Birdsall v. Davenport

The action was to recover the value of two bonds for the sum of $1,000 each, loaned by Thomas Davenport, as the executor of the estate of B. L. Johnson, to the firm of Davenport, Johnson & Co. The bonds were loaned under a receipt, or agreement, subscribed by the firm in the following form;

“N. Y., 21 st July, 1882.

“Rec’d from Thomas Davenport, ex’r of the estate of B. L. Johnson, one bond for $1,000, No. 4,408, of the C. and N. W. R. R. Co., and one bond, same amount, No. 4,764, of the Grand Rapids and Ind. R. R. Co. Which bonds we agree to return to him when called for, as they are loaned to us to use temporarily. Coupons 1st August and February, and 1st October and April.

“DAVENPORT, JOHNSON & CO.”

*553And. they were delivered under this receipt to the defendant, but they were not used by the firm of Davenport, Johnson & Co.; but it was admitted on the trial that James B. Davenport, the defendant, had given his individual note to Wells, Fargo & Co. for $1,250, and deposited these bonds with them as collateral security for the payment of that note on the day of the date of the receipt, and this deposit was relied upon by the plaintiff, as the assignee of Thomas Davenport, executor, as establishing a conversion of the bonds by the defendant.

No authority was given to the defendant .in the receipt or agreement, permitting him to use these bonds as security for his own indebtedness, or upon a loan of money to himself, but they were loaned to the firm to be used by that firm temporarily. They do not appear, however, to have been passed over to the firm by the defendant, but he took the bonds and appropriated them to his own use, and as this was done wholly without authority, and outside of and beyond the object for which the bonds were delivered to him, it was under the authorities a conversion. For any misappropriation or unlawful use of another’s property is a conversion; (McMorris v. Simpson, 21 Wend., 610), where it was held that an entire departure from the authority given for the disposition of the property would be a conversion of it. (Id., 615.) And this principle was followed in Scott v. Rogers (31 N. Y., 676), and in Bank of Rochester v. Jones (4 Comst., 497, 503, 504.)

This use of the bonds was made before the assignment was executed by Thomas Davenport as executor, and delivered to the plaintiff; that was made on the 6th of November, 1884, and it sold and transferred the bonds to the plaintiff, without specifically assigning to him this right of action for their conversion. But that was not necessary to enable the plaintiff to take advantage of this unlawful hypothecation of the bonds, for the assignment of the bonds themselves carried with it the right of action against the defendant for this unauthorized and unlawful appropriation of them. (Sherman v. Elder, 24 N. Y., 381, 384; Oneida Bank v. Ontario Bank, 21 N Y., 490, 497, 499; McKeage v. Hanover Fire Ins. Co., 81 N Y., 38, 42.) This rule in no way conflicts with anything that was said in Hall v. Robinson (2 Comst., 293). And these cases are entitled to be accepted as authoritv, although they may differ in the *554application of the law from those cited in support of the ruling at the trial.

The judgment should be reversed and a new trial ordered with costs to abide the event.

Judgment reversed, new trial ordered, costs to'abide event.