146 F. 625 | 6th Cir. | 1906
delivered the opinion of the court.
The plaintiffs below were a firm of stockbrokers engaged in business in New York. The action was brought to recover an alleged loss arising upon a sale and purchase of Northern Pacific stock by direction of a firm of stockbrokers doing business at Memphis under the firm name of Schloss, Miller & Malone. The defendant W. J. Chase is sued as the undisclosed principal for whom the Meni-
Jacob Berry & Co. had no reason to suppose that Schloss, Miller & Malone were not dealing for themselves, or, if they did, they had no knowledge of the undisclosed principal until after they had realized the large loss for which they sue. But the law is that, when there is an undisclosed principal behind, he may be made liable, although he was never given credit by the seller, provided the circumstances are not such as to make such a result unjust or'inequitable. But one who has dealt with an agent cannot upon discovery of an undisclosed principal hold both the agent and the principal liable. He must choose between the two, and an election once made he must abide by it. Mechem on Agency, §§ 695, 696, 698, 700; Fradley v. Hyland (C. C.) 37 Fed. 49; Tuthill v. Wilson, 90 N. Y. 423; Silver v. Jordan, 136 Mass. 319; Ahrens v. Cobb, 9 Humph. (Tenn.) 643; Curtis v. Williamson, 102 B. L. R. 57; Smithurst v. Mitchell, I El. & El. 622.
At the close of the plaintiffs’ evidence, and after the defendant, W. J. Chase, had testified, but before the defendant had notified the court of the conclusion of his evidence, the trial judge stopped the case, and instructed the jury to return a verdict for the defendant. Exceptions were duly reserved. The ground upon which the instruction was based was, as stated by the trial judge in his charge, as follows:
“Two questions present themselves to my mind that bar the plaintiffs’ right of recovery. The first is that this stock was not bought at the direction of Mr. Chase. Schloss, Miller. & Malone directed the buying of that stock at their motion. The second is, it is a Tennessee contract. Mr. Chase made his*627 contracts and agreements here with Hogan Sc Co., and their contract was assumed or transferred by some process to Schloss, Miller & Malone. So far as Mr. Chase is concerned, he had no further connection with any brokers, or any contracts except to sell that stock, and if they sold it themselves, and it went to New York, it would be a New York contract between these brokers and the New York brokers, but as between Mr. Chase and the New York brokers it is a Tennessee contract, and, being a Tennessee contract, all that is necessary under the law of Tennessee to avoid liability is to show by the proof that one of the parties to the transaction treated it as merely dealing in futures, in which the party bought or sold, but was not to deliver or receive, and in this ease I shall hold the plaintiff has no right of action. That being so. I direct you, gentlemen of the jury, to return a verdict for the defendant.”
For the plaintiffs in error, it is now insisted that the court erred in taking the case from the jury, and that there was some substantial evidence upon which the jury might reasonably have found that Schloss, Miller & Malone were authorized to buy as they did 25 shares of Northern Pacific stock on May 9, 1901, for account of W. J. Chase, and also some evidence that the contract was not a Tennessee but a New York contract. An attentive consideration of the evidence leads us to an agreement with this contention.
In passing upon a motion to instruct a verdict it is not the province of the judge to weigh the evidence. In Mt. Adams v. Lowery, 74 Fed. 463, 477, 20 C. C. A. 596, we gave elaborate consideration to the difference between the function of a judge when acting Upon a motion for a new trial because the verdict is against the evidence and a motion to instruct for want of evidence. In the latter case we said:
“His duty is to take that view of the evidence most favorable to the party against whom the motion is made — to direct a verdict — and from that evidence. and the inferences reasonably and justifiably to be drawn therefrom, determine whether or not, under the law, a verdict might he found for the party having the onus. If not, he should, upon the ground that the evidence is insufficient in law, direct a verdict against that party. That there is a mere scintilla of evidence is not enough to prevent the withdrawal of the ease from the jury. Such evidence is insufficient in law because so insufficient 'in fact.”
This has been many times reaffirmed and applied by this court. Travelers’ Ins. Co. v. Randolph, 78 Fed. 754, 24 C. C. A. 305; Standard Acci. Co. v. Sale, 121 Fed. 666, 57 C. C. A. 418, 61 L. R. A. 337; Shugart v. Atlanta, etc., Ry. Co., 133 Fed. 505, 66 C. C. A. 379.
If we look to the evidence tending to show that Schloss, Miller & Malone had authority from the defendant to sell and buy 25 shares of Northern Pacific stock on the Exchange in New York for and on account of the defendant, Chase, we find: (1) That either Hogan & Co., stockbrokers at Memphis, or Schloss, Miller & Malone, who succeeded to their unfinished trades or deals with or in behalf of Chase, did sell on or about March 30, 1901, 25 shares of Northern Pacific stock at 94 and a fraction. (2) Whether the alleged sale of such shares were made by Hogan & Co. or by Schloss, Miller & Malone is not clear. So far as it is of importance, there was a question for the jury as to whether the sale was made by the one or the other. There was evidence that Chase sold to Hogan & Co. 25 shares of that stock at 94 and something. This Chase testified to. He also swore
“A. W. I-Iogan & Co.: Please transfer open trades and ledger balance to tire firm of Schloss, Miller & Malone without additional cost.
“Yours truly, W. J. Chase.”
From this the jury might infer that whatever deals or trades were unclosed on books of Hogan & Co., and .whatever ledger balance there was affecting him, should be transferred to and carried out by Schloss, Miller & Malone. That Hogan & Co. did sell 25 shares of Northern Pacific stock short on account of W. J. Chase is the positive testimony of the surviving member of that firm. Mr. Schloss, of the firm of Schloss, Miller & Malone, was asked:
“At what price originally did Mr. Chase through you sell this stock ?”
Pie answered:
“Well, he did not sell it through us. He sold it through Hogan & Co., and we acquired the short side of it by instruction and consent of Mr. Chase. It was in the neighborhood of- 94 or 95. Whatever that amount was, was taken over at the same figures by Schloss, Miller & Malone.”
“Q. In this transaction, did you liavo any understanding with him, or any agreement as to when* the orders would be placed or filled? A. Mr. Chase would have to stale where ho wanted the order filled, or we could not fill it. That goes without saying. We were following his instructions. Q. You had instructions to fill it in New York? A. We had certainly had in-si ructions to fill in New York. That goes without saying. We were following his instructions.”
The same witness stated that on May 8th and 9th there was a great Hurry in Northern Pacific stock, and that on the 8th, after close of New York market for the day, he called upon Chase to make some settlement. and that he said he “would arrange it the next morning, and would either make delivery or put up sufficient money to guaranty us against loss.” This he says he did not do, and that he could not be found the next day, on which day the stock went up as high as 1,000, and whereupon plaintiffs called upon them to put up $20,000 immediate!}’. They being unable to find Chase, they wired plaintiffs to pay as high as $350 for 25 shares, and that plaintiffs obtained the necessary shares at $325. That it is not made clear whether Malone was speaking from his own knowledge of Chase’s original order to sell given to Hogan & Co., or from entries on the books of that concern, or from his knowledge of the usual course of their business, may be conceded. His examination, and above all his cross-examination, does not seem to have been so shaped as to clear this up.
It may therefore he conceded that the case for the plaintiffs as to Chase’s original direction to 1 logan & Co., was weak. The matter was somewhat strengthened by the evidence as to what occurred on May 8th, when he was called upon to make a settlement. Then he promised 1o either deliver the stock, or make a deposit to guaranty Schloss, Miller & Malone against loss. From this, in the absence of other or more credible evidence, it might be inferred by the jury that the sale theretofore made on the New York market had been originally authorized by him. If the jury should infer from all of the evidence that he had directed a sale of 25 shares of Northern Pacific stock to be made on his account in New York, they might also infer that such sale was to he made under the rules and regulations of the stock market of that city, in which case the contract would be a New York contract, and not a Tennessee contract. If the sale was to be made in New York, and the contract was valid under the law of New York, plaintiffs’ action would be governed by the law of that state, and not the law of Tennessee where the original order was given. So, too, if the transaction was of a character usually and customarily executed through New York stockbrokers and this was understood by Chase, Schloss, Miller & Malone would impliedly be authorized to make the trade through stockbrokers selected by them in New York.
The question as to whether the assignee, Darwent, is a real or fictitious person, and whether if he be a real person he is not acting in behalf of Schloss, Miller & Malone as the real plaintiff, is not so clear as to justify at this stage of the case a dismissal of the suit as one not really between citizens of different states. Upon another hearing the matter may be looked deeper into, and if it appear then that Schloss, Miller & Malone are the real plaintiffs, and the assignment a mere device to give the federal courts jurisdiction, the court should then dismiss the suit as one not within its jurisdiction.
Judgment reversed, and new trial awarded.