Schwind v. Boyce

Page, J., delivered the opinion of the Court. ' ' The appellant, who was complainant below, charges in his bill that" a certain Charles Delaney subscribed for twenty shares of the capital stock of the Schwind. Quarry Company of the par value of one hundred dollars per share ; that being unable to make payment he borrowed the money from the Calverton Building Association, for the'repayment of which the appellant became his surety; that in- order to’ protect the complainant and save- him harmless, Delaney pledged the cer ⁵¹⁵ tificate of said shares to the complainant, and the same were deposited in the safe of the quarry company “ for the purpose of turning it over to the control, keeping and possession of the complainant.” That Delaney, who had been made Secretary of the quarry company, made default in his payments to the building association whereby the complainant’s obligation on account of his suretyship became absolute, for the sum of $600 due to the association; and in addition thereto the said Delaney on account of money paid by him for Delaney to the association for maturing instalments was indebted to him in the sum of $248.65. That Delaney was dismissed from the service -of the quarry company and when he was about to leave the service of the company, he abstracted from its safe, without the knowledge and consent of the appellant, the certificate of the stock, and “ in order to wipe out the equities existing between the complainant and himself, he has recently transferred ” it to the appellee Boyce; that Boyce if he had not actual notice “ of the equities which then attached to the stock,” had such notice as “ put him upon inquiry in regard thereto.” That Boyce is not a bona fide holder of said stock and that Delaney has still an interest therein and that Delaney is financially irresponsible. On final hearing the Court dismissed the bill and the complainant appealed.

The controlling questions in the case are, 1st, did the appellant have a lien on the stock and 2nd, if he had, did Boyce have actual or constructive notice of it ? As to the first question. Mr. Schwind testifies that he agreed to go his security to the building association, and that to secure him Delaney was to leave his certificate in the stock book until the association was repaid or until the stock was paid for. He further testified that there never was a delivery of the stock to Delaney.

This testimony is in harmony with all the facts connected with the transactions of the parties. Mr. Schwind was the owner of the quarry. He proposed to form a corporation and put the business under its control. He desired that Delaney should be the owner of a portion of its stock.

Delaney did subscribe for twenty shares, for which ⁵¹⁶ he agreed to pay Schwind" two thousand dollars. To enable him to do this, -Schwind assisted him with the association. He first became his surety to the association for one thousand dollars, which Delaney subsequently paid. For the residue Delaney gave his note to Schwind, and later on made another loan from the association to effect which Schwind aided him, by “ hypothecating for him again.” When it is borne in mind that Delaney was financially irresponsible, it is not reasonable to believe that Schwind, as a reasonably prudent business man, would voluntarily put himself in a position where he might' be subjected to considerable loss, without providing some means whereby he could be protected.

He claims he did so by securing the pledge of the stock and that it was on that account that the certificate was not to be delivered until he had been made safe. In fact it was not delivered, and Delaney never obtained the possession of it, until he abstracted it from the' company’s safe, after he had been discharged from its service, without Schwind’s knowledge or consent. Delaney himself makes no statement with reference to the formation of the quarry company, or as to how Schwind became his surety. He was asked if anything was said to Schwind after he had left the employment of the company “as to his having a lien ” on the stock and his reply was, “ he never made a claim of a lien on my stock at all to me.

All I have seen about a lien was when this paper was filed. He never mentioned a word in reference to a lien to me.” All the details of the transaction as testified to by Schwind goes without denial from Delaney. Being without substantial contradiction and harmonizing as it does with what we regard as the probabilities of the matter, we must accept the statement he makes, and that being so are constrained to hold that the stock was pledged as set forth in the bill. It appears from the proof that to secure the two thousand dollars, Delaney incurred a liability to the association of $2,080.

Of this has been paid $1,514.51, leaving still due the sum of $565.49 for which Schwind is still liable as surety. The stock is pledged to secure the payment of this sum, as well as interest due to Schwind, and whatever sum he ⁵¹⁷ has to pay for Delaney to the association on account of fines and maturing installments. The remaining question is did Boyce have actual or constructive knowledge of the lien ? It is not claimed that he had actual notice, but it is contended on the part of the appellant that Boyd, who, it is said, was his attorney and agent in the transaction, had full notice, and that Boyce is affected with notice of everything that was within the knowledge of his agent.

Boyce himself states in his evidence that Boyd was his agent, “with full authority,” that he had given him power to act for him “in buying the stock” and that he had a verbal arrangement with him, that he “was to pay Mr. Boyd for acting as my (his) agent, one-third of what I (he) made on the stock.” There is nothing in the testimony to contradict this statement, and the facts as they appear