Gillett v. Whiting

• Decision Date: 03 June 1890
• Citation: 24 N.E. 790,120 N.Y. 402
• Parties: GILLETT et al. v. WHITING.
• Court: New York Court of Appeals Court of Appeals

120 N.Y. 402

24 N.E. 790

GILLETT et al.

v.WHITING.

Court of Appeals of New York, Second Division.

June 3, 1890.

Appeal from superior court of New York city, general term.

Action by Frank M. Gillett and William D. Mills against William I. Whiting. Verdict and judgment for plaintiffs, was affirmed by the general term, and defendant appeals.

Joseph A. Shoudy, for appellant.

Ira D. Warren, for respondents.

HAIGHT, J.

This action was brought to recover losses which the plaintiffs claim to have sustained by reason of certain stock speculation by the defendant. The plaintiffs, as brokers, purchased for the defendant, upon his order, 200 shares of stock, he delivering them $400 as a margin. Subsequently the stock was sold, resulting in a loss over and above the margin paid by the defendant, which loss is sought to be recovered in this action. In submitting the case to the jury, the defendant's counsel requested the court to charge that, in case the plaintiffs sold the stock without notice to the defendant, as to the time and place of sale, by doing so they violated their duty to the defendant, and converted the stock to their own use. The court refused to charge as requested, and an exception was taken by the defendant. It appears to us that this request was proper, and that the charge should have been made. The relation existing between the defendant as customer, and the plaintiffs as stock-brokers, was that of pledgeor and pledgee. The plaintiffs had undertaken to purchase and hold the stock for the defendant, subject to his order. The defendant had undertaken to make good his margin within a reasonable time after notice to do so; and, if this was not done, the broker could sell upon giving reasonable notice. But, if he sold without a demand to supply additional margin or notice that a sale would be made, the sale would be wrongful, and operate as a conversion of the stock. Markham v. Jaudon, 41 N. Y. 235;Stenton v. Jerome, 54 N. Y. 480;Baker v. Drake, 66 N. Y. 518.

In this case there is no claim made that it was a custom of the plaintiffs' office to sell without notice, which was understood by the defendant. The learned general term was of the opinion that the fact of conversion did not go to the whole damages asked by the plaintiffs, but entitled the defendant to a reduction of the plaintiffs' damages by the amount proven to have been suffered by the defendant from the sale at the particular time when it took place, and that no such amount was proven. We do not understand this to be the law. This action was based upon performance of the agreement by the plaintiffs, in which they undertook to carry for the defendant the stock purchased, and if, instead of performing the contract on their part, they converted the stock to their own use, they have no ground of complaint or cause of action against the defendant. This is not a case in which the customer is suing the broker for damages he has sustained by reason of a conversion of the stock by the broker, as was the case in Baker v. Drake, 53 N. Y. 211.

In this connection, it may not be necessary to discuss the evidence bearing upon the matter embraced in the request to charge, and we shall but briefly allude to it. The plaintiff Mills, upon his direct examination, stated that they repeatedly sent to the office of Scannell Bros., where the defendant's head-quarters were supposed to be, and where he said he would be, that he must come up to the office, and put up more money, for the plaintiffs would not carry the stock on their own money; that, not hearing from him, they sold out the hundred shares of Northwestern stock, at a loss of $775. It subsequently appears that this sale took place on the 19th day of October; that the remaining...