Summary
holding that "a sale of the stock by the broker . . . without notice to the customer of the time and place of sale is a conversion"
Summary of this case from Newbro v. FreedOpinion
Argued April 24, 1876
Decided September 19, 1876
James C. Carter for the appellants. James Emott and Frederick A. Ward for the respondent.
This case was argued orally before six members of the court. I did not have the benefit of that argument, nor of some of the subsequent discussion of the case, among the six judges, in our consultation room. It is, however, the practice of this court, that where a judge is absent from an oral argument of a case, it is to be treated as submitted to him, without oral argument.
Upon the consultation among the six members of the court who heard the oral argument, they were equally divided in opinion — three being for an affirmance of the judgment appealed from, and three for a reversal of it and for a new trial.
On my return to the court the case was submitted to me upon the printed appeal-book and the printed points of the parties, and I also had the benefit of the views in writing, and orally, of the judges who were for affirmance. My investigation of the case, and my reflections upon it, brought me to the conclusion that the learned judge, at the trial, fell into an error in rejecting the testimony which was offered by the defendants to show what were the usages of their office, and it has been thought best that I should draw up the views of the court upon the case, and the reasons for a reversal of the judgment, so that the parties may have some guide upon a new trial, if one is had. This I now do, as briefly as may be.
All but two (ALLEN and RAPALLO, JJ.) of the members of the court adhere to the decision in Markham v. Jaudon ( 41 N.Y., 235) on three points there maintained:
First. That the relation of broker and customer, under the ordinary contract for a speculative purchase of stocks, is that of pledgee and pledgor.
Second. That a sale of the stock by the broker, under such a contract, without notice to the customer of the time and place of sale, is a conversion.
Third. That oral proof of the usage of brokers in such cases is not admissible, to add to or make part of the contract.
See, also, Stenton v. Jerome ( 54 N.Y., 480), where Markham v. Jaudon ( supra) is referred to with approval.
But it is further considered that the parties to such a transaction, which thus creates the relation of pledgee and pledgor, between them, may provide by contract for any manner of disposing of the pledge to satisfy the claim upon it. This is not dissented from by any judge. This restriction is affixed, however, that the manner agreed upon must not be in contravention of a statute, nor against public policy, nor fraudulent. ( Wheeler v. Newbould, 16 N.Y., 392; Milliken v. Dehon, Ex'x, 27 id., 364; Stenton v. Jerome, supra.)
The points in this regard, upon which there is a difference of opinion in this case, are, first, whether there was not uncontroverted evidence of a contract to that effect; and, second, whether the defendants offered competent proof, that the contract between them and the plaintiff did provide for a sale without notice. As to the first of these points, the case must rest upon the evidence relative to the contract of the defendants with Rogers, and to the adoption of the terms of it into the transactions of the defendant with the plaintiff. We do not think that the evidence of that adoption was uncontroverted. There was a dispute as to it. The question was left to the jury, who found against the defendants. The defendants now claim that the judge erred in submitting to the jury the question whether that contract had been abandoned at the time the dealings between these parties commenced. The decisive answer to this point is, that the submission of that question to the jury was not excepted to. The exception taken was to the submission to the jury of the question, whether the dealings were under that contract, and can only be sustained by showing that this fact was conclusively established.
As to the second of these points, the defendants offered in evidence an instrument in writing, signed by the plaintiff. It was received without objection, although not consistent with the allegations of the answer. It is in the case. By it the plaintiff agreed that all transactions in stocks, under the direction of Rogers, should be in every way subject to the usages of the defendant's office. The last clause of this instrument was not unmeaning and useless. It was of some import. It was part of the plaintiff's agreement. The word "usages" meant the habits, mode and course of dealing in the office of the defendant. If, instead of this word, those habits, modes and course of dealing had been set forth at length in the instrument, would not the transactions of the plaintiff and defendants in stocks, under the directions of Rogers, have been subject to them, subject to the rules of law? As they were not so set forth, the word "usages," alone, does not convey the full meaning of the parties to the instrument, and a court may not, from a perusal of the paper, know all that was in their contemplation. There is need of parol proof to enable the word used by them to convey the full meaning with which they meant to charge it. And parol proof is competent therefor. If parol proof should show that it was a usage of the defendants' office, for want of margin, to sell stocks in pledge at the public board of brokers, without notice to the pledgor of time or place of sale, would it not tend to establish an agreement by the plaintiff, that the same course might be taken in his case? To so agree would not have contravened any statute, nor infringed upon public policy, and it might not have been fraudulent. We do not stop to consider the weight or effect of the testimony offered, when it shall have been received, nor how — either by counter proof or by rules of law — the plaintiff may meet and overpower it. The sole question now is: Was the proof offered by the defendants competent? We think that it was, and that it was error to reject it.
The rule of damages given to the jury was, we think, justified by the decision of this court in this case, on the first appeal. The judge charges the jury, in substance, that if the right of action was established, the plaintiff was entitled to recover, as damages, what it would have cost him to replace the stocks on a day within a reasonable time after the sale, deducting the sum due to the defendants, and the recovery was based upon the market value of the stock, on a day between the sale and the commencement of the action.
The charge was in accordance with the rule adopted by this court on the first appeal in this case. (53 N.Y.)
The judgment should be reversed and a new trial ordered for the erroneous rejection of testimony.
ALLEN, RAPALLO and EARL, JJ., concurred in the result, and also in the opinion, except as otherwise stated therein.
CHURCH, Ch. J., ANDREWS and MILLER, JJ., were for the affirmance of the judgment, but disagreed with the opinion only on the point of the rejection of the testimony of the usages of defendants' office.
Judgment affirmed.