Fuller v. Municipal Telegraph & Stock Co.

| N.Y. App. Div. | Jan 18, 1907

Kellogg, J.:

The manner in which the business was transacted at the so-called broker’s office at Kondout, and at the defendant’s main office at Albany, is not materially different from that described in Haight v. Haight & Freese Co. (112 A.D. 475" court="N.Y. App. Div." date_filed="1906-04-20" href="https://app.midpage.ai/document/haight-v-haight--freese-co-5198501?utm_source=webapp" opinion_id="5198501">112 App. Div. 475) and McCarthy v. Meaney (183 N.Y. 190" court="NY" date_filed="1905-11-21" href="https://app.midpage.ai/document/mccarthy-v--meaney-3606127?utm_source=webapp" opinion_id="3606127">183 N. Y. 190). Here thére were no sales. or purchases of stock pursuant to the orders of the various customers. The business of those offices, so far as the plaintiff" and his assignors are concerned, was all on paper; they were simply bookkeepers and not stockbrokers. The. plaintiff and his assignors actually intended to and believed they were buying, and selling stocks, and were paying their money on account of such supposed transactions. Otherwise the business was purely fictitious, The above cases show the liability of the defendant if it is established that Quincey, the person in charge of the Rondout office, represented the defendant so far. as to make it liable for his acts in receiving the moneys of the plaintiff and his assignors and paying them over to it.

It is unnecessary, to .discuss all the evidence bearing upon the-question of the liability of the defendant for Quincey’s acts. Among other things, the evidence tended' to show that the moneys received from the plaintiff and. other customers were deposited by ■ Quincey in the bank to the credit of defendant; that a part of said moneys consisted of a-commission .of oné-fourth of one per cent on the par value of the stock for buying, and selling the stock, and that the defendant agreed to pay Quincey One-lialf of that commission “ as his fee ” for doing the business, There was sufficient evidence to justify the findings that the defendant is liable for the moneys received at the Rondout office.

The complaint proceeds upon the theory that the plaintiff and his assignors paid money into the Rondout office as margins and commissions for stocks which they directed to be bought and which stocks were wrongfully reported as bought; that the stocks were not bought, and that the transaction, so far as the defendant was concerned, was simply to receive the money on account of a series of fictitious entries upon its books, and that having failed to perform its contract the defendant is liable to the plaintiff for the moneys received, with interest thereon.

Among the claims upon which recovery was had w.ere the Rafferty claim of $1,038.88 and the Hiltebrant claim of $253.68. The plaintiff., cannot recover upon either of these claims. When customers “ bought ” stocks at the. Rondout office, Q'uincey, the manager, gave them a slip stating that he had bought the stock in his name for their account. When he closed his relations with the defendant he put one of these- customers, without expense to him, in the Metropolitan Stock Exchange in Boston for the same stocks, giving him a ticket with that company and receiving .back the Quincey ticket. The other customer, when Quincey closed his relations with the defendant, offered to settle with him for a small amount and he paid it, and received the slip previously given. These facts Constitute the alleged assignment of these claims. It is evident that the business as conducted by Quincey and the defendant with reference to the plaintiff and his assignors vas illegal and both Quincey and defendant were liable for the wrongful acts. There can be no real question that Quincey knew the manner in which the defendant carried on its business and that the transactions so far as he and the defendants were concerned were purely bogus and existed only on paper. Therefore, when he substituted one company for the other and paid one customer • a small amount, it must be deemed that he was settling with his victim for the wrong done. By such settlement he obtained no title to any claim against the defendant. Quincey -could not recover from the defendant, and his alleged assignee is in no better position.

One Wolff had paid into the Rondout office $770 margin on account of the purchase of stocks. Quincey, when he closed his relations with the defendant, transferred Wolff’s account to the ■ Metropolitan Company and he was carried with the Metropolitan Company for several weeks for the same stocks without expense to him, and the transaction was then closed and Wolff was paid $1,100. In fact he received from Quincey $1,100 on account of the $770 which he had paid to Quincey and on account of the same transactions. After Wolff was transferred to the Metropolitan Company he was informed of the fact by Quincey and assented to it. So far as Wolff is concerned this may fairly be treated as one transaction.

It does not appear whether the transaction between Quincey and the Metropolitan Company was an actual" purchase of the stock or only a fictitious paper transaction. However that may be, Wolff received the same advantages from it that he would have received if Quincey had purchased the stock when the order was first given and when he was representing the defendant. It does not, therefore, seem that Wolff has suffered any damage by reason of the fact that Quincey and the defendant did not in the first instance purchase the stock. It is true the defendant still holds his money without consideration. But it received it under such circumstances that both it and Quincey were liable for it, and Quincey, one of the wrongdoers, reinstated the purchase and procured for Wolff all- the benefits intended. He received every benefit an actual purchase of the stock could have brought him. That was in fact an adjustment by one of the wrongdoers for, the wrong done, and after having had full satisfaction, Wolff, or his assignee, cannot now proceed against the other wrongdoer. If Quincey had remained the representative of the defendant when the $1,100 was paid to Wolff, it is evident that with the $1,100 in his pocket Wolff could not recover of tlie defendant the $770 which it had received. It is also clear that if an action had been brought against Quincey after this account was transferred to the Metropolitan Company, the transfer and the receipt by the plaintiff of the profits of the transaction, larger than the original investment, would be a defense so far as Quincey is concerned. If a defense to Quincey it would' seem to be a defense to the defendant, who was apparently a conspirator with him in obtaining the plaintiff's money. ,

When Quincey closed his relations with the plaintiff several other assignors of the plaintiff transferred their accounts to the Metropolitan Company through Quincey, but they either paid the regular commission or it does not appear how they were reinstated, and it appears that no moneys were received by them from the Metropolitan Company; and, therefore, as to those various claims, it cannot be said that the parties have received any satisfaction on account of the wrong done by the_ defendant in obtaining and withholding their moneys.

Prior to the times mentioned in the complaint, and at the time of the Mor them Pacific corner, the sudden drop in the market resulted in entries upon defendant’s books tending -to show that Quincey was indebted to it in a large sum, which indebtedness was on account of purchases made by the assignors through Quincey, and'these paper transactions are now urged by the defendant as a counterclaim. It isp evident that if defendant is liable for a return of the margins on account of the manner in which it did its business, it could have no legal claim for non-payment of margins on similar transactions. ■ It is unnecessary, therefore, to consider the evidence which tends to show that the defendant, to induce the assignors to continue doing business-with the Eondout- office, agreed to wipe the slate and start anew. The defendant, therefore, had no counterclaim.

The case is a long and complicated one, difficult and extraordinary, arid the discretion of the Special Term granting an additional allowance of costs was properly exercised.

The judgment, therefore, is reversed upon the law and the facts, and the referee discharged and a new trial granted, with costs to the appellant to abide the event, unless plaintiff within twenty days from entry of order stipulates'to modify the judgment by deducting therefrom the amount recovered on account of the Rafferty claim, the Hiltebrant claim and the Wolff claim. In case of such stipulation the judgment is so modified, and as modified is affirmed, without costs. The order appealed from is affirmed, without costs.

All concurred, Parker, P. J., not sitting.

Judgment reversed upon law and facts, referee discharged and new trial granted, with costs to appellant to abide event, unless the plaintiff, within twenty days from the entry of order, stipulates to have the judgment modified as per opinion. In case of such stipulation judgment is so modified, and as modified unanimously affirmed, without costs. Order appealed from affirmed, without costs.