Case ID: ad_130/html/0555-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.: Ingraham, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Clarence L. Barber, Appellant, v. Charles H. Ellingwood and H. Townsend Davis, Respondents.
    (No. 1.)
    First Department,
    February 19, 1909.
    Reference—long account not involved—counterclaim involving long account.
    Where stockbrokers, sued for a loss caused to a customer by selling out five different lots of stock without notice or authority, deny only one of the alleged transactions and defend upon the ground that all the sales were made at the plaintiff’s request and set out a counterclaim involving three' transactions not connected with those upon which the complaint is based, they are not entitled to a compulsory reference, there being but one item of the plaintiff’s claim in dispute.
    Moreover, the referability of an action is to be determined, in general, by the complaint, and cannot be made referable by pleading a counterclaim involving the examination of a long account.
    Ingraham, J., dissented in part, with opinion.
    .Appeal by the plaintiff, Clarence L. Barber, from an order of the Supreme Court, made at the Mew York Special Term and entered in the office of the clerk of the county of Mew York on the 25tlx day of January, 1909, directing a compulsory reference under section 1013 of the Code of Civil Procedure.
    
      Irving Paine, for the appellant.
    
      Duncan Edwards, for the respondents.
   Scott, J.:

The plaintiff appeals from a compulsory order of reference. The action is by a customer against a stockbroker. The complaint alleges thq establishment between the parties of the relation of customer and broker, and that between January 15 and 30, 1906, plaintiff deposited with defendants as part purchase money and margin on shares of stock to be bought and sold on plaintiff’s account, the sum of $9,000; that on or.about April 26, 1906, defendants were carrying for plaintiff a specified number of shares of five different stocks or securities ; that on or about-April twenty-sixth, April twenty-eighth and May third, respectively, defendants sold out the several specified stocks at prices which are named, and that all of said sales were made by defendants without notice to and without authority from plaintiff, and that on learning of such sales' plaintiff disaffirmed them. The complaint then alleges the market value of said stocks within a reasonable time after said sales, and making allowance to defendants for commission and interest, asks for a judgment for the net loss. The answer in effect admits all the material allegations of the complaint, except that defendants deny the alleged transactions as to one. of the named- stocks, and deny that they sold the stocks without the knowledge and authority of plaintiff, but, on the contrary, allege that they so sold them at plaintiff’s request.

It is manifest that up to this point there is nothing in the pleadings to justify a compulsory reference, as there is only one item in dispute, besides the question as to defendants’ authority to sell when they did. It is well settled that the referability of an action is to be determined, in general, by the complaint, and that a defendant cannot make an .action referable by pleading a counterclaim embracing the examination of a long account.

The defendants claim, however, that in the present case the determination of plaintiff’s claim will necessarily involve the examination of a long account, because of the nature of the transactions between the parties. .This claim is based upon what is denominated a “ first and separate defense,” and which, although not stated to be pleaded by way of counterclaim, is evidently intended to be so regarded. It is in the usual form of a stockbroker’s complaint agfiinst a customer, alleging that plaintiff opened three accounts with defendants; that numerous transactions were had; that plaintiff failed to keep his margins good; that' monthly accounts were sent to plaintiff; that defendants rightfully sold him out, and that there was left due to defendants a balance for which they ask judgment. There is no specific allegation, nor does it appear by necessary intendment that the half-dozen transactions upon which plaintiff sues were included in any of the accounts mentioned in this defense, and if they were, it by no means follows that it will be necessary to go over all these accounts in order to pass upon the plaintiff’s complaint respecting the particular matters which he specifies. We do not consider that the defendants have brought the case within the somewhat stringent rules respecting' compulsory references.

The order appealed from must, therefore, be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

McLaughlin, Laughlin and Clarke, JJ., concurred; Ingraham, J., dissented.

Ingraham, J. (dissenting):

While it is true that the question as to whether or not an action is in its nature one in which the trial can be without the consent of the parties before a referee instead of before a jury must be determined by the complaint, that question has reference merely to the nature of the action, as it is only an action to recover on a contract that can be so referred. Where the action is to recover upon a contract to be tried before a jury, if any issue in the case involves- the taking of an account which cannot be properly determined by a jury, a reference should then be ordered. It is quite clear that an action to recover damages for a tort could not be referred although it set up a defense which involved the taking of a long account. In many cases where a reference has been sustained on the pleadings no account appeared to be involved, but upon proof by affidavit that an account was involved in the determination of the issues presented by the pleadings a trial before a referee was ordered and sustained. The defendants’ counterclaim is directly connected with the cause of action alleged in the complaint, they both arising out of the same series of transactions. The action is to recover on a contract and is in its nature referable, the only question to be determined being whether or not from the nature of the pleadings and the proof necessary to sustain them such an account is involved as will make it impossible for a jury to satisfactorily dispose of the issues. In an action at law where there can be but one trial and where a verdict will have to be rendered on a trial either for the plaintiff or defendant, it is impracticable to split up the issues and order an accounting as distinct from the trial of the main issue in the action. Thus, if upon any of the issues presented an accounting is necessary, the only practical method is to order all the issues to be tried before a referee. I think this is such a case, and that the order below was properly granted.

I, therefore, dissent.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.