Case ID: ala_99/html/0566-01.html
Source: Caselaw Access Project
Author: {"author": "COLEMAN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Terry v. Birmingham National Bank.
    
      Action on Promissory Note.
    
    1. Plea of set-off; allegations of conversion by plaintiff —By a plea averring that the plaintifE was indebted to the defendant for the value of corporate stock belonging to the defendant, “which was sold by plaintiff for the use of defendant, and converted to its use, which he offers to set-off against the demand of plaintiff,” the defendant ratifies said sale and claims as a set-off the purchase-price of the stock ; and is not entitled to recover its actual value.
    2. Stock sold on exchange; agent for seller and buyer. — The fact that a member of the Stock Exchange, who was employed by the pledgee of the stock to sell it on the Exchange, was also employed by a buyer to purchase, at a limited price, stock of the character offered by the pledgee, does not invalidate the sale effected by such member, if. in accordance with the rules of the Exchange, he procured a fellow member to make the bid, and neither the pledgee nor the purchaser had any knowledge of each other’s intentions, or of their instructions to their agent.
    Appeal from tbe Circuit Court of Jefferson.
    Tried before tlie Hon. James B. Head.
    This was an action of assumpsit brought by the Birmingham National Bank against B. J. Terry, to recover the amount alleged to be due upon a promissory note; and was commenced on July 27, 1889. This is the second appeal in this case. — 93 Ala. 599.
    As is stated in the opinion, after the reversal of the cause, the trial was had on issue joined on the plea of set-off. The fourth plea referred to in the opinion, “offers to recoup against the said note the value of said stock,..... and asks for a judgment against the plaintiff for the difference between the value of said stock with interest thereon and the amount claimed to be due on said note.” The note, which is the foundation of the present suit, was executed by the defendant on May 4, 1888, and fell due on June 25,1888. As collateral security for the indebtedness evidenced by the said note, the defendant deposited with the plaintiff fifty shares of the capital stock of the Edison Electric Illuminating Company. After the maturity of the note, the defendant gave to B. D. Johnston, president of the plaintiff corporation, a power of attorney, authorizing him to sell said stock on the Stock Exchange in the city of Birmingham. After the execution of this power of attorney, the said Johnston employed one Lightfoot, a stock broker, to sell the stock on the Exchange. After this employment by Johnston, said Lightfoot was also employed by one E. W. Bucker to purchase for him at a limited price, some stock of the character of that offered by Johnston. After receiving this order to purchase the said stock, Lightfoot procured one Brádfield, a stock broker, and also a member of the Exchange, to make the bid authorized by Bucker for the stock when offered for sale by Lightfoot on the Exchange. In accordance with this arrangement, Lightfoot offered the stock for sale, and it was bid in by Bradfield. The proceeds of this sale were credited upon the note executed by tbe defendant, Terry, and the amount claimed on said note is tbe balance due thereon, after deducting tbis credit and other credits made upon tbe payment of different amounts by tbe defendant.
    Tbe testimony was in conflict as to whether tbe sale of tbis stock on tire Stock Exchange was valid. There was some testimony for tbe defendant tending to show that under tbe rules of tbe Stock Exchange it was a fictitious sale.
    Tbe testimony for tbe plaintiff tended to show that neither tbe plaintiff nor said Johnston knew of tbe intention of said Rucker to purchase the stock offered for sale, nor of bis employment of said Ligbtfoot to make tbe purchase, or of tbe instructions given by Rucker to said Ligbtfoot; and that tbe said Rucker did not know of tbe employment by said Johnston of the said Ligbtfoot to sell tbe stock, and that neither tbe plaintiff nor said Johnston bad any interest whatever in tbe purchase of said stock.
    It was shown by tbe testimony of tbe defendant himself, that be was present in tbe Stock Exchange at tbe time tbe stock was sold, and was informed of tbe intention to sell tbe stock on tbe day of sale; and that be never made any complaint about tbe manner in which tbe stock was sold.
    Upon tbe bearing of all tbe evidence, at tbe request of tbe plaintiff, the court gave the general affirmative charge in its behalf, and to tbe giving of this charge tbe defendant duly excepted. There- were- other exceptions reserved upon tbe trial of tbe cause, but it is deemed unnecessary to set them out in detail.
    On tbis appeal, tbe defendant assigns as error, among other rulings, tbe giving of tbe general affirmative charge in favor of tbe plaintiff.
    Lane- & White, for tbe appellant.
    Tbe sale of tbe stock in -this case was a conversion by tbe plaintiff of sáid stock, and rendered it liable to tbe defendant for tbe value thereof. 4 Amer. & Eng. Encyc. of Law, p. 108, § 4, and note ; Tyler on Usury, Pawns & Loans, p. 642; Penny v. State, 88 Ala. 105; Thweatt v. Stamps, 67 Ala. 96. Tbe sale of tbe stock by Ligbtfoot, under tbe circumstances, was a fraud, and did not divest tbe title of tbe defendant to said shares. An agent can not, in tbe same transaction, represent both tbe buyer and seller. — Beacham on Agency, §§ 66, 67, 68, 643, 789 ; 1 Amei\ & Eng. Encyc. of Law, p. 380, and cases cited in note 1; Farnsworth v. Hemmer, 1 Allen (Mass.) 494; s. c. 79 Amer. Dec. 756, Wassell v. Reardon, 11 Ark. 705; s. c, 54 Amer. Dec. 245; Harrison v. McHenry, 9 Ga. 164; s. c. 52 Amer. Dec. 435.
    Cabaniss & Weakley, contra.
    
    1. Even though the stock was sold by Lightfoot & Co., in the way claimed by the defendant, and such sale was a fictitious sale within the meaning of the rules of the Stock Exchange, such conduct on the part of Lightfoot & Co., did not amount to a conversion of the stock. — Dufresne v. Hutchinson, 3 Taunt. 117; Sargeant v. Blunt, 16 John. (N. Y.) 73 ; Laverty v. Snethen, 68 N. Y. 526; Bixel’s Case, 107 Ind. 537; Bis. Go. v. Dalrymple, 25 Md. 242, s. o. 89 Amer. Dec. 779; Lovelass v. Foioler, 11 Amer. St. Bep. 407. 2. But however wrongful may have been the conduct of Lightfoot & Co., in selling the stock .as they did, the plaintiff was not responsible for the same. Where an agent is authorized to employ an ancillary agent, such ancillary agent becomes individually liable to the principal, and the primary agent is liable only for culpa in eligendo. — Commentaries on Agents & Agencies, (Wharton), §§ 277, 238, 601; 1 Amer. & Eng. Encyc. of Law, pp. 394, 407, n. 2; Darling v. Stanwood, 96 Mass. 507; Warren Bank v. Stiff oik Bank, j.0 Cush. 582; Universiiy of Mich. v. Rose, 45 Mich. 284; Hilliard v. Richardson, 63 Amer. Dec. 743 ; Mayor v. McCary, 84 Ala. 472; Campbell v. Reeves, 3 Head (Tenn.), 226. 3. The defendant, not having the legal title to the stock, could not maintain trover for the conversion of same, nor plead such conversion as a set-off to this action. — Na-bring v. Bank of Mobile, 58 Ala. 204; Holliday v. Holgate. L. B. 3 Ex. 299; Johnson v. Stear, 15 C. B., N. S. 33Ó; Colebrooke on Collateral Securities, § 344.
   COLEMAN, J.

The Birmingham National Bank sued appellant Terry upon his promissory note. The record shows that “the defendant withdraws all pleas, except the plea of set-off, and the case tried on issue joined on the plea of set-off.” It would require a palpable disregard of this plain record entry were we to consider questions which might have legally arisen under other pleas, and which were not before the court. There was only one plea, and that was the plea of set-off, upon which issue was joined. Plea No. 2 reads as follows: “ The defendant, as a defense to the action of the plaintiff, sayeth that, at the time said action was commenced, the plaintiff was indebted to him in the sum of five thousand dollars, for the value of fifty shares of the capital stock of The Edison Electric Illuminating Company, the property of the defendant, which were sold by the plaintiff for the use of the defendant on or about the 8th day of December, 1888, and converted to its use, which he hereby offers to set-off against the demand of the plaintiff, and he claims judgment for the excess.” This plea distinctly states the shares were “ sold by the plaintiff for the use of the defendant,” and although these words in the latter part of the plea are followed by the averment, “and converted to its use,” the latter phrase, in the connection used, must be held to mean a conversion of the proceeds of the sale, rather than such wrongful conversion of the stock itself, as to authorize proof of damages resulting to the defendant by the sale. As framed, the defendant, by this plea, ratified the sale, and claimed, as a set-off the purchase price of the stock. The evidence is uncontradicted that the plaintiff credited the note with the purchase money received for the stock, and in his suit on defendant’s note, only claimed the balance unpaid.

Were we to consider the case as tried on plea No. 4, and regard that plea in the nature of a claim for damages, under the facts, the measure of recovery would be the difference between the price for which the stock sold, and its actual value when sold. And we have been unable to find any evidence, which would authorize a conclusion, that the stock did not bring its fair value on the day of sale. There is no evidence to show that there was any collusion or fraud or agreement between E. D. Johnston, representing the Bank, and the purchaser of the stock in regard to its sale or purchase. In fact the contrary is abundautly proven. Terry, who was a member of the Stock Exchange, by his 'pcwCT of attorney, directed that this stock be sold upon the Exchange. He was notified that it was going to be sold, was present when it was offered for sale, and knocked down to the purchaser. He knew the rules of the Stock Exchange, knew that the seller would be required to conform to its rules, and that a sale, made in accordance with them, would be a valid sale. There was no objection by him, at the time, that he had not had sufficient notice, nor did he object on account of the price bid. The subsequent advance in the market value of stock sold on exchange doubtless is a fruitful source of regret to sellers, who deal in stocks on exchange, but, in the absence of fraud, the advance in price can give no cause of action to the loser.

The principle of law that the same person can not be both buyer and seller has no application to the facts of the case. E. D. Johnston employed Lightfoot, a member of the Stock Exchange, to sell this stock. One E. W. Eucker, the purchaser, employed Lightfoot to purchase on the exchange, at a limited price, stock of the character offered by Johnston. Johnston knew nothing of Sucker's engagement or intent tions. In accordance with the rules of the exchange, Light-foot secured the services of Bradñeld, another member of tbe exchange, to bid the price fixed by Sucker. 'Lightfoot knew the instructions of both Johnston and Sucker, but neither Johnston nor Sucker had any knowledge of each other’s intentions, or their instructions to Lightfoot. And as we have stated, there is no evidence to show, that the rules of the Stock Exchange, which were known to Terry, were not observed, or that the stock did not bring its fair market value, which was credited upon the note of the defendant.

Under any view we take of the case, the plaintiff was entitled to the general charge upon all the evidence, and it is unnecessary to consider special exceptions to the rulings of the court.

Affirmed.