Court Opinion

ID: 8855000
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:27:34.412329+00
Date Added: 2024-06-11T17:05:37.774350
License: Public Domain

Mr. Justice Hatchett dissenting: The opinion of the majority of the court it seems to me disregards the well settled rules of law applicable to transactions of the kind here disclosed, disregards the fact that even on plaintiff’s theory of the case the issues, of fact were not fairly submitted to the jury, and then proceeds to decide the case upon a theory of law expressly disclaimed by plaintiff’s brief and upon an issue which was not before the trial court and which is not before this court upon the pleadings. It has been, supposed that the general rules of law applicable ■ to a transaction of this kind are well settled. I understand the law to be that in the buying and selling of stocks brokers act as the agents of their customers, sometimes as the agents of both parties to the transactions. Saladin v. Mitchell, 45 Ill. 79; Banta v. City of Chicago, 172 Ill. 204; Markham v. Jaudon, 41 N. Y. 235; Richardson v. Shaw, 209 U. S. 365; Don Passes on Stock Brokers and Stock Exchanges, 2nd ed., vol. 1, pp. 180, 182. If a broker faithfully and diligently executes the order of his customer, the customer is bound as principal and becomes indebted to the broker for the amount the broker has advanced in executing the order of the customer. Perin v. Parker, 126 Ill. 201; Hately v. Kiser, 253 Ill. 288; Markham v. Jaudon, 41 N. Y. 235; Don Passes on Stock Brokers and Stock Exchanges, 2nd ed., vol. 1, pp. 182, 218; Campbell on The Law of Stock Brokers, 2nd ed., pp. 41, 46; Meyer on The Law of Stock Brokers and Stock Exchanges, pp. 254, 255, 266. The customer has just as much right to cancel an order given and the broker is just as much obligated to exercise skill and diligence where the customer has canceled to prevent the fulfillment of the order as he would be obligated to fulfill the original order. If before the order to cancel is given the broker has become obligated to a third person, or if the order is given too late to be transmitted to the exchange in the exercise of ordinary diligence, the customer is nevertheless bound and held to the trade as made. Meyer on The Law of Stock Brokers and Stock Exchanges, pp. 273, 274; Don Passos on Stock Brokers and Stock Exchanges, 2nd ed., vol. 1, p. 211; Lloyd v. Silvers (Tex. Civ. App.), 274 S. W. 253. It is also well'settled that the broker has a general lien upon all stocks carried in the customer’s account as security for the debit balance owing by the customer to the broker. Campbell on The Law of Stock Brokers, 2nd ed., p. 17; Meyer on The Law of Stock Brokers and Stock Exchanges, pp. 313, 314; Markham v. Jaudon, 41 N. Y. 235; Richardson v. Shaw, 209 U. S. 365. It was the theory of defendants in this case (and I think they had a right to show, if they could) that the purchase of the Chicago Corporation stock had in fact been made prior to the cancellation of the order for the purchase of the same given by plaintiff; In support of that theory defendants called a witness by whose testimony they endeavored to show the circumstances under which this purchase was made by them. The record shows the following: ‘‘The Court: You don’t think you are going to show that by a clerk in somebody else’s office, do you? “Mr. Lord: I think this is the best evidence that that trade was executed and when it was executed. Here is a man that was right on the floor and got the document at the time. ‘ ‘ The Court: I think that is immaterial. The basis of it is when it was given and when it was canceled, not when it was executed. If they gave it one day and they handled it two or three weeks after, that is their business. “Mr. Lord: Does your Honor hold that whether the cancellation could be or could not be effective is immaterial in this case ? “The Court: I think in view of the circumstances it is. Whether it can or not is a self-serving declaration. You served a written notice as well as a verbal notice that it was canceled, and they are in evidence. They can’t excuse themselves now by coming back afterwards and saying that they couldn’t do it. “Mr. Lord: With all due respect to your Honor, I know you will grant me this permission. I except to the Court’s statement, and at this time I make a motion that a juror be withdrawn in this case. “The Court: Overruled.” To the contention of defendants that these statements by the trial judge in the presence of the jury were prejudicial, plaintiff replies by saying that the evidence defendants offered was wholly immaterial and irrelevant. The evidence was not immaterial on defendants’ theory and was certainly not immaterial if Lundborg’s testimony was true. Lundborg denied that he had given a verbal notice to plaintiff of the cancellation of the order to buy Chicago Corporation shares and expressly denied the evidence offered by plaintiff tending to show that the order for the purchase of the Utility and Industrial shares was conditioned upon the cancellation of the first order. There is a sharp and decisive conflict in the evidence upon this point. The remarks of the trial judge must have disclosed to the jury that he accepted the testimony of plaintiff and discredited the testimony of Lundborg. They gave the weight of the opinion of the judge in favor of the testimony of plaintiff. The effect could not have been much different had he told the jury that the testimony of plaintiff was to be believed, that of the witness for defendants disbelieved. It is hardly necessary to cite cases to the proposition that in this State it is reversible error for a trial judge to express an opinion on an issue of fact in the presence of the jury. A few of the cases which so hold are Andreas v. Ketcham, 77 Ill. 377; Marzen v. People, 173 Ill. 43; Illinois Cent. R. Co. v. Souders, 178 Ill. 585; People v. Lurie, 276 Ill. 630; Artz v. Robertson, 50 Ill. App. 27; Wellman v. Wellman, 191 Ill. App. 514. But the error of the trial court, in my opinion, did not end here. I think it excluded proper and competent evidence that was offered in behalf of defendants. It is defendants’ theory of the case that the order for the purchase of the Utility and Industrial stock was not conditioned upon the cancellation of the order for the Chicago Corporation shares, and upon that theory defendants had a right to show, if they could by competent evidence, that the order of plaintiff to cancel the purchase of the stock of the Chicago Corporation was received by them too late to be made effective through the exercise of diligence on their part. To that end it was important for defendants to show, if they could, that the written notice mailed by them on August 5, 1929, and received by plaintiff on the 6th, which stated that the order for the purchase of the Chicago Corporation stock was canceled, had been sent out by mistake and inadvertence. If the confirmation was in fact mailed through a clerical error (and that is defendants’ theory), it would seem that the legal effect of sending it would not be greater (in the absence of an estoppel which plaintiff disclaims) than the erroneous mailing by one person to another of a receipt for money. It has been held in well considered cases that under such circumstances the true facts may always be explained by parol evidence. Paris v. Lewis, 85 Ill. 597; Starkweather v. Maginnis, 196 Ill. 274; Donner, Childs & Woods v. Sackett, 251 Pa. 524, 97 Atl. 89; Friedman & Co., Inc. v. Newman, 255 N. Y. 340, 174 N. E. 703. There was a sharp conflict in the testimony of plaintiff and of Lundborg with regard to what had been stated about this alleged cancellation, plaintiff insisting that Lundborg had distinctly told him that the Chicago Corporation stock had not been purchased and that the order therefor had been canceled, while Lundborg testified that he only said that he did not think that the stock had been bought and that the stock was then marked up to 69. For the purpose of corroborating Lundborg’s version of the transaction and for the purpose of showing due diligence on their part, defendants offered evidence tending to show the facts with reference to the actual purchase of this stock on the morning of August 5, 1929, on the floor of the stock exchange through the brokerage house of Mitchell, Hutchins & Co. Defendants produced as a witness the order clerk for defendants, who represented them on the floor of the Chicago Stock Exchange, and proved that his duties there were the giving of orders received by him over the telephone from his firm to brokers on the floor for execution and the receiving of original reports of execution of trades of his firm from the brokers on the floor and reporting the same to his firm. He testified, identifying the execution slip in the handwriting of Shimmin, the expert specialist who handled the transaction, showing the purchase of the Chicago Corporation stock for plaintiff on August 5. It is in evidence as defendants’ exhibit 6. The witness was asked by defendants’ counsel when he first saw the document, from whom he received it, and what it was, as well as other questions tending to disclose the actual transaction and to prove facts which, if true, would show that it was impossible for defendants to make effective the attempted cancellation order which plaintiff gave. These questions were objected to by plaintiff, and the objections were sustained by the court. There was much evidence of the same kind excluded. The court refused to let Lee, the order clerk for defendants, tell the time that he had ’phoned plaintiff’s order, which was No. 242, to the floor of the Chicago Stock Exchange and to let the same witness tell what he said to another employee in telephoning the order there. The court refused to let Lee tell of a conversation he had with Lundborg on the morning of August 5 concerning the filling of plaintiff’s order. This evidence was ruled out upon the theory that it was not admissible as not having been made in the presence of plaintiff. Conversations between Lee and Walter Tholl, the representative of defendants on the floor of the Chicago Stock Exchange, were also excluded, although defendants offered to show by Lee that when the order was received it was telephoned by him to Tholl and that the number of the order was given to Tholl as 242. Conversations between Tholl and Shim-min, the specialist on the floor of the stock exchange, with reference to the transaction were also excluded. Defendants offered to prove by Lee that after the conversation with Tholl he placed the order in a box for cancellation and asked questions tending to disclose what the practice was in the office of defendants in handling such cancellation orders and how the notice was sent out to customers, but this was objected to by plaintiff and the objection was sustained by the court. Defendants then offered to show that after telephoning the cancellation order to their representative upon the floor of the stock exchange, Lee wrote a large letter “C” across the face of the order and placed it in the cancellation file; that under the regular practice of carrying on the business of that transaction, immediately after a cancellation order was entered the original order was taken out of the pouch where all open or unfilled orders were kept; that a large letter “C” was marked upon the orders to be canceled and were placed in the cancellation pouch; that these cancellations remained in this pouch until the end of the day when they were taken out by another employee and cancellation confirmations were prepared by defendants and mailed out to the customers. Defendants further offered to prove by this witness that after having been informed by Tholl that it was too late to cancel the purchase of 100 shares of Chicago Corporation stock he failed to take the order out of the cancellation bin and remove the letter ‘ ‘ C ” therefrom, and that it was due to his oversight in failing to do these things that the confirmation of the cancellation was prepared by other employees of defendants and mailed to plaintiff on the night of August 5, 1929. Plaintiff objected, and the objection was sustained by the court. Defendants then asked questions tending to disclose when Lee had first received notice of the price at which the 100 shares of Chicago Corporation had been bought for plaintiff’s account and, upon objection, offered to prove by the witness that he first learned of such price on the morning of August 6, 1929, and that he was then informed by Tholl that the order had been filled at $66 a share, but the plaintiff objected and the objection was sustained by the court. Tholl was produced as a witness "and questions asked him about the same matters were objected to, and the objections were sustained. The check of defendants to the order of Mitchell, Hutchins & Co. for the sum of $6,600, drawn on the Continental Hlinois Bank & Trust Co., and marked as having been paid through the Chicago Clearing House, was offered and received in evidence. The right of defendants to submit evidence as to any acts which in fact took place with reference to the execution or cancellation of these orders and also as to any verbal statements or admissions which accompanied such acts, is established by the cases, and I do not understand that plaintiff in his brief contends otherwise. The cases which so hold are many and well considered. Delaware & Hudson Canal Co. v. Mitchell, 92 Ill. App. 577; Prussian Nat. Ins. Co. v. Empire Catering Co., 113 Ill. App. 67; Benedict v. Dakin, 148 Ill. App. 301; Michigan Cent. R. Co. v. Gougar, 55 Ill. 503; Matzenbaugh v. People, 194 Ill. 108; Hoffman v. Chicago Title & Trust Co., 198 Ill. 452; G-reenleaf on Evidence, 16th ed., vol. 1, sec. 184-c; Jones on Evidence, 2nd ed., secs. 944, 952, 1235 and 1240. I think the court committed reversible error in excluding this evidence. Defendants in their original brief in this court, anticipating the reply of plaintiff, argued quite fully that there was no estoppel of defendants to deny that plaintiff’s order to purchase 100 shares of Chicago Corporation stock was canceled by defendants. They also pointed out that the issue of estoppel had not been raised by the pleadings of the case and therefore could not be urged. The brief of plaintiff replied in the following language: “We confess our inability to understand Appellants’ argument with reference to the so-called estoppel. There is no element of estoppel in this case. The pleadings set forth the claim of Appellee that he requested Appellants to buy for him 200 Utility & Industrial shares; that he tendered to them the amount remaining unpaid on account of such purchase and demanded their surrender, but that they refused to deliver such shares to him. ... We are unable to follow Appellants ■ argument that in his declaration Appellee should have specifically pleaded an estoppel. None is claimed, and liability is not predicated on cm estoppel but upon a conversion of Appellee’s property. ’ ’ Aside from the fact that the theory upon which a majority of the court decides this case is thus expressly disclaimed, it seems to me that the opinion overlooks the well settled law that the facts out of which an estoppel is alleged to arise must be established by a preponderance of the evidence (Stanley v. Marshall, 206 Ill. 20); that proof of such facts constituting a claim to estoppel must be of the clearest and most satisfactory character (Preble v. Conger, 66 Ill. 370); that where the complainant party relies on an estoppel as the basis of his claim, the alleged estoppel must be established by clear, precise and unequivocal evidence (Coal Belt Elec. R. Co. v. Peabody Coal Co., 230 Ill. 164). The law, I think, is equally well settled that if a complaining party relies upon an estoppel to establish his case, he must specifically plead it; that if the matter of estoppel does not appear in the declaration, the plaintiff must, by a replication to the plea, expressly show such matter and that he relies thereon. Smith v. Whitaker for use of Jonas, 11 Ill. 417. That distinguished authority, Chitty on Pleading, states the rule (15 Amer. Ed., vol. 1, p. 603): “If the matter of estoppel do not appear from the anterior pleading, the replication must expressly show such matter and rely thereon and there must be an appropriate commencement and conclusion to the replication; or by replying an estoppel without relying upon it, the advantage of the estoppel as such may often be lost.” At page 509 the same author says: “Matter of estoppel should be specifically pleaded as such. ’ ’ I have set forth my views quite at length because of what I conceive to be the great importance of this case to this commercial community and because I think the theory upon which the majority opinion proceeds is fundamentally wrong.