275 F. 438 | S.D.N.Y. | 1921
The plaintiff says that he means to sue in conversion and on contract; that from time to time he delivered some $13,000 in cash and $15,000 in securities, as margin to a speculative account, which he opened with the defendants, who were his brokers; that they accounted with him periodically, and in the accounts professed to have executed his orders; that on April 11, 1921, when he came to change the account upon their demand for further margin, the defendants were very slow in delivering to the new broker some of the securities which should have been in the account; that he later learned that in the case of $4,-000 par value of certain bonds, which they should have kept unsold, the actual bonds delivered to the new broker were not the same as those delivered by him, but that his bonds had been sold and others substituted when the account was changed. In the case of some of the securities alleged in the accounts to have been purchased, a former employee of the defendants swears that to his knowledge the defendants never bought or held -the securities for the plaintiff, as they should, but made only book entries.
From these facts he suspects that the defendants never did buy and sell any of the stocks which he ordered, and, if so, they had no right to apply any part of his margin to their own use to meet any losses. I
On the other hand, it is impossible for the customer to state his cause of action without that information. He must show that when the brokers sold or credited themselves with any of the margin, they had in fact not executed those orders upon which the losses depended which were their justification. It is entirely impossible for him to allege which of the purchases or sales which they reported to him they had not executed, unless he learns it from them. Yet in conversion or in an action for money had, he must show each several wrongful application of his property on'which he means to rely. That is not matter of damages, but of the very cause of action.
Now it may be that the plaintiff has stated enough to justify a bill in equity for an accounting; he has shown the fiduciary relation and several instances of misfeasance. Yet he is not fo.r that precluded from suing at law, and in his action he is entitled to all the usual procedure. I can see no reason to vacate the order, and much reason to allow the examination. However, in deference to Ex parte Fisk, supra, I think the order should be modified to prevent the use at the trial of any of the evidence procured.