Court Opinion

ID: 5207155
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:04:51.651748+00
Date Added: 2024-06-11T08:27:18.550418
License: Public Domain

Miller, J. (concurring):
The record now before us presents the same questions of law that were involved in both of the former appeals, on each of which we *308said: “ The plaintiff’s evidence established, if true, a distinct independent agreement to purchase, carry and sell upon order 1,000 shares of stock, of which the signing of the pool agreement was a mere incident.” I agree with Mr. Justice Woodwabd that there comes a time in the history of every lawsuit when the decision of a jury, on a question which must ultimately be decided by them, should be final. Independently of the main question, I can discover nothing in this record of which the defendants can justly complain ; the correspondence between the parties was clearly admissible; the question for the jury was sharply defined and the circumstances favorable to the defendants were emphasized by the charge of the court. Having twice held, on substantially the same record, that there was a case for the jury, I think that respect for the orderly administration of justice requires us to adhere to that ruling, to the end that this litigation may finally be terminated by a controlling decision of the court of last ’■esort. If the plaintiff proved a contract,' independent of the pool agreement, all discussion of the nature of pools and the rights of pool members is beside the question. The fact in issue was whether such a contract was made ; all else was collateral and relevant only as bearing on the probability of its having been made. After a critical re-examination of the case I am satisfied that the importance of the collateral matter has. heretofore been much magnified, and thus ,the real issue has been obscured. It must be conceded that, if the plaintiff’s evidence merely proves that he went into a speculative pool, as is said, he cannot recover in this action. On the other hand, if his evidence tends to establish a valid contract independent of the pool, substantially as alleged, he may recover. And it is important that the precise facts, the relations between the parties, the chronology of events and the conversations between them, be understood.
The defendants were the plaintiff’s brokers. They were members or prospective members of a pool organized or in process- of organization to speculate in Southern Pacific stock. They were not the agents of the pool, the sole agent and manager being Mr. Keene. The pool agreement provided that signers of the agreement holding sixty per cent in amount of the certificates subscribed could call for a settlement and a dissolution of the pool upon giving thirty days’ notice, and the manager was required to report the pool *309dealings to the members of the pool every thirty days. The defendant James B. Taylor testified: “We had taken an interest for the firm in this pool, and we would take an interest for some of our customers, letting them participate under us in the pool, as Mr. Keene did not take any one on his paper except stock exchange houses.” He admitted that the plaintiff would not have been allowed to sign the pool agreement. The organizer and manager of the pool would not allow any one but a stock exchange house to become a member for the obvious reason that he did not want the possible interference of outsiders or a too general distribution of the accounts of the pool transactions. I quite agree that the plaintiff could not be both in and out of the pool. He says he was never in the pool, the defendants say in effect that he was not in it until it was dissolved. I think upon their own showing they were members of the pool, but the plaintiff never became one. Of course no one but the manager could buy or sell on behalf of the pool, but the pool members could engage in as many independent transactions as they liked in that particular stock. The pool agreement contemplated that the certificates would be distributed among the members from time to time as purchases were made, and according to the testimony of one of the defendants that was done. The agreement provided that “ the same amount of certificates ” should be returned to the manager when called for; it also contained the following provision : “ We further agree to deliver to said agent and manager the same certificates delivered to us by him, as he may call and pay for them at cost and interest, at a rate not to exceed five per cent (5 per cent) per annum, excepting in case of transfer, in which event the number of the certificates thus transferred are to be furnished the said agent and manager and the new certificates are to be delivered to him in lieu of the original certificates delivered to us by him when called for.” That agreement clearly contemplated that transfers of certificates held by the members might be made; they were obligated merely to return when called upon a like amount. I do not suppose any one imagines that • every transaction on the stock exchange is represented by an actual transfer of certificates, or that any attempt is made in a stock broker’s office to hold against each transaction the identical certificates purchased. The defendants could deal ad UMtum in the Southern Pacific stock, and their mem*310bership in the pool only obligated them to be prepared to deliver o:i demand to the manager the same amount of stock which they had received from him; and whatever their relations to the pool were, I can perceive no legal obstacle to their purchasing stock for the plaintiff, or to their selling him an interest in their pool holdings, represented by a stated number of shares, on any terms which they and he could agree upon. We come now to the actual agreement made.
The plaintiff testified that one of the defendants informed him of the organization of the Southern Pacific pool and advised him to buy some of the stock, so as to get in at the bottom, as it was going to advance. I quote: “ I asked him for further details, all the conditions under which 1 would have to buy stock, and for what price I could get it at. Well, he said that they, or at least Keene, had already bought one hundred and fifty thousand shares of it, and they would either buy a thousand for me in open market or probably would give me a thousand shares of what Keene had bought, and in that case it would be given to me at two or three points less than the market price, but if they bought it at the market price, I would get it at the price then prevailing, which was fifty-nine or a little less; and I gave the order to buy it. * * * I asked him how I would stand if I wanted to sell this stock, and he said I would stand to be the same as if I bought the stock in the open market, that if.. I became dissatisfied with the way the pool was being conducted, or if for any other reason I desired to get out of this thousand shares, I would have the right to sell a thousand shares or any part of the thousand, at any time I saw fit.” The foregoing evidences something more than an indefinite -statement as to the salability of the stock. It is to be interpreted according to the relations of the parties and the nature of the transaction. The defendants were to buy as agents for the plaintiff, and carry on margin. They were to hold the stock as pledgees. If it were to be sold, they would havq to sell it on his order ; and if that conversation occurred, it could only have been understood by the parties in one way, i. e., that the defendants obligated themselves to treat the transaction as between the immediate parties precisely like a purchase in the open market. It is immaterial that this may have required them to take his stock or his interest in their stock off his *311hands. Continuing, the plaintiff testified : “ The date of that conversation was on or about the 25th of January, 1902. I did. not see the pool agreement. On the 25th of January I don’t recall that there was anything said about a pool agreement. They said they would carry these ten (evidently meaning one) thousand shares for me on a small margin of five per cent, or at the most ten per cent. * * * The next time I had any conversation about this was two or three days later, in the customers’ room. I asked Mr. Taylor if he had bought this thousand shares as I had ordered. He said he had. To make my mind easy about it I asked him what price it had been bought at. He said I need not worry about that, that he didn’t recollect the exact fraction, but I had it on the terms agreed on and lower than the price at which it was selling then; it had gone up a couple of points then and it would not go back again that low.” According to the plaintiff’s version the contract had now been made and executed so far as the purchase was concerned. Thus far there is no suggestion that the plaintiff was to become a member of the pool. The defendants were to purchase, and they informed him that they had purchased for his account, 1,000 shares of stock. They had the option of purchasing in the open market or of allotting him a corresponding interest in their pool holdings, and whether they purchased in the open- market or through the pool was immaterial to him; he was concerned only with the result, which, as between the parties, was to be that of a purchase of stock to be carried on margin by the broker and sold on order. The plaintiff testified that subsequently said defendant asked him to sign a note ratifying the verbal agreement, saying that it was only a matter of form. That note is as follows:
“Feb. let, 1902.
“ Messrs. Talbot J. Taylob & Co.,
“Hew York:
“Deab Síes.— Confirming my talk with your firm, I hereby authorize you to sign the Southern Pacific agreement, to Mr. James R. Keene as agent and manager, for 1,000 shares for my account. “ Yours truly,
“ (Signed) A. H. RIDGrELY.
“ A. H. Ridgely, Esq.”
That writing standing alone would establish the fact that the plaintiff became a member of the pool through the defendants as *312agents, but when considered in the light of the plaintiff’s testimony, the time and circumstances under which it was given, and the conceded fact that the plaintiff would not have been permitted to become a-member of the pool, it does not have that effect. 1 am considering now its legal effect, not its value as an evidentiary fact. Con - tinning, the plaintiff testified in reference to a subsequent conversation, in which he requested permission to see the pool agreement, as follows: “ Finally, they said it was only a private paper between themselves and Mr. Keene, anyway; that it didn’t concern me; that I could look at it if it was any satisfaction to me, but it had nothing to do with me; that as far as I was concerned the pool agreement was only a matter of form; that it was between them and Mr. Keene.” The plaintiff’s understanding of the transaction is thus stated by him: “ I did not express my desire to go on and take an interest in the pool for the thousand shares. I was to take a thousand shares of his participation — that they were going to participate in it and gave me a thousand shares of their stock.”
I think the contract proved does not differ in substance or effect from that alleged, and that should be the test. The members of the pool had to take their stock at the average price, which could only be determined on the dissolution of the pool; the defendants agreed to purchase for the plaintiff 1,000 shares of stock in the open market, or to allot him a corresponding interest in their holdings at the market price; the members of the pool had to respond to the calls of the manager as purchases were made; the defendants agreed to- carry the plaintiff’s stock or interest on a margin of five or not to exceed te.n points; the net result of the pool speculation could not be determined until a final accounting; the defendants agreed to sell the plaintiff’s stock or close out' his interest on order on the basis of stock exchange sales. If the plaintiff’s version is to be believed, the transaction was in effect the ordinary stock transaction between broker and customer, and whether it should be that in form rested with the defendants who controlled the transaction and had the choice of method. Upon that theory the pool agreement was a collateral matter, and the plaintiff’s knowledge of stock speculation and of pool methods is of less importance than it has heretofore been considered by us.
It was immaterial to the plaintiff how the defendants discharged *313their obligation to him. One of the defendants testified that when the plaintiff's margin was exhausted they assumed his interest at fifty-nine, and sold a thousand shares short, as the expression is, in the open market to protect themselves. It is not suggested that that was a breach of any duty which they owed to the pool members, nor is there any apparent reason why they could not have done the same thing when he ordered them to sell. I agree with Hr. Justice Woodwaed that the verdict should be reinstated.