206 Mass. 275 | Mass. | 1910
This is a suit in equity to recover securities (or the value of them) alleged to have been deposited with the defendant, a stockbroker, for the purpose of carrying on that species of gambling referred to in R. L. c. 99, § 4. The cause was sent to a master, who found that the plaintiff at the solicitation of one Smith, an employee of the defendant, deposited the bonds in question with the defendant as security for stock transactions; that Smith ordered purchases and sales of stocks without personal directions from the plaintiff, only occasionally reporting to him what was being done; that shares of stocks aggregating large amounts in value were bought or sold from time to time, monthly statements of which were sent to the plaintiff.
The first question raised is whether there was evidence sufficient to warrant a finding that the plaintiff intended that there should be “ no actual purchases or sales ” of stocks, and that the defendant “ had reasonable cause to believe that said intention existed ” in the sense in which these words are used in R. L. c. 99, § 4. The master found that the plaintiff had an affirmative intention that actual purchases and sales should not be made, and a judge of the Superior Court refused to override this finding. A reading of the evidence reported touching this matter convinces us that this conclusion of the master was amply warranted. All the circumstances of the transactions go far toward establishing such intention. The testimony of the plaintiff tends in the same direction. The master saw the witnesses and heard their oral testimony, and there is no foundation for argument that his decision is plainly wrong. Therefore it must stand. For the same reasons the finding that the defendant had reasonable cause to believe that such intent existed cannot be reversed. Holt v. Silver, 169 Mass. 435. Joslin v. Goddard, 187 Mass. 165, 167. The first three exceptions taken by the defendant to the master’s report were overruled rightly.
It becomes necessary to determine whether upon all the evidence the defendant ought to prevail on the ground that he made “ an actual purchase or sale of said securities ” in accordance with R. L. c. 99, § 4. This was an affirmative defense set up by the defendant in his answer, and the burden of proving it rests upon him. Lonergan v. Peck, 136 Mass. 361, 364. Sayles v. Quinn, 196 Mass. 492. Wylie v. Marinofsky, 201 Mass. 583,
The result of these findings is that there were numerous transactions in Massachusetts in which the defendant had no certificates of stock in his possession or control to correspond with or meet the alleged purchases or sales on account of the plaintiff,
The method of settling balances on the stock exchange through the medium of a clearing house is recognized as a commercial custom and convenience. Breck v. Barney, 183 Mass. 133. Dillaway v. Alden, 88 Maine, 230. But that is not decisive of the question now presented. The defendant undertakes to show an “ actual purchase or sale ” of definite “ securities ” in order to make out his defense under the statute. In determining precisely the sense in which these words were used by the Legislature, it is important to bear in mind that the statute “ is intended to suppress a well-known species of gambling. ... It is intended to suppress that gambling by putting such restraint upon those who are tempted to indulge in it, or to assist others in indulging in it, as can arise from a liability to pay back money received in the business.” Corey v. Griffin, 181 Mass. 229, 232. Wilson v. Head, 184 Mass. 515, 518. Brown v. Mutual Stock Co. 198 Mass. 524. The meaning of the words “ actual purchase or sale ” is made somewhat more plain by the language of R. L. c. 99, § 6, to the effect that in actions like the present “ settlements . . . without the completion of the purchase or sale of the securities ” shall be prima facie evidence of an “ intention that there should be no actual purchase or sale.” While “purchase or sale ” standing alone and construed with technical strictness may mean in many connections a completed and consummated transfer of title,
Reliance is placed by the defendant on Bearse v. McLean, 199 Mass. 242. The question presented in that case was whether a general finding of fact by the Superior Court that there had been actual purchases or sales within the meaning of the statute should be reversed as unwarranted by evidence. That decision only went to the extent of holding that the evidence in support of the finding of fact was not quite so attenuated as to justify an appellate court in pronouncing it plainly wrong in view of the strong presumptions which always exist in favor of such findings. Requests in that case which might have raised points somewhat analogous to those here presented related to the statute of frauds or became immaterial in view of the findings of fact. The case is far from being an authority in support of the defendant’s contention.
Although there was evidence that in a number of transactions the defendant did have in his control certificates for the stock purchased for the plaintiff’s account, yet as to many there either was no such evidence or there was definite evidence that he did not have them. The whole series of dealings based upon the bonds deposited with the defendant was thus tainted with illegality and the plaintiff is entitled to recover. Way v. Greer, 196 Mass. 237, 245. Kennedy v. Welch, 196 Mass. 592, 595. Embrey v. Jemison, 131 U. S. 336.
It follows that -the decree overruling the defendant’s exceptions numbered one, two and three, and sustaining his exceptions numbered four, five and six must be reversed and that a decree must be entered overruling all the exceptions, that the decree overruling the exceptions to the master’s supplemental report should be affirmed, that the decree dismissing the bill should be reversed, and that a decree should be entered in favor of the plaintiff for $2,850 with interest from the bringing of this suit and for costs.
So ordered.