Case ID: ad_119/html/0373-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Atwood Violett and Others, Copartners Doing Business under the Firm Name and Style of Atwood Violett & Company, Appellants, v. Paul W. Horbach, Respondent.
    First Department,
    May 10, 1907.
    Principal and agent — bailment — sale of stock by broker — waiver of sale without notice.
    A sale of collateral security by a broker without notice pursuant to a judgment of foreclosure even if deemed to he unauthorized is waived if the pledgor on - acquiring knowledge of the sale makes no protest and takes no. steps to dis-affirm- it until a year later. Under such circumstances the pledgor must disavow the act of his broker- within a reasonable time after it comes to his knowledge or he'will be deemed to have acquiesced-in it.
    The 'fact that the pledgor when appealing from the judgment of 'foreclosure , urged that by reason of the sale of securities he should only be required to give diminished security shows a ratification of the sale.
    Appeal by the plaintiffs, Atwood Yiolett' and others, copartners, etc., from an order of the Supreme Court, made at the New York Special Term and entered, in the office of the clerk of the county of New York on the 19th day of February, 1907. ’
    ' William, P. 'Maloney,, for the appellants, .. . ' •
    
      A. 8. Gilbert, for the respondent.
   Scott, J.:

. The plaintiffs appeal from an order requiring them to deliver to. defendant 2,100 shares of the common Stock, of. the Manhattan Transit Company, upon receiving.from the defendant the amount.of a judgment recovered herein by plaintiffs against defendant, with the costs of appeal and interest.

The circumstances leading up to this order are peculiar. The plaintiffs are cotton brokers and acted as such brokers for the defendant in certain speculative transactions in cotton. , To secure .them against loss he deposited with them 2,100 shares of Manhattan Transit Company stock. This action was. brought to recover a balance claimed to be due to plaintiffs on such transactions; to fix the amount due,- to determine that plaintiffs were entitled to a lien on said transit company stock for the ' amount due them, and to-foreclose such lien. - •

The action was tried before a referee and resulted in a judgment ‘ fixing the amount due to plaintiffs at $7,029.72, declaring tliat plaintiffs were entitled to a lien therefor upon the 2,100 shares of Manhattan Transit Company stock, and authorizing and empowering the plaintiffs to sell said shares “upon the curb” in th© city of New York, crediting the proceeds thereof .upon their judgment, and, if there should be a.surplus, to deposit the same with.the chamberlain 'of the city of New York. The judgment did not require notice of :sal'e to -be given to defendant, nor did it, in terms, dispense with . the necessity for such notice. . It is alleged by the plaintiffs, and is not denied, -that it would be impracticable to give notice of a, sale “ upon the curb.” The above-described judgment was entered on January 8, 1906, and notice of the entry thereof was on the same day served on the defendant’s attorney. After the entry of the judgment, and before any proceedings were taken thereunder, plaintiffs’ attorney inquired of the attorney for the defendant'as to what the defendant intended to do about paying the judgment, but .received no satisfactory reply. Thereafter, and on January 11, 12, 15 and 16, 1906, the plaintiffs sold the Manhattan Transit Company stock oh the curb,” in lots varying from 100 to 800 shares. The reason given by plaintiffs for selling the stock in small lots and on different days, is that the stock had .no value except a speculative one, and to have sold 2,100 shares át one time would have depressed-the price to a nominal figure. The defendant does not' controvert this statement. The proceeds of the sale amounted to $6,147.85, which plaintiffs credited upon their' judgment, and on January 27, 1906, notified defendant of the fact of the sale and its result, and that execution would be issued for the balance still due upon the judgment, amounting to $881.87. The defendant appealed from the above-mentioned judgment (just when does not appear), but no step was taken by him to secure the same on appeal or to stay proceedings thereon until January 30, 1906, after notice of the sale of the stock had been received. A motion was then made to the court below to fix the amount of the undertaking to be given on appeal, and the fact that the plaintiffs had already sold the stock and realized over $6,000 thereon was urged as a reason why an undertaking should not be réquired in a larger sum than $1,000. This argument was apparently accepted by the court, and the amount of the undertaking to be given was fixed at the sum suggested by the defendant. The appeal was unsuccessful, and the judgment was affirmed with costs, with a reduction of the extra allowance (117 App. Div. 910). In the meantime the price “ upon the curb ” of Manhattan Transit ■ Company stock had somewhat increased, and the defendant now claims that inasmuch as the judgment did not specifically authorize a sale of the stock without notice, such a .sale was invalid.' Even .if this contention were to be admitted to its full extent, it would not justify the order now appealed from, because, even if the sale .without notice was unauthorized, the defendant must be deemed to have ratified it. He received notice df the sale on January 27, 1906, and made no protest, and took no steps to disaffirm the sale until a year laten' It is perfectly well settled that in such a case, the. principal-must disavow the act of. his broker within a reasonable time after it comes to his knowledge, or lie- will be deemed to have acquiesced*in it; and if he fails to repudiate the acts within á reasonable time after notice,, his failure will Operate as a ratification. (Clews v. Jamieson, 182 U. S. 461.) Furthermore, the -defendant successfully used and urged the «ale of the stock as a reason why he should be required to give' less security on appeal than might otherwise have been fixed. Under all these circumstances, he must be deemed to have ratified the plaintiffs’ gale of the stock, and consequently can have no claim arising therefrom.

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

■Patterson, P. J., Ingraham, Laughlin and Clarke, JJ., concurred.-. _ .

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