
    The First National Bank of Baltimore vs. Frances Cornelia Taliaferro.
    
      Usage — Evidence—Contract—Privity—Part only of Contract not Admissible — Negotiable securities — Measure of Damages.
    
    No custom or usage can ever be allowed to contravene the law.
    No custom or usage prevailing among banks, bankers, and brokers can change the legal character of a power of attorney, and convert it into a totally different instrument, capable of effecting results never contemplated by the person executing it.
    Certain blank powers of attorney executed by T. and by her delivered to V., merely authorized V. to sell certain registered Virginia consols belonging to T. and by her entrusted to Y. for sale. In an action by T. against a bank in Baltimore, to which Y. had hypothecated said consols as security for his own debt thereto, it was Held:
    That evidence was inadmissible to prove, that according to a custom or usage among banks, bankers, and brokers in Baltimore, registered Virginia consols were treated as negotiable, when accompanied by powers of attorney like those executed by T.
    The defendant after proving that Y. was out of the State of Maryland, and that the contract made by him with the defendant, when Tie pledged these consols, was delivered up to him after the sale of the consols by the defendant, offered to prove the printed part of the contract under which V. hypothecated said securities. On objection it was Held:
    That said offer was properly refused,
    1st. Because the contract made by Y. and the defendant, without the privity or knowledge of T., could have no effect upon her right to recover from the defendant.
    2nd. Because the offer was only to prove the printed part of the contract, which implied that there was some other part in writing, and the contract, if admissible at all, was only admissible in its entirety.
    The securities hypothecated were certificates of indebtedness, with interest coupons attached, three of which coupons on each certificate were due at the time of the hypothecation. Held:
    1st. That the measure of damages was not limited to the value of the coupons overdue on the certificates at the time they were pledged, and such value as the certificates themselves would have had with the coupons not then due deducted.
    2nd. That as the overdue coupons had not been detached, from those not due, the same rule of liability must apply to all of them, and the defendant could not he relieved from liability for the unmatured coupons on the ground, that being commercial paper payable to hearer and passing by delivery, the defendant acquired a good title to them by reason of its having taken them from Y. for value before maturity.
    Appeal from the Superior Court of Baltimore City.
    The case is stated in the opinion of the Court.
    The cause was submitted to Robinson, Irvins, Bryan, Fowler, and McSherry, J.
    
      Alexander Preston, J. Alexander Preston, and Wm. A. Fisher, for the appellant.
    Evidence is admissible of the usage of a trade or locality to add a term to the contract, or a special meaning to a word, and the parties are presumed to contract in reference to the usage. Appleman vs. Fisher, 34 Md., 540.
    In Kraft vs. Fancher and Brown, 44 Md., on pages 215, 216, Judge Alvey says: “It is now well settled, in the absence of any clear expression to the contrary, that he who deals in a particular market, must be taken to deal according to the custom of that market,' and ha who directs another to make a contract at a particular place, must be taken as intending that the contract may be made according to the usage of that place; and in this last case it is quite immaterial, that the principal himself is unacquainted with the usage or custom with reference to which his agent or factor may deal.” In this case, Yeazey certainly was the agent of Miss Taliaferro,, “to sell, asign, transfer and set over,” the certificates of indebtedness, upon which this case is brought; as in Kraft vs. Fancher, &c., the appellee Avas dealing in a particular market, and accordingly must be taken to have dealt in such market, with reference to the custom in such market, and it is immaterial Avhether she knew of such custom or not.
    Evidence of this usage, viz., that transfers of stock, of the character used, were considered by all bankers and brokers, as including the power to pledge, in the authority to sell, does not contradict the powers in any way, and is not inconsistent with or repugnant to the terms of the powers. The jury should determine whether a usage exists or not. Burroughs vs. Langley, 10 Md., 248.
    The only ground upon, which evidence of a usage universal among persons dealing in the class of securities, in controversy could be rejected, is that the parol evidence contradicts or is repugnant to the express terms of the written contract. If hoAvever, the appellant proved, as was offered, by its counsel, the universal construction of the stock transfers, to include the power to pledge, in the term sell, or in the other expressions, then this contract of the appellee must be taken to have heen made with reference to such usage, and there is no repugnancy.
    It is always permissible to show that an individual has a -habit of using some expressions in a sense different from their ordinary signification. In like manner evidence is admissible of a general usage in a particular place and trade, to use certain expressions in a certain sense. It is an extension merely of a familiar principle, and if it be allowable to prove that one person uses certain words in an unusual manner, it would seem difficult to exclude evidence of a similar use by all persons in a trade. Abbott’s Trial Evidence, 297; Myers vs. Sarl, 7 Jurist, N. S., 97.
    The appellant’s second exception is practically included in its first exception, and the same reasons are urged in favor of this exception.
    The third exception was to the ruling of the Court excluding the printed part of the note or obligation, which was given by Mr. Yeazey to the Bank, at the time of the loan. The note was in the possession of Mr. Yeazey, who was in Minnesota. Secondary evidence of the note was admissible. 1 Taylor on Evidence, sec. 441.
    The appellant’s fourth and last exception was taken for the purpose of reviewing the Court’s instructions in reference to the measure of damages. The appellant and appellee offered conflicting prayers.
    The true measure of damages should be the value of the overdue coupons at the time they were pledged by Yeazey, together with such value as the bonds themselves would have, with the coupons not then due deducted.
    The coupons on these bonds were negotiable, being in this form:
    
      “The Commonwealth of Virginia will pay the bearer, dollars, 1st July, 18 , interest due on bond No.
    Coupons containing negotiable words pass from hand to hand by mere delivery, as bank notes, vesting in the holder an absolute title. Burroughs on Public Securities, 574; Spooner vs. Holmes, 102 Mass., 503; Mercer County vs. Hacket, 1 Wall., 83; Clark vs. Iowa City, 20 Wall., 583; Ketchum vs. Duncan, 96 U. S., 662.
    This principle was also recognized in this State in the case of the Chesapeake and Ohio Canal vs. Blair, 45 Md., 102. In that case the Court say, on page 110:
    “The bonds in question were coupon bonds, in the usual form of such securities, and intended to pass by nominal delivery, and which, if not destroyed, have the qualities of negotiable paper. * * * * Such bonds are treated as negotiable by the commercial usages and understanding of the country, and their negotiable quality has been fully recognized, not only by many of the State Courts, but by the Supreme Court of the United States, in repeated decisions, and being negotiable, the rules applicable to negotiable paper apply to them.”
    The coupons unmatured on these bonds, passed by delivery to the appellant, with all the privileges of ordinary commercial paper. The title passing by delivery, the holder for value, without notice, obtains an absolute title, although the coupons may have been fraudulently procured or even stolen from the true owner. McGrath vs. Van Stavoren, 22 Albany, L. J., 271; County of Bates vs. Winters, 97 U. S., 83; New Orleans vs. Clark, 95 U. S., 644; Marcy vs. Township of Oswego, 92 U. S., 637; Smith vs. Sac County, 11 Wall., 139.
    
      J. S. T. Waters, Frederick W. Brune, and Stewart Brown, for the appellee.
   McShebry, J.,

delivered the opinion of the Court.

This case is before us for the second time. On the first occasion Miss Taliaferro was the appellant; now the bank has appealed from the judgment recovered against it. On the former appeal it was decided that the blank powers of attorney signed by Miss Taliaferro, and delivered by her to I. Parker Veazey, merely authorized Veazey to sell the registered Virginia consols belonging to Miss Taliaferro, and entrusted by her to him for sale; and that by no possible construction could those powers of attorney be regarded, as conferring authority upon Veazey to hypothecate the consols to the bank as security for his own debt thereto. It was further held that the Bank had notice of Veazey’s restricted authority, and that it consequently did not acquire any title to these securities against the rightful owner. 71 Md., 200.

Upon the second trial, which resulted in the judgment from which this appeal was taken, the bank offered to prove by several witnesses that, according to a custom or usage amongst banks, bankers and brokers in Baltimore, registered Virginia consols were treated as negotiable, when accompanied by powers of attorney like those executed by Miss Taliaferro; but the Superior Court excluded the proffered testimony, and this ruling forms the ground of the first and second exceptions in the record now before us. There is no error in this ruling. Without considering the numerous objections urged against the admissibility of this testimony, it is sufficient to observe that no custom or usage can ever be allowed to contravene the law. If the powers of attorney were only powers to sell, and did not authorize Veazey to pledge the securities for his own debt, as was distinctly decided on the former appeal, — and that decision must govern us now, Brown vs. Somerville, 8 Md., 444,— no custom or usage prevailing amongst banks, bankers and brokers could possibly change the legal charater of the powers of attorney, and convert them into totally different instruments capable of effecting results never contemplated by the person who executed them. Foley & Woodside vs. Mason & Son, 6 Md., 37; Allen vs. Saint Louis Nat. Bank. 120 U. S., 20. In the case last cited, the Supreme Court, in disposing of a similar q uestion observed, that the finding of the Circuit Court that the transactions between the factors and the plaintiff “were all according to the general usage of trade between banks and cotton factors at Saint Louis,” could not aid the plaintiff, “because the usage attempted to be set up was not shown to have been known to the defendants or to other owners of cotton; and because it ivas contrary to law. in that it undertook to alter the nature of the contract between the factors and their principals, which authorizes them to sell, but not to pledge.” The custom or usage referred to in the ojsinion filed on the first apqseal in the case at bar, was a custom or usage in accord with the legal effect of the powers of attorney, and not one repugnant thereto.

The appellant, after showing- that Veazey was out of the State of Maryland, and that the contract made by him with the bank, when he pledged these consols, was delivered up to him after the sale of the consols by the bank, offered to prove the printed part of the contract under which Yeazey hypothecated Miss Taliaferro’s securities. The refusal of the Court below to allow this to be done is the error complained of in the third bill of exception. This ruling was clearly correct. What possible effect could the contract made by Yeazey and the bank, without Miss Taliaferro’s privity, or knowledge, have upon her right to recover from the bank? Yeazey was not her agent to pledge the consols, but only to sell them; and nothing that he did in palpable breach of his restricted and limited authority — restricted and limited as the bank necessarily knew or had reason to sirspect — could in any way bind or estop Miss Taliaferro, or confer title to the securities upon the hank. But beyond this there is another insuperable objection. Tbe offer was to prove only tbe printed part of tbe contract. This implies that there was some other part in writing. So the offer was to prove part of an entire contract. If admissible at all, it was only admissible in its entirety.

Tbe fourth and last exception relates to tbe action of tbe Court in granting tbe prayers of tbe appellee, and in rejecting that of tbe appellant. Tbe instructions granted, at tbe instance of tbe appellee, were clearly right. They need not be examined here, because they are fully -supported by tbe opinion filed in this case on tbe former appeal. Tbe prayer presented by the appellant, and rejected by tbe Superior Court, was properly rejected. It is in tbe following words: “If the jury shall find a verdict for t.be plaintiff, the measure of damages should be tbe value of tbe coupons overdue on the certificates of indebtedness at tbe time that they were pledged by I. Parker Veazey to tbe defendant, together with such value as tbe bonds themselves would have bad with the coupons not then due deducted/'

Each certificate of indebtedness, together with tbe coupons for the semi-annual interest thereon, was printed on a single sheet of paper. Tbe coupons bad not- been detached from tbe certificates. Three of tbe coupons on each certificate were overdue when Veazey pledged tbe securities. Now, the prayer asked tbe Court to say to the jury, as the law of tbe case, that though Miss Taliaferro might' recover from the bank tbe value which tbe certificates would have bad if detached from tbe coupons, and tbe value of the three overdue coupons, because of tbe notice which tbe bank had of Veazey's want of power to pledge tbe certificates and overdue coupons; yet the bank was not responsible to Miss Taliaferro for the value of the unmatured coupons, because being commercial paper, payable to bearer, and passing by delivery, the bank acquired a good title to them by reason of- its having taken them from Yeazey for value before maturity. But did it take them without notice? Upon what principle can the bank claim that it is an innocent holder of coupons printed on the middle of a sheet of paper, whilst it is not an innocent holder of the certificate printed on one end of the same sheet, and not an innocent holder of the remaining coupons printed on the other end of the same sheet — all being undetached, and all acquired at the same time, under a power of attorney, which did not authorize the agent to pledge any part of the securities? The notice which affected the bank was not confined to the certificates alone, but, of necessity, extended to the securities, and to every part of the securities, as they then were. If the bank knew, or was bound to know, that Yeazey had no power to pledge the certificates, it equally knew, or was bound to know, that he had no power by pledging the certificates to confer title to the coupons which were printed on the very same sheet of paper with the certificate. His authority to deal with these securities was the power of-attorney, and that alone, and it gave him no more right to pledge undetached and unmatured coupons than it did to pledge the certificates themselves. The cases relied on by the appellant relate to detached coupons. But no case that we are aware of has ever held that one who takes a bond, and its undetached and unmatured coupons under such circumstances as to charge him with notice that the title to the security is not in the person negotiating it, still acquires a good title against the rightful owner, not to the bond itself, but, to the unmatured coupons attached to it, and that, too, simply because those coupons are unmatured.

(Decided 18th March, 1890.)

Finding no errors in tbe rulings of tbe Superior Court, its judgment will be affirmed.

Judgment affirmed, with costs.  