Niehuss v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
Decision Date | 18 April 1986 |
Docket Number | No. 85-1944,85-1944 |
Court | United States Appellate Court of Illinois |
Parties | , 97 Ill.Dec. 483 Fern NIEHUSS, Plaintiff-Appellee, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Defendant-Appellant. |
Gemma Allen, Chicago, for plaintiff-appellee.
This appeal is from judgment entered on a $25,000 jury verdict for plaintiff in her action to recover profits lost as a result of defendant's failure to execute her order to purchase four contracts in silver futures. Defendant contends that: (1) evidence of a settlement offer was erroneously admitted; and (2) the damage award was excessive because the trial court: (a) gave instructions as to damages which were improper and confusing; (b) refused to admit evidence of the sale by plaintiff of her substitute silver contracts; and (c) refused defendant's evidence as to mitigation of damages and its instruction thereon.
It appears that plaintiff was a sophisticated investor familiar with the intricacies of commodity trading when, on September 2, 1980, she went to an office of defendant The only dispute with respect to liability is whether plaintiff placed a definite order with defendant. Plaintiff claims that she ordered the four contracts on September 2 while defendant asserts that she did not place a definite order until September 8 when she decided to purchase only two contracts. Since the parties presented conflicting testimony with respect to the events which took place between September 2 and September 8, we will summarize that testimony in more detail later in this opinion. It is undisputed, however, that the price of silver was $17.37 per ounce 2 on September 2 and that silver traded "up the limit" 3 from September 3 to September 8. On September 9 plaintiff asked Gorkis to close her commodity account and to transfer her funds back to her ready asset account. (She also talked to Wilfred Fritz, the Merrill Lynch office manager, who spoke to Gorkis about the transaction.) On September 11, plaintiff opened a commodity account at E.F. Hutton. She purchased one silver contract at $21.30 per ounce on September 11 and another contract at $22.30 per ounce on September 12. The silver market reached a high of $24.25 per ounce on September 25 but plaintiff did not sell her contracts until December 1980 when she sold at $18 per ounce. Defendant was not allowed to introduce evidence of the December sale at trial.
[97 Ill.Dec. 485] to open a commodity trading account because she wanted to purchase contracts in silver futures. She spoke to Patrick Gorkis, an account executive, who told her that she would have to make a margin deposit of $4,000 for each of the four 1,000-ounce February 1981 silver futures contracts she wished to purchase. Plaintiff did have sufficient funds in a ready asset 1 account she had with defendant to cover the margin requirement and Gorkis ordered $16,000 transferred therefrom to the commodity trading account. Although plaintiff's monthly statement indicated that the transfer was made on September 2, Gorkis did not order the silver contracts for plaintiff on that date.
With respect to the placement of the order, plaintiff testified that during her visit to defendant's office on September 2 she told Gorkis that she wanted to purchase four 1000-ounce contracts in February 1981 silver. She initially told him that her son-in-law might want to purchase the silver contracts with her but when Gorkis told her that he could not do so because he had not signed the forms, plaintiff said she would take the silver herself and settle with her son-in-law later. Although she did take additional forms home for her son-in-law, she filled out the forms for her individual account in defendant's offices and told Gorkis that she had sufficient funds in her Merrill Lynch ready asset account to cover the $16,000 margin requirement for the four silver contracts. Gorkis called her account executive to verify the amount in her account and, when plaintiff asked whether she had to sign any papers to transfer the funds, Gorkis told her that the transfer had already been made. When plaintiff left the office on September 2 Gorkis said that he was going to order the silver immediately. She then told him that she would call him from home to find out exactly what she had to pay for it. She never reached him on September 2 so she went down to defendant's offices the next Wilfred Fritz, vice-president and manager of the Chicago commodity office of defendant at the time of this transaction, testified that Gorkis, as an agent, was not allowed to exercise discretion in entering orders. His obligation was to place the order when he received it if an approved client had money in her account. On September 9, he had a conversation with Gorkis regarding his dealings with plaintiff on September 2. He testified as follows:
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[Mr. Fritz]: That is essentially correct."
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