915) · DecisionDepot

The Yamato v. Bank of Southern California

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Supreme Court Jun 5, 1915 No. L.A. No. 3464.Published

Before: Henshaw

Synopsis

The facts are stated in the opinion of the court.

HENSHAW, J.

Plaintiff brought this action to recover possession of fifty shares of its capital stock, alleged to be wrongfully in the possession of the defendant. The right of plaintiff’s possession, as pleaded, rested in a pledge of the stock by one Inui as security for the payment of his promissory note to the plaintiff in the sum of four thousand one hundred and seventy-five dollars. Inui at that time and thereafter was the secretary of the plaintiff. The defendant asserted the right to possession of the stock as collateral security for a promissory note which Inui made to it some six months after the date when the stock was pledged and delivered to plaintiff. The evidence leaves no doubt over the facts that Inui did give his promissory note to plaintiff as pleaded and secured this note by the pledge of the fifty shares of stock in question. Six months thereafter he executed his promissory note for one thousand eight hundred dollars to defendant and pledged as security the same certificate of fifty shares of stock of plaintiff. Inui was. not authorized by plaintiff to take the stock. He had not paid his debt to plain

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tiff. Plaintiff had not in any way released the pledge and unquestionably the stock was illegally abstracted—in short, stolen—from the plaintiff and pledged with defendant. To overcome the prior and superior right of plaintiff to the possession of this stock under these circumstances defendant pleaded that plaintiff permitted Inui to retain possession of and access to the certificate of stock after it was pledged with it,

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and thereby enabled said Inui to have and take and deliver said certificate of stock to'this defendant”; that at the time that defendant made its loan to Inui it had no notice or knowledge of the pledge to plaintiff; that Inui “was the secretary of plaintiff and transacted with this defendant a large amount of business for and on behalf of said plaintiff, and said Inui was at such times one of the managing officers and agents of plaintiff; that at the time, of the institution of this suit and for a long time prior thereto, and for some time thereafter, said Inui was dangerously sick and ill and confined to his bed, and later died of said sickness and illness, and affiant has been unable to learn of or find or locate any property or effects of said Inui, other than said certificate of stock; that plaintiff suffered and permitted this defendant to have and continue in the peaceable and undisturbed possession of said certificate of stock from June, 1910, until November, 1911, without in any way asserting its alleged claim thereto or advising this affiant of said alleged claim, and did not assert said alleged claim to or advise this defendant thereof, until after said Inui was dangerously sick and was unable to testify or participate in this controversy; that it was by the negligence and sufferance of plaintiff that the state of facts of which it now complains happened; that plaintiff ought to be and is estopped by its negligence and conduct herein in asserting a claim to said certificate of stock prejudicial to this defendant; that it is specifically provided by section 3543 of the Civil Code of this state that where one of two persons, both innocent, must suffer by the act of a third, he by whose negligence it happens must be the sufferer, and this defendant pleads above acts and said provision of said code in bar of plaintiff’s alleged cause of action.” The court found in the precise language of this averment and concluded that it was “by the negligence and sufferance of plaintiff that the state of facts of which it complains happened, and that the plain

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before it carried the first notification to plaintiff of its possession by a demand that it be transferred upon the books of the company; that is to say, it was in January, 1910, that the plaintiff received the stock in pledge; it was in June, 1910, that defendant received it in pledge, and in November, 1911, defendant presented the certificate, to plaintiff for transfer, and thereafter plaintiff made its demand upon defendant for possession of the stock. It is not contended that plaintiff did any affirmative act touching the rights of the defendant by reason of which an estoppel could be raised in the latter’s favor. Its acts are said to be acts of negligence. They are defined as negligence in not keeping possession of the certificate—negligence in permitting Inui, the debtor, to have charge of the certificate—negligence in not getting the certificate indorsed and delivered to it by Inui—negligence in not having its pledge noted on the stub of its stock book—negligence in not discovering the abstraction of the certificate, and, finally, “it was negligent in not being diligent. ’ ’ But all this amounts to no more than that the plaintiff trusted a man who occupied one of its responsible official positions. Every corporation and every business firm in the land must do and does the same thing. No business of any magnitude or consequence can be transacted without a trust imposed in somebody, and where a trust must be imposed it is always possible to violate the trust. It was, therefore, not negligence upon the part of the plaintiff that it was possible for Inui, its secretary, to have stolen the pledged stock, and no other of the acts of negligence charged and found against the plaintiff amount to anything. It does not appear that defendant’s position would have been bettered in the slightest if these acts or omissions of plaintiff had not taken place. It would not have enlightened defendant, for example, if the pledge to plaintiff had been noted on the stub of the stock book. It would not have advantaged defendant if plaintiff had discovered the theft of the stock the day after it was pledged to defendant, for the injury had then been accomplished. The defendant was not charged'with notice that Inui had pledged it and did not know that he had pledged it until the defendant, in turn, offered it for transfer, and defendant itself waited more than a year before so doing.

Synopsis

HENSHAW, J.

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