Case ID: ny-super-ct_2/html/0162-01.html
Source: Caselaw Access Project
Author: {"author": "Oakley J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. & W. G. Ward versus Selah Van Duzer.
    In order to charge a defendant, in an action for money paid, for the purchase of stock on his account, and by his order, the plaintiff must clearly show the authority under whieh he acted, and prove that, he was instructed by the defendant to make the purchase. And where the proof was so defective at the trial that the jury would have been compelled to infer such authority from conversations and admissions of the defendant, which were neither explicit nor satisfactory, the plaintiffs were non-suited and the Court refused to set the non-suit aside.
    At the time of the purchase of the stock by the plaintiffs, the persons with whom they contracted for its delivery had no stock standing in their names on the books of the corporation by which it was issued, and there was no evidence, that they* were in fact the owners of the stock, which they professed to sell. Held, that the transaction was void under the act relative to stock-jobbing, and that the plaintiffs’ action could not be sustained.
    This was an action of assumpsit for money paid by the plaintiffs for the defendant in the purchase of stock for him and by his orders, or to recover the value of the stock which consisted of fifty shares in the Fulton Bank, of the city of New-Tork.
    The cause was tried before Mr. Justice Oakley, and at the trial the plaintiffs called William J. Robinson, a stock broker, as a witness, who testified, that on the 19th of May, 1826, he sold to the plaintiffs fifty shares of stock in the Fulton Bank, at 84 per cent on its par value, for which the plaintiffs at the end of 60 days paid him the cash with interest from the date of the purchase. But at the time of the sale the witness had not a single share ot the stock standing in his name, neither could he recollect whether he transferred the fifty shares to the defendant when he received his money, nor whether they were in fact transferred at all, (as he acted as a broker for other persons,) although he presumed they must have been conveyed to the plaintiffs.
    The witness being cross examined, and asked, who the owner of the stock was, the counsel for the plaintiffs objected to the question, but the objection was overruled, and an exception was thereupon taken to the opinion of the Judge. The witness then testified, that he sold the stock for J. M. D. Lawrence and S. L. Gouverneur, but he knew not whether they had any stock standing in their names, either on the 19th of May, when the sale took place, or on the 20th of July, when payment was made; nor w as the witness privy to any transfer of the stock by them. He however paid over the money received of the plaintiffs to his principals, and he therefore concluded that a transfer of the shares took place. The witness testified further^ that it is the common custom well known to all dealers, to transfer bank stock by means of powers of attorney authorizing the transfers, which accompany the certificates of stock, and these certificates and powers pass from hand to hand, as if they were negotiable. The witness presumed, that his principals owned the stock when he sold it, although it might have been hypothecated for some loans.
    The plaintiffs then called a witness, who testified, in substance, that the defendant had admitted to him, that he had directed the plaintiffs to purchase some stock in the Fulton Bank, (without stating the quantity, however,) and that he had paid $200, on account of the purchase. Another witness, (a clerk of the plaintiffs’) also testified, that on the 19th of May, he heard the defendant consulting with the plaintiffs, as to theexpediency of purchasing stock in the Fulton Bank. But he heard no orders for that purpose given, and all other facts known to him he derived from the plaintiffs and their books.
    The cashier of the bank was then called, who testified, that neither on the 19th of May, 1826, nor on the 20th of July following, nor at any intermediate period, had Lawrence any stock standing in his name on the books of the Fulton Bank. On the 15th of July, Gouverneur had thirty-five shares standing in his name, which he afterwards, on the 22d of the same month, transferred to Robinson and another person. Robinson transferred fifteen shares, which stood in his name, but no stock was ever transferred to the defendant, and he never, at any time, held any stock in the bank in his own name; but the plaintiffs at all times between the periods above specified, were holders of a large number of shares.
    The plaintiffs then produced a certificate of fifty shares of said stock, with a power of attorney attached thereto, and offered to transfer the same to the defendant, upon receiving the same amount therefor, which they had paid to Robinson.
    The cause being rested upon this evidence, the defendant moved for a nonsuit, which was granted by the presiding Judge, who gave the plaintiffs leave, at the same time, to move to set it aside.
    
      Mr. J. Hoyt, for the plaintiffs, now moved to set the nonsuit aside, and contended,
    I. That there was sufficient testimony given to entitle the plaintiffs to go to the jury.
    II. That as to the statute relative to sales of stock, [2 R. L. 187,] the plaintiffs were under no obligation to set it up as against Robinson, and the defendant could not avail himself of it to defeat the action. He considered the money advanced as a loan to the defendant, and, as this was not an action upon the contract, the plaintiffs were entitled to recover back the money paid out for the defendant. It was not necessary that the stock should stand in the name of the vendor;—it was sufficient if he owned it. [7 Cow. 24, Frost v. Clarkson.] Here the plaintiffs purchased the stock, and the defendant could have received it at any time by paying the money advanced. Whether the plaintiffs were directed to buy the stock or not, was a question for the jury, and there was evidence enough to satisfy them upon that point. At all events, the plaintiffs were entitled to an opinion of the jury upon the facts, and the nonsuit was improperly granted. [Mr. Hoyt also cited the following cases: 1 Mass. R. 139. 3 T. R. 418. 6 T. R. 61.]
    
      Mr. Anthon for the defendant, contra, contended,
    I. That there was no evidence to sustain the action, nor any evidence, from which the jury could legally infer the existence of a contract; and if the case had gone to the jury, and they had found for the plaintiffs, their verdict would have been set aside as against evidence. The evidence does not prove any authority on the part of the plaintiffs to purchase stock for the defendant of any kind, and if it showed a general intention on the part of the defendant to purchase, there was still a total want of all proof as to the quantity to be procured.
    II. The contract was, at all events, void by the statute. It is proved, 1. That Robinson, the broker, had no stock at the time he pretended to sell fifty shares to the plaintiffs. 2. Neither Lawrence nor Gouverneur had any, nor was any ever transferred to the defendant. It was then a mere jobbing transaction, at least on the part of those, who sold the stock to the plaintiffs, if any in fact was sold. But it is not even proved, that any stock was ever conveyed to the plaintiffs by Robinson, and as they had a large quantity of their own, the presumption is, that the sales were all ideal, founded upon contracts to deliver stock at a future period, the sellers having none in possession at the time of the purchase, on the part of the plaintiffs.
    
      Mr. Hoyt, in reply, said that if the plaintiffs were bound to show an express authority, they had shewn it by the testimony of the clerk, who had heard the defendant consulting with the plaintiffs as to the purchase. Add to this the fact, that the defendant paid, the plaintiffs $200 on account of the stock, and his admission of a purchase, and he thought the authority of the plaintiffs was fully made out.
   Oakley J.

I. There was no evidence of any authority by the defendant to the plaintiffs to purchase stock, of a certain character, so as to enable the jury to find any verdict in the case. The only proof on the subject was furnished by the testimony of Will-cox, who stated that the defendant told him, that he had directed the plaintiffs to purchase some stock, and had paid $200 on account. If the jury had been left to pass on this evidence, they could have found nothing. II. There was no proof, that the plaintiffs ever purchased any stock for the defendant.

None was ever transferred to the defendant on the books of the bank.

2. The power of attorney spoken of by Robinson, (and which he merely presumes must have existed,) if it existed at all, is shown to have been in the hands of the plaintiffs, aud they ought to have produced it. Parol evidence of its contents was incompetent, and there was therefore no proof at all of the pretended sale by Robinson to the plaintiffs.

3. There was no stock in existence, which was the pretended subject of the sale. Robinson had none, and Lawrence and Gouvemeur, for whom he pretended to act, had none.

It is clearly, as the case stands, a void transaction, within the act relative to stock-jobbing. That act makes entirely void (2 R. L. 187, s. 18,) all contracts for the sale of the stock of any Trank, unless the seller, at the time of the contract, shall be in the actual possession of the certificate of such stock, or otherwise entitled to the same in his own right, or duly authorized by some person so entitled, to transfer such certificate. If Robinson, therefore, or Gouverneur and Lawrence, who were the pretended sellers of the stock, were not entitled to any on the day of the sale, and were not possessed of any certificate of stock, t.he whole contract between the plaintiffs and Robinson was illegal and void. The proof shows, that neither of them at the time had any stock standing in their names in the books of the bank, and there was no evidence of any certificate of stock in the names of either. Robinson does not pretend to say that he had any, and he must have known the fact, if it had been so.

The affair was manifestly a mere stock-jobbing transaction, and if the proof had shewn that the plaintiffs acted on it, in pursuance of any authority from the defendant, the whole proceeding being illegal, the plaintiffs could not call on the defendant to refund them the money paid on the pretended purchase. No right of action could accrue to the plaintiffs from their own violation of the law; much less can the plaintiffs claim to have made the purchase for the defendant, when it is evident, that if he can give any authority to purchase at all, he must be presumed to have authorized a legal purchase onty.

Motion to set aside nonsuit denied.

Note.—The Court rested their judgment on the ground, that there was no evidence to show that the defendant had authorized the purchase of the stock, so that the jury could have found a verdict on the proof as it stood.

[Ward and Hoyt, Att'ys for plffs. W. A. Seely, Att’y for deft.]