I concur in Mr. Justice BUSHNELL'S opinion as to the regularity of the real estate mortgage foreclosure. I also concur in the findings that plaintiffs are estopped to claim the dividends on the American Logging Tool Company stock which have been paid to the bank. However, I believe that some of the plaintiffs are not entitled to a return of their share of the stock held by defendants.
It is true that the trust instrument limited the trustee's power to sell, assign, or dispose of the corpus and conferred no right to pledge. The evidence shows that James R. Postal, the trustee, did pledge the stock, notwithstanding the testimony of Spencer F. Postal that he was told by a bank officer, many years after the pledge was made, that the stock was left with the bank only for the purpose of applying the dividends on the mortgage. The trial judge evidently paid little attention to this testimony of an alleged admission. He properly held that the written documents introduced in evidence conclusively show that the stock was pledged. We have italicized the significant words in these documents.
While the mortgage negotiations were pending, James R. Postal wrote to the bank on July 15, 1925, stating that he was inclosing abstracts, application for the loan, a tax history and insurance policies, and also that: *Page 231
"At the time I return the mortgage to you I will also send asigned collateral agreement covering the 832 shares of American Logging Tool stock, together with copies of my letters to The American Logging Tool Company advising them to mail all future dividend checks to your bank for the credit of Ellen Postal."
The mortgage note was dated August 26, 1925, and on August 27th, James R. Postal wrote to Mr. Verdier, vice-president and cashier of the Home State Bank for Savings, as follows:
"From the proceeds of this loan will you kindly pay the two notes in the amounts of $7,500 and $5,000 and secured by 832 shares of American Logging Tool Company common stock. The Home State Bank for Savings is to hold this stock as additionalsecurity to the mortgage of $20,000. The balance of the mortgage loan after your expenses have been deducted is to place to the credit in your savings department, of Ellen Postal.
"I have instructed the American Logging Tool Company, as per copies of my letter to them, to pay all dividends on their stock held by you as collateral direct to the Home State Bank for Savings for the credit of Ellen Postal and am inclosing a letter from Ellen Postal to you authorizing you to charge her account with the interest at each interest period.
"You, no doubt will want a collateral agreement covering theLogging Tool stock. If you will send me the form you wish, I will sign and return at once."
Four days later, the vice-president and cashier answered Mr. Postal saying:
"The stock certificates are properly signed and will not require an additional assignment of this collateral." *Page 232
On August 26, 1925, a letter, signed "Jas. R. Postal, Trustee," and "Jas. R. Postal," was mailed to the American Logging Tool Company directing it to send all dividends on the stock standing in the name of James R. Postal, Trustee, and James R. Postal, to the Home State Bank for Savings for the credit of Ellen Postal. On the same date Ellen Postal wrote the letter referred to in the letter of James R. Postal, dated August 27th, directing the bank to charge her savings account with interest on the mortgage signed on that date. She also stated:
"It is understood that my savings account is to be made up of dividends from 832 shares of American Logging Tool stock which you are holding as additional security to this mortgage."
From September 21, 1925, up to and including December 20, 1930, dividends were paid each and every month to the bank, and thereafter every second month to June 20, 1931. These dividends were credited by the bank on cards which bore the legend:
"Dividends paid Home State Bank for Savings, for credit of Ellen Postal on Jas. R. Postal Trustee and James R. Postal stock by American Logging Tool Company."
They show the original entries, beginning subsequent to the date of the mortgage, as made by the bank from time to time.
Four hundred seventeen shares of stock stood in the name of James R. Postal, Trustee, and 415 in that of James R. Postal. The certificate of the latter bore no indorsement on its reverse side, though the correspondence shows beyond any question that the entire 832 shares were left with the bank as collateral. Appellee in a supplemental brief produced a photostatic copy of an assignment in blank of the *Page 233 415 shares in a separate instrument dated May 29, 1925, signed by James R. Postal with signature guaranteed by the Guaranty Trust Company of New York. Presumably it was sent to the Home State Bank for Savings, though this assignment was not introduced in evidence. The judge found that all of the stock had been deposited as collateral. No claim founded on lack of signature is contained in the statement of questions involved in appellant's original brief. The lack of such signature prompted the inquiry by the court. The printed record as presented is sufficient to show conclusively that the entire 832 shares were left with the bank as additional collateral and, under the circumstances, indorsement was not necessary to constitute a binding pledge. 2 Comp. Laws 1929, § 9528 (Stat. Ann. § 19.339); Graham v. Wilson, 272 Mich. 574.
James R. Postal, now deceased, besides being trustee of the entire corpus, held a one-sixth beneficial interest in the American Logging Tool Company stock as cestui que trust. There was no restriction in the trust instrument prohibiting anycestui from doing what he or she is pleased with his or her beneficial interest. James R. Postal and Ellen Postal had a right to transfer their interest as they saw fit. See Henderson v. Sherman, 47 Mich. 267; Young v. Gnichtel, 28 Fed. (2d) 789;First National Bank of Spartansburg v. Dougan, 250 Fed. 510. Also, see Palmer v. Williams, 24 Mich. 328, and Williams v.Spurr, 24 Mich. 335, wherein we held that a conveyance in breach of trust by a trustee who was also a cestui under the trust, transferred his beneficial interest, even though it did not affect the interests of the other cestuis. Consequently, there was a valid pledge of the one-sixth undivided interest in the stock owned by James R. Postal and plaintiff *Page 234 Margaret Postal, claiming as his heir, took that one-sixth undivided interest subject to the pledge to the bank.
The letter of Ellen Postal dated August 26, 1925, conclusively shows that she was aware of the pledge of the stock and acquiesced therein. We said in Quimby v. Uhl,130 Mich. 198, 212, that:
"Where beneficiaries either expressly or impliedly assent to the action of their trustee in managing their property not in strict accord with the terms of the trust, they will be held to have acquiesced in such action. * * * A party cannot complain when he has consented."
See, also, In re Sheiler's Estate, 172 Mich. 600; In reHoffman's Estate, 183 Mich. 67; and Lawrence v. First Nat'lBank Trust Company of Kalamazoo, 266 Mich. 199. Since Ellen Postal acquiesced in the pledge, she was estopped to deny that the trustee had authority to pledge, and all four plaintiffs, as her heirs, are likewise estopped to contend that there was no pledge of her undivided one-third interest.
The bank is entitled to hold as security only the one-third undivided interest of Ellen Postal and the one-sixth undivided interest of James R. Postal in the American Logging Tool Company stock. The decree should be modified accordingly, with costs to prevailing appellants.
WIEST, C.J., and NORTH, J., concurred with BUTZEL, J. FEAD, J., took no part in this decision. *Page 235