137 Misc. 259 | City of New York Municipal Court | 1930
The action is to recover damages for the conversion, by defendants, who are stockbrokers, of certain of plaintiff’s securities deposited by him with the defendants, the conversion being the sale by defendants of such securities without notice to plaintiff. The complaint alleges that the defendants agreed not to sell the securities unless upon plaintiff’s failure, after notice by defendants, to put up sufficient margin to cover the drop in the market of the stocks purchased by plaintiff through defendants. In their
There was testimony on behalf of plaintiff that on three occasions prior to October 29, 1929, the defendants notified plaintiff to put up sufficient to cover his margin. No evidence was offered by defendants to contradict this testimony, their contention being that under the contract they were not obliged to give notice, and they also insist that, in any event, conditions in the stock market on the day of the crash were such that it was not humanly possible to give notice.
Plaintiff testified that on the morning of October 30, 1929, which was the day after he was sold out, he read in a newspaper that “ all the stocks went down ” and that he immediately made, out his check for SI ,000, and told his cousin to take it to the defendants. The defendants also urge that this conduct on the part of the plaintiff shows that he was not expecting any notice from them. The difficulty with this contention is that it is hard to reconcile it with the testimony of Paone, the representative of the defendants with whom the plaintiff had his dealings and who, the defendants concede, had authority to conduct the transactions. Paone, who was called by the defendants, testified: “ Q. Did you at the time or at any time subsequent thereto promise to notify him when more margin was required? A. In a general way all my clients I told them I would notify them when I am notified by the firm. Q. Did you promise him specifically you would do that? A. Yes and no. Q. Tell us what you mean by that? A. I mean this: If the decline in the market is enough that the margin clerk gave me a list of the clients that shows shortage in margin I call them up for the requirement. Q. And you did that with Mr. Disanza on several occasions? A. Yes, sir. Q. And on the sale of October 29th you didn’t call him? A. No.”
In Rosenthal v. Brown (247 N. Y. 479, 485) it was held: “ If the broker waives the right to exact strict performance, and gives time and indulgence to the customer, he cannot recall this waiver at his own option without giving notice to the customer, to the end that the latter may have an opportunity of protecting the account. Good faith will not permit the 'broker, after having once waived the right to close the account without notice upon default of payment at the prescribed time, suddenly to stop short and insist upon closing the account when the other party is not prepared to put. up the
Under these decisions, it seems to me it was the defendants’ duty to adduce evidence, if they could, (1) to rebut plaintiff’s testimony of the previous notices, or (2) to show, if they were able to do so, that they had retracted their promise, if they had made one, not to insist upon the right to sell without notice.
Motion for reargument granted and, upon such reargument, the motion to set aside the verdict and for a new trial is granted, costs to abide the event.