
    WILLIAM SMITH, Plaintiff, v. CHARLES L. FROST, Defendant.
    RULINGS OF THE COURT ON THE TRIAL.
    Testimony received must be limited in its effect as provided BY SUCH RULINGS.
    Amendments to conform pleadings to proofs, when allowed.
    In this action, the form of the complaint was for the unlawful conversion of bonds of plaintiff by the defendant.
    The proofs established that a right of action existed in favor of plaintiff, by reason of a promise of the defendant, and of the connection of the latter with the company who issued the same.
    Plaintiff at the close of the trial moved to amend his complaint so as to conform it to his proofs. The court referred the plaintiff’s application to the general term, and after directing a verdict for the plaintiff, ordered all the exceptions to be heard in the first instance at general term.
    It appeared that all the testimony that established a cause of action in favor of plaintiff had been taken under the specific objections and exceptions of the „defendant to all evidence of this class, except only so far as it would tend to show notice to defendant of the plaintiff’s claim; and the court expressly ruled that it should be limited to that effect solely, and that was the clear and expressed understanding between the court and the counsel at the trial, and the trial was conducted and concluded upon that theory.
    The general term held that under such circumstances the plaintiff should not be allowed to amend his complaint so as to conform the same to the proofs, for in such case the defendant would have judgment passed against him without a hearing upon the merits. He had a right, under his objections and exceptions, and the express rulings of the court, to consider that all this testimony was received, as applicable only to the cause of action stated in the complaint, it being limited by the court to the effect, the same would have to show notice to the defendant of the plaintiff’s claim. This testimony was not received for the purpose of establishing a cause of action founded upon defendant’s promise or contract.
    Held, that the real issue between the parties had not been tried, and a new trial was ordered, with costs to the defendant to abide the event.
    Before Sedgwick and Speir, JJ.
    
      Decided May 3, 1875.
    The complaint is in form for a conversion of certain .railroad bonds with their coupons. The court directed the jury to render a verdict for the plaintiff, and assess the damages at sixteen thousand four hundred and twenty-three dollars, and ordered the exceptions to be heard in the'first instance a,t- general term.
    The plaintiff and James W. Smith, in 1857, being the owners of ten bonds of the Peoria and Oquawka Railroad Company, of one thousand dollars each, secured by the first mortgage upon the railroad, borrowed of one Benjamin F. Camp, and placed these bonds with him as collateral to the loan. In 1862, they repaid him the loan, and on calling for the bonds, they found that he had borrowed five thousand dollars upon them of the Union Mutual Insurance Company, and had pledged the bonds to that company. Camp, in the meantime,, failed to pay his debt to the company and redeem the bonds, and the Peoria and Oquawka Railroad Company became embarrassed, and made default in their interest on these bonds. The bonds and mortgage contained a clause, that in case of default of interest for a certain time, the principal should be become due.
    In December, 1862, the bond holders and other creditors entered into an agreement, for the foreclosure of the mortgage upon its road, and the reorganization of the company. In the plan for foreclosure, the defendant was one of the three trustees to purchase and reconvey the property to a new corporation organized for the purpose. As trustee, he was, ‘’to receive all the bonds and coupons of the old company, and to purchase the road under the decree of foreclosure, for the benefit of all parties interested. A decree of foreclosure and sale was obtained November 23, 1863, and the road and property was sold March 21, 1864, and purchased by the defendant Edward Weston, and Henry L. Marquand, as commissioners, agents, and trustees of The plaintiff and other bond holders of the old company, and who associated under the plan of reorganization to form the Toledo, Peoria and Warsaw Railway Company, April 18, 1864.
    The bond holders who elected to come in under the plan, were required to pay each his proportion of the amount bid for the property at the sale by the defendant and his associates, which was sixty-six dollars and sixty-six cents, on each one thousand dollar bond, and ten per cent, upon the amount of the bonds held ’ by each person, for which a new bond of the new company was issued. In March, 1864, an arrangement was entered into that the Smiths should pay the assessment of sixty-six dollars and sixty-six cents, on each of the ten bonds of the old company belonging to them, which Camp had put temporarily out of their reach, and also the ten per cent, assessment upon the whole number of those bonds, and the new company should issue their new bonds, to which the holders were entitled, and place them in the hands of the defendant as trustee for the Smiths, and that the defendant should collect or receive the coupons and interest on those new bonds, and pay them over, deliver or account for them to the Smiths. This arrangement was to continue until they could get Camp to pay his note or should pay it themselves, if they could not make him do it, so as to get the old bonds from the Insurance Company where Camp had pledged them, and thus place the matter in such a condition that the new company could close it up and finally and definitely deliver possession of the new bonds to the Smiths. Accordingly the Smiths, through the agency of the defendant, paid this percentage on the purchase, and the ten per cent, on their bonds, and thus became entitled to seventeen bonds of the new company. One of these bonds they received for the one thousand dollars, which they paid. The remaining sixteen were put into the hands of the defendant.
    The defendant regularly paid the coupons and interest on these bonds to the Smiths, until and including December, 1869. The defendant was president of the new company from its organization. The bonds were entered in the books of that company as the property of the Smiths.
    The insurance company continued to hold Camp’s note, since March, 1858, and no interest had been paid on it since December, 1865, and repeatedly demanded payment of Camp. The defendant negotiated with the company to buy Camp’s note, and the company had the note protested on March 4,1870, and next day sold the bonds to defendant at private sale for five thousand dollars. This left one thousand four hundred dollars still due from Camp on the note. The plaintiff tendered to the defendant the amount he had paid the insurance company, with interest, and demanded the bonds. The defendant refused to surrender them.
    The interest of James W. Smith was assigned to the plaintiff before suit. The suit was then brought. The only testimony given by the defendant was to show that the Smiths in January, 1866, took a mortgage from Camp on Westchester County bonds to secure themselves from loss by reason of Camp’s having failed up to that time to redeem the bonds of the Smiths, which he had wrongfully pledged in 1858. The case was then submitted.
    The defendant’s counsel moved to dismiss the complaint. on the ground that no cause of action alleged in the complaint had been made out by proof. The plaintiff’s counsel applied to conform the pleadings to the proof, if necessary. The court referred the plaintiff’s application to the general term, and denied the defendant’s motion, to which he excepted.
    
      Hammond & Stickney, attorneys for plaintiff; James Emott, of counsel.
    
      Marsh & Wallis, attorneys for defendants; Luther R. Marsh, of counsel.
   By the Court.—Speir, J.

The defense setup on the trial was, that the proof did not conform to the complaint. The defendant’s counsel at the close of the trial moved to dismiss the complaint, on the ground that no cause of action alleged in the complaint had been made out by the proof. It is not claimed that no cause of action had been shown.

The objections to evidence offered during the trial were not placed upon the ground that it was inadmissible under the complaint, but that it was immaterial.

The defendant’s counsel claims that no evidence was given in this case relating to any right of action existing by reason of any alleged promise of the defendant, in regard to the bonds, or out of the defendant’s connection with the railroad company, except such evidence as was admitted solely on the question of notice to the defendant of plaintiff’s alleged ownership. And further, even if proof had been admitted generally, and not limited as he claims it was, yet the court would not, even if the evidence had made out a case, have permitted the plaintiff in the action for a tort, to have recovered on any promise or obligation growing out of the defendant’s dealings with the plaintiff.

This brings us at once to the complaint and the proofs. Passing for the moment the technical question of the form of the action, whether in tort or contract, the defendant would become liable equally to the the plaintiff if the plaintiff was in fact the real owner of the sixteen first mortgage bonds of the Toledo and Warsaw Railway Company, with the coupons attached. If the defendant after proper demand unlaw-t, fully converted them to his own use, the plaintiff would be entitled to their value after proof of the same. If the defendant held them as plaintiff’s agent, and refused to deliver them on application, he would be liable to the plaintiff in the same way and for the same amount. The allegation in the complaint that the defendant wrongfully possessed himself of the ten mortgage bonds of the Peoria and Oquawka Railroad Company, may be stricken out on motion, as redundant, when it appears.

Those bonds became discharged by the foreclosure of the mortgage, and I think it is plain enough the defendant acquired a perfect title to them by his purchase from the company. The company had good right to sell these bonds in open market, or at private sale, for whatever'sum they saw fit. The pledgor, Camp, could only object to such a sale. How while the defendant held these bonds lawfully, I think he treated them as belonging to the plaintiff, and became his agent to receive from him his percentage and assessment; and he received six hundred and sixty-six dollars and sixty-six cents to enable the plaintiff to participate in the new company, and undertook to recover from the new company the bonds, and hold them for the plaintiff. The defendant has not any title to the new bonds ; he holds them for the plaintiff. If it became necessary to pay the insurance company to recover the old bonds from them, and surrender them to the new company, he, in paying that five thousand dollars as plaintiff’s agent in the prosecution of his trust, and the only interest that he can have is to be reimbursed for the money he has paid out. This money has been tendered to him. He simply surrendered ten of the old bonds, and obtained the issue of the new ones. Being coupon bonds, title is acquired by the party purchasing them.

Thus far, the facts have been stated, deduced from the evidence presented under exceptions taken on the trial, for the purpose of showing that the defendant acquired title to these bonds by the purchase he made of them. It is, however, proper to state that all the testimony taken, showing or tending to show, that a right of action exists by reason of any alleged promise of defendant, in regard to the bonds, or out of his connection with the railroad company, was taken under the specific objections of the defendant’s counsel, and his exceptions to the ruling of the court admitting such testimony. The objections were, however, taken persistently at the out-set of the trial to all evidence of this class only so far as it would tend to show notice, and it was stated by the learned judge “that he would limit it to that.” This was, as appears from the case, the clear understanding between the court and the defendant’s counsel. Although it is quite apparent that the objection to this evidence was put upon the ground that it was not admissible in an action for conversion, yet the trial being conducted upon that theory to the end, should the court decide at general term that the pleading should be so amended to conform to the proof, the d f ndant would have judgment against him without being heard upon the merits, which he has a right to consider as secured to him by his objections and exceptions, and upon the limitations within which the testimony was restricted by the court. In this we think there was error. The result of the trial was, that a large amount of testimony was taken, which in view of the court made out a clear case for the plaintiff, and which up to the end of the trial was received, as the defendant had a right to suppose, as having no application to the question of the defendant’s alleged promise in regard to these bonds, or ont of his connection with the railroad company. The real issue between the parties has not been tried.

There should be a new trial, with costs to the defendant to abide the event.

Sedgwick, J., concurred.  