Court Opinion

ID: 5315048
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:07:42.21382+00
Date Added: 2024-06-11T08:29:15.762487
License: Public Domain

McAvoy, J.
The appeal is from a judgment which was founded upon a verdict of a jury in an action brought by a firm of stockbrokers against their customer for an amount advanced for him in the purchase of securities, less what was recovered upon the sale of such securities, which had been held by the brokers as collateral for advances. The sale of the stock was made in November, 1929, upon the failure of the customer to send in more margin which had then been demanded.
The defendant’s defense was that he had an agreement with a branch manager or customers’ man to the effect, as his testimony shows, and as the court construed the agreement upon the trial, that the plaintiffs would sell out his stocks when the equity was wiped out in such a manner that there would be no loss. This agreement was not set up as a counterclaim, as it should have been, if it were intended to constitute a setoff or a reduction of plaintiffs’ claim, but even though it had been so pleaded, it would not have availed the defendant, for his evidence shows that he was not damaged by the breach of the agreement.
He testified that he demanded on the morning of the 6th of November, 1929, that his whole account be sold out and at that time there was an equity in excess of $4,000 in the account. He said he wanted his account entirely sold out that day because it was just about even at that time. He testified that the branch manager, Leary, said he would sell nothing; that he had nothing to do with selling and that if the defendant wanted to sell he should give his own orders to the selling clerk.
If there were an agreement to sell just as the stock reached the *239bottom of the equity, so that there would be no loss in the account, except the loss of the collateral, which had been put up for the loans, it was then the duty of the defendant to reduce any possible damage by proceeding to sell on his own account. His testimony shows that any damages then accruing could have been prevented from occurring, if he placed an order to sell as Leary told him to do with the selling clerk of the house. Thus the damage resulted not from the breach of the contract by Leary in failing to sell, but from defendant’s placing his order to sell only 1,700 shares instead of his entire ownership of 2,700 shares, because his account then at prevailing prices was approximately even, and there would have been no damage if he himself had placed the order to sell at the time that it is alleged Leary broke the agreement.
We think, therefore, as a matter of law, the alleged agreement, if made — and there is considerable doubt that it is not such an extraordinary and unusual agreement, as could not have been made properly by the sort of employee who is alleged to have made it ■—■ does not constitute any defense to the plaintiffs’ claim to the amount of their advances, and the defense should have been dismissed and judgment directed for the plaintiffs for the sum of $31,748.29, with interest from November 14, 1929, as there is no dispute about the amount due.
The judgment and order appealed from should, therefore, be reversed, with costs, and judgment directed in accordance herewith in favor of the plaintiffs, with costs.
Dowling, P. J., and Merrell, J., concur; Finch, J., dissents.