New-York tribune., 1904-10-12
HONOR ON THE exchange
Witnesses in Northern Pacific Corner
Case Tell of Standards.

Samuel Sinn who Of the witnesses on
Monday at the hearing before Philip j.. heVelle'
referee in the action brought by John j. . LedIS'
of Chicaco 10 recover from the stock brokerage
firm OF Sternberger. Fuld & Sim $4,000 lost by
him in the Northern Pacific corner Of May = l'Ol'
was further cross-exa mined yesterday by henry .
Wilcox. attorney for the plaintiff. Mr.. Wilcox
asked the witness with regard 10 standards OF
honor the Stock Exchange Mr. Sim sald 'Ila' nav
II was customary for stock brokers 10 suiier the
consequences Of any act not honorable, and that
they must always make their promises good
Mr.. Wilcox put this question:
Then. II you promised that you Wouiu IA w
Mr. OLeary's Northern Pacific matter 10 his sat
,sfacrio, and that he need not worry about the
price YOU would regard that a promise in honor
would you not?"
Nj. Moran for the defendant firm. objected to
having the witness answer this question. The wit
ness did not admit that telegram referred TO con-
veyed a promise and all the skill of the cross-e1-
aIniner could not get him 10 make such an admis-
sion.
IF broker fails TO comply with HIS promise
what is his duty?
ITO suffer the consequences answered Mr.. Sim.
MI Sim denied emphatically that his firm took
advantage OF the condition which existed on May
8 1901 owing to the rise in the Northern Pacific
stock to secure a financial gain for itself He de-
clined 10 produce the books at this hearing but
said that he would produce them at the trial OF the
action.
The following telegram referred TO several
times while Mr. Sim was the witness stand. 1t
was sent by Sternberger. Fuld & Sim, 10 J. J.
Townsend, Of Chicago;
We insist that all shorts in Northern Pacific
for anybody. Sorry we have to be so imperative
but the danger is too great. 1t sold up 10 700 cash
to-day.
M Sim testified that this dispatch was not sent
until after 23O o N. on May q and that his firm
had not refused 10 stay short. but that the dis
patch was sent because Mr.. Townsend had sent A
dispatch, which the nrm had lost. requesting II
10 send him strong dispatch 70 the effect that the
shorts must be covered Mr.. Sim said that he had
no idea why AIr Townsend had made such re-
quest and had no suspicion that he had requested
the dispatch the purpose OF deceiying his Gus
toners
Mr.. 6ternberger Of the defendant firm. the next
witness testified that he had written the telegram
10 Air T6Ansend at the request OF Mr.. Sim, who
had told him that Townsend wanted the firm 10
send a strong dispatch in regard To Northern
Pacific.
Q.-Had you any suspicion that Mr. Townsend
r1Irnose Of decefzinq or defrailding somebodv? A.
] never discovered that il was sent FOR such
QEWhat was the danger which was so great for
the firm when you sent that Telegram? Al don
remember.
rs # customary for broker 10 send 10 another
broker for tho benefit of a customer such dummy
telegrsms for the purpose Of creating a false i'm
pression?" asked AIr. Wilcox.
Mr.. Sternberger said that the telegram not
sent for purpose Of creating false impression,
and declared that he intended 10 deceive nobody
Alr. Wilcox asked the broker again whether
not this telegram had been at the close of the
market. when the prices were falling Mr.. Stern
berger insisted that he had sent # at 2l1 r. m,
and not at the close Of the market.
William NJ Kingsley. Of Kingsley e. Mabon testi-
fed that in HIS opinion Sternberger Fud & Sim
had acted prudently when they followed the in
structions Of the customer regarding the purchase
Of Northern Pacific stock. and added that under
the circumstances he would have acted that
firm had acted IN the matter. Mr.. Kingsley testi-
fed that he had purchased hundred shares Of
Northern Pacific at 5000 each the panic day.
Edward /. Norton Il stock broker. gave II as his
opinion that Sternbe:ger. Fuld & Sim had in
way acted impTudently rcCkIcssly with their
customer when they purchased at the market price
the two hundred shares Of Northern Pacific stock.