Merchants' & Manufacturers' National Bank v. William A. Baeder Glue Co. , 164 Pa. 1 ( 1894 )

Opinion by

Me. Justice Williams,

The plaintiff bank was a judgment creditor of the Baeder Glue Company. It caused an attachment execution to be issued upon its judgment and summoned William H. Kern, among others, as a garnishee. He pleaded “ nulla bona,” and a trial was had upon the issue so raised. The question presented by this issue and actually tried in the court below was whether Kern was indebted to the glue company, or had in his possession any of its property for which he was liable to account. It appeared from the evidence that he had a large demand against the company and had received property belonging to it as collateral security for this demand. The principal item of the property so received by him was a warehouse receipt for about twenty-two hundred barrels of glue stored in the city of New York. He sold the glue for twenty-four thousand dollars to one who within a few days sold it for thirty-two thousand dollars. Three questions were presented upon these facts: First, what was the true amount of the demand held by Kern against the glue company ? Second, what amount had he received from the company in securities, or from the sale of col-laterals, which was applicable to the payment of the debt due him? Third, did the sums so received by him satisfy his just demands against the company and leave a balance in his hands for which he ought to account ? If so, what was the amount of such balanoe ?

These were questions of fact to be determined by the jury upon the evidence, and the learned trial judge submitted them in an impartial charge, and with proper instructions. The verdict is a final disposition of them. But some questions are now raised that do not seem to hav.e figured at the trial, and are pressed with great earnestness as reasons for a reversal of this judgment. Among these is that of the power of a court in this state to seize, or exercise jurisdiction over, property actually situated in another state. We do not understand that any such power was exercised or asserted by the court below. There was no attempt at seizure of the glue stored in the city of New York, no service on, or notice to the warehouseman. It was the money in the pockets of the garnishee arising from the sale of collaterals held by him, and his own bona tides in making such sales, that the attaching creditor, standing in the shoes of his debtor, had a right to inquire into.

The glue company could, and in the light of the verdict it is proper to say that it did, waive or surrender its right to require an account from William H. Kern; but if this was eollusively done it did not bind the creditors of the company. The holder of collateral securities is not bound to obtain the highest possible price for them, but he is bound to the exercise of common business prudence and of good faith in his management and conversion of them. His debtor may acquiesce in, and assent to, his fraudulent conduct for himself, but he cannot bind his creditors by such acquiescence or consent. They have a right to demand, what he ought in good conscience to demand, an account from his creditor for the collaterals placed in his hands. This disposes of the sixth, seventh, eighth, ninth, tenth and eleventh assignments of error.

The admission of the testimony of Nagle and Pearce is complained of in the third, fourth and fifth assignments. This testimony was offered as bearing upon the good faith of William H. Kern in dealing with the warehouse certificates, and as tending to show collusion between him and his son, who was an officer and stockholder in the Baeder Glue Co., for the purpose of covering the assets of the company and placing them beyond the reach of creditors. We think it was competent for this purpose, and the errors assigned to its admission are overruled.

Nor can we assent to the proposition made in the ninth head of the argument for the appellant, that there was no evidence that justified the submission to the jury of the liability of William H. Kern, to account for the sum of $3,850 paid through Hood Gilpin. This money was paid by L. C. Haughey to relieve himself from a criminal prosecution for the embezzlement of moneys belonging to the Baeder Glue Co. Howard R. Kern was the prosecutor acting in behalf of the company. A settlement was made with him and the prosecution discontinued by his leave. The presumption is that what he did as prosecutor he did on behalf of the company he represented. He-had no right to sacrifice the company or its just claims for his own private advantage, and if he was base enough to engage to do so, or to permit the prosecution for the embezzlement of the money of the company to be discontinued in consideration of a bribe paid to him as an individual, he ought not to be heard to allege his own turpitude. The money paid should go, where it of right ought to go, to the party whose money was embezzled and whose officer conducted the prosecution. We see no error in this record that requires us to reverse the judgment, and it is now affirmed.

Mr. Justice Mitchell dissented.