Court Opinion

ID: 6922287
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:06:04.401548+00
Date Added: 2024-06-11T16:06:50.065769
License: Public Domain

MARSHALL, Circuit Judge
(dissenting.)
With all deference to the views of my brothers, I must respectfully dissent from the reversal of the findings below as to the nature of Quarti’s instructions to Moretti in November, 1956, and the question of whether the parties had forgotten them by July, 1957. Rule 52(a), F.R.Civ.P., directs us to accept findings of a district court unless they are “clearly erroneous.” In my view, the findings below are correct and in fact compelled by the record.
*659In October, 1956, or thereabouts, Moretti wrote Quarti and recommended the sale of the B & 0 stock if and when it reached 57 or 58. Quarti sent the disputed instructions to Moretti in November. Moretti made no record of the instructions and in fact lost the letter some time between its receipt and the time of trial. His reply was, “I note that you authorize to sell this stock above 58.” The majority, relying upon the language of defendant’s answer, concludes that Moretti did not undertake any obligation to send monthly confirmations, to sell when the stock went above 58, or even to record or keep a copy of the instructions.
Construed literally and viewed in isolation, the language might be sufficient to reach the conclusion drawn. We are not, however, dealing with a technically phrased provision of the Internal Revenue Code, nor are we faced with a record barren of other relevant evidence. Viewed in the context of Moretti’s own prompting to sell at 58, the word “authorize” on his part does not bear the weight placed upon it by the court. It would, under those circumstances, serve as an adequate reply to an absolute command as well as to a merely permissive grant of power.
Moreover, the parties were bound by an explicit contractual provision to act in accordance with the customs and usages of the stock market. Defendant produced an expert to testify as to the manner in which a broker or customer’s man would execute certain orders. His testimony, in relevant part, was as follows:
“By the Court. Q. You said, and if you are not quoted correctly do not hesitate to correct me, because all we want is the fact, and we want the benefit of your expertise, a customer is long some securities with your house and says, ‘Sell it above 50,’ and at the time when the order is given it is far away from that. Then about seven or eight months later the market starts to approach it. What do you think is the area of discretion of the broker? You say he has discretion. What is the area of discretion? A. I think a good broker would then check with his customer when the stock reached 45 or 46 and remind him by phone or personal contact that the stock is now approaching the 50 level, to please give more specific instructions. I would ask, ‘Shall we start to scale the order?’ If he does not hear from the customer, then he will start to sell the stock above 50, 50V2, 50%, 51, and he starts to sell a little at each price.
$!• * if *34
“Q. Let us take a customer who is not easily reached, because he is abroad. He communicates with his broker and says, ‘Now, I am long with your house this and this stock, sell me out at above this and this price.’ A. Under those circumstances, we would send him a confirmation and you have a specific order. You definitely have a sell order to sell above a certain price. When the price reaches that level, we will start to sell stock.
“Q. It is common custom in the trade, is it, to send confirmation of that kind of order? A. That very day and every month thereafter.
“By Mr. Samuels. Q. What you have said comes within the GTC? A. That is the way a GTC order would be handled.”
The District Court, relying on the plain meaning of the testimony of defendant’s expert, held that Quarti’s instructions should have been treated as a GTC order and that the B & 0 stock should have been sold when it reached 58. Since no other expert testimony was offered, reliance upon it cannot possibly be upset as “clearly erroneous.”
But the findings of the District Court were also based on the conduct of the parties themselves. In Moretti’s answer to Quarti’s November instructions, he notes that he has “authority to sell [Vanadium] above 49” and that it “is alright to sell [Menasco] at 6% or better.” When these stocks reached the specified *660price, they were sold in small blocks, exactly according to the expert testimony above. Moretti described the transactions in this manner: “I waited for the stock in question to go to the limits specified by Mr. Quarti, and I sold them slowly afterward.” This is hardly support for the majority’s assertion that they were sold “because in the exercise of the judgment and discretion of the brokers it was a good time to sell them at the prices and in the small blocks at which they were sold.” Moreover, other correspondence demonstrates that when Quarti desired Moretti to exercise discretion in the broad unrestrained sense employed by the majority, he said so in unmistakable terms. Finally, Quarti’s letter of August 5, 1957, which changed Moretti’s instructions, says merely, “If by a lucky chance it should go above 60 — let us say 60 net for me — I would sell at least one half * * * I would like to sell with all caution to get the best out of it. Please write me in this respect.” Moretti treated this as a GTC order to sell at 61, yet one is tempted to ask why this, if the majority is correct, is more than an “authorization” to sell “above 60 net for Quarti.”
The Court also upsets the finding that the parties subsequently forgot the November instructions. It is undisputed that they were not mentioned again until after B & 0 had risen above 58 and declined. Moretti’s letter of July, 1957, requesting instructions on B & 0 indicates he was not conscious of any prior directions on the subject. The majority concludes, however, that the conduct of the parties is “just as consistent with the supposition that they remembered it as it is with the supposition that they had forgotten about it.” Even accepting that conclusion, we still are not free to reject the findings of the court below as “clearly erroneous.” Fed.Rules Civ.Proc. Rule 52, 28 U.S.C.A.
I would, therefore, remand with instructions to award damages limited to the difference between the highest price at which the stock could have been sold on July 25 and 26 and the price at the time of the new order to sell at 61. I agree with the majority that the new instructions deprived defendant of his freedom to comply with the November order and to protect himself from further damages. The new contractual relationship having intervened as a result of Quarti’s own decision, it would be inconsistent with our notions of compensation to award him more.