Boyd v. Conshohocken Worsted Mills

Opinion by

Mr. Justice McCollum,

It is not necessary to consider now whether Augustus Boyd was incompetent under clause (e) of § 5 of the act of May 23, 1887, to testify to matters occurring in the lifetime of George Bullock, for if he was, his incompetency was removed by the action of the appellant company in calling him, under § 7 of that act, to testify to such matters. When he was first called 'as a witness in his own behalf, his examination was confined to his demand on May 31, 1890, for the dividends, and this was more than a year after the death of Bullock. He was then called by the appellant, and compelled to testify, as if under cross-examination, to matters occurring in Bullock’s lifetime, after which he was a competent witness for himself “ as to all relevant matters, whether or not these matters were touched upon in his cross-examination§ 7, act of May 23, 1887, P. L. 160; Corson’s Est., 137 Pa. 160. The 4th specification of error is therefore overruled.

We think the learned judge of the court below was clearly right in holding that the questions contained in the 1st, 2d and 3d specifications of error were not admissible. They were not relevant to the subject-matter of the examination in chief, and were evidently intended to introduce the appellant’s defence under cover of a cross-examination. The only matter to which the witness had testified was his demand for the dividends on May 31, 1890, and this did not open the door to a cross-examination of him concerning transactions he had with Bullock many years before. If these transactions justified the company in refusing to pay the dividends on his demand, it was proper to show them as a part of its defence, but it could not introduce them in the manner proposed. In considering the remaining specifications, regard must be had to the material facts which are admitted by the parties or established by the verdict.

It appears that on July 1, 1882, Boyd was the owner of 300 shares of the stock of the appellant company, and Bullock was indebted to him in the sum of $10,000. On that day Boyd sold and. transferred his stock to Bullock for $30,000, and received Bullock’s note for $40,000 at five years, with interest payable quarterly. This note was for the price of the stock and the amount of Bullock’s indebtedness to Boyd on other matters. As collateral to the note the stock was transferred by Bullock to Boyd, and a certificate therefor was issued to him and duly registered, so that from that time to the present Boyd has appeared on the books of the company as the owner of the stock. From the dividends declared by the company, after this transaction and before the maturity of the note, the sum of $5,700 belonged to the stock so held by him, but was paid by the company to Bullock, without any authority from the legal holder of the stock to make such payment, or notice to him that a dividend had been declared. The uncontradieted testimony of Boyd is that he repeatedly spoke to Bullock on the subject of the dividends, and was always assured by him that the company had not declared any but that it was accumulating a fund as a working capital. It appears now that a dividend of five per cent was declared by the company on November 11,1884, one of six per cent on November 10, 1885, and one of eight per cent on November 9,1886, and that these were all paid to Bullock, at the time or soon after they were declared. It is conceded that the dividends belonged to Boyd, and that in an action by him against the company to recover them at any time prior to June 29,1887, the unauthorized payments to Bullock would not have been available as a defence. But it is claimed that by a transaction with Bullock on that day he relinquished his right to the dividends.

What was that transaction? A reduction of the debt to $22,000. by payment on account of it, a retention of the collateral security for it, a surrender of the old note, and an acceptance of a renewal note on one year’s time for the balance of it. It is true that the new note conferred on the creditor additional power over the collateral, but this was in aid of the creditor in the conversion of the security, and did not in any sense impair it. It is clear from the testimony of Boyd that he did not understand that the transaction involved a surrender by him of $5,700 of the collateral security which he then held, and the only conclusion consistent with a belief in his veracity and Bullock’s integrity is, that it was the mutual intention of the parties that Boyd should retain all the security he then had by virtue of the pledge of the stock in July, 1882.

It is contended that the claim of the appellant company respecting the nature and effect of this transaction is sustained by Fairbank v. Merchants’ National Bank, 30 Ill. Ap. 28, decided by the Supreme Court of Illinois in October, 1889. In that case a husband deposited with the bank, on May 14, 1883, as collateral security for his own note and the note of a firm of which he was a member, 100 shares of his wife’s stock in the Chicago City Railway Co. This stock had been previously pledged by him to the bank as security for his indebtedness to it, and, during the life of the first pledge, his wife received the dividends upon it. After her death the bank filed a bill in equity against her executor to compel her estate to account for and pay the dividends so received by her. The question was, whether the transaction of May 14, 1883, was a continuance of the pledge which was in force when she received the dividends or the creation of a new and distinct pledge. It was claimed by the bank that the note of May 14, 1883, was a renewal of the notes for which the stock was originally pledged, and by the estate that it was in satisfaction of them.

The court, conceding that the intention of the parties must govern, found the fact to be as claimed by the estate. But the evidence in that case differed materially from the evidence in this. In that case it was the duty of the court to find the facts and ascertain the intention of the parties, whilst in this these matters were for the jury, and our examination of the evidence is for the purpose of determining whether it is sufficient to support the verdict. It is probable that in each case the facts were correctly found from the evidence in it. We are satisfied, from our examination of. the testimony in the case at bar, that the verdict was fully authorized by it.

The appellant company, with full knowledge that the dividends belonged to Boyd, who appeared on its books as the owner of the stock, and who, it is now admitted, was entitled to receive them, deliberately paid them to Bullock without the consent of or notice to the owner, and, whilst conceding the mispayment, seeks to evade its own just liability by setting up an alleged equity in Bullock’s estate, arising from subsequent transactions between the pledgor and pledgee. It is a defence founded upon an unauthorized act, to which the company and Bullock were parties, and which was unknown to Boyd at the time of the transaction, in which it is claimed he surrendered, without knowing it, $5,700 of his collateral security. If it is technically admissible in this action, it is clear from the undisputed evidence that there is no substantial merit in it. A separate consideration of the second renewal is unnecessary, because tbe condition existing after the first one was not changed by it.

The instructions to the jury were unobjectionable, and the remaining specifications of error are overruled.

J udgment affirmed.