Court Opinion

ID: 5213745
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:18:26.03538+00
Date Added: 2024-06-11T08:27:24.368787
License: Public Domain

Laughlin, J. (concurring):
Although at the time the sale was made by the brokers the customer did not have the stock, having sold it in the interim between authorizing the brokers to sell at a fixed price and the time the stock reached that, price, yet the transaction did not constitute a short sale or give rise to the obligations that exist between the customer and the broker on a short sale which, on the part of the broker, are to carry the transaction for a reasonable time by borrowing the stock on the customer putting up margins. ( While v. Smith, 54 U. S. *431522.) The customer had the stock when he authorized the broker to make the sale, and it "was understood that he would deliver the* stock when notified of the sale. In the absence of any subsequent agreement changing his liability, he was to furnish the stock immediately upon being notified by the brokers so that they might deliver it to the purchaser, and on his failure to do so the obligation of the brokers to -the purchaser doubtless was to purchase and deliver the stock. That being the liability of the brokers to the purchaser, the measure of damages for which the brokers were liable to him was what it would have then cost the purchaser to buy the stock elsewhere. That is not the theory upon which the brokers sought to recover. They apparently rested their case on the theory that the negotiations between them and the defendant relieved them of that obligation,'and that the defendant undertook to provide the stock. If the brokers acquiesced in the offer on the part of their customer to provide the stock, they doubtless waived their right to an immediate delivery, and were not at liberty to purchase themselves or to consent to a purchase by the person to whom they made the sale until after the lapse of a reasonable time to enable the customer to procure the stock, or, at least, until a further demand upon the customer' by which the latter’s time to purchase the stock should be limited. This they undertook to' do by the notice to the effect that in the event of the failure of the customer to deliver the stock at or before noon on the 28th day of June, 1907, the brokers would purchase it at that time for the account of the customer. On that theory of the case it. was the duty of the brokers to give the customer until that time to deliver the stock, and to refrain from purchasing it themselves and from consenting to a. purchase by the person to whom they had made the sale. This they did not do, for the purchase was made with their consent on the 27th day of June, 1907. I, therefore,, see no theory upon which they were entitled to recover' on the basis of the pureháse made on that day.
Judgment and order reversed, new trial ordered, costs to appellants to abide, event.