Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Cole

• Decision Date: 15 March 1983
• Citation: 189 Conn. 518,457 A.2d 656
• Court: Connecticut Supreme Court
• Parties: , 35 UCC Rep.Serv. 944 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. v. Morton E. COLE. Morton E. COLE v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., et al.

Page 656

457 A.2d 656

189 Conn. 518, 35 UCC Rep.Serv. 944

MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. v. Morton E. COLE.

Morton E. COLE v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., et al.

Supreme Court of Connecticut.

Argued Jan. 13, 1983.

Decided March 15, 1983.

[189 Conn. 520] Morton E. Cole, with whom, on brief, was Cyril Cole, Hartford, for appellant (defendant in first case, plaintiff in second case).

Philip S. Walker, with whom, on brief, was Felix J. Springer, Hartford, for appellee (plaintiff in first case, defendant in second case).

Before PETERS, ARTHUR H. HEALEY, PARSKEY, SHEA and GRILLO, JJ.

PARSKEY, Associate Justice.

These cases arise out of a transaction involving the sale of shares of stock of the Connecticut General Life Insurance Company (CG) owned by Morton E. Cole (Cole). In one case (Merrill Lynch case) the stock brokerage firm of Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) brought an action against Cole for breach of contract by Cole to sell Merrill Lynch 5000 shares of CG stock. In the other case (Cole case) Cole sued Merrill Lynch in six counts for breach of contract, fraud, and fraudulent breach of trust. The cases, which were tried simultaneously, the Merrill Lynch case being tried to the court and the Cole case to the jury, resulted in a judgment for damages in favor of Merrill Lynch in the court trial and a verdict and judgment for Merrill Lynch in the jury trial. Cole has appealed in both cases.

The trier could have found the following facts. Cole is the owner of 19,950 shares of CG common stock, which stock is generally traded in the over-the-counter market. Merrill Lynch is a broker-dealer member of the New York and other major stock exchanges. For many years Cole has been a customer of Merrill Lynch through its branch office in Hartford. Cole is also an attorney who has maintained an office in Hartford for many years.

On February 19, 1974, Cole informed Byrne Kinney, a registered representative of Merrill Lynch at its Hartford office and Cole's account executive, that he wished to sell all of his shares of CG common stock. At that time CG shares were selling at $52 a share in the open market. The $52 price was for 100 share lots but not for large blocks such as Cole owned. Kinney informed Herbert H. Hedick, manager of the Hartford office, of Cole's offer and thereafter arranged a meeting among Cole, Kinney and Hedick on February 20. At that meeting Kinney and Hedick informed Cole that an attempt to dispose of the entire block on the open market would depress the market price to Cole's detriment. They recommended that Cole give Merrill Lynch an opportunity to bid for the whole block as a principal for its own corporate account. At that time Merrill Lynch in its capacity as broker-dealer "made a market" ¹ for CG stock and retained an inventory in the stock for such purpose.

Over the telephone and in the presence of Cole and Kinney, Hedick sought a bid from Charles Truchan, Merrill Lynch's block trader in New York, who extended an offer of $51 a share for the entire block at the same price which Cole rejected. Truchan then extended an offer to pay $51 for 5000 shares if Cole would give Merrill Lynch a thirty minute option to purchase the remainder of the block. Cole rejected this offer but agreed to sell 5000 shares outright to Merrill Lynch at $51.50 with an option in Merrill Lynch to purchase, by the end of the trading day, the remaining 14,950 shares at $51.75. Truchan accepted Cole's proposal and attempted unsuccessfully during the balance of the trading day to place the remaining shares. Cole remained in Hedick's office until the close of trading when Truchan called to state that he was unable to exercise the option for purchase of the remaining CG shares. The proceeds from the sale of the 5000 CG shares were credited to Cole's account.

Shortly after Cole left Hedick's office, Truchan called Hedick again with an offer to purchase the remaining shares at the expired option price of $51.75. This offer was immediately conveyed by telephone to Cole by Kinney, but Cole indicated that he was not interested in doing any more business that day.

The next morning, February 21, 1974, Cole called Hedick and asked to nullify the prior day's trade because he felt the price for the 5000 shares was inadequate. A meeting among Cole, Kinney and Hedick was arranged for that afternoon, at which Cole repeated his request that the sale of the 5000 CG shares be nullified but Hedick refused to consider rescission of the transaction and informed Cole that he had an obligation to deliver the 5000 shares to Merrill Lynch by the settlement date of February 27, 1974.

Consistent with its usual practice after executing any stock transaction, Merrill Lynch mailed a confirmation notice to Cole on February 21, 1974, memorializing his sale of 5000 shares of CG on February 20, 1974, at $51.50 a share. On February 22, 1974, also pursuant to its usual practice, Merrill Lynch mailed a "securities due" notice to Cole informing him that by the settlement date of February 27, 1974, the 5000 CG shares sold to Merrill Lynch on February 20, 1974, would have to be delivered. Both of these communications were sent to Cole's Hartford office address at One Constitution Plaza. Because of Cole's avowed intent not to deliver the 5000 shares, Hedick sent him a telegram at his Hartford office late in the day on February 22, 1974, informing him of his obligation to deliver the shares. The telegram further advised that in the case of Cole's failure to deliver the securities as requested, Merrill Lynch would purchase and charge to his account a number of shares equal to those he was obligated to deliver under the February 20 agreement.

As a result of Cole's failure to deliver the 5000 CG shares by the February 27 due date, Merrill Lynch "bought-in" 5000 shares of CG stock in the market to eliminate the deficit in its corporate trading account inventory. The cost of these "buy-in" purchases exceeded by $8572.23 the amount Merrill Lynch had contracted to pay Cole for his shares.

Cole left for Florida on February 22 and returned on March 6, 1974. Upon his return Cole hand delivered a letter to Hedick in which he noted his objection to the transaction involving the sale of 5000 CG shares to Merrill Lynch.

The trial court found the issues for Merrill Lynch in its suit against Cole and rendered a judgment for Merrill Lynch in the amount of $8572.23 plus interest from February 27, 1974. In the suit by Cole against Merrill Lynch the jury returned a verdict for the defendant. From the judgment in both cases Cole has appealed. We affirm.

I FACTUAL CLAIMS

Cole asserts a number of factual claims. First, he claims that his agreement with Merrill Lynch was to sell his entire block of CG shares rather than a contract to sell 5000 shares accompanied by a time limit option in Merrill Lynch to purchase the remaining shares at a stated price. He also claims that at the time of the transaction his mailing address was in Miami, Florida rather than his office at Hartford. The jury, in response to a specific interrogatory, found against Cole on the first claim and the court in its memorandum of decision specifically found against him on both claims. Since there was conflicting evidence on both claims, the resolution of these issues was for the determination of the trier. Halperin v. Pine Plaza Corporation, 180 Conn. 85, 87-88, 428 A.2d 340 (1980). Cole's challenge to the factual findings is nothing more than a request that we accept his version of the facts and this we cannot do because it is not our function to retry the case. Edgewood Construction Co., Inc. v. West Haven Redevelopment Agency, 170 Conn. 271, 272, 365 A.2d 819 (1976).

II EVIDENTIAL CLAIMS

Cole called Hedick as a witness. During direct examination Cole offered Hedick's notes as full exhibits. On cross-examination the court properly permitted inquiry into these notes. While it is settled Connecticut law that inquiry upon cross-examination is limited by the scope of the direct examination; Grievance Committee v. Dacey, 154 Conn. 129, 150, 222 A.2d 339 (1966) appeal dismissed, 386 U.S. 683, 87 S.Ct. 1325, 18 L.Ed.2d 404, reh. denied, 387 U.S. 938, 87 S.Ct. 2048, 18 L.Ed.2d 1006 (1967); that scope is determined by all of the evidence offered during direct examination. An exhibit offered and received as a full exhibit is in the case for all purposes. If admitted during direct examination it is as much a part of that examination as the testimony of witnesses. If Cole wished to preclude cross-examination with respect to the contents of the notes, he should not have offered them in evidence during the direct examination. Robinson v. Faulkner, 163 Conn. 365, 373, 306 A.2d 857 (1972). He could have had the notes marked for identification only and withheld the offer until Merrill Lynch presented its case. Shulman v. Shulman, 150 Conn. 651, 659, 193 A.2d 525 (1963).

Cole, who appeared pro se, called himself as a witness and was duly sworn. While on the stand he used certain notes in connection with his testimony. On cross-examination counsel for Merrill Lynch was permitted, over objection, to examine these notes. Cole claims that since he acted in the dual capacity of an attorney and party litigant he had a right as an attorney to keep confidential his trial brief notes. The ruling permitting the notes to be examined was correct. If a witness, when testifying, uses a document to refresh his recollection, that document thereby becomes available for examination by the opposing party. State v. Grimes, 154 Conn. 314, 323, 228 A.2d 141 (1966); Neff v. Neff, 96 Conn. 273, 280-81, 114 A. 126 (1921). A pro se party who takes the witness stand is treated like any other witness. The fact that he is also an attorney does not ensconce him in a professional immunity blanket.

Cole's further claim that exhibits in the Merrill Lynch (court) case should not have...