Court Opinion

ID: 5205422
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:00:55.44281+00
Date Added: 2024-06-11T08:27:16.529645
License: Public Domain

Scott, J.:
The plaintiffs are dealers in bonds and investment securities, and the defendants are stockbrokers, and both transact their business in the city of New York. The action is for damages for defendants’ failure to deliver to plaintiffs $50,000 of unstamped five per cent bonds of the Southern Pacific of California Railway Company. The sale of the bonds by defendants to plaintiffs on September 2, 1903, and the failure to deliver them were not disputed, the sole controversy being as to the amount of damages recoverable. The sale price was' $112. The bonds were very inactive, few sales ' being reported, and these at long intervals. It appears that of the total issue of bonds some were stamped with an agreement giving the company the' right to redeem them at 107.50 in»1905. The remainder, being unstamped, matured in 1937, and were not redeemable until then. The unstamped bonds, such as defendants sold,, were scarce and not easily obtainable, and commanded a higher price than the stamped bonds. There was gre'at difficulty in proving the market price of unstamped bonds,, or that there was any market price for them on September 3, 1903, the date on which the bonds should have been delivered. There was evidence of a sale on September 1, 1903, but it was not made entirely clear whether the subject of the sale was stamped or unstamped bonds. Railing direct evidence of market value in New York on September 3,1903, owing to the lack of evidence of actual sales, both sides called expert witnesses to.estimate the valué of the bonds on the day of delivery, their estimates being computed upon their opinion as to the income basis upon which the value should be estimated and the length of. time the bonds had to run. Their estimates of value varied considerably according to the income they severally considered a purchaser should be content to realize from an investment in the bonds, taking into account the general condition of the market and the price at which other bonds of a similar character were sold. One *469of the witnesses for the plaintiffs was permitted to state that he “ knew of a transaction [in San Francisco] in August, 1903, at 118,” and the refusal to strike this evidence out is assigned as error. "We think that the evidence was incompetent. It is evident that the witness had no personal knowledge of the transaption, and it is not shown wdiat the transaction ivas, or at what time in August it took place. The sale by defendants was made in New York, and the delivery should have been made in that city on December third, and a transaction some time in August in San, Francisco was too indefinite to furnish a just basis for estimating damages. We cannot say that this evidence did not affect the verdict, for the jury found damages based upon the assumption that the bonds were worth 118 in New York on September 3, 1903.
The judgment and order must be reversed and a new trial granted, with costs to appellants to abide the event.
Pattebson, P. J., Olabke and Houghton, JJ., concurred; Ingbaham, J., dissented.