Court Opinion

ID: 6236051
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:32:46.719679+00
Date Added: 2024-06-11T08:58:03.189900
License: Public Domain

Mr. Justice Gordon
delivered the opinion of the court, May 7th 1879.
Says the learned judge of the court below, in his charge to the jury: “If you find that this is a contract for the purchase and sale of stock, then, I instruct you, upon the law of Pennsylvania, as very clearly settled in the case of the Bank of Montgomery v. Reese, that the true measure of damages is the difference between the value of the stock on the day it was sold and the highest value that it reaches up to the day of trial.” No longer ago than the 4th day of March 1878, in the case of the Huntingdon and Broad Top Railroad v. English, 5 Norris 247, this court, without dissent, ruled that the rule of damages as stated in the Bank v. Reese, 2 Casey 143, did not apply to ordinary stock contracts, but only to trusts and cases where justice could not be reached by the ordinary measure of damages.
Where parties, as in the present case, stand in equali jure there cannot be two different rules of compensation for the breach of a contract, one for the buyer and another for the seller. Were North & Co. suing on a breach of the alleged contract by Phillips, their damages would be measured by the market price of the stock, on the day fixed for its delivery, as compared with the contract price. If we reverse the parties the same rule applies; if North & Co. *255refused to execute the contract, then Phillips was entitled to the difference in the prices as above stated, but nothing more, unless fraud was practised upon him, and then his damages might be exemplary. In fine, the rule governing damages in contracts for stock is the same as that in contracts for any other marketable commodity.
Without special notice of the remaining assignments of error, we pass to an examination of the character of the contract, or contracts, between these parties. It would seem, from the statement of the counsel for the plaintiff below, that the defendants were to carry for him four hundred shares'of the stock of the Pennsylvania Railroad Company untiltthe 11th of November 1872, and six hundred of the same shares until the 14th of the same month. He complains that they “slaughtered” these shares, on the morning of the eleventh of November; that is, if we understand the term, sold them before the time for which they had agreed to carry them had expired. Hence arises his claim for damages.
Phillips, himself, says: “ On receiving that note” (the one informing him of the sale) “I went to the offibe of Messrs. North & Co. on the morning of the 11th of November 1872. I saw Mr. George North. I said to Mr. North I had received notice of the sale of my one thousand shares of Pennsylvania Railroad stock; what does it mean ? He replied he was called on, or something of the kind. Then I asked him why he did not notify me. I think he made no response to that. Then I told him I would not accept the sale. * * * Then North, pulling out his watch, said, ‘ I call on you for $5000 margin, in five minutes,’ or heAvould sell my stock. Then I said to him, ‘You notified me you had sold the stock;’ then I told him I Avould hold him responsible for the stock he held of mine.” So the matter rested until the bringing of this suit.
From the above testimony, one would naturally conclude, that Phillips Avás the actual oAvner of one thousand shares of stock which his brokers had, without authority, disposed of. But there was nothing of the kind. These stock shares belonged to the defendants. Phillips neither had paid for, nor intended to pay for any of them. They Avere worth at this time some $52,000, and Phillips himself being judge, Avas not worth half that amount. According to the statement, above referred to, North & Co. were only to carry them for him for a certain length of time, for a consideration, technically called a “shave.” In other Avords, they agreed to hold this stock in his name, for thirty or sixty days, as the case might be, in order that he might have the advantage of any rise in price that might happen in the meantime, it being also understood, that he must make good any fall in such price. Thus, the dealings of the par-ties Av-ere in “differences” and “margins,” and the purchase and sale of the stock was a mere pretence. Hence it Avas, that when North was challenged about the disposition of these stocks, he *256made no demand for their price but for margin. So Phillips, on the other hand, never pretends that he paid for any of the shares, ■which the defendants, from time to time, professed to sell to him, but he says, “ I settled margins, from time to time, as they called for them by their notes; that is, notifications of Messrs. North.” Now, as is said in Maxton v. Gheen, 25 P. F. Smith 168, transactions in stocks, by way of margins, settlement of differences and payment of the gain or loss, without any intention to deliver the stocks, are mere wagers. Nothing, however, could better describe the transaction in hand than the above language. It is conceded that an optional contract may be valid and binding upon the parties to it, as in the case of Kirkpatrick v. Bonsal, 22 P. E. Smith 125, where the agreement was to deliver oil, within a given time, buyer’s option and at a fixed price, but there was nothing in the transaction which indicated an intent to gamble on the fluctuation of prices. Had any such intent been apparent, the result would have been different, for the doctrine above stated, is in that case, emphatically recognised and approved. In the case in hand, however, the very proofs adduced by the plaintiff to establish his several contracts with the defendants, reveals the fact that they were mere gambling devices, such as the courts will not help the parties to enforce.
Judgment reversed.