Weisberg v. Hunt
| Decision Date | 03 June 1921 |
| Citation | 239 Mass. 190,131 N.E. 471 |
| Parties | WEISBERG v. HUNT et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Report from Superior Court, Suffolk County; Jabez Fox, Judge.
Action by Samuel Weisberg against William Hunt and others. Reported by the superior court after a finding for defendants. Judgment for defendants.
The action was to recover back moneys paid defendants, who were stockbrokers, as margins. The first count based on the statute relative to stock gambling was not relied on by plaintiff; his contention being that the orders were given and their execution undertaken by defendants with the express understanding that the transactions were to be completed by an actual receipt and delivery of certificates of stock that defendants did not execute his orders in accordance with this understanding, in that they did not actually receive certificates for stocks ordered to be purchased, nor make actual delivery of certificates of stocks ordered to be sold. The auditor found that all orders were executed and completed in accordance with the rules of the exchange through which they were made, providing for the delivery only of the balance between a broker's purchases and sales.
William Reed Bigelow, of Boston, for plaintiff.
P. H. Kelley, of Boston, for defendants.
This is an action of contract in which the plaintiff seeks to recover money paid by him to the defendants as margins for the purchase and sale of stocks. The declaration is in two counts, one under R. L. c. 99, §§ 4-7 (now G. L. c. 137, §§ 4-7); and the other on an account annexed for the amounts so paid. The case was tried in the superior court without a jury. The plaintiff put in evidence the report of an auditor before whom the case had been heard, then rested and elected to stand upon the second count. He does not claim that he is entitled to recover under the cited statutes, but relies wholly on alleged failures of the defendants to perform their contracts with him. In his brief it is stated that ‘* * * the plaintiff does not claim any illegality in any contract in this case.’
The defendants reside in Massachusetts and are and have been partners carrying on business as brokers and having an office in Boston. They are members of the Consolidated Stock Exchange of New York. On October 16, 1918, the plaintiff began ‘operations in the stock market’ through them, and on that day signed and delivered to them at their request a printed document entitled ‘customer's registration card.’ This directed that all orders for the purchase or sale of securities given by the plaintiff should be executed by the defendants at their discretion on or through any stock exchange or curb exchange in Boston or New York. It also provided:
‘All orders executed in New York, or any New York Stock Exchange or Curb Exchange, shall be executed in accordance with the laws of New York and the rules and regulations of the said exchanges prohibiting fictitious and illegal transactions, contracts and agreements; and [further that] it is understood and agreed that the validity of all transactions * * * executed on any New York Stock Exchange or New York Curb Exchange shall be controlled and determined solely by the laws of New York.’
Furthermore, said card authorized the defendants to ‘loan, hypothecate or otherwise use’ all securities held or carried by them on account of the plaintiff and empowered them without demand or notice to ‘close out at public or private sale’ any securities held or carried for the plaintiff whenever they deemed it necessary for their protection.
At the time he signed the card, the plaintiff gave the defendants $400 as a margin, for which amount a receipt was given by them, which recited that it was agreed that ‘all orders given * * * are to be executed according to the rules of the Consolidated or New York Stock Exchange, and all stocks bought or sold may be received or delivered through the clearing house, according to the rules of the exchange, and such a delivery shall be a good delivery.’ Thereafter the plaintiff ordered the defendants to buy and sell stock certificates for him at various times. These orders were in writing and all authorized their fulfilment in accordance with and subject to the laws of the state where they were executed and the rules and regulations of the stock exchanges where the purchases were made, prohibiting all fictitious and illegal transactions and agreements, and further empowered the defendants without demand or notice to close out any of the securities carried by them in the manner stated in the registration card and hereinbefore recited.
On Februry 11, 1919, the plaintiff received a balance then standing to his credit on the books of the defendants and delivered to them a release of all claims and demands which he then had against them. Neither party now claims that the financial transactions entered into prior to that date are still open.
On April 10, 1919, the plaintiff ‘again began operations in the stock market,’ making a new deposit and receiving a receipt like those previously given him. He was not asked to sign a new registration card. Thereafter followed transactions relating to the purchase and sale of stock certificates upon the plaintiff's account and order, the last of which was on November 13, 1919. For the payments made by the plaintiff from time to time he received receipts in form like those hereinbefore referred to. His orders were in writing and were in form like those previously considered. During this time the plaintiff paid to the defendants in all $4,400 and received from them $1,752.01.
As the findings of the auditor as to what took place upon the plaintiff's orders cannot be substantially abridged, reference must be made thereto. The result of the transactions however was this: The defendants at the opening of the next business day for each transaction in behalf of the plaintiff, sent to the clearing house of the New York Consolidated Stock Exchange where many of the transactions took place, a full record of all their transactions for the previous day, which record is known as the clearing house sheet, and which is required by the rules of said exchange. Under and in accordance with said rules, transactions are cleared in the following manner: All clearing house sheets each day submitted are checked up; a record is then made by the clearing house showing the excess of purchases over sales, or sales over purchases, of a given security, as made by each member of the exchange for the previous day; on a given hour of that day the clearing house sends to each member whose sales exceed his purchases of a given security an order to deliver the balance of said securities to some other member of the exchange, and gives to each member whose purchases of a given security exceed his sales the name of a member of the exchange from whom he is to receive the shares to which he is entitled. The rules of the exchange require that all securities shall be delivered in accordance with such order on or before a given hour on the same day and provide for the prices at which deliveries shall be made. An adjustment of the difference between the actual price at which a security was bought or sold and the setting price is thereafter made through the claring house, thus making the transaction, so far as prices are concerned, in accord with the actual amount bid at the time when the purchase or sale was made.
The record does not show what stocks were bought or sold in this manner on each exchange.
No evidence was introduced before the auditor or before the court as to the law of New York with reference to transactions concerning the purchase and sale of stock, and it must be assumed to be the same as the common law of Massachusetts. Bearse v. McLean, 199 Mass. 242, 85 N. E. 462.
On November 13, 1919, before the opening of the stock market on that day, the defendants called the plaintiff's attention to the condition of his account and to the ‘dangerous state’ of the stock market and asked for a further margin. The plaintiff did not furnish this, but gave the defendants a ‘stop loss' order as to some stock which the defendants claim was then being carried on his account. The auditor finds that such order authorized the sale of the stock on the market when the price fixed was reached in the exchange, and trading at said point having been reached, the stock was sold in accordance therewith. On the same day the plaintiff sold another stock short, but on account...
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Fisher v. Drew
...by the stated facts. Livingston v. Hammond, 162 Mass. 375, 38 N. E. 968;Fisher v. Doe, 204 Mass. 34, 41, 90 N. E. 592;Weisberg v. Hunt, 239 Mass. 190, 131 N. E. 471;King v. Freedman, 239 Mass. 560, 564, 132 N. E. 367. The defendant's motion that judgment be entered in his favor was denied. ......
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In re Codman
...536, 97 N.E. 70, was another margin case to the same effect. Perhaps the latest Massachusetts margin case is that of Weisberg v. Hunt, 239 Mass. 190, 131 N.E. 471. finding was for the defendant on the ground that it had complied with its contract as contained in the receipts given, and, as ......
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Marshall v. James
...The defendants rely on Zembler v. Fitzgerald, 234 Mass. 236, 125 N. E. 299;Adams v. Hayden, 236 Mass. 454, 128 N. E. 798;Weisberg v. Hunt, 239 Mass. 190, 131 N. E. 471;Walters v. Albee, 245 Mass. 216, 139 N. E. 521. In Zembler v. Fitzgerald, the plaintiff had a positive intention that the o......
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