New York Law Review

Tag: Personal Property Law

  • Kubli v. N.Y.C. Police Prop. Clerk, 27 N.Y.2d 552 (1970): Finder’s Rights to Lost Bearer Bonds

    Kubli v. N.Y.C. Police Prop. Clerk, 27 N.Y.2d 552 (1970)

    Under New York Personal Property Law, a lost United States bearer bond is classified as an “instrument,” not “property,” and thus cannot be returned to the finder but must be retained by the police pending delivery to the person entitled thereto.

    Summary

    Henrietta Kubli found a $10,000 United States bearer bond in a subway station and turned it over to the police. After three years, she requested the bond’s return as the finder, but the Police Property Clerk refused. Kubli sued, arguing the bond should be considered “property” under the Personal Property Law, entitling her to it since the owner hadn’t been found. The court held that the bond was an “instrument” under the statute, precluding its return to the finder, regardless of the owner remaining unknown. This decision highlights the importance of statutory interpretation and the distinction between different types of found items.

    Facts

    On July 21, 1966, Henrietta Kubli found an envelope containing a $10,000 United States bearer bond in the 33rd Street PATH Station in Manhattan.
    The bond was a 2%% treasury bond of the 1956-1959 series, issued in 1944 and redeemable on or after September 15, 1956.
    Kubli immediately turned the bond over to the 30th Street Police Precinct and received a receipt.
    After three years, Kubli demanded the bond from the Police Property Clerk, but her request was denied.

    Procedural History

    Kubli sued the Police Property Clerk in the New York City Civil Court to recover the bond.
    The Civil Court ruled in favor of the defendant, dismissing the complaint.
    The Appellate Term affirmed the Civil Court’s decision without opinion.
    The Appellate Division, First Department, reversed the lower courts and directed judgment for Kubli.
    The New York Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    Whether a lost United States bearer bond is considered an “instrument” or “property” under Article 7-B of the New York Personal Property Law.
    Whether federal Treasury regulations preempt New York law regarding the disposition of lost bearer bonds.

    Holding

    No, because under New York Personal Property Law, a bearer bond falls within the definition of “instrument,” not “property”.
    No, because in disputes not touching the rights and duties of the United States, questions of title to bearer securities of the Federal Government are to be decided by State law.

    Court’s Reasoning

    The court reasoned that the New York Personal Property Law distinguishes between “property” and “instruments.”
    “Property” includes money, goods, chattels, and tangible personal property, excluding “instruments.”
    “Instrument” is defined as a check, draft, promissory note, bond, bill of lading, warehouse receipt, stock certificate, or other paper evidencing a chose in action or a right with respect to property.
    The statute explicitly includes “bond” in the definition of “instrument.”
    The court rejected Kubli’s argument that “bond” should be limited to “commercial paper,” finding no support for this exception in the statute’s language. The court stated, “The Legislature could easily have stated this exception had it been intended.”
    The court also rejected Kubli’s argument that the phrase “or other interest in property or in an enterprise” qualifies the word “bond.” Instead, the court held that this phrase only qualifies the immediately preceding terms, “share, participation or other interest”.
    The court noted that the bond found by Kubli evidenced a right in the bearer to payment, fitting the definition of an “instrument”.
    Consequently, the bond cannot be returned to Kubli but must be retained in police custody pending delivery to “the person entitled thereto.”
    The court addressed the pre-emption arguments, stating that the federal regulation relied upon by Kubli applied only to bearer securities not yet due and was therefore inapplicable.
    The court further stated that, “In disputes not touching the rights and duties of the United States, questions of title to bearer securities of the Federal Government are to be decided by State law”.
    Acknowledging the equities favoring Kubli’s position and the statute’s apparent purpose of encouraging responsible action by finders, the court emphasized it could not ignore the statute’s clear terms. The court recognized the need for legislative action to address the disposition of instruments when the owner cannot be ascertained.

  • Bache & Co. v. Walston & Co., 281 N.Y.S.2d 94 (1967): Liability for Conversion Despite Good Faith

    Bache & Co. v. Walston & Co., 21 N.Y.2d 635, 281 N.Y.S.2d 94, 227 N.E.2d 584 (1967)

    A party who obtains stock certificates through a transfer that does not comply with the relevant provisions of the Personal Property Law is liable for conversion, even if they acted in good faith.

    Summary

    Bache & Co. sued Walston & Co. for conversion of stock certificates. The certificates were not transferred in compliance with the Personal Property Law. Walston argued that it acquired the certificates in good faith, thus absolving it from liability. The court held that Walston’s good faith was irrelevant because the original transfer was not in compliance with the Personal Property Law, and therefore Walston was liable for conversion. The damages were measured by the cost of replacing the securities within a reasonable time after discovering the conversion.

    Facts

    Bache & Co. was the original owner of certain stock certificates. These certificates were transferred to Walston & Co. However, the transfer did not comply with former section 162 of the Personal Property Law. Bache & Co. discovered the conversion and replaced the securities within six business days, incurring a cost of $87,136.07.

    Procedural History

    The case initially went to the trial court, the result of which is not specified in the provided text. Upon appeal, the New York Court of Appeals initially ruled in favor of Walston & Co., as detailed in the dissenting opinion referenced (21 N.Y.2d 219, 229). However, the court granted reargument. Upon reargument, the Court of Appeals reversed its prior decision and directed judgment in favor of Bache & Co.

    Issue(s)

    Whether Walston & Co.’s good faith in acquiring the stock certificates absolves it from liability for conversion when the initial transfer of the certificates did not comply with the requirements of the Personal Property Law.

    Holding

    No, because the failure to comply with the Personal Property Law in the transfer of the certificates means Walston is not protected by sections 166 and 168 of that law, and its good faith does not absolve it from liability for converting Bache & Co.’s property.

    Court’s Reasoning

    The court reasoned that because the stock certificates were not transferred in compliance with former section 162 of the Personal Property Law, Walston was not protected by former sections 166 and 168 of the same law. The court cited Pierpont v. Hoyt, 260 N.Y. 26 and Casey v. Kastel, 237 N.Y. 305 in support of this proposition. Consequently, Walston’s good faith was not a relevant consideration. The court stated, “Since the transfer did not comply with the above-mentioned section Walston is not protected by former sections 166 and 168 of the Personal Property Law and its defense of good faith does not absolve it from liability for converting Bache & Co.’s property.”

    Regarding damages, the court applied the rule that the measure of damages for conversion of stock certificates is the cost of replacement within a reasonable period after discovering the conversion. The court cited Mayer v. Monzo, 221 N.Y. 442, 446 and Jones v. National Chautauqua County Bank, 272 App. Div. 521, 528. Since Bache & Co. replaced the securities within six business days, the court awarded damages based on that cost.

    The court emphasized the importance of strict compliance with the Personal Property Law in stock certificate transfers. This protects the integrity of the market and ensures that parties cannot inadvertently acquire ownership through faulty transfers, even if they act in good faith. The dissent, referenced from the original appeal, highlights a different interpretation of the applicable statutes, suggesting a greater emphasis on the good faith of the purchaser.