Howell v. First of Boston Int'l Corp.

• Decision Date: 28 May 1941
• Citation: 309 Mass. 194,34 N.E.2d 633
• Parties: HOWELL v. FIRST OF BOSTON INTERNATIONAL CORPORATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

309 Mass. 194

34 N.E.2d 633

HOWELL

v.FIRST OF BOSTON INTERNATIONAL CORPORATION.

Supreme Judicial Court of Massachusetts, Suffolk.

May 28, 1941.

Action of contract by Marion K. Howell against the First of Boston International Corporation to recover the purchase price of stock purchased by the plaintiff from the defendant together with interest. The controversy was submitted to the trial judge in a district court upon a case stated, and the trial judge found for the plaintiff in the sum of $3,195.11. From an order of the Appellate Division vacating trial judge's finding and ordering judgment for the defendant, the plaintiff appeals.

Order of Appellate Division affirmed.

Appeal from Municipal Court; Zottoli, Judge.

Argued before FIELD, C. J., and LUMMUS, QUA, DOLAN, and COX, JJ.

Edward M. Dangel, D. S. Smith and G. A. Goldstein, all of Boston, for plaintiff.

V. V. R. Booth and L. M. Lombard, both of Boston, for defendant.

LUMMUS, Justice.

Late in 1929 the defendant, then known as First National Corporation, was a registered broker in securities within the meaning of St.1921, c. 499, G.L. (Ter.Ed.) c. 110A, the sale of securities act, popularly known as a blue sky law, which has since been superseded by revision contained in St.1932, c. 290 and amendments. The present case depends upon the original law with its few amendments up to and including the year 1929.

Late in 1929 the Chase National Bank of the City of New York and the Chase Securities Corporation were selling theirshares to the general public in blocks consisting of one share of each corporation. The State Street Trust Company, at the request of the plaintiff, undertook gratuitously in accordance with its custom to buy for her nine such blocks of stock. As it had done in similar cases for many years, it placed an order with the duly registered stock brokerage firm of Bright, Sears and Company to buy for it nine such blocks, represented by a receipt of Bankers Trust Company, the depositary of such blocks. Bright, Sears and Company knew of no purchaser except the State Street Trust Company, and relied upon its credit in making the purchase.

Bright, Sears and Company bought the receipt representing nine such blocks for $1,950 from the defendant, which relied upon the credit of Bright, Sears and Company and did not know whether that firm was buying as principal or agent. The defendant delivered the securities to Bright, Sears and Company in the form of ‘street certificates' negotiable by delivery, and received payment from that firm. That firm sent the State Street Trust Company a memorandum of the purchase made for the latter, in which the purchase price and the commission were stated. After the State Street Trust Company had received that memorandum it advised Bright, Sears and Company for the first time that it was buying for the plaintiff, and did so apparently for the purpose of having the shares registered in her name.

In September, 1935, the plaintiff learned for the first time that the securities that she had bought in 1929 had not been qualified for sale in Massachusetts under G.L. c. 110A (St.1921, c. 499) §§ 4-7, with amendments appearing in G.L.(Ter.Ed.) c. 110A, §§ 4-7. On October 8, 1935, she tendered the securities to the defendant, together with all dividends received by her, and demanded a return of the purchase price. The tender was refused. She then brought this action of contract on October 10, 1935, for the purchase price with interest. The controversy was submitted to the trial judge in a district court upon a case stated. He found for the plaintiff, but his finding was vacated by the Appellate Division, which ordered judgment for the defendant. The plaintiff appealed to this court. We are in the same position as was the trial judge, as to both and law. The case of Boston Lodge, Order of Elks v. Boston, 217 Mass. 176, 104 N.E. 453, cited by the plaintiff for the proposition that this court must accept inferences of fact drawn by the trial judge from a case stated unless unwarranted in law, no longer can be cited as authority for that proposition. United States Fidelity & Guaranty Co. v. English Construction Co., 303 Mass. 105, 109, 20 N.E.2d 939;Azevedo v. Mutual Life Ins. Co., 308 Mass. 216, 217, 31 N.E.2d 559.

The sale of securities act was intended to protect the general public, not security brokers. The latter were considered able to look out for themselves. Accordingly, Section...