
    VAN SCHAICK v. RAMSEY.
    (Supreme Court, General Term, Third Department.
    December 3, 1895.)
    Conversion—Damages.
    In pursuance of a contract, shares in a certain corporation, to the amount of $10,000, were issued to defendant, to be used as collateral to raise $5,000 for the use of the company on plaintiff’s account, defendant having the option to purchase the stock, or cause it to be transferred to plaintiff. The stock was subsequently transferred to a third person as collateral for a loan of $5,000, which defendant received, and paid to the company as provided, and defendant thereafter sold the certificate to the person who had advanced the loan, receiving $5,000 therefor, in addition to the amount previously paid. Held, in an action for conversion, that plaintiff could recover only $5,000, his actual interest in the stock at the time it was sold, and not the par value thereof.
    Appeal from judgment on report of referee.
    Action by David Van Schaick against Joseph H. Ramsey to recover for the alleged conversion of corporate stock. From a judgment for plaintiff, an appeal was taken by defendant, pending which he died, and thereupon Charles H. Ramsey, as executor, was substituted as defendant in his place. Reversed.
    Argued before MAYHAM, P. J., and PUTNAM and HERRICK, JJ.
    Maynard & Gilbert (Isaac H. Maynard, of counsel), for appellant.
    William F. Beutler, for respondent.
   PUTNAM, J.

On the trial, plaintiff read in evidence a contract made between him and defendant’s testator, in two parts, marked “A” and “B,” of which the following is a copy:

“Plaintiff’s Exhibit A.
“For value received, and in consideration of one dollar, in hand paid me by Joseph H. Ramsey, of Howe’s Cave, N. Y., I, David Van Schaick, late or at present of Albany, hereby agree with the said Ramsey to sell him at his option one hundred shares New York and Montana Mining and Milling Company stock, at any time he may elect to buy the same one year from this date, at par value of one hundred dollars for each share. The scrip for the same shall be issued by the company to the said Ramsey for me, to be used as collateral to raise five thousand dollars for the use of the company on my account. If the said Ramsey does not elect to buy the stock, the scrip for the same shall be transferred to me. David Van Schaick.
“Dated July 27th, 1885.”
“Plaintiff’s Exhibit B.
“Whereas, one hundred shares of the New York and Montana Mining and . Milling Company stock has been issued to me by the said company in pursuance of an agreement of this same date between David Van Schaick and myself, the stock is to be used as collateral to raise five thousand dollars for the use of the company on his account. In case the said one hundred shares are not purchased by me as provided in the said agreement, the scrip for the same is to be transferred to the said Van Schaick. J. H. Ramsey.
“Dated July 27th, 1885.”

It was admitted that the New York & Montana Mining & Milling Company issued stock certificate No. 9 for 100 shares, dated July 27, 1885, to Joseph H. Ramsey, the defendant, and that the defendant, subsequent thereto, sold and transferred the said certificate and the stock therein called for to George Westinghouse, Jr., of Pittsburgh, Pa., and received therefor $10,000. It also appeared that, after the agreement A and B was executed, plaintiff transferred the stock therein described to George Westinghouse, Jr., as collateral for a loan of $5,000, which sum Ramsey received, and paid to the New York & Montana Mining & Milling Company. Afterwards Ramsey transferred the stock to Westinghouse. The latter paid him $10,000 for the stock,—$5,000 when it was placed with him as collateral, and $5,000 afterwards, when the absolute transfer was made. Plaintiff claimed that, by the transfer of the stock to Westinghouse, Ramsey unlawfully converted it. The referee so found, and awarded judgment against the defendant for $10,000, the par value of said stock, with interest and costs.

Sedgwick, in his work on the Measure of Damages (volume 2, p. 391, marg. p. 480), says:

“There are many cases, however, where the plaintiff, though entitled to recover, is not at liberty to receive the full value of the property. So, in cases of pledge, if the pledgee tortiously sell the pledge, or otherwise wrongfully put it out of his power to return the article pledged, the pledgor’s right of recovery is clear; but the pledgee in such action has a right to have the amount of his debt recouped in the damage.”

See, also, Insurance Co. v. Dalrymple, 25 Md. 269-307; Wheeler v. Percles, 43 Wis. 332; Belden v. Perkins, 78 Ill. 449; Grumann v. Smith, 81 N. Y. 25; Smith v. Reeves, 33 How. Prac. 183.

In the case under consideration, assuming that Joseph H. Ramsey, by the absolute transfer of the stock to George Westinghouse, Jr., converted it, and hence that the plaintiff was entitled to recover, yet, as in the case of a pledgor, his recovery should not have exceeded the amount of his actual damage. He should only have been allowed to receive an indemnity for the actual injury. Let us consider the situation at the time of the alleged conversion. Ramsey had then, as he was authorized to do under the contract A and B, pledged the stock to Westinghouse, to secure a loan of $5,000. He had received the money, and paid it into the company for the plaintiff. Thus, in fact, Ramsey had paid plaintiff $5,000 on account of the stock by paying that sum to the corporation on his account. If, then, Ramsey had never made any subsequent transfer to Westinghouse, and had concluded to take the benefit to purchase under the contract, plaintiff having received $5,000 on account of the stock, Ramsey would only have been obligated to pay him the additional sum of $5,000. Again, if there had been no subsequent sale by Ramsey to Westinghouse after the transfer to the latter as collateral for a loan of $5,000, and Ramsey had not elected to purchase the stock before plaintiff would have been entitled to the retransfer from Westinghouse, he would have been obligated to pay the latter the sum of $5,000 loaned upon the stock. Before the alleged conversion, plaintiff had received $5,000 on his stock collected and paid him by Ramsey. It is not alleged or claimed that he ever had repaid to Ramsey or Westinghouse the amount so loaned. We think plaintiff’s real interest in the stock should be deemed to have been $5,000, and that his recovery should have been limited to that sum and the interest thereon.

If the judgment from which this appeal is taken is allowed to stand, the respondent will receive for the stock the amount of the judgment, $10,000 and interest, and also the $5,000 paid by Ramsey to the New York & Montana Mining & Milling Company, on his account. Although Ramsey lawfully obtained for and paid for plaintiff $5,000 on the stock before the alleged conversion, and although such conversion was of stock legally mortgaged for one-half its value, plaintiff, by the judgment herein, was allowed to recover the full value of the stock. We think plaintiff’s damages should have been limited to the actual amount of his interest in the stock at the time of the alleged conversion.

There are other questions raised which we do not think it necessary to consider or discuss. For the reasons above suggested, the judgment should be reversed, a new trial granted, and the referee discharged; costs to abide the event. All concur.  