Case Name: James C. Papadopulos vs. William E. Bright & others
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1928-05-29
Citations: 264 Mass. 42
Docket Number: 
Parties: James C. Papadopulos vs. William E. Bright & others.
Judges: 
Reporter: Massachusetts Reports
Volume: 264
Pages: 42–48

Head Matter:
James C. Papadopulos vs. William E. Bright & others.
Suffolk.
March 12, 1928.
May 29, 1928.
Present: Rugo, C.J., Braley, Pierce, Wait, & Sanderson, JJ.
W. R. Bigelow, for the plaintiff.
S. E. Gifford, for the defendants.

Opinion:
Sanderson, J.
The plaintiff seeks to recover on a count for money had and received the amount of two payments made by him to the defendants. On December 2, 1925, he requested the defendants, as brokers, to purchase and sell for his account such stocks as he might order from time to time, and deposited with them $500. On December 4,1925, he ordered them to purchase fifty shares of the stock of a specified company. The evidence would justify the finding that on the same day, at the defendants' request, these shares were purchased by their New York correspondents, who received delivery of and retained in their possession a certificate for the shares, having made payment therefor in full. The defendants had a margin account with their New York correspondents and were at all times during the period covered by the declaration entitled to the immediate delivery of fifty shares of the company's stock. On March 3, 1926, in response to a request by the defendants for $400 additional margin, the plaintiff paid them $200. He testified that they then agreed to notify him if more margin were needed. The defendants' contention was that no such agreement was made; that this money was received by them upon an agreement that they should enter a stop order to sell the shares if the market declined below a certain point; that on the same day it did so decline, the shares were sold and the purchaser thereof received delivery of a certificate therefor from the defendants' correspondents. On March 5, notice of the sale reached the plaintiff who went to the defendants' office and demanded repayment of the money deposited.
The jury, by their answer to a question submitted, found that the defendants through their agents made an actual purchase and actual sale of the stock on the plaintiff's account. The defendants assented to the order directing a verdict for the plaintiff for nominal damages. The plaintiff excepted to so much of the order as limited his recovery to nominal damages, and contends that he is entitled to recover both payments made because the defendants did not buy, receive and carry the stock ordered as required by the law of New York.
The conditions of employment, as stated in his request dated December 2,1925, did not contemplate the purchases and sales of stock in any particular State. His orders might be executed upon any exchange where they could be filled. The fact that the first order placed, and the only one involved in this action, was executed in New York, and was therefore subject in certain respects to the rules and regulations of the New York Stock Exchange, does not mean that the parties intended that the contract between them was to be governed by the laws of that State relating to stocks bought on margin; it contained no provision that it was to be so governed. Barrell v. Paine, 242 Mass. 415, 425. Marshall v. James, 252 Mass. 306, 310. The contract was made in Boston, the payments were made there, and, apparently, it contemplated delivery of stock to the plaintiff in that city if deliveries were required by him. The case falls within the general rule that a contract obligation and its interpretation are governed by the law of the place where it is made.
Not only did the defendants make no agreement to hold the stock bought, but the plaintiff expressly agreed'before the stock was purchased that they might loan or pledge any stock thereafter carried on the plaintiff's account, and also that the stock might be used to make deliveries to and for other cus tamers. With this authorization the plaintiff cannot successfully contend that the defendants were bound at all times to have on hand available for delivery to him, either in their possession or pledged to a bank, specific securities of the kind and amount ordered. If such an obligation ever existed, it arose out of the agreement on March 3, 1926, and no breach of duty before that date could have been found on the evidence. Delivery of the stock to their agents was in legal effect delivery to the defendants. As the finding that the purchase was actually made was justified by the evidence, the plaintiff is not entitled to a return of the money deposited.
Under the law of this Commonwealth, apart from special contract, the legal title to stocks carried on margin for a customer is in the broker; and although the customer has a right to pay for and demand delivery thereof at any time, he does not become a creditor of the broker who has bought the stock for him on margin until after demand and refusal, or the equivalent. Hall v. Paine, 224 Mass. 62. Richardson v. Shaw, 209 U. S. 365, 382, 384. Under the original contract the defendants had the right to sell the stock whenever such sale was deemed necessary for their protection. They bound themselves to deliver fifty shares on payment and demand by the plaintiff and they had a right to ask for additional margin when the money deposited did not sufficiently protect the stock.
At all times during the period covered by the declaration this stock was listed and actually traded in on the New York Stock Exchange. No evidence was offered tending to prove the price at which it might have been bought after the plaintiff first learned of the sale. In the absence of such evidence the plaintiff, if entitled to recover, would be limited to nominal damages. Stewart v. Johnson, 252 Mass. 287, 289. Hall v. Paine, supra, pages 65, 66.
The order denying the motion that certain interrogatories be answered was right. Because of the facts found by the jury, the state of the accounts of the defendants and of their correspondents with their customers was immaterial to any issue here involved. Barrell v. Paine, 236 Mass. 157, 163, 164. Harris v. Friedman, 245 Mass. 479, 482. Ryan v. Whitney, 257 Mass. 218, 224.
For reasons which already sufficiently appear we are of opinion that there was no error in the refusal of the judge to give the rulings requested and none in that part of the charge to which exception was taken.
Exceptions overruled.