Case Name: Albert C. Wills, Appellant, v. Investors Bankstocks Corporation, Respondent. (Actions Nos. 1 and 2.)
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1931-05-01
Citations: 232 A.D. 197
Docket Number: 
Parties: Albert C. Wills, Appellant, v. Investors Bankstocks Corporation, Respondent. (Actions Nos. 1 and 2.)
Judges: 
Reporter: Appellate Division Reports
Volume: 232
Pages: 197–204

Head Matter:
Albert C. Wills, Appellant, v. Investors Bankstocks Corporation, Respondent. (Actions Nos. 1 and 2.)
First Department,
May 1, 1931.
Howard C. Kelly, for the appellant.
Jerome G. Rosenhaus of counsel [Kopp, Markewich & Null, attorneys], for the respondent.

Opinion:
O'Malley, J.
The plaintiff brings two actions, both in conversion. One is for defendant's alleged unlawful detention of twenty shares of iEtna Life Insurance Company stock, valued at $2,050; the other for like detention of ten shares of Equitable Trust Company stock of the value of $1,445.
Judgments in the City Court in plaintiff's favor have been reversed by the Appellate Term upon the theory that plaintiff failed to show title, or right to immediate possession to the stock, in himself.
J. S. Schofield & Co., hereinafter referred to as Schofield & Co., dealers in investment securities, were engaged in business in Waterbury, Conn., and held themselves out as specialists in bank and insurance stocks. The defendant was and is a concern doing business in New York city as a dealer in stocks. Between the respective home offices of these two companies was maintained a teletype, or a telegraphic wire device.
On November 19,1929, plaintiff, a resident of Waterbury, Conn., bought from Schofield & Co. twenty shares of iEtna Life Insurance Company stock at lOlf and paid in cash therefor a net sum of $2,030. On the same day Schofield & Co. purchased from the defendant a like number of shares of the same stock at 99, for a total price of.$1,980, paying the defendant therefor by draft. This, transaction was arranged by teletype and confirmed in writing. In a series of teletype communications, Schofield & Co. asked that the name of the plaintiff be put on the shares purchased, and on the same day wrote the defendant confirming the sale of the twenty shares of iEtna Life Insurance Company stock " transferred to the name of Albert C. Wills," and expressed a desire that the stock be forwarded " as soon as transferred so we can make delivery to our client."
The following day the defendant asked for and received by teletype plaintiff's name and address. Upon receipt of Schofield & Co.'s letter of November nineteenth, just referred to, and the draft in payment of the purchase price, the defendant wrote Schofield & Co. on November 20,1929, stating that they had on that day placed the twenty shares " into transfer in the name of Albert C. Wills, 95 Bank Street, Waterbury, Connecticut, in accordance with your instructions."
The defendant actually purchased the required number of shares and obtained physical possession of the certificate therefor. This certificate, however, was in the name of one Lyon, and not the plaintiff, and was in the defendant's possession when plaintiff made a demand for it on April 16,1930, the date of the alleged conversion. Lyon was the defendant's nominee.
The apparent ground for defendant's refusal to turn the certificate over to the plaintiff, although it had received payment in full for the transaction, was the fact that, following an involuntary petition in bankruptcy, Schofield & Co. had been adjudicated bankrupt on November 23, 1929. At this time Schofield & Co. was indebted to the defendant on a general account in a sum in excess of the value of these particular shares of stock. It is conceded, however, that the money due and owing by Schofield & Co. to the defendant in no way represented any advances on the stock here involved.
A like series of transactions took place between plaintiff, Schofield & Co. and the defendant with respect to the stock of the Equitable Trust Company on November 20 and 21, 1929, the alleged conversion of which is made the basis of the first cause of action.
The defendant maintains that under the circumstances here presented, Schofield & Co. was not acting as a stockbroker with respect to the plaintiff, but was transacting the business as a stock dealer or jobber.
We are of opinion that, so far as this defendant is concerned, Schofield & Co. was the agent of the plaintiff as a disclosed principal in the transactions. At the very outset this defendant was notified that the purchase was for the plaintiff; that the stock was to be transferred to his name, the defendant itself requesting his address, and receiving payment in full. The mere fact that Schofield & Co. took a profit rather than a commission on the transaction - should make no difference. This defendant had been paid in full.
With respect to plaintiff it had no lien or claim on the stock. It would be manifestly most unjust to permit it to defeat plaintiff through a counterclaim arising out of a general account against Schofield & Co. which in no wise was connected with the subject-matter of the transactions here involved.
The actions fall within the principle of Le Marchant v. Moore (150 N. Y. 209). Under the reasoning of that case the defendant here would have been entitled to regard Schofield & Co. as owner of the stock, had it not been notified of the plaintiff's rights in the premises. Having notice of such rights, it was bound to recognize plaintiff's claim and deal with the stock accordingly. (Le Marchant v. Moore, supra, 218.)
It follows that the determination of the Appellate Term should be reversed, with costs in this court and in the Appellate Term, and the judgments of the City Court affirmed.
Finch, P. J., Sherman and Townley, JJ., concur; Merrell, J., dissents.