184 N.Y. 121 | NY | 1906
This action was brought to recover a balance alleged to be due upon a stock transaction in which the plaintiffs acted as stockbrokers for the defendant.
The plaintiffs on April 21, 1900, bought stocks for the defendant, as his brokers, without requiring the advance of any margin by him and carried the same for him for several months when they requested the defendant to receive the shares so purchased and pay the purchase price thereof and their commissions. He did not comply with this request and thereafter, under date of August 8, 1900, the plaintiffs sent to the defendant a letter, the only portion of which material to this appeal is as follows: "Inasmuch as the stock has not yet been sold we wish to give you a further opportunity to take it up or to supply us with sufficient margin to carry it if you so desire. If, however, you do not make suitable arrangement in this respect before Monday next (August 13) we shall sell this stock for your account and hold you responsible for the loss."
No further or other notice of the intended sale was given. On August 13, 1900, the stocks were sold by the plaintiffs "on the curb," that is to say, in the roadway near the sidewalk in Broad street in the city of New York, where brokers gather and deal in securities which are not listed at the New York Stock Exchange. The sale resulted in a loss with which the plaintiffs sought to charge the defendant in this action. The trial judge ruled that the amount of the plaintiffs' recovery was not to be reduced by reason of any irregularity in the notice of sale or by any irregularity in the sale itself; to which ruling the defendant excepted. Exception was also taken by the defendant to the refusal of the court to submit *124 to the jury the question of the market value of the stock and to the refusal to submit the question as to what was the highest market value between August 13 and September 15, 1900. The plaintiffs recovered a verdict for the whole amount claimed.
In this case, although the brokers advanced the whole of the amount necessary to purchase the securities instead of only a percentage thereof (which has come to be commonly known as a margin) the relation between them and their customer was that of pledgees and pledgor, as in Markham v. Jaudon (
But it is suggested that the defendant was not entitled to any notice of sale whatever, because by his answer and upon *125 the trial he took the position that the stocks were purchased under an arrangement whereby the plaintiffs were bound to sell them for the defendant's account, after carrying them a few days, when instructed to do so; that the defendant ordered them to be sold within three days; and that the plaintiffs neglected to comply with the order, by reason of which the defendant sustained damage to the amount of $525. The jury found against the defendant on this claim, but it is not perceived that there is anything in it which precludes the defendant from insisting that if the plaintiffs were carrying the stocks for him under his agreement to pay for them when required, as the plaintiffs asserted was the fact, they could not lawfully sell the stock without notice.
The sale "on the curb" without notice was clearly a conversion of the pledged stock. "For a conversion of the pledge, the pledgee was liable for the damages sustained by the defendant, but whether they would equal the amount of the claim would depend upon the facts developed." (Gruman v. Smith,
CULLEN, Ch. J., O'BRIEN, HAIGHT, VANN, WERNER and HISCOCK, JJ., concur.
Judgment reversed, etc. *126