Court Opinion

ID: 7898139
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:53:45.641333+00
Date Added: 2024-06-11T16:32:09.482450
License: Public Domain

Alvey, C. J.,
delivered the opinion of the Court.
In this case the action was brought by the appellee against the appellants for the non-delivery of certain railroad stocks purchased by the defendants for the plaintiff ; and for money paid by the plaintiff to the use of the defendants, by the fraudulent procurement of the alleged agent of the defendants, and by the mistake of the plaintiff.
The defendants are stock brokers, and while their principal house and place of business is in the City of New York, they have a branch house in the City of Baltimore, and the business is conducted in New York in the firm name of Peters, Schenck & Co., and in Baltimore as Andrews, Peters & Co., Andrews being the resident manager of the branch house in Baltimore. The firm are not members of the Stock Exchange in the City of Baltimore, but all their stock transactions are conducted through the Stock Exchange of the City'of New York. Hence, orders given for the sale or purchase of stock by a customer in Baltimore is executed by the house in New York, the two houses being connected by private wire ; but stocks or bonds are received and delivered by the house in Baltimore and accounts are rendered and settled there with the customers dealing with the branch house.
*426The plaintiff, an old and long established dealer in jewelry and silver ware in the City of Baltimore, became a customer of the branch house of the defendants, and •dealt in stocks and other securities quite extensively from some time in May, 1884, to the end of the year 1885. During that period there were many purchases and sales for and on account of the plaintiff; and it seems to have been the regular course of dealing and method of conducting the business, that where accounts were active, that is to say, where debits and credits were frequent, the house furnished to the customer monthly statements of account, made up in New York and furnished to the Baltimore house for delivery, showing the state of the dealing, and the balances the one way or the other. These monthly statements were furnished for and delivered to the plaintiff, though with some irregularity during the latter part of the dealing. From the time of the commencement of the dealings between the plaintiff and the defendants to about the middle of December, 1885, the latter had in their employ a person by the name of Palmer, who was largely entrusted with the business of' the branch house, and with whom most of the dealings of the plaintiff were transacted. It was out of the dealings with this agent that the present litigation has sprung, — the agent having perpetrated gross frauds in the course of that dealing. And the general question here is, who is to bear the consequences of the infidelity and fraud of such agent ?
The action was brought on the 15th of' July, 1886 ; and it is in assumpsit on the common counts, with three special counts added ; the first of which special counts alleges that the defendants, in consideration of the sum of $18,000, to be paid to them by the plaintiff, agreed to purchase and deliver to the plaintiff, 200 shares of the common stock of the Chicago, Milwaukee and St. Paul *427Railway Company ; and that the plaintiff paid to the defendants said purchase money, but the defendants have failed and refused to deliver the stock ; the second spe- . cial count alleges that the defendants, in consideration of the sum of $8,000, to be paid to them by the plaintiff, agreed to purchase and deliver to the plaintiff, 400 shares of the stock of the New York, Lake Erie and Western Railroad Company ; and that the plaintiff paid to the defendants said purchase money, but the defendants have failed and refused to deliver the stock ; and the third special count alleges that the defendants, in consideration of the sum of $8,100, to be paid to them by the plaintiff, agreed to purchase and deliver to the plaintiff 300 shares of the stock of the Missouri, Kansas and Texas Railroad Company ; and that the plaintiff paid to the defendants said purchase money, but the defendants have failed and refused to deliver said stock. To this declaration the defendants pleaded, 1st, That they never were indebted as alleged ; and, 2nd,-That they never promised as alleged.
The case was tried before the Judge, without the aid of a jury; and the Judge found, not a sjoecial verdict, but an itemized verdict in reference to the different subjects of claim, in this form :
“It disallows all claim of plaintiff for or in reference to the Chicago, Milwaukee and St. Paul Railroad Company stock, mentioned in the narr., except as hereinafter mentioned.
“ It allows the plaintiff for the value of 400 shares of New York, Lake Erie and Western Railroad Company stock, mentioned in the narr., with interest thereon from 11th of June, 1886.............................................$13,234 96
“It allows the plaintiff for the value of 100 shares of the Missouri, Kansas and Texas Railway Company stock, mentioned in the *428Amount brought forward............013,234 96
narr., with interest thereon from 11th June, 1886..................................................... 3,286 12
“ It allows the plaintiff for the amount of the check for 04,318.31, given by him to defendants on the 18th of December, 1885, with interest from that date............................. 5,265 60
“It allows the plaintiff for the amount received by defendants, and applied by them to purchase of C., M.'& St. Paul Railroad Company stock, being 0125.31, with interest from June 13, 1885............. 166 81
021,954 09
“Less dividend on last named stock, paid by Palmer to plaintiff, on 30th of April, 1886, being 0500, with interest thereon from that date.......................................................... 590 33
021,363 16”
And upon judgment being entered the defendants appealed.
There was a large mass of evidence produced, some of which was conflicting as to material facts, and upon that evidence each party offered prayers, some of which are long enumerations of what were supposed to be the facts established by the evidence, each side stating the facts in their several prayers which were deemed essential to the support of the particular hypotheses desired to be maintained, and upon which the Court was asked to affirm certain legal propositions as the result of the finding of such facts. Some of the prayers offered by the plaintiff were accepted and affirmed by the Court, as furnishing correct rules to guide in considering and applying the facts of the case ; but all those offered by the defendants were rejected.
*429It is very difficult, in a case presented as this is, where the trial Court has considered the whole case at large and drawn its conclusions, made up of mixed law and fact, to review the judgment with reference only to the legal propositions involved ; for while on a special verdict or a case stated there is no difficulty in applying the law that will control the facts thus ascertained, in a case like the present, where the whole evidence and the law have been considered together, in a concrete form, there is always danger of doing injustice both to the Court below and to the party in whose favor it decides, by disturbing the finding, for some supposed misconception or misapplication of the law. Eor while the finding of the facts is exclusively with the Court below, the law applied, or that should have been applied, is alone the subject of review in this Court. And therefore the very able discussions of the evidence, in the briefs of counsel in this case, avail nothing here, except as such review of the evidence may show the existence or non-existence of facts tending to support the hypotheses of the prayers granted or rejected by the Court.
Of the prayers offered by the plaintiff, those numbered one, two, four, six and seven were granted, the others being rejected. The first of the plaintiff’s prayers relates to the New York, Lake Erie and Western Railroad Co. stock, mentioned in the second special count of the declaration, and in the verdict of the Court. The second prayer of the plaintiff, granted, relates to the Missouri, Kansas and Texas Railroad Co. stock, mentioned in the third special count of the declaration, and also in the verdict of the Court; and the seventh prayer of the plaintiff, granted, relates to the check for $4,318.31, referred to in the verdict of the Court. The other granted prayers relate simply to the measure of damages.
Many of the most important facts of the case are undisputed, and about which therefore there is no conten*430tion. Among these are the facts that the stocks mentioned in the verdict of the Court, and for which allowances were made, were purchased by the defendants for the plaintiff, and were paid for by the plaintiff ; that the stocks were duly received by the defendants in Baltimore to be delivered to the plaintiff, but that they never were in fact delivered to him : That instead of the genuine certificates of the stocks purchased and received'by the defendants to be delivered to the plaintiff, raised or forged certificates were delivered to the plaintiff, at his place of business, on the 18th of December, 1885, by Palmer, professing to act for and in the name of the defendants, and at the same time claiming and receiving of the plaintiff the check for $4,378.31, as being the amount due the defendants from the plaintiff, for the stocks then professed to be delivered, when in fact there was nothing due from the plaintiff to the defendants whatever, as would appear from the statements of account then in the possession of the plaintiff. That some short time before December 18th, 1885, after repeated requests made by the plaintiff for the statement of his account with the defendants, Palmer furnished statements of the account dated respectively, November 1st and December 1st, 1885, which were afterwards and before the 18th of December,’ 1885, discovered to be false and simulated ; and that upon such discovery, correct copies or duplicates of the monthly statements of the account, which had been furnished by the New York house, to be delivered to the plaintiff, were requested by the plaintiff, and were forthwith furnished to him, and which he had in his possession on the 18th of December, 1885. That in the statement as of November 1st, 1885, it appears that under date of October 5th, 1885, on the credit side, 100 shares of Missouri, Kansas and Texas Railroad Company stock are entered as “ delivered ; ” and in the statement of December 1st, 1885, it appears that under date of Novem*431ber 4th, 1885, on the credit side, 400 shares of New York, Lake Erie and Western Railroad Company stock are entered as “delivered.” And it is conceded that the stocks thus entered in the statements of account as “delivered ” had been paid for by the plaintiff; and he was, of course, entitled to the delivery of the stocks as of the dates of those entries.
It is also among the undisputed facts, that on the 18th of December, 1885, Rhett, the clerk of the defendants, went to the store of the plaintiff and there delivered to the latter a statement of account, made up to the ITth of December, 1885, and at the same time delivered to the plaintiff 500 shares of Texas Pacific Railroad Company stock, for which the plaintiff receipted, and according to the showing of the account rendered, Rhett asked for and received of the plaintiff a check for $1194, as being in full of the amount due the defendants to that date. Immediately after Rhett left the store, Palmer appeared and delivered to the plaintiff a memorandum statement, not in the form of any prior statement that had been delivered, but quite different, and at the same time delivered the raised or forged certificates of stock ; and, according to the memorandum statement furnished of the amount due on the stocks, after deducting the amount of the check that had just previously been, given on t-he settlement with Rhett, Palmer made the amount due the defendants on account the sum of $4318.31, and for which the plaintiff then and there gave him the check for $4318.31, payable to the order of the defendants, and Palmer gave a receipt therefor as in settlement of account in full. It is conceded that this check obtained from the plaintiff, payable to the order of the defendants, was, on the 19th of December, 1885, indorsed for deposit to the credit of the account of the defendants in the banking house of Garrett & Sons, by Palmer, and that the defendants did in fact receive such credit, and *432the check was duly paid, and the amount thereof entered as a credit in the bank book of the defendants; but that the amount of the check was afterwards entered as a credit in the account of Morrison, a customer of the defendants, by Rhett, .the defendants’ clerk, under some impression made upon him that the credit belonged to that account, though in fact it did not.
It is not disputed that Palmer was in the employ of the defendants from the commencement of the dealing of the plaintiff with them to about the middle of December, 1885; and that his duties and powers comprehended the receiving of orders for the purchase and sale of stocks and securities; the transmission of such orders to the New York house, the receipt of securities and the delivery thereof to customers, and, occasionally, the delivery of monthly statements to those entitled to receive them; and especially were such duties performed by him in the transactions had by the plaintiff with the firm of the defendants. It is contended by the defendants that immediately, upon discovei’ing the fact of the false and simulated statements of account furnished the plaintiff by Palmer, they dismissed Palmer from their service, and that this was before the transaction of December 18th, 1885 ; but it is denied by the plaintiff that he had any knowledge whatever of the discharge of Palmer at the time of that transaction in regard to the stocks and the check, and not until some time thereafter. The certificates of stocks were put carefully away in a safe deposit by the plaintiff, and their raised and forged character was not discovered until some time in June, 1886, when they were taken to the offices of the railroad companies for transfer. Thereupon demand was made upon the defendants for the delivery of genuine certificates of stock, and that demand being refused, the action was brought.
If there was no other evidence in the case required to be considered than the facts enumerated in and made the *433"basis of the first, second and seventh prayers of the plaintiff, we should hold without hesitation that those prayers are unobjectionable. But those prayers do not embrace all the facts of the case, and all of them conclude to the right of the plaintiff to recover, and thus exclude from consideration all other facts that might or could change or modify the conclusion to be drawn from all the facts of the case. Prayers concluding as these do should embrace all the facts in proof, as well those in support of the claim of the plaintiff as those in support of the defence, unless it be where the finding of the facts in support of the claim of the plaintiff necessarily negatives the proof of the facts offered in support of the defence, or vice versa. In other words, where one state of facts null not consist with the other.
In this case the defence is, first, that Palmer was not the agent of the defendants at the time of the delivery of the raised or forged certificates of stock, and the acceptance of the check as in full of the balance on settlement; second, that if the plaintiff was then entitled to treat Palmer as still in the employ of the defendants, the transaction of that date with him was not within the scope of his authority, and therefore not binding on the defendants; and third, that the plaintiff in conducting the transactions with Palmer, resulting in the loss sued for, was guilty of such negligence and want of ordinary care as to operate an estoppel on him, and so preclude the right of recovery against the defendants for the loss sustained by the fraud of Palmer. And it was the object of the prayers offered by the defendants, which.were rejected, to present and obtain the benefit of these grounds of defence, in the consideration of the case by the Court.
It is a very well settled principle of law, that if a person has dealt with an agent within the limit of the authority confided to him, or within a course of husi*434ness by the agent which has been sanctioned and approved by the principal, such person has the right to assume, if not otherwise informed, that the authority in the agent continues; and when the dealing continues after the authority is revoked, the principal is nevertheless hound, unless notice of the revocation of authority is brought home to the party so dealing with the supposed agent. Sto. Ag., sec. 470; McNeilly vs. Continental Life Ins. Co., 66 N. Y., 28; Hatch vs. Coddington, 95 U. S., 56. And it follows, as a logical consequence from this principle, that the onus of proof of the fact of discharge and notice thereof is on the' party who denies the authority of the agent. But whether the act or acts of the agent in question were within the scope of the recognized powers or duties of such agent, or were of the class of acts' or transactions that the agent was allowed to do or perform in the name of the defendants, in the course of their dealing with customers generally, or loith the plaintiff, were questions of fact' that were properly submitted to the finding of the Judge, by the prayers of the plaintiff, upon the whole evidence. But it is objected to these prayers, that they fail to submit for consideration, and entirely ignore, all the facts and circumstances of the case relied on by the defendants for the purpose of raising an estoppel upon the plaintiff, as to his right to recover for and in respect to the stocks and check mentioned and allowed for in the verdict of the Court; and it would appear that the objection is well taken. For without in any manner intending to intimate what conclusion should he drawn from the facts in proof, we think there are circumstances that should have been considered in support of the defence taken by the defendants. We are of opinion that, as reflecting upon the question of estoppel, there should have been submitted for consideration, all the circumstances immediately connected with the fraud of Palmer in dealing with the *435stocks purchased by the defendants for the plaintiff and allowed for by the Court; the furnishing the plaintiff with the false and simulated statements of account, the discovery thereof, and the correction by duplicates of the true accounts, which remained in the possession of the plaintiff, and what those accounts indicated as to the previous dealing; the subsequent delivery to the plaintiff of the raised and forged certificates of the stock, and all the circumstances of the settlement by the plaintiff with Palmer, and the passing, of the check to the latter on such settlement, in view of the settlement just previously made with Ehett, and all the facts and incidents of those transactions, and the facts immediately connected therewith, and the subsequent discovery of the fraud; as tending to show that the plaintiff had the means and facility in' his possession, or at his command, for the prevention or detection of the fraud of Palmer, and which would have enabled him, by the exercise of ordinary prudence and care, such as reasonably careful business men generally exercise in such transactions, to prevent or detect the fraud before its final consummation, or to discover its penetration within a reasonable time thereafter so as to afford to the defendants an opportunity to seek restoration or indemnity of the delinquent agent. Such degree of care and prudence is required of the plaintiff for the protection of the defendants, if the latter be ignorant and blameless themselves, in regard to the particular transactions. In all such cases, the question whether there has been exercised in regard to the transactions involved that ordinary and reasonable degree of care required of the party or parties, under all the circumstances disclosed, including the relation of the parties and the course of dealing between them, is one of fact; and hence it was necessary that that question should have been submitted to the finding of the Judge by the prayers of the plaintiff.
*436It is the settled doctrine of many cases upon this subject, that negligence, to amount to an estoppel, must be in the particular transaction itself, and be the proximate cause of leading the adverse party into mistake, and also must he the neglect of some duty which is owing to such adverse party or to the general public. This is the doctrine as settled by the case of Hardy & Bros. vs. Chesapeake Bank, 51 Md., 562, 571; and it is the doctrine as settled by the English Courts, and hy the Supreme Court of the United States. Governor and Company of the Bank of Ireland vs. Trustees of Evans Charities, 5 Ho. L. Cas., 389, 410; Arnold vs. The Cheque Bank, 1 C. P. Div., 578; Leather Manufacturers’ Bank vs. Morgan, 117 U. S., 96. The doctrine is of comparatively modern growth, and it has heen so formulated as to promote the ends of justice, and it has no application except where the purposes of justice require it. Therefore it has been well said by the Supreme Court, in Bank vs. Morgan, supra, that the Courts “ to promote the ends of justice, have sustained the general princijde that, where a duty is cast upon a person, hy the usages of business or otherwise, to disclose the truth — which he has the means, by ordinary diligence, of ascertaining— and he neglects or omits to discharge that duty, whereby another is misled in the very transaction to which the duty relates, he will not be permitted, to the injury of the one misled, to question the construction rationally placed by the latter upon his conduct. ” But while this principle is both just and beneficent in a state of circumstances which may make it properly applicable, we must be careful that it be not carried too far. It must be confined to the particular transaction in question, and not be allowed to depend upon remote or collateral facts or transactions ; and the alleged negligence and omission of duty must be the direct and proximate cause of the loss sustained. Nor can the estoppel be raised *437against a party for any mere neglect of what would be prudent in respect to himself or his own interest, or even neglect of some duty owing to third persons with whom those seeking to set up the estoppel are not privy. Arnold vs. The Cheque Bank, 1 C. P. Div., 578, 588. All that can be required of a party is that he act with that ordinary diligence and care that reasonably prudent business men generally observe, under the like circumstances, in examining the statements of his accounts rendered, and in making settlements with reference thereto, to avoid errors and to prevent or detect frauds, where the neglect of that degree of care may operate to the prejudice of parties with whom he deals. More than this, ordinarily, cannot be required. Hardy & Bros. vs. Chesapeake Bank, 51 Md., 591. A party who employs an agent and puts him. in a position of trust to transact business with third parties, cannot be relieved of liability for the frauds and misdoings of such agent, unless it be shown that the loss sustained, as the result of such frauds, would not have occurred but for the neglect and want of ordinary care on the part of the party seeking to hold the principal liable ; nor can the principal be relieved in such case, if by the exercise of due and reasonable care in respect to the duties of the agent, the loss would not have occurred. But it has been held in several cases, that as the right to seek and compel restoration and indemnity from the party committing the frauds might have proved a valuable one, it is a sufficient defence to the right to recover, if it is made to appear that the defendants, by reason of the negligence of the plaintiff, and of his negligence alone, were prevented from exercising the right of seeking restoration or indemnity within such reasonable time as the right might possibly have been available to the end. Leather Manufacturers’ Bank vs. Morgan, supra. What is such reasonable time, however, is purely a question of fact, *438under all the circumstances of the case. McKenzie vs. British Linen Co., 6 App. Cas., 82.
It follows from what we have said that there, was error in granting the first, second, and seventh prayers of the plaintiff, for the failure to embrace and submit for consideration the facts tending to support the e'stoj)pel sought to be raised by the defendants. But we think there was no error in refusing to grant the several prayers offered by the defendants. The first, second and eighth of those prayers may be considered as out of the case, in view of the finding of the Court in respect to the stocks to which those prayers related. But the third, fourth, fifth, tenth and eleventh prayers are objectionable, because they are too broad, and comprehend too many matters that are collateral and with but an indirect relation to the main transactions, and therefore not elements to raise an estoppel against the plaintiff in respect to the very transactions involved in this case. Moreover, the prayers are objectionable, because they unduly restrict the authority of Palmer, by confining the consideration of the Court to certain enumerated facts, and thereby excluding others that should be considered as bearing upon the question of authority.
The transaction in regard to the C., M. & St. Paul stock, and that in regard to the United States bonds, referred to in the prayers, while they may show the course of dealing, and reflect upon the question of knowledge, cannot be invoked to show negligence on the part of the plaintiff, and thus be made, even in part, the basis of an estoppel in respect to the particular transactions here involved. Nor do we think that because the plaintiff repeatedly requested Palmer, as the agent of the defendants, to deliver the particular stocks in question, and that Palmer delayed, and offered excuses which -were accepted by the plaintiff, and that the latter did not complain to the defendants of such delay, *439would constitute a ground of estoppel. To say that such acquiescence or non-action on the part of the plaintiff would constitute an estoppel, would be going very much farther than any decided case of which we are aware, and would fix a criterion that would be most dangerous in the transaction of business entrusted to the conduct of agents. If a party places an agent in a position to transact a certain kind or character of business, and the agent, while professing to act in respect to that business, in his dealing with a third party interested in the subject-matter, makes representations as to such subject-matter, upon which the third party relies, supposing them correct, the mere reliance upon such representations, though they prove to be unfounded, can never be set up as an estoppel, upon any theory that it is the duty of such third party to mistrust the representations of the agent, and to communicate such suspicion to the principal. The doctrine of estoppel has never been carried to such an extent. And the extent of Palmer’s authority in dealing with the stocks in question, and to make the settlement with the plaintiff on the 18th of December, 1885, depends upon the relation of Palmer to the defendants from the commencement of his employment, and during the time that the plaintiff dealt with -the firm ; unless the defendants show affirmatively that his powers and duties had been restricted, to the knowledge of the plaintiff. These questions, of course, are apart from the question of the imputed negligence of the plaintiff in his failure to examine the monthly statements furnished him, and the securities received, within a reasonable time after he received them.
The sixth, seventh and ninth prayers of the defendants go to questions of the legal sufficiency of proof as to certain propositions involved ; but we think the Court was clearly right in rejecting them all. The eleventh prayer was made dependent upon the finding the facts *440set out in- the preceding prayers, and as we hold that those prayers were defective in their collocation of facts, it follows that this eleventh prayer is objectionable for the same reason.
(Decided 19th June, 1890.)
The remaining question is one as to the measure of damages. And in regard to this we think the rule adopted by the Court below, as to the stocks allowed for, was erroneous. The general rule is, doubtless, in actions for conversions, that the value of the thing converted, at the time of conversion, with interest to the time of trial, afford the proper measure of damages. Here the stocks were purchased for the plaintiff and were paid for hy him, and he had demanded the delivery of the stocks, and they were charged as delivered as of certain dates. He was therefore entitled to them as of those dates, and could at once have instituted actions for them, or their value. It is not claimed that the defendants either sold the stocks for their own account, or actually converted them to their own use. They were fraudulently converted by a third party, in no way for the use or benefit of the defendants. The value of the stocks at the time they were charged as delivered, with interest to the time of trial, should be made the measure of recovery. As to the check, there was no error in regard to the time from which interest was allowed. The judgment must be reversed and a new trial awarded.
Judgment reversed, and new trial awarded.