Opinion
Argued May 23, 1924
Decided June 3, 1924
Christian S. Lorentzen and John V. Irwin for appellant. Charles A. Houston for respondent.
This action is founded upon what is alleged to have been an account stated and the answer is simply one of denial. The judgment dismissing the complaint rests upon a verdict directed after a motion made by each side for such direction. Therefore, the judgment must be affirmed if the verdict is sustained by any version either of the law or of the facts.
The plaintiff is the surviving partner of a firm of stockbrokers. As we shall assume, defendant's testator was a customer and some time prior to April 1, 1913, had established a marginal account. On May 1st a statement of account was made by the brokers which bore the heading "E.M. Scognamillo (the testator) in account current with Charles P. Britton Co." and starting with a balance of $8,686.74 as of April 1st, contained certain debits and credits and struck a balance of $8,849.77. It also contained a list of certain "long" stocks held in the account and bore the familiar initials "E and O.E." This statement of account was sent to the customer and on May 19th he addressed to the brokers a letter which read as follows: "Being unable to take up or close out the stocks you have purchased and carried for me as per last statement I ask you to kindly hold same until my return to this country in October, 1913, when I will settle the account with interest." So far as appears the account was carried by the brokers without any new items, except of interest, until December, 1917, when their attorney had a conversation with the customer demanding payment of the balance with the then accumulations of interest and in response to which demand the latter said, amongst other things, in substance that he knew all about the foregoing statement and that it was correct but that he had not any money. Thereafter this suit was commenced.
Under the rules applicable to any ordinary relationship of debtor and creditor we think that here arose a new contract in the form of an account stated, and a demand for payment with failure to pay entitling the creditor to bring suit. The statement which was mailed to the customer set forth in appropriate form the alleged items of an account with the resulting balance and the letter from the customer by necessary implication assented to the correctness of the account and promised to settle, that is, pay the same. This assent, while in our opinion that is unnecessary, was fortified in 1917 by the conversation between the customer and the broker's attorney (who was recalled as a witness in behalf of defendant). ( Volkening v. DeGraff, 81 N.Y. 268, 270.)
We do not think that the effect of the statement and of the assent to the correctness thereof were impaired by the fact that it contained the usual letters "E and O.E." The meaning of the latter is perfectly well understood and they are intended to guard against some insubstantial error of inadvertence or mistake. Nobody would claim that they are intended to provide for the insertion in an account of some new and substantial item. This was evidently the view of defendant's counsel for we find nowhere in the record of the trial any suggestion that the letters had the effect now claimed for them and there is no suggestion that there had been any proposal to vary the account set forth in the foregoing statement in any manner.
We also think that the statement and the customer's letter in reference to the same as well as the conversation with the broker's counsel later furnished ample and uncontradicted evidence of a demand for payment and refusal thereof.
The question then is whether there is anything in the relationship of broker and customer which prevented the creation of an account stated.
For the sake of the discussion assuming the correctness of all that was said in the case of Kennedy v. Budd ( 5 App. Div. 140, 144), and especially relied on by the Appellate Division and defendant's counsel to the effect that there is an implication that a broker will carry stocks for a reasonable time to enable the customer to ascertain whether or not he can make a profit on the transaction, it is not denied by that case and of course cannot be, that at some point the broker has a right to call upon the customer to pay and take up his account. The former is not compelled to resort to the stocks held as security in the account before taking steps for the collection of the balance due him. ( DeCordova v. Barnum, 130 N.Y. 615.)
In our opinion the brokers did all that they were required to in this case. The account had been inactive for at least a month before their statement was sent and from the letter written by the customer in answer to the statement it was perfectly apparent that no further activity of it was intended. Under these circumstances for some reason the brokers chose not to sell the stocks but to take the steps necessary to establish an account stated which would then become the same kind of a basis for action as would have been a promissory note. Assuming that the customer might have made some objection to this course, it is sufficient to say that he did not, but accepted the statement as correct and promised to settle the account. It would be extravagant to give to his letter the significance claimed by defendant's counsel that it called for a continuance of the account within the meaning of some of the language used in the Kennedy case. Plainly the letter acknowledged a closed account, an account stated, and asked for leniency in point of the time within which the obligation should be enforced.
Under all of these circumstances we think that the transactions amounted to an account stated even as between the brokers and defendant's testator. ( Burnham v. Black, 121 N.Y. Supp. 616; Lawson v. Douglass, 17 N.Y. Supp. 4; Knickerbocker v. Gould, 115 N.Y. 533.)
What was said in Thompson v. Baily ( 220 N.Y. 471, 475) concerning the duty of a broker having a margin account "to carry the thing purchased for his customer until additional margin has been demanded and refused" was so said in discussion of the broker's right to close out the account by a sale of securities and has no reference to the question here involved.
Therefore, the judgment should be reversed and judgment granted for plaintiff for the amount demanded in the complaint, there being no dispute as to the amount, with costs in all courts.
CARDOZO, POUND, McLAUGHLIN, CRANE, ANDREWS and LEHMAN, JJ., concur.
Judgments reversed, etc.