Case Name: RAMSAY v. MILLER et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-12-30
Citations: 120 N.Y.S. 523
Docket Number: 
Parties: RAMSAY v. MILLER et al.
Judges: 
Reporter: West's New York Supplement
Volume: 120
Pages: 523–527

Head Matter:
RAMSAY v. MILLER et al.
(Supreme Court, Appellate Division, First Department.
December 30, 1909.)
1. Novation (§ 5 )—Substitution or New Debtor.
Plaintiff opened, an account with a brokers’ branch office, deposited a sum of money, and ordered a purchase of stock. The manager transmitted the money as received to the main office, but did not transmit plaintiff’s orders for stock, but transmitted in plaintiff’s name a number of orders to buy and sell various stocks, which were excuted by the brokers who believed them to be plaintiff’s orders, and entered them on their account. Plaintiff, in ignorance of these transactions, subsequently ordered a sale of the stock he had ordered, and the manager then confessed to plaintiff that he had misappropriated the money, and stated that, if plaintiff would be quiet and not do anything about it, he would readjust the matter, and pay plaintiff his money, whereupon-plaintiff replied: “Very .well,. * * * I have no disposition to be hard upon you. If you have made a mistake, and if you have done a wrong thing, I am the last man when you are down to kick you further.” It did not appear that plaintiff at this time knew the state of his account on the brokers’ books. In accordance with his promise to the manager, he kept silent for about three months, when he wrote to the brokers for a copy of his account, and upon its receipt at once disavowed it. Held,, that the conversation between plaintiff and the manager did not amount to a novation.
[Ed. Note.—For other cases, see Novation, Cent. Dig, § 5; Dec. Dig. § 5. ];
2. Election of Remedies (§ 7 )—Acts Constituting.
There was no election of remedies, for plaintiff never attempted to pursue the manager’s promise to readjust the matter.
[Ed. Note.—For other cases, see Election of Remedies, Cent. Dig. § 12; Dec. Dig. § 7. ]
3. Principal and Agent (§ 163 )—Ratification of Unauthorized Act of-Agent.
The manager being the general agent of the brokers, and in no sense-an agent of plaintiff, his breach of trust was a breach of duty owed to-the brokers, and there could be no ratification of his acts by plaintiff as-those of his agent.
[Ed. Note.—For other cases, see Principal and Agent, Cent. Dig. § 618; Dec. Dig. § 163. ]
4 Principal and Agent (§ 166 )—Ratification of Unauthorized Act of-Agent—Knowledge of Acts by Principal.
There can be no ratification of an agent’s acts where the principal is-ignorant of the whole extent and nature thereof.
[Ed. Note.—For other cases, see Principal and Agent, Cent. Dig. § 627;. Dec. Dig. § 166. ]
Ingraham and Laughlin, JJ., dissenting.
Appeal from Trial Term, New York County.
Action by Arthur T. Ramsay against Abraham P. Miller and others. From a judgment for plaintiff, and an order denying a new trial, defendants appeal.
Affirmed.
Argued before INGRAHAM, McRAUGHLJN, LAUGHLIN, HOUGHTON, and SCOTT, JJ.
Benjamin N. Cardozo, for appellants.
W. W. Mumford, for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
For other cases see same topic & § number in Dec. &.Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
SCOTT, J.
Appeal from a judgment for plaintiff entered upon a. verdict directed by the court.
The plaintiff was a resident .of Washington, D. C. Defendants, a firm of stockbrokers, maintained a branch office in Washington, of which one Ludwig was general manager. On January 28, 1907, plaintiff opened an account with defendants by depositing $1,000 with Ludwig and ordering the purchase of 100 shares of the common stock of' the steel corporation. He received a notice from defendants'main office in New York, advising him of the purchase of the stock. From, time to time plaintiff paid other sums into the branch office, and ordered further purchases of steel stock, until he had finally paid in all about $6,000. Ludwig transmitted this money, as it was received, to defendants. He did not, however, transmit plaintiff's orders as to the purchase of stock, but, on the contrary, transmitted in plaintiff's name a great number of orders to buy and sell various stocks, all of which were. executed by defendants, who believed them to be plaintiff's orders, arid entered them on his account. Plaintiff was in ignorance of these transactions, and in July, 1907, ordered the sale of all of the steel stock which he supposed he had bought. Ludwig then confessed to plaintiff that he had misappropriated his money. Ludwig said, "If you will just be quiet and will not do anything about it, I will readjust this matter, and pay you your.money"—to which plaintiff replied: "Very well, Mr. Ludwig, I have no disposition to be hard on you. -.If you have made a mistake, and if you have done a wrong thing. I am the last man when you are down to kick you further." It does not appear that plaintiff at this time knew the state of his account on defendants' books. He had received no statement except the first one showing the purchase of 100°shares of steel. In accordance with his promise to Ludwig plaintiff kept silence until early in November, 1907, when he wrote to defendants asking for a copy of his account, and, when it was received, he at once disavowed it.
Upon this state of facts we think that the court below was right in directing a. verdict for the plaintiff. The situation of the parties, when plaintiff and Ludwig had the conversation above mentioned, was that defendants owed plaintiff the amount of money he had paid, and Ludwig in turn owed defendants the same sum. The conversation between plaintiff and Ludwig did not amount to a novation, because it indicated no intention or disposition on plaintiff's part to release his claim against defendants, and accept Ludwig as his debtor "in defendants' place. All he did was to agree to keep silence for'an unspecified time in order to enable Ludwig, if he could, to satisfy the defendants', debt to plaintiff. All that plaintiff did, or agreed to do, was to keep silence. Mere silence, no prejudice resulting therefrom to the defendants, does not estop plaintiff from recovering from defendants. Norden v. Dule, 120 App. Div. 1, 104 N. Y. Supp. 854. There was no election of remedies, for plaintiff never attempted to -pursue Ludwig's promise to readjust the matter.
The defendants rely chiefly upon what they claim to have been a ratification of Ludwig's acts by plaintiff's silence. The doctrine of ratification is usually applied as between principal and agent when the principal through some form of acquiescence is held to have ratified and adopted his agent's unauthorized acts, and the many cases cited by defendants are in the main of this character. There are difficulties, however, in the way of applying that doctrine to the present case. In the first place, Ludwig was the general agent of the defendants, and in no sense an agent of plaintiff. His breach of trust was a" breach of the duty which he owed to defendants. It would be inaccurate therefore to speak of plaintiff as ratifying the acts of defendants' agent. If anything were to be claimed in that regard, it must be that he adopted them as his own, and of that there is no evidence." But, even if we could consider Ludwig as in any sense the plaintiff's agent and speak of a ratification by plaintiff of Ludwig's -acts, it would be impossible to find such ratification in the present case, because it does not appear that plaintiff knew the whole extent and nature of Ludwig's acts. On the contrary, the evidence is that he did not. "Before a principal can be held to have ratified the unauthorized act of an assumed agent he must have full knowledge of the facts so that it can be said that he intended to ratify the act. If his knowledge is partial or imperfect he will not be held to have ratified the unauthorized act, and the proof of adequate knowledge of the facts should be reasonably clear and certain, particularly in a case like this where, so far as the record discloses, no substantial harm has come to the defendants from the delay or the acts of the principal." Trustees, etc., v. Bowman, 136 N. Y. 521—526, 32 N. E. 987.
The judgment and order appealed from are affirmed, with costs.
-McLAUGHLIN and HOUGHTON, JJ., concur.