
    Frank P. Byrne and Others, as Executors, etc., of John Byrne, Deceased, Respondents, v. Camille Weidenfeld and Isaac B. Newcombe, Appellants.
    Second Department,
    June 8, 1906.
    Conversion of securities — plaintiff must show right to immediate possession at time of conversion — evidence — error in excluding evidence that securities were pledged with third person with plaintiff’s consent.'
    Conversion is, so to speak, based not upon eepit but deiinet, and á plaintiff in , order to recover is bound to show an existing right to immediate possession at the time of the alleged conversion.
    Hence, when in such an action to recover the value of securities pledged with the defendant, the latter answers that the parties were engaged in a joint venture, and that the securities had been pledged with the consent of the plaintiff to a third person, it is error to exclude evidence of such joint venture showing that the securities were still pledged with the third person- and that the debt to him was still undischarged.
    Such defense is admissible under a general denial.
    A promise by the defendant to return the securities if the plaintiff paid a sum due is not inconsistent with such defense, for the action is not founded upon the contract.
    Appeal by the defendants, Camille Weidenfeld and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Nassau on the 28th ' day of February, 1905, upon, the verdict of a jury rendered by direction of the court after a trial at the Nassau Trial Term.
    'Edward Lauterbách \_Henry L. Bcheuermcm, Chernies L. Craig and Charles A. Jackson with him on the brief], for the appellants.
    
      Edward J. McGuire, for the respondents.
   Jenks, J.:

On November 1, 1897, the defendants, a firm of stockbrokers, then in liquidation, sent a statement to Byrne showing his indebtedness to it of $600,000 and that it held his. securities against such indebtedness. The upshot of interviews and correspondence was an offer by Byrne to pay that debt if the defendants would deliver his securities to him, and an acceptance of such offer by defendants. At the appointed place and time, November 10,1897, tender of that debt, as stated by defendants, and demand for the securities was made,.but the defendants answered that they were unable to deliver . the securities. -This action is for a conversion based upon that default. At the close of the case the court, upon motion of the plaintiff, and in the face of requests for submission, and under . exceptions by both the defendants, directed a verdict for the plaintiff for 8361,591, the difference between his debt to the defendants and the market, value of the .securities.

The principal question on this appeal is presented by the. ruling in exclusion of testimony offered, to establish a defense. The complaint of conversion is, so to speak, based not upon cepit but cletinet, and the plaintiff was bound to show, an existing right to the imme-. diate actual possession of the securities'-at the time of the alleged conversion. (Smith v. Smalley, 19 App. Div. 519, and authorities cited.) And, therefore/ the deféridants were entitled to show that at the time of the alleged conversion the immediate right to such possession was in a third person. ^ For if so it was not in the plaintiff, and if’ not in the plaintiff he could not complain of such a conversion. Such evidence did not necessarily attack plaintiff’s title, but necessarily challenged his then right of immediate actual possession and thus tended to absolve the defendants from a chaige of conversion. And it. was' in any event admissible tinder -thé general denial, pleaded by the defendant. (Griffin v. Long Island R. R. Co., 101 N. Y. 348, 353 et seq.; Ontario Bank v. N. J. Steamboat Co., 59 id. 510; Siedenback v. Riley, 111 id. 560.) Flow the version of the defendants that Was excluded is that they; arid the plaintiff were joint venturers, in schemes requiring large, sums of money which had. been raised upon the notes and obligations of the defendants seen red. by the pledge of securities, includ-. ing the securities of the plaintiff or part of them ; that at the time of the alleged con version such securities Were out at-such pledge; that' the' common ventures had proved unprofitable"; that the debt behind that pledge Was undischarged and that the' pledgee was in possession of the'pledge.- "

It is to be noted that the defendants do not assert that this pledge was made by them for their own benefit perforce of. their possession of the bonds and their- interest therein as collateral for the debt of the plaintiff to them. If this were the fact, then the tender of that debt and the demand sufficed to charge the conversion upon them, for if then the securities were out of their possession, under such circumstances they were bound at once to regain them. (Lawrence v. Maxwell, 53 N. Y. 19.) As the interest of the defendants in. such securities as collateral for plaintiff’s debt to them is not the basis of the pledge by the defendants, of course that debt is not the measure and the limit of any lien'of the third party as pledgee that may charge the plaintiff' as owner of the securities. With the assent' of the plaintiff, the defendants could charge the securities by a pledge, valid against the plaintiff, to the limit of that assent. (Lawrence v. Maxwell, supra.) If at the'time of the alleged conversion they'had pledged them within such assent and certainly for the joint benefit, then until the debt of the pledgée was tendered or discharged, the pledge was entitled to the possession, and not the plaintiff. (Lewis v. Mott, 36 N. Y. 395 ; Thompson v. St. Nicholas Nat. Bank, 113 id. 332 ; Donald v. Suckling, L. R. 1 Q. B. 585 ; Union Bank v. Laird, 2 Wheat. 390 ; Western Transportation & Coal Co. v. Kilderhouse, 87 N. Y. 430, 440.) The defendants were not precluded from such defense to this action. The case for the plaintiff without the evidence excluded may have justified a direction of the verdict, but the question, of course, is whether such exclusion was right, and if not, whether it was prejudicial. It may well be that" the uncontradicted evidence showed that the defendants agreed to deliver up the securities on payment of a certain sum, and that they failed to do so. But they are not sued for a breach of contract, but for conversion. The plaintiff did not offer to discharge all liens against the securities, but only to pay his indebtedness to the defendants provided they would restore his securities, and the defendants "did not undertake to state the extent of the lien, but only the amount of the plaintiff’s .indebtedness to them upon the securities which they had Carried for him. All that was said, written or undertaken by the defendants may have been entirely consistent with the existing pledge of the securities with others for the obligations of the joint venturers. If the plaintiff was cognizant of the course-of the venture, the situation of affairs and the powers of the defendants to pledge tlie securities upon his assent, express .or implied, and certainly of a pledge accordingly, it was not necessary to inform him of the situation. The letters of the defendants may be read to indicate tlie existence of such pledge inasmuch as the plaintiff is informed of the demand for the payment of the obligations against which the securities aré held by a third person and -of the thréátened sale of them'by that person upon the default. On' the other hand, while the plaintiff in his conversion based on the detinet was not bound to show facts relevant to a conversion incepit (Lawrence v. Maxwell, supra), his letters do not express disapproval or surprise or censure at the fact that a third party in possession of the securities threatens a sale thereof. •

If it be asked then why the defendants, in view of an existing lien, undertook to deliver the securities, upon payment of their indebtedness from the plaintiff, which did not in law release the securities from tlie pledge,, it may be suggested . that they supposed that they could regain tlie securities^ perhaps by substitution, perhaps by payment of the $600,000 for their withdrawal, although not strictly entitled thereto, and yet thereafter found the pledgee inexorable. And it may be asked, on the other hand, why the plaintiff offered' to pay the indebtedness if- the defendants would restore the securities, provided lie knew that he was absolutely entitled to them upon' such tender Or payment, or else could hold the defendants for a conversion. "If he knew or had.reason to suppose that, the securi.ties were "with others subject to such a lien as is asserted by the '■ defendants, he may have -counted himself happy upon such a deliverance. If the plaintiff knew of such a lien or .had reason to suppose that it existed under his assent in the common venture, he cannot say that the defendants cannot be heard to assert that lien in defense fo this action,, simply because they stated his indebtedness to them. Upon tender and demand their .answer was that they regretted they would be unable to deliver the securities and they did not. thereby take any distinct ground that precluded ¡them from ' this ■ defense in conversion. (Everett v. Coffin, 6 Wend. 603.) As the evidence in support of the version .of the defendants is not before us, we cannot, determine whether it is cogent and convincing, or improbable and flimsy. . It may carry conviction despite the ' other evidence; it may invite incredulity upon its face or upon comparison, . That-.is not the question now up,- It suffices that we cannot see -that- the defendants are not prejudiced by the exclusion. ■

I think: that the defendants were entitled to offer it, and that the exclusion requires a reversal of the judgment and the granting of a new trial, costs to abide the event. Discussion of the other inter-. esting questions raised and argued with ability and ingenuity by both of the learned counsel is, therefore, unnecessary.

Hirschberg, P. J., Hooker, Rich and Miller, J J., concurred.

Judgment reversed and new trial granted, costs to abide the event, , -  