
    H. O. Andrews, Plaintiff and Respondent, v. Wm. B. Clerke, (survivor, &c.,) Defendant and Appellant.
    Where a defendant, by agreement between him and the plaintiff, purchases with his own money, stock and bonds for the former, upon a commission specified, and agrees to hold them until a day named and then sell them for the plaintiff; and the plaintiff deposits with the defendant a sum of money as security to him against loss, and agrees to watch the market value of the stock and bonds while the defendant is to so hold them, and in case of a decline in such value to give him additional security against loss, and if he fails to do so, that the defendant may sell the stock and bonds at the brokers’ board in the city of New York; that their market value as between the parties should be the price at which they were bought and sold at the daily meeting of said board of brokers; and on the 31st of October, 1855, on demand of the defendant, §1,012.25 of additional security was furnished to him; and on Saturday, the 3d of November, 1855, the market value of said stock and bonds was such that with the securities then held by the defendant, he was folly secured against loss; and on Monday, the 5th, (the stock falling in the market,) the defendant, without notice to the plaintiff and without his consent, sold the stock and bonds at the brokers’ board at their then highest market value, and at prices amounting in all to $16,850, which was $156.63 less than the plaintiff owed him on a settlement made on the basis.that the sale was authorized; whereas, charging the defendant with their market value on the day until which he had agreed to hold them, there would be due to the plaintiff on the latter day, the sum of §1,093.16, it was held:
    I. That the plaintiff was not in default, by reason of not having anticipated on the morning of the 5th, that the value of said stock and bonds would decline on that day, and by not having given to the defendant additional security on that day before the board of brokers met.
    2. The plaintiff not being in default up to the time of the sale of the stock and bonds by the defendant; such a sale was unauthorized and illegal, and the defendant by reason thereof is liable for the market value of said stock and bonds on the last day of the period during which he had agreed to hold them.
    
      3. According to the substance and legal effect of the transaction, the stock and bonds when so purchased became the property of the plaintiff, subject only to the defendant’s lien thereon for his advances and commissions.
    (Before Boswobth, Oh. J., and Woodruff, T.)
    Heard, November 9th;
    decided, December 4th, 1858.
    This is an appeal by the defendant from, a judgment entered against him on the report of Henry Nicoll, Esq., as referee. The action is brought by Henry 0. Andrews against William B. Clerke, as survivor, &c., of Thomas Clerke, deceased.
    The complaint, dated 12th January, 1856, alleges the death of Thomas Clerke, on the 16th of November, 1855, and his prior partnership with the defendant, under the firm of W. B. Clerke & Co.
    The possession by the defendant’s firm, November 5, 1855, of certificates of 200 shares of Erie Railroad stock, and $10,000 worth of Erie Railroad bonds, the property of the plaintiff, subject only to a lien for moneys advanced by them, of an amount which the plaintiff could not state precisely, but less than the par value of said stock and bonds, during 'the period from the 5th of October, 1855, to the tenth of that month; which stock and bonds the defendant’s firm agreed to hold for the plaintiff’s use, subject to his redemption, for sixty days.
    That defendant’s firm sold said stock and bonds on the 5th of November, 1855, without notice .to him, and applied the proceeds to their own use, and have not paid the same to the plaintiff although requested.
    It demands judgment for $18,275, and interest, allowing advances made by defendant’s firm to the plaintiff to be deducted therefrom. • .
    The answer, dated 19th March, 1856, denies that the defendant had in his possession such bonds and stock as are mentioned in the complaint, being the property of the plaintiff.
    It also denies the alleged agreement to hold stock and bonds for plaintiff’s use.
    Also any sale and disposal of bonds and stock of the plaintiff without notice to him; also the market value thereof as stated in the complaint.
    It avers an agreement of plaintiff to deliver to defendant’s firm further security for the sum advanced, if the market price of certain bonds and stock theretofore held as security for certain advances by them to him should decline, and in case he did not, the defendant’s firm should be at liberty to sell the same at the board of brokers without notice.
    Also the decline of such stock and bonds in the market before any sale, and their continuing to decline, and reasonable diligence by the defendant to find the plaintiff to notify him.
    It sets up, by way of counter-claim:
    Advances to the amount of..................... $17,633 72
    Services to the amount of...................... 150 00
    The reply, dated 11th April, 1856, admits the making of advances but denies the amount, and the plaintiff not having the means of fixing it, leaves the defendant to make proof; and avers that a large amount was advanced at usurious rates.
    The report of the referee shows, that the firm of William B. Gierke & Go., ( consisting of the defendant and Thomas Gierke,) in February, 1855, purchased, with their own money, for the plaintiff, $10,000, of certain mortgage bonds of the New York and Erie Railroad Company, and on the 6th of April, 1855, they also, in like manner, purchased 100 shares of the stock of said company. They were, by agreements made, from time to time, between them and the plaintiff, to hold the bonds until the 5th, and the stock until the 9th of December, 1855. They were, then, to sell the same for and on account of the plaintiff, and retain out of the proceeds the purchase money, and interest thereon, and certain commissions, agreed upon between them and the plaintiff.
    As security to them, against loss, the plaintiff deposited with them a certain amount of money, and it was agreed between them that, the plaintiff should watch the market value of the said stock and bonds during the time, that the said defendants had as aforesaid agreed to hold the same, and should from time to time, in case of a decline in the market price of said stock and bonds, give to them additional security against loss, and in case of his failure to do that, they should be at liberty to sell the said bonds and stock at the brokers’ board in the city of NewYork.
    The market value, of said bonds and stock, was fixed and established, as between, these parties, by the prices, at which, the same were bought and sold at the daily meetings of said board of brokers in the city of New York.
    On the 81st of October, 1855, the plaintiff, on the demand of said firm, furnished them additional security to the amount of $1,012.25.
    On Saturday the 3d of November, 1855, the market price of said stock and bonds was such that, with the securities furnished to and held by the said firm, they were fully secured against loss.
    On Monday the 5th of November, 1855, the said firm sold said stock and bonds at the brokers’ board in the city of New York, at the highest market prices at said board on that day, and at prices amounting in the aggregate to $16,850. Such sale was made without notice to the plaintiff and without his consent.
    On the 6th of December, 1855, the market price of said bonds was $87, per $100, and if sold that day would have produced $8,700. The 100 shares of stock, at their market price on the 10th of December, 1855, would have produced $9,500. If the sale made on the 5th of November, 1855, is to be treated as authorized and justifiable, the plaintiff on that day, after being credited with the proceeds of the actual sales, would be indebted to said firm in the sum of $156.63.
    If such sale was unauthorized and a breach of the firm’s agreement, and if the firm is chargeable with the market value of said bonds on the sixth and of said stock on the 10th of December, 1855, then the sum, which the plaintiff is entitled to recover, is $1,093.16, and interest thereon from the 10th of December, 1855, which interest, to the date of the referee’s report, amounted to $173.85.
    The said Thomas Clerke died on the 16th of November, 1855. The referee reported that, the plaintiff was entitled to judgment against the said William B. Clerke as survivor for the sum last mentioned, amounting with interest to the 18th of March, 1858, (the date of his report) to the sum of $1,267.01.
    Exceptions were duly filed to the decision of the referee. Judgment having been entered on his report, the defendant appealed from it to the General Term.
    
      Richard 0. Gorman, for appellant.
    
      
      M iS. Van Winkle & Geo. A. Halsey, for respondent.
   By the Court.

Bosworth, Ch. J.

—By the agreement, between the plaintiff and the defendant’s firm, as it is found by the referee, the said firm had no right to sell the said bonds and stock prior to the 5th of December, 1855, even though there should be a decline in the market price of the same, unless the plaintiff failed, upon the occurrence of such a decline in the market value, to give to said firm additional security against loss. On Saturday, the 3d of November, 1855, the market value of said stock and bonds was such, that the securities, held by said firm, fully protected them against loss. On the fifth, the next business day, the firm sold said stock and bonds, and, (tested by the result of such sale) the firm was unsecured by the sum of $156.63.

The plaintiff, on the facts as found, was not in default by reason of not having anticipated, on the morning of the fifth, that the market value of the stock and bonds would decline during that day, and by not having given to the defendant, additional security, on the morning of that day, before the board of brokers met. On the 31st of October, 1855, on being requested by defendant’s firm, to do so, the plaintiff had given to them further security. That security on the day preceding the sale, was as ample as it was his duty to make it, or the said firm had a right to demand. The plaintiff was not required, because he had not agreed, to furnish further security before a decline occurred. He agreed to furnish it, in case a decline occurred. Assuming that, the price of sale, at the brokers’ board, is, as between these parties to be the test of the market value of such stock and bonds, then until sales had been there made, on the fifth of November, it would not be determined that the market value of the stock and bonds had declined. The plaintiff ought not to be held in default, in case a decline occurred during the fifth, if he furnished additional security before the brokers’ board met on the morning of the sixth. We think, that the plaintiff had not failed to perform the agreement, on his part, by reason of not having furnished further security on the 5th of November, 1855, before such sale was made.

When the stock and bonds had been purchased by William B. Gierke & Co., they were, as between them and the plaintiff, the property of the latter. The firm, by the agreement, had a right to retain and sell them, when the time arrived at which they were authorized to sell. We do'not doubt, however, that on any day prior to the arrival of such time, the plaintiff, by paying or offering to pay all that the defendants would be entitled to demand or retain, if they should hold them until the time "to sell arrived and then sell them, would have a right to require the stock and bonds to be transferred and surrendered to him.

The substance of the transaction is the same as if the plaintiff had himself made the purchases, and borrowed of the said firm the money required to pay for them, and had then, to secure the defendants, transferred the stock and bonds to them upon the same agreement as to holding and selling them, and reimbursing to the defendants the amount of their loan, and as to keeping them secured by new securities, if necessary, until the time stipulated for selling the stock and bonds had arrived.

It cannot be said, therefore, that the facts proved, (as found by the referee,) make a case differing in its entire scope and meaning, or substantially from that presented by the allegations contained in the complaint.

In good sense, the stock and bonds were the property of the plaintiff and were held by the said defendants as a pledge to secure the repayment of the moneys advanced to complete the purchase with the interest thereon and to secure also the payment of their commissions.

If this view be correct, then the defendants could not lawfully sell the stock, without first notifying the plaintiff of the time and place of such sale, even though it was the duty of the plaintiff to furnish further security on the morning of the 5th of November, 1855.

The fact that the agreement, in terms, authorizes the defendants to sell, in case of the default of the plaintiff to furnish further security upon a decline of the market value occurring, confers no power which the law has not granted to every pledgee in case of a default to pay the debt secured when due. (Stearns v. Marsh, 4 Denio, 227; Wilson v. Little, 2 Comst., 443.)

It confers no more power than a mortgage of real estate, which in terms, authorizes the mortgagee to sell, in case the mortgagor fails to pay, on the maturity of the mortgage debt, and which does not provide how or when the mortgaged property shall be sold.

It will not be pretended, I think, that, in such a case the ■ mortgagee could, by a private sale, without notice to the mortgagor, cut off the mortgagor’s equity of redemption.

We are of the opinion that the plaintiff was not in default, in the matter of furnishing further security, when the sale was made; and that the sale was illegal and a breach of the defendant’s contract; and that the judgment should therefore be affirmed.

Judgment affirmed.  