Colonial Trust Co. v. Central Trust Co.

Opinion by

Mr. Justice Bbown,

The facts found by the court below were all properly found. Under the evidence, they could not have been different, and the very narrow question on these appeals is whether the Central Trust Company acted within its rights under Wood’s pledging agreement with it when it purchased the pledged securities on January 15, 1910. If it did so act, it became the absolute owner of the securities, accountable to no one for any profit it might subsequently realize on a resale of them, just as it could look to no one to reimburse it for any loss it might sustain : Plucker v. Teller, 174 Pa. 529. By resales of those securities, made in a few days, it realized $1,582.29 over and above Wood’s indebtedness to it. If it is the legal right of the appellee to keep that money, no proceeding in equity can give it to another. Legal rights are as safe in chancery as they are in a court of law, and however strong an appeal may be to the conscience of a chancellor for equitable relief, he is powerless to grant it if the one from whom it must come will be deprived of a legal right. Relief in such a case can come only as the conscience of the one vested with the legal right may prompt him to bestow it. In the case under consideration the learned chancellor below held, and was compelled to hold, that the Central Trust Company is but exercising a legal right in holding on to the money claimed by the complainants in the bill and cross bill, and this being so, equity can do nothing for either of them.

If the Central Trust Company was required to sell the securities at public sale, it would be well contended that such a sale was not held. .Counsel for appellee concede this to be true and say of the sale that it was a private one, “made in a semi-public way.” The authority given by the pledgor to the pledgee did not require a public sale of the pledged securities upon the failure of the pledgor to pay his obligations. The broad authority given was to sell “at public or private sale,” at the option of the appellee, on the nonperformance of the promise of Wood to pay, and such sale could be without demand, advertisement or notice, with the right in the appellee to become the purchaser and absolute owner of the securities, free of all claims and trusts. The terms of this contract could not be clearer, and as it was a lawful one, the pledgor and his trustee in bankruptcy are bound by it, and the pledgee, in the absence of fraud, had the right to become the absolute purchaser of the securities at a private sale: McManus v. Sweatman, 22 W. N. C. 54; Jeanes’s App., 116 Pa. 573; Hiscock v. Varick Bank of New York, 206 U. S. 28. Nothing done by the pledgee, from the time it took the securities from the pledgor until it sold them, bears the slightest taint of fraud, and that it was justified in selling them in the manner complained of by the appellants is made clear by the following facts found by the court below: “When the pledgee learned of the failure of the pledgor it made immediate investigation of the character of the securities in its hands, with a view to protection against loss. The market value of some of the pledged stocks was at times of little value; some were speculative and non-dividend paying, and at the time of the sale the market was on a decline, and had the sale, been délayed for-a month longer the pledgee would have, sustained a loss. The Westinghouse stocks were- of companies then in financial difficulties. There was no proof that the securities as a whole were worth, on the day of the sale,more than the amount of the pledgee’s claim.”

Under the terms of the note, the securities pledged for its payment might have been sold by the trust company at private sale,-without demand upon the maker to pay and without notice to him that such sale would be made. This, however, was not done, though the securities pledged by the adjudged bankrupt were held on a fluctuating and declining market. On January 14, 1910, demand was made upon the trustee in bankruptcy for payment, and, upon his refusal to pay, notice was given him that the collaterals would be sold. What was done by the appellee in selling them was lawfully done, and the title which it acquired was an absolute one. On this unanswerable legal proposition it has a right to stand when alleged equities are asserted against it.

• No distinction can be made between the claim of Clara J. Kirkland, the victim of Wood’s perfidy, and that of the complainant in the original bill. She executed the power of attorney in the usual form on the back of her stock certificate, without restriction or condition, and the appellee took it and held it as an innocent pledgee, without notice, divested of all claims that she might have upon it: Wood’s App., 92 Pa. 379; Gilbert v. Building Association, 184 Pa. 554; Cochran v. Fox Chase Bank, 209 Pa. 34; Shattuck v. American Cement Co., 205 Pa. 197; King v. National Bank, 227 Pa. 22. On the day this particular stock was sold and purchased by the appellee no surplus was realized from the sale of all of the securities to be accounted for to either of the two appellants.

Appeals dismissed and decree affirmed at the costs of appellants. . .