Dobbs v. Perlman

• Decision Date: 21 February 1939
• Docket Number: 27158.
• Citation: 2 S.E.2d 109,59 Ga.App. 770
• Parties: DOBBS et al. v. PERLMAN.
• Court: Georgia Court of Appeals

2 S.E.2d 109

59 Ga.App. 770

DOBBS et al. v. PERLMAN.

No. 27158.

Court of Appeals of Georgia, Division No. 1.

February 21, 1939

Rehearing Denied March 29, 1939.

Syllabus by the Court.

Kelley & Dickerson, of Douglas, and Hirsch & Smith, A. S. Clay, and Hamilton Lokey, all of Atlanta, for plaintiffs in error.

Gibson & Wood, Heath & Heath, and John S. Gibson, all of Douglas for defendant in error.

GUERRY Judge.

The facts as shown by the pleadings and undisputed evidence are these: Sam Perlman, the defendant, was the owner of 100 shares of the capital stock of Fox Film Corporation, known as

Class A stock, evidenced by a certificate registered in 1932. The defendant, desiring to sell this stock, placed it in the hands of G. C. Stewart, a broker and securities dealer in Valdosta, Georgia, to be sold. Stewart, being unfamiliar with the market price of this stock on October 25, wired Dobbs & Company, who are stock brokers and members of the New York Stock Exchange and who maintain offices in Atlanta and New York, as follows: "Wire bid price for one hundred Fox Film class A common original advise trend market." Dobbs & Company replied that the price was 16 7/8 per share. On the same date Stewart sent to Dobbs & Company by air-mail a letter, enclosing the stock indorsed for sale and said "Your Atlanta office quoted this stock today, bid 16 7/8. As this is original stock, there having been some exchange proposition presented to stockholders since this stock was purchased, I am sending it to you for the purpose of inspection, and to be sure that the above bid applies on this particular stock, and that if it be sold that we are selling the stock on which the bid is made. Am forwarding the stock to you by air-mail and will very much appreciate your wiring me tomorrow, either through your Atlanta office, or direct, the bid on stock Saturday morning and upon receipt of same my client will then decide whether he decides to sell on the bid price. If the bid is around seventeen and I receive your wire in time to sell the stock Saturday morning, I think it is the intention of my client to sell. Awaiting your telegraphic advice Saturday morning. ***" On Saturday morning Dobbs & Company wired Stewart "Can probably get 17 1/2 for Fox A stock if quick answer." Stewart replied by wire: "Sell hundred shares Fox Film Class A at seventeen or better wire extension." Dobbs & Company replied by wire: "Sold one hundred Fox Film Class A at seventeen and three-eights extension one thousand seven hundred and seventeen dollars and ninety six cents." On Monday following October 28, Stewart drew a draft on Dobbs & Company for $1,717.96 which draft was paid, and Stewart paid Perlman $1,709, the amount of the draft less his commission.

When Dobbs & Company made delivery of the stock to Birnbaum & Company, the purchasers, it developed that the purchasers had bid on the stock which was quoted on the New York Stock Exchange, which was known as Twentieth Century Fox Film Corporation stock. It appeared that in 1933, after the issuance of the stock owned by Perlman there had occurred a reorganization of Fox Film Corporation; that at the time it had outstanding Class A common stock and Class B common stock; as a result of that reorganization the holders of Class A stock became entitled to receive one share of Class A new common stock for each six shares of Class A old common stock formerly held; that in 1935 Fox Film Corporation acquired all the assets of Twentieth Century Pictures and again reorganized its capital structure and pursuant to such reorganization and merger Fox Film Corporation changed its name to Twentieth Century Fox Film Corporation, and its capital stock was reclassified into preferred and common stock so that holders of Class A common stock new, received one half of a share of the preferred stock and one fourth of a share of the common stock for each share of said Class A common stock new, and one share of preferred stock and one half share of common stock (new) for each share of Class B common stock, new; that the value of the stock owned by Perlman, which was known as Fox Film (old) was only about one-sixth the value of the Fox Film stock (new) the exact figures being given in the evidence; that the old Fox Film stock was not quoted on the New York Stock Exchange but that the new was, and plaintiff did not know of the distinction and quoted the price bid, which was on the new stock, rather than on the old which the defendant owned; that Birnbaum & Company bought the stock quoted on the Exchange and Dobbs & Company had to deliver this stock; that they bought it at the price quoted and have suffered a loss thereby in the amount of the difference between the actual market value of the stock owned by Perlman and the money paid because of their mistake in selling Perlman's stock as stock in the new Fox Film Corporation.

They brought their action for money had and received. They alleged that through their mistake the defendant is in possession of money which in equity and good conscience he is not entitled to retain. They offered to repay or reimburse the defendant for any expense which he has incurred as a result of the transaction, and to do anything required in equity. They alleged that they cannot return the stock for the reason that when Birnbaum delivered the stock to the transfer agent of Fox Film Company that the old stock was canceled and its equivalent in new stock was issued in the place thereof.

It is clear to our minds that the plaintiffs were not purchasing the stock for themselves but were acting as selling agents for the defendant. It is also clear that they were not placing a value on the stock at which they would buy, but were quoting what they thought was the market price of the stock. They were negligent, for their especial attention was called to the fact that the particular stock certificate sent them was the stock the seller had to sell and not another kind of stock. They made a mistake, and are liable for any injury or damage which may flow from such negligent action on their part. Any expense caused defendant, any loss occurring because of such conduct, should be borne by them. On the other hand, should the defendant be allowed to retain money paid him because of a mistake of fact, not of judgment or opinion, whereby he received that to which he was not entitled? The evidence shows without contradiction that defendant has in his possession money, the difference between the actual market value and the price paid under a mistaken impression, for which he gave nothing of adequate value in return. He did not sell his stock to a purchaser at an appraised value placed on it by the purchaser; he sold it at a market price, which the plaintiffs did not fix. The plaintiffs made a mistake, negligent to a degree, but, a mistake which has enriched the defendant. A defendant however, under such circumstances, would not be required to repay money paid under a mistake of fact made by the plaintiffs where such payment has caused a change in the position of the payee who received the money in good faith, and where it would be unjust for him to be required to refund. Grand Lodge, A. O. U. W. v. Towne, 136 Minn. 72, 161 N.W. 403, L.R.A.1917E, 344 and cases cited.

While our Code, § 37-211 provides, "If a party, by reasonable diligence, could have had knowledge of the truth, equity shall not relieve; nor shall the ignorance of a fact, known to the opposite party, justify an interference, if there has been no misplaced confidence, nor misrepresentation, nor other fraudulent act," it is also said in the following section (37-212), that "The negligence of the complaining party,...