Leonard v. Woodruff

• Decision Date: 23 June 1932
• Docket Number: No. 59.,59.
• Citation: 259 Mich. 434,243 N.W. 252
• Parties: LEONARD v. WOODRUFF et al.
• Court: Michigan Supreme Court

259 Mich. 434

243 N.W. 252

LEONARD

v.WOODRUFF et al.

No. 59.

Supreme Court of Michigan.

June 23, 1932.

Appeal from Circuit Court, Kent County; Willis B. Perkins, Judge.

Suit by Michael Leonard against Don M. Woodruff and others, copartners doing business as Don M. Woodruff & Co. From a judgment for defendants, plaintiff appeals.

Affirmed.

Argued before the Entire Bench.Travis, Merrick, Johnson & McCobb, of Grand Rapids (Thomas N. Robinson, of Benton Harbor, of counsel), for appellant.

McAllister & McAllister, of Grand Rapids, for appellees.

BUTZEL, J.

Michael Leonard, plaintiff, a Grand Rapids representative of a large insurance company, also solicited business through the Detroit office of the company. On October 2, 1929, while in Detroit, he called upon Abraham Ghysels, a former resident of Grand Rapids who had moved to Detroit and was employed by the brokerage firm of Don M. Woodruff & Co., defendants herein. During the previous four years, Leonard had been purchasing stock, sometimes for cash and occasionally on margin, from a number of brokerage houses. On his visit to Ghysels' office, his interest was aroused in Grand Rapids Savings Bank stock, which had been rapidly and continuously advancing in price, and the market in which was very active. Ghysels told Leonard that he purchased stock in the Grand Rapids Savings Bank for his wife because of the report that the bank would be merged with the Union Commerce Group of Detroit. Rumors of large bank mergers were rampant, and there was much speculation in bank stocks at the time. The following day plaintiff gave defendants, through Ghysels, a firm order to purchase 10 shares of the stock at the market, which he was informed was around $1,225 per share. Defendants executed the order, together with another one for a like number of shares, by purchasing 20 shares from E. H. Collins & Sons, brokers, for $1,215 per share, and charged plaintiff such cost plus $10 a share for commission. thus making the total price $12,250. There appears to be no dispute over the reasonableness of the commission charged. Under the proposed plan of merger, 5 shares of Union Commerce Group stock were to be exchanged for each share of Grand Rapids Savings Bank stock. Testimony shows that defendants had additional stock on hand, some of it being held for the account of Mrs. Ghysels, but they had at all times a sufficient number of shares, either in the form of stock or interim depositary receipts for the exchange of the Guardian Union stock, as hereinafter stated, to enable them to make deliveries to all customers who had purchased the stock.

Plaintiff paid $3,000 on the purchase price and deposited as additional collateral, 20 shares of People's Wayne County Bank stock, and subsequently 100 shares of Winters & Crampton Class A stock. The proposed merger of the Grand Rapids Savings Bank with the Union Commerce Group did not materialize, but a merger with the Union Guardian Group was thereafter planned; the latter company being a large holding company into which the Union Commerce Group was also merged. The new merger proposed had proceeded so far that on November 15, 1929, 7,469 out of the 7,500 shares of Grand Rapids Savings Bank had been deposited with the Guardian Trust Company as depositary, so that they might be exchanged for stock of Guardian Detroit Union Group, Inc., if certain conditions were met. In that event 5 shares of Guardian Detroit Union Group, Inc., stock were to be issued for each share of Grand Rapids Savings Bank stock. The exchange was to be made on or before December 1, 1929, but the time was later extended to February 1, 1930. Defendants deposited all of the stock held by them, including the 10 shares purchased for plaintiff, and received depositary receipts of the Guardian Trust Company. The record indicates the plaintiff contemplated and desired the stock he bought to be exchanged. On October 1, 1929, he wrote defendants that ‘if the market on Union Commerce stock improved, I would like to protect myself. Perhaps this will be possible in a day or two some place over 250.’ There is no showing, however, that he either directly gave or withheld his consent to the depositing of his shares for exchange into stock of the Guardian Detroit Union Group, Inc.; on the other hand, there is every indication...