291 Mass. 264 | Mass. | 1935
This is an action of contract with common counts for money had and received and counts for breach of contract. The answer of the defendants is a general denial. The case was tried to a jury. At the close of the evidence the judge directed a verdict for the plaintiff in the sum of $1. To this ruling both the plaintiff and the defendants excepted. The defendants waive their exceptions if the plaintiff's exceptions are overruled.
The plaintiff's “concern is directed to sustain the plaintiff’s exceptions on the question of damages.” During the trial the plaintiff excepted to the admission of certain evidence and to the refusal to give certain instructions. The witnesses for the plaintiff were L. Guy Dennett (hereinafter called Mr. Dennett) and his son, Ellis H. Dennett. On direct examination Mr. Dennett testified, in substance, that he was the plaintiff’s brother and had been a lawyer for forty years. He first went to the defendants on
On October 18, 1929, the defendants sent the plaintiff
The witness testified that he consulted an attorney who sent a letter dated November 1, 1929, addressed to Gray and Wilmerding, which in part reads: “We understand that Mr. Dennett had previously notified you that he was proposing to take up this stock and would pay for the whole of it if you required it. There was no agreement or understanding at any time that any particular amount of margin should be kept for this account, but he complied with your request for payments as they were made from time to time. Under such circumstances, unless you are prepared to deliver this stock on the payment of the balance that is due on the account, we shall be obliged to protect our client’s rights by such measures as may be necessary. We also want the Electric Bond & Share stock. You have given no information about it. Perhaps in the confusion of the day you did not realize that this stock was in this account. We would like your prompt answer.” The defendants replied to the attorney’s letter on the same day by a letter which stated that the plaintiff owed the defendants $2,284.72 on account, against which the total value of the securities therein at the close of business on October 29 was $2,495, which was not a sufficient margin, and that the account was sold out at the opening on October 30, 1929. On November 6, 1929, the plaintiff’s attorney wrote to the defendants restating what was said in the letter of November 1, 1929, and making certain inquiries as to the time of day the stocks were sold. On November 7, 1929, the defendants replied to this letter as
Later, the witness ordered the defendants to buy ten shares of Electric Bond & Share, and received a confirmation slip dated November 26, 1929, from the defendants. This stock cost $772.50 and it changed the credit balance of $488.38 to a debit balance of $284.12, from which interest was deducted, making a final debit balance of $282.74 which was paid by check on December 2, 1929. The certificate for the said ten shares was received by letter of transmittal dated December 10, 1929, and was the same certificate the witness had previously deposited as margin with the defendants. October 31, 1929, was Thursday. The stock exchange was closed the following Friday and Saturday and reopened on Monday, November 4, 1929. It was also closed on November 5 and 9. Before the trial it was stipulated and agreed "that the value of American Superpower and Electric Bond & Share common stock, at the times concerned in this action, shall be taken from the Wall Street Journal.” It was stipulated that American Superpower stock had sold at varying prices between October 15 and November 15, as low as $15 on November 13, and as high as $29.75 on November 4, and that Electric Bond & Share Company stock had sold as low as $50.25 on November 13 and as high as $91.75 on November 4. These values taken from the Wall Street Journal were admitted but subject to the objection and exception of the plaintiff as to all figures prior to October 30, and subsequent to October 31, but the plaintiff did not question the accuracy of the figures. For the reason that it is not in dispute that the plaintiff
On principles of rescission, the plaintiff contends that he is entitled to recover back the amount he had advanced to the defendants. His right depends upon the contract. His argument is predicated on the theory that the defendants in wrongfully selling the plaintiff’s securities were guilty of such a repudiation of the contract as to entitle the plaintiff to rescind and recover the consideration paid by him. We assume for the purpose of discussion that the sale of the securities was wrongful. It is true that where margin is advanced to a broker and the customer’s orders to buy are not executed at all or are improperly executed, as in the case where the broker sells his own securities to the customer, or when the broker is guilty of actual or constructive fraud, the customer may rescind the agreement and recover back his margin. Todd v. Bishop, 136 Mass. 386, 395. Crehan v. Megargel, 235 Mass. 279, 283. Wisbey v. Alan Shepard & Co. Inc. 268 Mass. 21, 22. Quirk v. Smith, 268 Mass. 536, 540. Plumer v. Houghton & Dutton Co. 281 Mass. 173, 175. In the case at bar the plaintiff does not contend that the defendants obtained by fraud the money with which his account was opened, nor that the defendants did not make actual purchases of securities which were carried on the plaintiff’s account. As the order was properly executed the plaintiff has no right to rescind on account of any acts done by the defendants up to that time. Harris v. Friedman, 245 Mass. 479, 482. Thereafter the defendants held the stock in the plaintiff’s behalf, the beneficial ownership being in the plaintiff and the legal title in the defendants. Compare Palley v. Worcester County National Bank, 290 Mass. 501, 508. If sales of the plaintiff’s securities were thereafter made by the defendants in violation of the agreement under which they were held, the plaintiff is remitted
The plaintiff’s next contention is that he is entitled on the facts to more than nominal damages and that the trial judge misinterpreted the rule of Hall v. Paine, 224 Mass. 62; S. C. 230 Mass. 62. The rule in this Commonwealth is well settled that in circumstances as in the case at bar the customer is entitled to nominal damages only when he could have purchased stocks to replace those wrongfully sold, within a reasonable time after such sales at substantially the same prices as those for which the sales were made. Hall v. Paine, 224 Mass. 62, 65. Stewart v. Johnson, 252 Mass. 287, 289. In the case at bar the accuracy of the figures determining the value of the stock sold and covering a reasonable period after the plaintiff’s brother received notice, on November 1,1929, of the sales, is not controverted. These figures show that the stock could have been replaced at prices below those at which the wrongful sales were made. The case at bar is governed by the above stated rule. The plaintiff argues that the rule works a hardship on the innocent party, since the latter may not be fully compensated in damages if he replaces stock at a price in excess of the price at which the stock was wrongfully sold. The plaintiff made no purchase of stock at any price until almost a month after his brother had knowledge of the wrongful sales, at which time the order for the purchase of ten shares of Electric Bond & Share was given. If the stock had been replaced at a higher price immediately after the sales and the price had fallen thereafter, a stronger case for special damages would have been made out. See Hall v. Paine, 224 Mass. 62, 69. He could have placed himself in the position he would have been in had there been no sale of his securities. In the absence of such evidence the plaintiff is entitled to nominal damages only, as the trial judge ruled. Papadopulos v. Bright, 264 Mass. 42, 47. The fact that, upon the purchase of ten shares of Electric Bond & Share Company to replace those sold, the defendants delivered the same certificate which they had received from
We have considered all the points argued by the plaintiff. It results that the plaintiff’s exceptions are overruled. The defendants’ exceptions are therefore waived.
So ordered.