I agree with the majority of the court in holding, as follows:
1st. That the contract in question when carried out according to its terms and as contemplated by the parties resulted in the relation of pledgeor and pledgee between Bunnell *Page 233 Scranton and the plaintiffs, as to all stock purchased for the plaintiffs under and according to the contract.
2d. That upon the facts found by the committee any original stock in fact so purchased for any customer might be re-pledged by Bunnell Scranton for their own debt.
3d. That upon such facts also such original stock might be sold or otherwise finally disposed of by Bunnell Scranton for their own purposes at any time, provided that at or before such sale or final disposition they actually and in fact substituted for such original stock an equal number of shares of the same kind of stock.
4th. That a like disposition might be made by Bunnell Scranton of any such substituted stock upon a like substitution at or before such disposition, and so on adinfinitum.
5th. That such stock actually substituted by Bunnell Scranton for the stock so disposed of, immediately on such substitution and sale being made, became the property of the customer, subject to the pledge.
6th. That in all instances where any of the plaintiffs can show that either the original stock purchased for them according to the contract, or that which was substituted for it in the aforesaid manner, was in the possession of Bunnell Scranton or their agents or pledgees at the time of the assignment, such plaintiffs are entitled to redeem their property.
To this extent I agree with the majority opinion. With what that opinion seems to me to hold expressly or by implication upon certain other points I do not agree.
In the first place, it seems to hold that the broker may at any time sell the original stock purchased for a customer, without first actually substituting in place of it other like stock, and may afterwards, at any time before the termination of the contract, substitute after-acquired stock with equal effect for all concerned.
This seems to me to be inconsistent with the legal conception of a pledge. In cases where, prior to the sale of such pledged stock, other stock is in fact substituted, the parties may be regarded, upon such a state of facts as is found by *Page 234 the committee, as consenting to such sale and substitution, and thus in effect giving and receiving the substituted stock in pledge. But where no such substitution is made in fact the case is entirely different.
In such a case it can hardly be supposed that the customer has consented to let his stock be sold and take his chances of having other stock substituted for it at some indefinite time in the future at the caprice of the broker. A sale made without first substituting other stock is a wrongful conversion and ought to be so held.
In the next place, suppose a broker, without in fact substituting other stock therefor, sells the original stock purchased and being carried for a customer, at a time either when the broker himself owns stock of the same kind, or has none, but subsequently to the sale acquires it. The opinion seems to hold that, in such cases the lien of pledge in favor of the customer attaches to the stock then owned by the broker, or which he may subsequently acquire, without any act of substitution, and without any intent to substitute on his part.
It seems to me that in all cases of sale of the original stock by the broker for his own purposes, some unequivocal act of the broker manifesting and carrying out an intent to substitute other stock in place of that sold should be required, and where this cannot be shown to have been done before such sale, no lien of pledge in favor of the customer attaches to the stock of the broker then on hand, and certainly not to any which he subsequently acquires.
Lastly, the opinion seems to hold that, under the circumstances disclosed by the record, when the New York brokers purchased the stocks for Bunnell Scranton which were in the possession of the New York brokers at the time of the assignment, such stock upon its purchase by the New York brokers became the property of the customers, pledged to Bunnell Scranton, and by them sub-pledged to the New York brokers. This it seems to me is not so. When purchased by the New York brokers it was the property of Bunnell Scranton, bought for them as their own by their own *Page 235 agents and not for the customer through any agent of his. The New York brokers and the customer were strangers.
Undoubtedly Bunnell Scranton bought the stock in order to fill the customer's order eventually, and would not have purchased but for that order; but I think the stock so purchased from first to last was the stock of Bunnell Scranton alone, until they by some act set it aside and appropriated it to some customer. I agree, however, that the act of Bunnell Scranton in crediting the customer with a certain number of shares of a given stock may be regarded as such an act. This was done, however, only on the purchase of the original stock and not on the purchase of most of the stocks which the plaintiffs now claim. If at the time of the assignment the New York brokers were carrying certain stocks for Bunnell and Scranton which the latter had not thus actually set apart or appropriated to their customers, then I hold that the customers had no property in such stocks. I do not think the facts found warrant the conclusion that any such substitution was in fact made in the case of most of the stocks now claimed by the plaintiffs.
The mere fact that a broker, at and after a sale of the original stock purchased for a customer, has and at all times retains in his possession or within his control sufficient stock of the kind sold to fill his customer's order at any time, and that he owned or controlled it in order to be ready to fill such order, will not of itself give the customer any property in such stock so held or controlled.
The majority opinion divides the plaintiffs into five classes with reference to their power or ability to identify their property. Classes one and two are I think entitled to redeem the property pledged. In those cases it is of necessity shown that the stock is either that which was originally purchased for the customer or that which had been in fact lawfully substituted for it. In regard to the other three classes, I think they are not entitled to redeem because the existence of a pledge is not shown.
I have thus briefly indicated, without arguing at length, *Page 236 the points wherein I dissent from the opinion of the majority of the court.