Dudley A. Tyng & Co. v. Woodward

• Decision Date: 26 June 1913
• Citation: 88 A. 243,121 Md. 422
• Parties: DUDLEY A. TYNG & CO. v. WOODWARD.
• Court: Maryland Court of Appeals

88 A. 243

121 Md. 422

DUDLEY A. TYNG & CO. v. WOODWARD.

Court of Appeals of Maryland

June 26, 1913

Appeal from Baltimore Court of Common Pleas; Thos. Ireland Elliott Judge.

Action by Dudley A. Tyng & Co. against Frederick E. Woodward. From a judgment for defendant on a directed verdict, plaintiff appeals. Affirmed and remanded for new trial.

Argued before BOYD, C.J., and BRISCOE, BURKE, THOMAS, URNER STOCKBRIDGE, and CONSTABLE, JJ.

Horace S. Whitman, and Thomas F. Cadwalader, both of Baltimore, for appellant.

Arthur L. Jackson and C. H. Millikin, both of Baltimore, for appellee.

BOYD C.J.

This is an appeal from a judgment rendered in favor of the appellee in a suit brought against him by the appellant, on a verdict rendered in pursuance of an instruction granted by the lower court. The declaration originally included six common counts and four special counts, and it was amended by adding an additional one. The foundation for the suit is the claim by the appellant that it sold to the appellee 50 shares of the capital stock of the Burroughs Adding Machine Company at $400 per share, and upon his refusal to accept and pay for them it resold them at $301 per share; the suit being for the difference between the contract price and the amount realized at the resale.

As the appellant claims that it is entitled, upon the evidence in the record, to recover upon the first, seventh, ninth and the additional (eleventh) counts, and does not contend that the others apply, we will briefly state what they are. The first is the common count "for goods bargained and sold by the plaintiff to the defendant." In the seventh it is simply alleged that the defendant purchased from the plaintiff the 50 shares of stock at $400 per share, and the defendant agreed to pay said sum for the same, and the plaintiff offered and tendered them to the defendant, but he refused to pay for them, or any part thereof. The ninth alleges that the defendant offered to pay the plaintiff $400 per share for 50 shares of that stock, and the plaintiff accepted the offer and tendered them to the defendant, who thereupon refused to accept and pay for them. The eleventh count is substantially in the language of the ninth, with this addition: "And the plaintiff then, after due notice to the defendant, sold said fifty (50) shares of stock in the usual and customary manner in which said stock is sold in the market for the sum of three hundred and one dollars ($301) per share, being the best price then obtainable for the same by the plaintiff." The defendant filed the general issue, pleas of never indebted and never promised. There are 11 bills of exception containing rulings on evidence, and the twelfth contains a prayer granted at the conclusion of the plaintiff's case, instructing the jury "that the plaintiff has offered no evidence in this case legally sufficient, under the pleadings, to entitle the plaintiff to recover, and therefore the verdict of the jury must be for the defendant." We will first consider that prayer.

The theory of the appellee in offering that prayer seems to have been that the resale was invalid because there was no public sale, and no such notice given to the public as justified the resale. For that he relies on a number of decisions of this court, which we will refer to. In Maryland Fire Ins. Co. v. Dalrymple, 25 Md. 242, 89 Am. Dec. 779, the plaintiff sued the insurance company for damages for the sale and conversion of certain shares of stock of the Baltimore & Ohio Railroad Company, which he had pledged to secure the payment of a sum of money lent to him by the defendant. It was agreed by the parties that if the loan was not promptly paid the president of the insurance company could, without further notice, sell the collaterals for the purpose of satisfying the loan. Notice was given the plaintiff to return the loan by the 14th of November, 1860, and on the 20th of that month the defendant procured the stock to be sold at the board of brokers, and became the purchaser thereof at $55 per share; the stock having from the date of loan to November 15th varied in price from $79 to $56.50 per share. The stock was held by the defendant until the spring of 1862, when it was sold publicly at the board of brokers, fairly and in the usual way, in parcels to different persons, at prices ranging from $60 to $67 per share, the ruling market prices. It was held that under the terms of the contract the notice given on the 13th of November was sufficient to entitle the defendant to sell on the 20th, that a sale "publicly and fairly made" at the board of brokers to a third person would have been a legal sale under the contract, but that the doctrine that persons holding fiduciary relations are incompetent to purchase the property held by them in trust was applicable to the relation of pledgor and pledgee. The sale on the 20th of November, 1860, therefore, did not operate to vest the title in the defendant as purchaser, or to work a conversion of the stock; the plaintiff not having elected to treat that sale as a tortious conversion. But it was also held that, as the bailment continued and the defendant caused the stock to be sold publicly at the board of brokers and transferred to the several purchasers, the latter sales were valid. It was said that no further notice was required by the contract, and no valid objection could be made to the place and mode of sale --not being impeached on the ground of unfairness or bad faith.

In Balto. Marine Ins. Co. v. Dalrymple, 25 Md. 269, some of the same questions were involved. Certain of the stock held by that company was sold to other persons, after notice of such intended sales at the board of brokers, but 770 shares of the Baltimore & Ohio Railroad Company stock was bought by the defendant through the agency of a broker employed for the purpose. On the next day the defendant sold the 770 shares to a Mr. Denison, and it was held "the defendant had not the legal right to dispose of the stock at private sale; that the sale so made (to Denison), on the 21st of November, 1860, was therefore contrary to the duty of the defendant as pledgee, and in law tortious, for which the plaintiff is entitled to maintain his action either in trover or case."

In Bryson v. Rayner, 25 Md. 424, 90 Am. Dec. 69, in which there was a bill in equity to compel the appellee to return 19 shares of stock transferred to him as collateral security for the repayment of loans, it was held that a sale of nine of those shares made by a broker at private sale was valid, the appellant having authorized the appellee "to give the stock to any broker to sell on said day" in case they were not redeemed by a certain time named, but as to the other shares which the pledgee purchased, he still maintained the character of bailee, and they could be redeemed. It was said "In the absence of this special authority, according to the rulings of this court in the cases referred to (Dalrymple Cases, supra), it would have been the duty of the pledgee to have disposed of the stock at public sale, after a reasonable notice to the public of the time and place of sale, or at the public stock board."

It may be well, in order to avoid any misunderstanding, to refer at this point to Manning v. Shriver, 79 Md. 41, 28 A. 899, where it was said: "We agree that one being a trustee, executor, or agent, or in any other like fiduciary relation, will not be allowed to purchase property sold by him in that character. The rule is one of general application, and the reason of the rule is that one will not be permitted to purchase an interest where he has a duty to perform inconsistent with the character of purchaser. We agree, too, that both upon reason and authority the relation of pledgor and pledgee comes within the operation of this rule." The opinion then went on to say: "But it is equally well settled that this rule does not apply where the pledgor expressly authorizes the pledgee not only to sell the pledge, but to purchase it in his own right. *** The purchase by a pledgee in such cases is exempted from the operation of the general rule upon the same ground that a mortgagee will be allowed to buy at his own sale, if the mortgagor so agrees. In this case it will be observed that the plaintiff was authorized to sell as agent, but at the same time he was authorized to buy in his own right."

In Rosenstock v. Tormey, 32 Md. 169, 3 Am. Rep. 125 the appellee, a stockbroker in Baltimore, was ordered upon October 4, 1866, by N. Hoflin to buy 100 shares of Illinois Central railroad stock on the joint account of Louis Rosenstock, J. Hoflin, and himself. Tormey immediately and, as he stated, "according to the course of trade and the regular custom of the business" directed his correspondents, who were brokers in New York, to make the purchase, which they did at $128 per share, and Tormey paid the purchase money ($12,825.00) therefor. The defendants failed to pay him, and on April 16, 1867, "after notice to the defendants, and according, also, to the due course of trade and the custom of the particular business," the plaintiff directed his correspondents to sell the stock in New York, which they did, and realized only $11,400. The suit was to recover the difference between the amount paid on the purchase and that realized from the resale of the stock. The court said the plaintiff had the right to make the purchase through correspondents, brokers, or subagents in New York, and, having made the purchase and expended his money, it was his duty to notify the principals of the fact and request them to receive the stock and pay him the price he had paid for it, with usual and reasonable commissions for making the purchase. Upon receiving the notice it was the duty of the defendants...