Court Opinion

ID: 5500769
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:59:08.10476+00
Date Added: 2024-06-11T08:33:55.535070
License: Public Domain

Landon, J.
For several months prior to August 15,1882, the defendants, who were stock-brokers in the city of New York, were carrying for the plaintiff, who resided at Sandy Hill, N. Y., a “short” sale of 1,000 shares of Delaware & Lackawanna stock upon a margin furnished them by plaintiff. For about a month prior to August 15th the price of the stock had been rising! and the parties had had some correspondence about it. The plaintiff and the defendant Wiley had interviews at Saratoga respecting it on the 25th and 27th of July. The plaintiff, at-the first interview, said he thought he had better cover, and Wiley advised him to wait. At the second interview—the price still rising—the plaintiff again proposed to cover, and the defendant advised him to wait, and suggested that he make a “turn in the market. ” August 9th the defendants, at New York, telegraphed the plaintiff as follows: “Lackawanna, 143 bid. Send more margin, or advise us what to do.” Plaintiff answered: “Buy 2,000 at market, and stop loss with margin either way.” Defendants replied the same day: “Don’t want to carry Lackawanna on six points margin. May not be able to stop it if it goes up. Will buy in your stock when present margin is about exhausted. ” The next day, August 10th, the plaintiff met Wiley at Saratoga, and complained that his order of the previous day was not filled, and proposed to cover then, and save the balance of his margin. Wiley advised him not to buy, but stay short, and said that if he would do so they would carry the stock for him until he could get out all right. Plaintiff, answered that with that understanding he was willing to wait, and leave it as it was. August 15th the rise in the price about exhausted the'margin, and defendants, without notice to plaintiff subsequent to August 9th, bought in the stock at an average of 148§, and covered the short sale, and notified the plaintiff. Plaintiff immediately repudiated the transaction by letter sent to the defendants. The matter ran along until February 10, 1883, when defendants received an order from plaintiff to cover his stock at market price. The price was then 121§. Defendants, insisting that the *623stock had been covered August 15th, refused to comply-with the order of February 10th. Upon the basis of the purchase of August 15th there would be due plaintiff $82.71. Upon the basis of the order of February 10th there would be due him $16,420.43. The jury gave plaintiff á verdict for one-lialf the latter sum. The defendant Wiley contradicted the version of the interview at Saratoga given by the plaintiff, and gave a different one, but, as the jury found for the plaintiff, we adopt his version. The testimony tended to show that if defendants had filled plaintiff’s order of August 10th the- plaintiff might have made some money if he “had struck it right, ” as he expressed it, in giving his subsequent orders. . But the trial judge held that the defendants were not obliged to fill that order because plaintiff’s margin was then below 20 per cent., at which figure he was to keep it; but the trial judge instructed the jury that if Wiley, at the interview with the plaintiff at Saratoga, August 10th, agreed to keep the stock borrowed, the defendants’ purchase of August 15th was unauthorized, because it was cone'ededly made without a further request to put up more margin. The judge further held that such an arrangement, if made, was not an agreement binding the defendants to carry the stock for any given time, because it was without consideration, but it was a waiver of their right under the contract to cover until they had given plaintiff notice to make his margin good. He further held that, unless such an arrangement was made, the plaintiff could not recover. The learned counsel for the defendants urge that the arrangement, if made, whether termed an agreement or a waiver, was void for want of consideration. They argue the case as if the defendants had agreed to carry the stock after the margin was exhausted, and incur whatever loss might result, and give the plaintiff whatever profit might result. But the trial court distinctly held that the arrangement was nothing but a waiver of the existing right under the contract to cover until the defendants had given further notice. Before the interview of August 10th the defendants had given plaintiff notice to furnish more margin. With that notice in force, the defendants had the right to buy as they did on the 15th. If no notice was in force, they had no right to buy without giving plaintiff notice. Gillett v. Whiting, 120 N. Y. 403, 24 N. E. Rep. 790; White v. Smith, 54 N. Y. 522; Hess v. Rail, 95 N. Y. 362. If the defendants waived that notice, they thereby took upon themselves no additional obligation; they retraced their previous steps; they simply said, in effect: “We do not stand upon that notice, or upon any right to cover without notice. We hope no notice will be necessary; but if it should be, you may wait until we give it.” Clearly, the plaintiff could safely wait until he received notice. Besides, the loss, if any, would have to be made good by the plaintiff. It would be a case of trusting to his credit instead of to his cash. The complaint characterizes the transaction between Wiley and the plaintiff on the 10th of August as a contract, by which the defendants agreed to carry the short sale of stock as long as plaintiff pleased. We assume this characterization to be wrong. But, in addition to this erroneous characterization, the complaint sufficiently alleges what the actual -contract between the parties was, and what the acts of the defendants were which are relied upon as constituting its breach. The breach of the contract is no part of the contract itself, but results from acts in pais under it. The question is whether such acts do in fact constitute a breach. Holmes v. Holmes, 9 N. Y. 525. If these acts show that the defendants closed the transaction without giving the plaintiff the notice to protect himself which the circumstances required, then they are liable for the loss resulting from this breach of duty; and in determining whether any notice was due from the defendants to plaintiff we must look into the circumstances as they actually existed. Any one can see that a notice might be given one day under the pressure of the circumstances of that day, and be withdrawn another day under changed circumstances, or upon a personal explanation or solicitation. Fair dealing is the main test with re*624spect to such matters; the duty of each party being not to mislead the other to his loss. It seems to us that the least that can be made of the interview of August 10th is that the plaintiff could rely upon not being closed out under any previous notice, but could wait until he heard further from the defendants.
Exception is taken to the rule for the measure of damages. The court stated it to be the difference between the price at which defendants actually bought the stock and the price at which they could have bought it in when they received plaintiff’s order to do so on the 10th of February following. This rule is sanctioned by authority. Campbell v. Wright, 118 N. Y. 594, 23 N. E. Rep. 914; White v. Smith, 54 N. Y. 522. It is urged that the plaintiff ought to be confined to the best price for which he could have bought the stock within a reasonable time; say 30 or 60 days, as in cases of unauthorized sales. Wright v. Bank, 110 N. Y. 237, 18 N. E. Hep. 79. But the plaintiff sustains no damages until his order to buy is disobeyed, and the date of that order fixes the date of the measurement of his damages. We can see that this rule may operate harshly, but it would be equally harsh to compel the plaintiff to buy against his judgment and inclination, and thus give to the defendants’ wrong a compulsion which would deprive plaintiff of his liberty of action. The ease was submitted to the jury upon the questions of fact in a careful and satisfactory manner, and the fact that the jury gave the plaintiff only half the amount which they ought under the rule of damages given them by the court we think is satisfactory evidence that they were not influenced by passion or prejudice. Judgment affirmed, with costs.
Mayham, J., concurs.