Fitchthorne v. Barclay, Moore & Co.
| Citation | 14 Pa. D. & C. 83 |
| Decision Date | 10 July 1930 |
| Docket Number | 18542 |
| Parties | Fitchthorne v. Barclay, Moore & Co |
| Court | Pennsylvania Commonwealth Court |
Victor Frey, for plaintiff
Layton M. Schoch, for defendant.
Trespass for conversion of securities.
Averring that the defendants, with whom he carried a margin account, sold out 6300 shares of the stock standing in said account, " without proper and sufficient notice to the plaintiff that the margin was near exhaustion," and " without reasonable notice of the intention to sell securities," plaintiff seeks to recover damages for the conversion. In their affidavit of defense the defendants denied any impropriety in the making of the sale, set up an agreement by plaintiff waiving notice of an intention to sell, but alleging that in any event proper notice was given. Under the head of new matter in the affidavit, defendants related that their inability to notify the plaintiff of their intended action was due to his absence from the city and to his failure to follow an itinerary which he had left with them, and the various efforts they made to communicate to plaintiff the change which was taking place in the status of his account are detailed. Most of these are admitted in plaintiff's reply to new matter. On the whole, there is less conflict in the pleadings and testimony than is usual in such cases. The main issues have to do with the contract or understanding subsisting between the parties, with particular reference to the amount of margin required in plaintiff's account; and, everything taken into consideration, whether any notice of the sale of securities was required. A minor issue involves certain stock in plaintiff's account which he says he authorized defendants to hold as additional marginal collateral but which they say it was understood was never included as margin. Plaintiff takes the further position that, conceding defendants' right to have made a sale under the circumstances, the sale of 6300 shares was an excessive sale, and that a sale of one-half that amount would have brought his margin up to the customary point.
From the pleadings, testimony and numerous exhibits we make the following
Findings of fact .
2. In January of 1919 plaintiff signed an agreement authorizing the defendants to use any securities in his account in such manner as they might elect so long as he was indebted to them, and particularly giving his consent to a sale without notice of any securities purchased or held as collateral in the account should the security at any time be not satisfactory to defendants. The said agreement contained further provisions as follows:
3. Subsequently, in the same year, the plaintiff closed out his account entirely with the defendants and did no business with them whatsoever for a period of more than two years. In September, 1921, he again began to trade through defendants, and continued so to do until the happening of the occurrences now to be related. At no time subsequent to September, 1921, did plaintiff sign a new agreement with defendants.
4. From time to time the defendant firm sent out notices to all customers announcing the margin which would be required for accounts. Prior to 1926 the margin required appears to have been 20 per cent. and in that year it was raised to 25 per cent. and in March, 1923, to 30 per cent.
5. There was no specific agreement between plaintiff and defendant as to the amount of margin which he would be required to maintain in his account, but in numerous margin calls sent out by defendants to plaintiff the rate of margin then being required by defendants in all accounts was invariably mentioned.
6. On or about June 7, 1928, the plaintiff started on an automobile trip to Canada, after having left with defendants a sketchy itinerary, in which he stated that on Friday, June 9th, his address would be in care of L. E. Fichthorn, Southington, Connecticut; on Saturday or Sunday at Mt. Royal Hotel, Montreal, Canada, and on June 14th to 17th in care of H. Huer, No. 226 Wellington Road, Buffalo, N.Y. It was not stated in the itinerary where plaintiff could be reached between June 11th and 14th. On June 12th defendants received from plaintiff a letter dated June 10th from Quebec, Canada, stating that plaintiff would leave for Montreal on the 11th, and proceed from Montreal to Buffalo, where he could be reached on June 13th or 14th.
7. On June 7th plaintiff went to Hartford and while there decided to go to Quebec instead of Montreal and from Montreal to Quebec.
8. On June 9, 1928, there took place a sharp decline in prices in the stock market, and on the same day defendants telegraphed plaintiff that his account needed additional security. This telegram sent to Mt. Royal Hotel, Montreal, Canada, at which plaintiff was supposed to be according to the itinerary. Again, on Monday, June 11th, the defendants telegraphed to the same address that plaintiff's account needed still further security. These telegrams were received by plaintiff on Monday, June 11th, at 7 P. M.
9. On June 12th at various times during the day the defendants made several efforts by telegraph and telephone to communicate with the plaintiff, but were unable to reach him. The defendants called plaintiff's brother at Southington, Connecticut, but plaintiff had left no address; defendants were informed that plaintiff might be reached at Quebec.
10. After a further fall in prices on June 12th, the defendants, at about 10 and 11 o'clock in the evening, sent telegrams to plaintiff at several addresses, notifying him that they would sell in the morning at the opening of the market certain specified stocks. This telegram was received by plaintiff on Wednesday, June 13, 1928, at about noon.
11. Meanwhile, on June 13th, at about 8 o'clock in the morning, the defendants had received from the plaintiff a telegram sent from Rochester, New York, reading as follows:
12. Orders to sell the stocks specified in defendants' telegram of June 12th were placed by defendants shortly after 9 o'clock on the morning of June 13th, and at the same time plaintiff was wired that it was impossible to delay selling.
13. In accordance with the orders thus given by the defendants, the following stocks standing in the plaintiff's account were sold at the mentioned prices:
500 shs. Lee Tire & Rubber
17 3/8
2000 shs. Inspiration Copper
19 1/2
500 shs. Granby Cons
49 1/8
500 shs. Texas Pacific Coal & Oil
13 1/8
300 shs. Magna Copper
47
500 shs. Nevada Cons. Copper
21
500 shs. Mo., Kans. & Texas Ry
30 5/8
500 shs. Anaconda Copper
63 1/4
500 shs. Howe Sound
52
500 shs. International Mercantile Marine Pfd
36
14. On the same day, plaintiff was advised that the sale had taken place and immediately protested the same and called upon the defendants to reinstate the account by a repurchase of the sold stocks on or before June 18, 1928.
15. Defendants refused to repurchase any of the stock unless and until plaintiff put up additional collateral. Plaintiff thereupon undertook to repurchase on the dates and at the prices listed below all of the stocks sold except 500 shares Granby and 500 shares Howe Sound:
500 Anaconda
June 20
$ 32,612.50
August 22
September 17
2000 Inspiration
October 8
52,912.50
October 15
October 19
500 Inter. Mer. Mar
June 20
18,887.50
500 Lee Tire
September 25
10,025.00
October 2
300 Magna
June 14
15,085.00
June 26
500 Mo., K. & T.
June 14
16,825.00
500 Nevada Cop.
June 27
11,450.00
500 Tex. P. C. & O.
October 19
16. If plaintiff had repurchased all of the said stocks within thirty days after June 18, 1928, he could have done so at the following outside prices:
500 Lee Tire at 20 3/8, would have been substantially what
he actually did pay at a later date, to wit
Th0 Nevada Cop., were actually purchased within thirty days, and as to these the actual cost to plaintiff as set forth in finding fifteen should be taken.
17. On the basis of repurchases within thirty days after June 18th the total cost to plaintiff would have been $ 215,199, which exceeded the proceeds of the defendants' sale of $ 192,807.50 by $ 22,391.50.
18. The plaintiff's margin with defendants during the days under consideration was as follows: June 7th, 29 per cent.; June 8th, 25.4 per cent.; June 9th, 25.2 per cent.; June 11th, 21.3 per cent.; June 12th, 17.3 per cent.; June 13th, 31.8 per cent.; June 14th, 29.3 per cent.
19. The 2900 shares of American Ship & Commerce stock were held as collateral security by defendants for plaintiff's indebtedness to them, but not as marginal collateral, because of the price at which said stock was selling, and so should not be included in any calculation...
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