75 Misc. 2d 450 | N.Y. App. Term. | 1973
Lead Opinion
Plaintiff a stock brokerage firm, commenced this action to recover $506.81 representing the damages allegedly sustained by it on its sale of certain securities ordered by defendant and not paid for. The amount sought represents the difference between $25,375 purchase price of the securities bought by plaintiff for defendant’s account at defendant’s request and the $24,868.19 net price received by plaintiff when it sold the securities. Defendant does not deny ordering the securities at the price claimed but asserts that the transaction was to be on a C. O. D. basis with payment to be made for the securities only on their physical delivery to defendant or his bank. Scrutiny of the record reveals no express testimony by defendant that the purchase order he placed with plaintiff was conditioned upon the transaction being consummated on a 0. O. D. basis. Viewing defendant’s testimony and that of plaintiff’s witnesses as a whole, there appears at most to have been an understanding that plaintiff would try to accommodate defendant’s request, but that failing such accommodation the transaction would simply be a regular trade. There is no basis for a finding on this record, that plaintiff agreed to condition the^ transaction on a C. O. D. basis. Further, there was no proof óf^any^written objection by defendant to the confirmation sent to him'by .plaintiff, which confirmation did not indicate any special mannei'-of handling the sale. It is also clear that the securities purchased by plaintiff for defendant’s account were delivered by plaintiff todefendant within the ambit of section 8-313 (subd. [1], par. [c])of the Uniform
Plaintiff’s sale of the security on the open market at the best price obtainable was entirely proper since defendant’s tender of the full purchase price was a conditional tender requiring immediate, reciprocal delivery of the shares. This is not such an offer as puts plaintiff in the position of having failed to mitigate damages. The stockbroker’s commission on such resale is under these circumstances a proper charge against the defaulting purchaser.
The judgment should be reversed, with $30 costs, and judgment directed for plaintiff as prayed, for in the complaint, with costs.
Dissenting Opinion
(dissenting). I concur in part and dissent in part from the decision of the majority. As there was no express testimony by defendant that his order of the securities from plaintiff was, at the time of the order, conditioned upon the transaction being consummated on a C. O. D. basis and, in view of plaintiff’s denial of such an agreement, the dismissal of the complaint was improper. Further, there was no proof of
However, the trial testimony also reveals plaintiff’s failure, indeed its refusal, to mitigate damages. As the majority properly observes, “ The relation between the customer and the broker, after the excution of the customer’s order, became one of debtor and creditor as to the amount advanced by the broker, and the commissions, and pledgor and pledgee as to the stock itself.” (Pistell, Dean & Co. v. Obletz, 232 App. Div. 313, 316 [4th Dept., 1931].) It is true that one of the remedies available to the broker-creditor upon the buyer’s default in payment, is to resell the stock as an agent for the buyer and thereafter recover as damages the difference between the contract price and the net amount received on resale. It is equally true that the buyer, as pledgor, had the right “ to redeem the stock from the pledge by paying his debt”. (Pistell, Deans & Co. v. Obletz, supra, p. 316.) Notwithstanding defendant’s failure to effect payment within the five-day period specified in Federal Beserve Board regulations, plaintiff did not resell the stock until 12 days after the due date for'payment. Standing uncontradicted in the record is defendant’s assertion that he offered to pay the full purchase price, and that offer continued to the date of the .sale by plaintiff for defendant’s account. Indeed, defendant assertedly made an actual tender of the total purchase price by bank teller’s check on the very date plaintiff resold the stock, which was declined, plaintiff demanding a certified check or an escrow arrangement as the only alternatives to a liquidation of defendant’s position. Plaintiff’s proceeding with the sale on the open market, at a certain loss, was improper under the circumstances. As pledgee, it unreasonably prevented redemption of the stock from the pledge. As creditor, it failed to mitigate its damages (see 13 N. Y. Jur., Damages, § 27 et seq). That plaintiff should also be awarded, as damages herein, commissions “ earned ” for effecting the unnecessary sale, seems, under the particular circumstances presented, to be unconscionable. The award of any more than nominal damages to plaintiff is unwarranted. Accordingly, I vote to reverse the judgment on appeal without costs and to direct judgment for plaintiff in the amount of $1, with costs.
Lupiano and Quinn, JJ., concur in Per Curiam opinion; Frank, J. P., dissents, in part, in memorandum.
Judgment reversed, etc.
