Powers v. Savin

Van Brunt, P. J.

This action was brought by the plaintiff, claiming the ownership by her testator of 300 shares of Chicago, Milwaukee & St. Paul stock, which had been pledged, with other securities, by the firm of O. M. Bogart & Co. without right or authority with the firm of Savin & Vanderhoof as collateral- for a loan of $50,000, which securities were subsequently -sold; and, judgment is demanded for the surplus realized upon such sale over "the amount of said loan. Mr. Justice O’Brien, in his opinion, states the questions presented by the pleadings to be: First. Had Hollis L. Powers, the plaintiff’s testator, title to the stock? Second. Did Bogart & Co., without his counsel or authority or right, pledge such stock ? Third. Can the firm of Savin & Vanderhoof hold the stock or apply the surplus realized upon the sale thereof upon account of any other indebtedness due them from Bogart & -Co. as against the plaintiff? Fourth. Is the defendant Wheeler, upon the facts proven, entitled to judgment for the surplus realized upon the sale of other securities pledged for a second or other loan made by the firm of Bogart ■& Co.?

We concur in the conclusion arrived at by Mr. Justice O’Brien as to the third -and fourth of these questions. In view of the conclusion reached by us as to the first, it is entirely unnecessary to decide the second; and we cannot concur in the conclusion arrived at by him as to the first. It appears from the evidence that almost immediately after the pledge of the stock in question Bogart & Co. made a general assignment for the benefit of creditors to the defendant Wheeler; and the attempt is made to identify the St. Paul & Milwaukee stock pledged for the debt of Savin & Vanderhoof as stock belonging to the plaintiff’s testator by entries now appearing upon the loan book of Bogart & Co. And the determination of the question now under discussion depends upon whether such entries were admissible in evidence or not. It appears that Bogart, Jr., sent the securities which were pledged to Savin & Vanderhoof, and made a memorandum of the loan on a stock exchange ticket, called “tickets,” which memorandum he testified was correct; and at the same time he made a memorandum on the loan envelope of the collaterals therein contained. These memoranda were the only memoranda made of the Joan in the first instance. The slips were not produced upon the trial, but evidence was introduced showing that they were made for temporary purposes only, and that when entries were made therefrom into the books of the firm no attention was thereafter paid to them. There was no evidence that these-particular memoranda had been lost, although there was some to the effect that a search had been made for them; and in response to a notice to produce-a statement was made by one of the attorneys that a-search had been made for them, but they could not be found. It does not appear with certainty what was done with these memoranda, and there is no evidence as to what was put upon the slips. Mr. Bogart’s best recollection was that he placed them in an envelope, and that the envelope was with the books, and was left for the cashier, Townsend, to enter in the loan book. Townsend remembers-nothing about the original memoranda, although the entries were made by him in the loan book. Such entries were not made contemporaneously, but after the failure of Bogart & Co., and after Townsend had come back from being absent, which he states might have been a week after the failure. Townsend testified that he either copied the memoranda from slips, (temporary stock exchange slips,) or that they were called off to him; and it does not appear that there was any other source from which he could get the entries.

As Mr. Justice O’Brien has shown, the learned referee states that the memoranda of entries on the envelope correspond with the entries in the loan book, and that in this a grave error was committed, because in that part-of the entry which is most material to this action there is a fatal discrepancy,, —the entry on the envelope not containing the initials “H. L. P.,” which appear opposite the entry in the loan book, in relation to the 300 shares of St. Paul stock, and which it has been held to indicate that the stocks in question were the 300 shares of St, Paul stock belonging to the plaintiff’s testator. The evidence of this entry in the loan book is claimed to be admissible because of the rule laid down by the court of appeals as to the admission of account books in Mayor v. Second Ave. Ry. Co., 102 N. Y. 572, 7 N. E. Rep. 905. But a brief examination of that case will show that the condition of the proof was essentially different' from that which appears by the record in the case at bar. The case cited was an action by the mayor to recover from the Second Avenue Railroad Company for work and labor and materials for which the railroad company was claimed to be liable. The work done and materials furnished related to the pavement of the streets in and about the-rails of the defendant’s railroad. In order to prove the time spent in the doing of this work, the plaintiff called as a witness the foreman' who had charge of the work, under whom were two gang foremen, each having charge of a separate gang of laborers. The chief foreman kept a time book, in which was entered the name of each man employed. He visited the work twice a day, and while there took on the time book the time of each man as reported to him by the gang foreman, who did not see the entries; and also that he-marked the men’s names as he saw them, and knew their faces. The gang foremen testified that they correctly reported to the chief foreman the names of the men who worked, and if any did not work full time they reported that fact also. And the main foreman testified that he correctly entered the reports in the time book as reported to him in the usual course of business each day. And it was held that with such evidence the books were admissible, because the gang foremen were testifying of their own knowledge as to the correctness of the reports made by them to the main foreman, and the main foreman testified that in this time book he correctly entered the reports as made to him. Under such condition of proof the court held the evidence to be admissible, but in the case at bar the evidence was essentially different. In the first place, there is no evidence as to what Bogart, Jr., entered upon the slips, and in view of the fact of the entry upon the loan envelope the presumption would seem to be that the letters “H. L. P.” did not appear upon the slip. And, further, the bookkeeper, Townsend, who made these entries, had no recollection as to whether he entered them from the slips or from somebody who called them off to him. Therefore we do not know that even what was upon the slips was entered in these books. The person who called off these entries is not produced, and there is a very decided Jink missing which was supplied in the case cited. And in view of the fact that it was claimed that the entries upon the slips and the envelope corresponded, the inference would be that, as the letters “H. L. P.” did not appear upon the envelope, they did not appear upon the slip, and Townsend must have got his information somewhere else. How, we do not know, except perhaps it may have been from the inspiration of this somebody who made the announcements to Townsend for entry; whether from the slips or not does not appear.

But Mr. Justice O’Brien has come to the conclusion that upon another principle those entries are admissible, viz., that they are declarations found in the books of Bogart & Co. against their interest in respect to the ownership of these 300 shares of stock; and attention is called to the rule laid down in Greenleaf on Evidence, that “there are two classes of admissible entries between which there is a clear distinction in regard to the principle upon which they are received in evidence; and one of the classes consists of entries made against the interest of the party making them, and these derive their admissibility from this circumstance alone. It is not, therefore, material when they were made. The testimony of the party who made them would be tile best evidence of the fact; but if he is dead the entry of the fact, made by him in the ordinary course of business and against his interest, is received as secondary evidence in a controversy between third persons.” And attention is also called to the case of Adams v. Bowerman, 109 N. Y. 23, 15 N. E. Rep. 874, where the entries in a firm’s books as to its solvency were admitted for the purpose of proving the insolvency of that firm in an action to which they were parties. How, it seems to us that this principle has no application whatever to the case at bar. If Bogart & Co. were suing here, or were the defendants in this action, it is possible that the principle might apply, but probably not, as the person who made the entries is alive; but in the present case the party making the entry is not only alive, but, upon being called, shows that he knew nothing about the facts to which the entry related. But when we take into consideration the fact that these books were not Bogart & Co.’s books at this time, and that they were being written up that the assignee might ascertain the condition of the estate of which he was the assignee, it is clear that such entries were not made in the ordinary course of business, and that the title of Bogart & Co. to this stock could not be impeached,or impaired thereby. It is no duty of an assignee to confess judgment, or to make admissions in reference to the liabilities of his assignors,—which would.be the result of the admission of an entry of this description. In the face of the evidence showing the circumstances under which this entry was made, showing that the party who made it had no knowledge whatever of the transaction, showing that a material part of the entry, as far as this case is concerned, seems to have been evolved out of his own imagination, it certainly cannot be the law that upon sucli an entry the title of property can be disposed of. We think, therefore, that it was error to admit these entries in evidence, and because thereof the judgment must be reversed, and a new trial ordered before another referee, with costs to appellant to abide the event.

Andrews, J., concurs.