“It is settled that where a bailee of goods or securities re-bails, re-pledges, or on some other contractual basis delivers possession of the same to another, and the latter is guilty of negligence or other misfeasance resulting in the loss of or injury to the property, the latter is liable directly to the owner who was the original bailor.”
How later courts described this case
- “It is settled that where a bailee of goods or securities re-bails, re-pledges, or on some other contractual basis delivers possession of the same to another, and the latter is guilty of negligence or other misfeasance resulting in the loss of or injury to the property, the latter is liable directly to the owner who was the original bailor.”
- “This is the rule at common law and also under the Uniform Commercial Code.”
- repledgee liable to pledgor for breach of duty of reasonable care in protecting and preserving collateral
Written by the judges who cited it.
The opinion
McGivern, J.
(concurring). Although I concur in the opinion of and the result directed by Justice Eager, I would go further. In my view, his exposition leads onward to the ineluctable corollary that Cleveland is answerable to the plaintiff as a matter of law.
Cleveland was a well-rewarded pledgee and had a duty both under the common law and the Uniform Commercial Code to observe reasonable care while the securities were in its custody. And, privity aside, this duty extended to the true owner for any damage. Instead, the securities lost half their value because Cleveland did not exercise a reasonable surveillance of the conversion dates as to the plaintiff. All the more culpable because Cleveland admits it had knowledge of the publication of the notice of redemption and facilities to notify interested parties. And at the time of making the arrangements with the Irving Trust Co., the latter specifically notified Cleveland that as a sentinel Irving was leaving its post. Cleveland cannot exculpate itself by saying it had great expectations of Sterling Grace. Neither the coils of the common law nor of the statute are that easily shaken off. (Ouderkirk v. Central Nat. Bank of Troy, 119 N. Y. 263 ; Traverse v. Liberty Bank and Trust Co., Superior Court, Suffolk County, Massachusetts, No. 86050 In Equity decided January 30, 1967.) And be it noted, the Uniform Commercial Code is to be liberally construed (§ 1-102, subd. [1]).