Wisbey v. Alan Shepard & Co.

• Decision Date: 26 June 1929
• Citation: 268 Mass. 21,167 N.E. 334
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: WISBEY v. ALAN SHEPARD & CO., Inc., et al.

268 Mass. 21

167 N.E. 334

WISBEY

v.ALAN SHEPARD & CO., Inc., et al.

Supreme Judicial Court of Massachusetts, Suffolk.

June 26, 1929.

Appeal from Superior Court, Suffolk County; E. B. Bishop, Judge.

Action by Henry A. Wisbey against Alan Shepard & Co., Inc., and others. From a decree for plaintiff, defendants appeal. Affirmed.

W. R. Bigelow, of Boston, for appellant Alan Shepard & Co.

J. M. Raymond, of Boston, for appellee.

WAIT, J.

This case is controlled in principle by Hall v. Paine, 224 Mass. 62, 112 N. E. 153, L. R. A. 1917C, 737, AND 230 Mass. 62, 119 N. E. 664; in which it was decided that one who is dealt with as a broker is not at liberty, as a principal, either to buy or to sell directly to the customer stocks which he is directed, as a broker, to sell or buy for him, and that on discovering that the broker has so dealt, the customer may repudiate the transaction and recover what he has paid with interest.

The bill filed October 20, 1927, in substance, alleged that, induced by the defendant Alan Shepard & Co., Inc., on January 24, 1927, he delivered to it 65 shares to Lowell Electric Light Company stock to sell at ‘market,’ or $64 per share, as a broker for him, and, as a broker, to purchase for him from the proceeds certain shares of the Beecher Falls Company, Inc., class A stock at $40 per share; that on January 25 he authorized the purchase of 200 shares more of the class A stock at $40 per share with money loaned by the defendant at 5 per cent. per annum, and to be paid for by the plaintiff when delivery was requested; that it advised him that it had made such sale on January 24, and had purchased for him 104 shares of class A stock with the proceeds, and had purchased for him, on January 25, 200 shares of said class A stock through such loan; that on September 10, 1927, it demanded $3,000 additional deposit to prevent immediate sale of the stock, and, on his protest that it had no such authority, advised him that it had sold substantially all said class A stock at $27 a share. The bill alleged further that the representations as to the market for class A stock were false and fraudulent; that in fact the defendant had never executed the orders for the class A stock, or, if it had executed them, had done so in pursuance of a fraudulent scheme to induce him to purchase, to open an unauthorized margin account in his name, to create a false market by purchases and sales by people connected with it, or acting in accord with its desires, and wrongfully to sell out his account in accordance with such false...