Ouimette v. E.F. Hutton & Co., Inc.

• Decision Date: 18 July 1984
• Docket Number: No. 83-1751,83-1751
• Parties: Gerard T. OUIMETTE and Helen Ouimette, Plaintiffs, Appellants, v. E.F. HUTTON & COMPANY, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 72

740 F.2d 72

40 Fed.R.Serv.2d 470

Gerard T. OUIMETTE and Helen Ouimette, Plaintiffs, Appellants, v. E.F. HUTTON & COMPANY, INC., Defendant, Appellee.

No. 83-1751.

United States Court of Appeals, First Circuit.

Argued March 8, 1984.

Decided July 18, 1984.

Robert J. Doyle, Boston, Mass., with whom Kehoe, Doyle, Playter, Novick & Strimaitis, Boston, Mass., was on brief, for plaintiffs, appellants.

Paul Curcio, Providence, R.I., with whom Paula A. Kelly, and Hinckley & Allen, Providence, R.I., was on brief, for defendant, appellee.

Before COFFIN and BOWNES, Circuit Judges, and GIERBOLINI, ^* District Judge.

GIERBOLINI, District Judge.

This is an appeal from a jury verdict entered for the defendant in a breach of agency relationship action brought under diversity jurisdiction in the United States District Court for the District of Rhode Island.

On May 16, 1979 plaintiffs, Gerard T. Ouimette and Helen Ouimette (the Ouimettes) placed an order for a purchase of 10,000 shares of Caesar's World (Caesar's) stock with defendant E.F. Hutton (Hutton). On that same day Hutton traded, at the Ouimettes' request, some of the Caesar's stock. Then, on the following day, May 17, 1979, Hutton "sold out" all of Caesar's shares without the Ouimettes' authorization, effectively cancelling their account. Thereafter, on May 25, 1979, plaintiffs "settled their account" (paid for the 10,000 shares purchased) and received $7,000 as profits from Hutton.

The Ouimettes brought suit against Hutton to recover additional profits they would have received had Hutton not sold the stock on May 17, 1979. They alleged in essence that the unauthorized sale of the stock constituted a breach of their agency relationship. Defendant, on the other hand, claimed that no agency relationship existed between them because before Hutton ever agreed to purchase the stock for the Ouimettes it demanded a deposit from plaintiffs by the end of the next business day. Because the deposit was not received on May 17, 1979 Hutton "sold out" the stock. ¹

At trial, Mr. Ouimette testified in relevant part that Hutton requested the deposit after the price of the stock had fallen to $65.00 per share. Nevertheless, two of Hutton's employees, Steven Fusco, the broker dealing directly with the Ouimettes, and John Pliakas, Fusco's supervisor, contradicted Mr. Ouimette's testimony and testified that they demanded the deposit before the requested purchase of the stock be made. The issue went to the jury, and a verdict for defendant was rendered.

On appeal, plaintiffs assign two errors. First, they allege that the district court erred in refusing to instruct the jury on the issue that Hutton may have waived the deposit requirement by accepting commissions derived from the trading of the Caesar's stock. Second, they aver that the district court also erred in instructing the jury that the Ouimettes may have ratified Hutton's unauthorized sale by accepting the $7,000 profit. ²

I

Waiver of Deposit

Plaintiff's proposed instruction read in pertinent part as follows:

If the transfer of the stock and cash portfolio was a condition precedant [sic] as contended by the Defendant, the Defendant's unauthorized actions prevented performance by the Plaintiff. Casale v. Corrigan [Carrigan] & Boland, Inc., 288 So.2d 299, 301 (Fl.App.1974) [sic]. Further, the condition precedent was waived by the Defendant when it was paid a commission for the purchase and sale of the stock which constituted a benefit of the executed contract. (citations omitted). Therefore, if you find that the Defendant's actions prevented performance of the condition precedent by the Plaintiff or the Defendant's action of accepting the benefit of the contract (brokers commission) was a waiver of the condition precedent, then your verdict must be for the Plaintiffs.

Obviously, this requested instruction is not a model of clarity. Nonetheless, the Ouimettes insist that even if it was "less than artful", it still imposed upon the district court a duty to submit it to the jury in proper form because the legal theory is necessary to the determination of the issue.

Defendant, on the other hand, argues that plaintiffs failed to clarify the confusing charge or to offer any further explanation. They thus allege that plaintiffs waived any right to appeal the district court's denial to instruct on the issue of waiver.

Plaintiffs' proposed instruction was brought to the district court's attention for the first time after the conclusion of all the evidence. At that time, the following colloquy ensued:

The Court: Well, that's telling them that as a matter of law, the acceptance of the commission is a waiver, is that right?

Mr. DeCesare (counsel for plaintiffs): That's correct your honor.

The Court: That's what you want?

Mr. DeCesare: That's correct ...

Plaintiffs' counsel then proceeded to discuss another requested instruction. The trial judge did not rule on any of the proposed instructions. Instead, he advised the parties that they would have some time later to consider the instruction he intended to submit to the jury.

At the next morning's session plaintiffs failed to bring to the attention of the court the proposed waiver instruction. Other instructions nonetheless were discussed and objections made thereto. The district judge then indicated that he would note both parties' exceptions to the requests which were not given, and that after the jury went out he would go over them with the parties so that they would have a record. After having instructed the jury, the trial judge ruled that the requested waiver instruction was "denied as confusing". He then stated: "[t]he parties may have an exception. Put these together for the record please. Anything further?." Both parties answered in the negative.

The aforementioned recitation of what transpired reveals that plaintiffs never distinctly stated that they objected to the denial of their instruction as required by Rule 51 of the Federal Rules of Civil Procedure. ³ In contrast, they did object to the inclusion of defendant's ratification instruction and to the court's instruction on what constituted reasonable time within which plaintiffs might have replaced the stock.

Nevertheless, the trial judge noted the parties' objections to the instructions not submitted, effectively including in the record objections that were never verbally made. This is contrary to Rule 51 and the established practice in this circuit, which require the trial judge to afford the parties an opportunity to distinctly state their objections and the grounds on which they are based. The trial judge is further required to inform counsel of its proposed action upon requests prior to their arguments to the jury so that counsel may argue intelligently. Dunn v. St. Louis-San Francisco Railway Company, 370 F.2d 681, 683-684 (10th Cir.1966); Bouley v. Continental Casualty Company, 454 F.2d 85, 88 (1st Cir.1972); Rivera v. Rederi A/B Nordstjernan, 456 F.2d 970, 976 (1st Cir.), cert. denied, 409 U.S. 876, 93 S.Ct. 124, 34 L.Ed.2d 128 (1972); French v. United States, 487 F.2d 1246, 1247 (1st Cir.1973); Carrillo v. Sameit Westbulk, 514 F.2d 1214, 1219 (1st Cir.), cert. denied, 423 U.S. 1014, 96 S.Ct. 445, 46 L.Ed.2d 385 (1975); Gay v. P.K. Lindsay Co., Inc., 666 F.2d 710, 712 (1st Cir.1981), cert. denied, 456 U.S. 975, 102 S.Ct. 2240, 72 L.Ed.2d 849 (1982); McGrath v. Spirito, 733 F.2d 967 (1st Cir.1984).

District courts should heed the following admonition by Judge Aldrich, sitting by designation, in Dunn, supra, at 683-684:

The manner in which objections were sought to be preserved after the charge paid lip service to the requirements we have previously voiced, (citation omitted) but defeats their purpose. We scarcely need to repeat that the purpose is at least two-fold, to make it abundantly clear to the court not only what is the party's position, but in what way the charge is believed to depart therefrom, and to give the court full opportunity to make corrections. (citations omitted) The duty imposed upon counsel of "stating distinctly the matter to which he objects and the grounds of his objection" cannot normally be performed until the charge has been heard in its entirety. Usually until then it cannot be told "distinctly" to what extent a request has not been given. The court may believe that it has fully done so. As to this an a priori exception "to the extent that the request is not given in substance", meets none of the rules requirements. (citations omitted). In fact, we find little distinction between what happened in the case at bar and a so called general exception to the charge, which is universally condemned. (citations omitted).

As we recently held in Spirito, supra, Rule 51 is binding on both the court and attorneys and neither can circumvent it.

Notwithstanding the above, because the trial judge did state that he would preserve the parties' objections and they relied on the court's statements, and since our warning in Spirito is so recent, we proceed this once to consider whether the refusal to instruct the jury on the issue of waiver constituted reversible error. See Dunn, supra. ⁴ Although all parties are entitled to adequate jury charges upon the controlling issues of the case, the district court need not follow the exact language of the parties' requested instructions. Wolff v. Commonwealth of Puerto Rico, 341 F.2d 945, 946 n. 1 (1st Cir.1965); McKinnon v. Skil Corp., 638 F.2d 270, 274 (1st Cir.1981). The court is only required to properly apprise the jury of the applicable law. Turner Construction Co. v. Houlihan, 240 F.2d 435, 439 (1st Cir.1957); Sears, Roebuck & Co. v. Penn Central Co., 420 F.2d 560, 564 (1st Cir.1970); McKinnon, supra.

Moreover, a requested instruction to the jury may be correctly refused if it is improper or erroneous, and the district court is not required to correct it, Stewart v. Capital Transit Co., 108 F.2d 1 (D.C.Cir.1939), cert. denied, 309...