Jones v. Gallagher

| Utah | Jun 15, 1881

Twiss, J.:

This action is brought to recover the sum of five thousand dollars, loaned and advanced by the plaintiff to defendant for defendant’s use between the fifteenth day of January, 1877, and the fifteenth day of January, 1879.

The plaintiff is a banker, and the sum sued for is a correct statement of his account, which the defendant admits would be due the plaintiff were it not for the counter-claims alleged in the answer.

The evidence shows that during the time the account was accruing, the plaintiff purchased with his own money for the defendant stocks upon the order or request of the defendant, taking title to them in his own name; and until the thirteenth day of November, 1878, sold the same as directed or requested by the defendant, charging him interest for the money so used. That on the day last named the plaintiff held — which had theretofore been purchased as aforesaid for the defendant — three hundred and twenty shares of Justice stock, worth nine dollars per share; fifty shares of Alta stock, worth eighteen dollars per share; and two hundred shares of Tip Top stock, worth one dollar and eighty cents per share, which the defendant on that day directed the plaintiff to sell, and invest the proceeds of such sales in the stock of the North Bonanza, at a price per share not exceeding two dollars and seventy-five cents. The plaintiff refused to comply with this direction, saying: “Not knowing anything about North Bonanza, except its feline reputation, I must decline to relinquish Comstock securities for ‘ wild cats,’ although by the turn you propose we should have more of them.” The North Bonanza soon afterwards advanced to upwards of five dollars per share, and remained there for a day or two; since then it has been down to twenty-five cents, and from that up to a dollar and a half, and has been regularly assessed. If the plaintiff had complied with the directions of the defendant, and the North Bonanza stock had been sold at the time when it was at the highest price, there would have been a profit in the deal of about six thousand dollars, which the defendant claims as one item in his counter-claim.

Was the plaintiff under obligation to sell the stock and invest the proceeds of such sale, as directed by the defendant ? In other words, did the plaintiff have such an interest in the stock which he was directed to sell as would enable him to disregard the express directions to sell and reinvest, without incurring liability to the defendant for the results of such refusal to act ?

The plaintiff and defendant both say in their testimony that the plaintiff held the stock as security for the payment of the account. The defendant drew from the plaintiff when the stocks held by him were in excess of the amount of the account. .The defendant in his testimony says: “It was understood in a general way that I should keep the account good, or make it good. I was to give him money when he wanted it, and to take money down when I wanted it. In 1878 he began to call on. me for money, and I was unable to put it up. The stocks I then had were not sufficient to make my account good; I think my account was several thousand dollars behind — selling at the market prices. That condition of affairs had existed for several months; I think I got into extremely deep water during the spring. He asked once or twice for money, and as long as I thought I had a chance to pull through, I said I would try to pay as soon as I could ; then when I found I could not get through, I told him I did not know when I could. * * * He was not to buy all the stocks I ordered without reference to the state of my account; .1 could have swamped him if he did. As my account then stood, I reasoned that when I ordered any particular stock bought, he had the right to buy or not as he chose, depending on the state of my account. In the condition my credit was with him at that time, I would have to provide for tbe payment of the stock ordered. That is the reason I provided for the purchase of this stock by ordering the sale of other stocks. There was no agreement as to the amount of stock he would buy, nor of what kinds; he always bought anything I asked him to. I suppose each transaction amounted to a separate one. If he chose to fill it, all right; if he didn’t, all right. I don’t suppose I could have made him buy stocks unless he wanted to; he usually wanted to, though.”

From the facts testified to by both plaintiff and defendant, it is apparent beyond controversy that upon the purchase of stock for the defendant by the plaintiff, with his own money, credit was given upon the stocks held for the defendant by the plaintiff, 'and as a conclusion of law, the plaintiff had a special property in the stocks purchased by him with his own money, the title to which was made to himself, with the knowledge and without objection of defendant, and therefore with his acquiescence; that he held them as security for the money advanced by him in their purchase, as well as for the benefit of the defendant, for the purpose for which they were purchased: Brown v. McGran, 14 Pet. 479" court="SCOTUS" date_filed="1840-02-18" href="https://app.midpage.ai/document/william--james-brown--co-v-mcgran-86153?utm_source=webapp" opinion_id="86153">14 Pet. 479.

If the plaintiff had simply held these stocks for sale, he would have been the agent or factor of the-defendant for the purpose of selling them, and as such was bound to comply with his directions as to their sale.

But they were not consigned to the plaintiff for sale, nor were they purchased with the intention of holding them for accruing dividends, but for the purpose of speculating upon their fluctuating prices. At the time the order for sale was given, the account of plaintiff exceeded the value of the stocks held by him, therefore the defendant was not the absolute owner; nor was he entitled to the absolute control and disposition of them. Each party had interest which the other was bound to respect; and each was bound to act in good faith and in the exercise of a sound discretion, so far as his acts affected the interest or rights of the other; and the plaintiff was not compelled to obey an order to sell given to him by the defendant that would unnecessarily result in a loss or damage to himself. Suppose the order to sell to be construed to be distinct and disconnected with the order to reinvest, the good faith and the exercise of a sound discretion on the part of the plaintiff in refusing to sell should have been, with proper instructions, submitted to the jury: Field v. Farrington, 10 Wall. 141" court="SCOTUS" date_filed="1870-12-18" href="https://app.midpage.ai/document/feild-v-farrington-88246?utm_source=webapp" opinion_id="88246">10 Wall. 141. But I am not of the opinion that this dispatch contains two distinct and separate orders, ■ one to sell, the other to reinvest. The words, “ Turn my Tip Top, Justice, and Alta, without limit, into North Bonanza,” constitute one indivisible order, an entirety; the order to sell was inseparably connected with the order to reinvest; he had no authority to sell and apply the proceeds in payment of defendant’s account. The direction was to turn the stocks named in North Bonanza; if he performed one, he must comply with the other. This direction was given at a time when defendant says, “ I think my account was several thousand dollars behind;” and “that condition of affairs had existed for several months.” This order in effect directed the plaintiff to dispose of certain securities held by him, and to take another in place of them. I do not find in the examination of the record and testimony any contract or understanding between the parties requiring the plaintiff to do it. The order to sell and reinvest being one, the plaintiff was not obliged to comply with it; the difference between the value of the stocks at the time the order was made and at the time they were afterwards sold is immaterial in this action; the right of the plaintiff to sell at the time of sale, and the good faith and sound discretion in which it was made, are not in issue.

I am therefore of the opinion that the verdict allowing damages for the failure of plaintiff to sell the Justice, Alta, and Tip Top mining stocks, as directed by the defendant on November 13, 1878, is not supported by any evidence rightfully before the jury; and that there was error in admitting evidence as to the value of the stock of the North Bonanza, in support of the item in counter-claim based upon the failure of the plaintiff to comply with the order to purchase.

The questions raised by the allegations of the defendant claiming damages because the plaintiff reported to him sales of Challenge and Ophir stocks, when in fact, as defendant alleges upon his information and belief, they were not sold, as reported by plaintiff, but were held by him for a long time, and afterwards sold at an advanced price, were properly submitted to tbe jury by instructions 9 and 10, requested by the plaintiff, in which the jury were instructed that i£ the sales were made and stocks sold as reported, the defendant was not entitled to the damages claimed in his counter-claim by reason of such alleged report of sale and subsequent sale of the stocks; which instructions were refused by the court. Judgment reversed, and the case remanded for new trial.

Emerson, J., concurred. Hunter, C. J., dissented.