George v. Pierce

GAROUTTE, J. Plaintiff, claiming to be pledgeholder brings this action for conversion of the pledged property. Some of the facts presented by the record are as follows: De Long-owned a large tract of land in Marin county, upon which land he kept a great number of dairy cows. He borrowed twenty-five thousand dollars from Cowell and gave these dairy cows into the possession of George, the plaintiff herein, as pledge-holder, to secure the lien. During the life of the pledge De Long, under the provisions of the Civil Code, made an assignment for the benefit of creditors, and Pierce, the defendant, became the assignee under such assignment. Thereafter, deeming the proceedings pertaining to the pledge void, he took possession of the cows. The pledgeholder thereupon brought the present action in conversion for damages. One herd of these cows is involved in the present ease. Other cases are pending, resting largely upon similar facts, as to the remaining herds.

In Francisco v.Aguirre, 94 Cal. 180, it was held that an assignee such as this defendant Pierce stood in the shoes of his assignor. Hence, if De Long had no right to take the possession of these cows from the pledgeholder, then Pierce had no right to do so, and his taking would be wrongful and a conversion. Pierce, in taking possession of the cattle, appears to have acted upon the theory that the possession of George as pledge-holder was not such a possession as the Civil Code contemplated, and, therefore, no lien rested upon the cattle, as against the assignee for the benefit of creditors. This position is untenable for the reason that the sufficiency of George’s possession was a matter that De Long, the pledgor, could not attack. Measuring and testing the case from this standpoint, the judgment against Pierce finds full justification in the law. But at this point complications present themselves by reason of the following facts:

While this action was pending certain creditors of De Long secured a judgment against him, levied upon these cows by execution, and sold them. The title under this sale thereafter vested in Pierce for the benefit of the creditors, by reason of a transfer from the purchaser. By supplemental answer Pierce set out these facts as a defense to the action. The trial court refused to admit evidence tending to establish them, and this refusal is assigned as error. An important question meets us [174]at the threshold of the investigation. Did Pierce by the action of the creditors get title to the property? There is no question but that the creditors, after the assignment of De Long, had the right to- prosecute their respective claims against him and levy executions upon this property to satisfy judgments recovered. Francisco v. Aguirre, supra, is directly to this point. It follows that title to the property passed to Pierce as a result of the action if the property was subject to execution and sale at the hands of the creditors. It certainly was so subject if the transfer by De Long of the possession of the cattle to the pledgeholder, George, plaintiff in this action, was not accompanied by an actual and continued change of possession. For any other kind or character of transfer to the pledgeholder would leave the property subject to the satisfaction of the debts of De Long’s creditors, regardless of Cowell’s lien. We have examined the record with extreme care, and have failed to find evidence supporting a finding of fact to the effect that there was an actual and continued change of possession from De Long to George. To sustain the validity of a pledge, as against creditors of the pledgor, there must be an open and visible change of custody of the property. Secret liens of all kinds are abhorrent to the law, and for these reasons are not supported. Let us look at the facts surrounding this transfer.