262 F. 607 (D.D.C. 1919), 3240, Tuckerman v. Mearns

Docket Nº:3240.
Citation:262 F. 607
Party Name:TUCKERMAN v. MEARNS et al.
Case Date:December 01, 1919
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 607

262 F. 607 (D.D.C. 1919)



MEARNS et al.

No. 3240.

United States Court of Appeals, District of Columbia.

December 1, 1919

Submitted October 9, 1919.

Appeal from the Supreme Court of the District of Columbia.

Page 608

C. C. Tucker, C. A. Keigwin, and Allen MacCullen, all of Washington, D.C., for appellant.

F. J. Hogan and W. H. Donovan, both of Washington, D.C., for appellees.

VAN ORSDEL, Associate Justice.

Appellant, plaintiff below, brought a suit in equity in the Supreme Court of the District of Columbia to recover the value of certain stock purchased for him by defendant firm of Lewis Johnson & Co.

Lewis Johnson & Co. were a copartnership, conducting a banking and stock brokerage business in the city of Washington from 1858 until November, 1914, when it went into bankruptcy. At the time of the transaction here involved, the partners constituting the firm were defendants Mearns and Williams and one John W. Henry. Plaintiff was a customer of the bank, and on March 28, 1912, had on deposit therein the sum of $21,890.40, together with certain securities bought on his account and held for him. On that date he directed the firm to purchase for him 200 shares of the capital stock of the Amalgamated Copper Company. The stock was purchased through Post & Flagg, brokers, the firm's New York correspondent, at $80 per share. On the same day, Johnson & Co. notified plaintiff of the purchase, and on the following day debited plaintiff's account with $16,000, the purchase price, plus $25 commission.

No demand for delivery of the stock was ever made by plaintiff. The record evidence, on which there is no dispute, disclosed that from the date of the purchase until the failure of the firm, about 2 years and 8 months, the stock was carried on the books of the firm to the credit of plaintiff, and periodical statements were furnished plaintiff, showing the credit to his account of successive quarterly dividends accruing upon on the stock. It also appears that Johnson & Co. never had actual possession of the stock, but that it was held by Post & Flagg to the credit of Johnson & Co. Until May 31, 1912, or about 2 months after the purchase, Johnson & Co. had to its credit with Post & Flagg 200 shares of the Amalgamated Copper Company's stock, but after that date it was short at least 400 shares, and so continued until the date of the bankruptcy.

Plaintiff, in his bill, averred at length the circumstances of the purchase of the stock and the leaving of the stock with Johnson & Co.

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upon special deposit subject to plaintiff's order. It was sought by the prayers to discover the whereabouts of the stock and what had become of it, and to secure its surrender to plaintiff, if possession could be had; otherwise, a personal judgment for its value.

At the conclusion of the hearing, the trial court dismissed the bill with the following statement:

'In this case no accounting is sought and under the proofs the facts show a simple bailment. While the bill prayed for a discovery, the answers of the defendant revealed no facts other than those which were within the knowledge of the complainant. I am of the opinion that the remedy at law is plain, adequate, and complete, and that the bill should be dismissed without prejudice to an action at law.'

From the decree dismissing the bill, plaintiff appealed. At the inception we are confronted by the peculiar relation which exists between a stockbroker and his customer. It is the customer who purchases the stock. He merely procures the broker as his representative to buy it on his account. The broker is but the agent of the customer, bound to follow his directions or decline the agency. Galigher v. Jones, 129 U.S. 193, 9 Sup.Ct. 335, 32 L.Ed. 658. Being a mere agent for the purchase of the stock, the title to the stock, both legal and equitable, is in the customer. Richardson v. Shaw, 209 U.S. 365, 377, 28 Sup.Ct. 512, 52 L.Ed. 835, 14 Ann.Cas. 981. If the broker advances money in making...

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