229 A.D. 415 | N.Y. App. Div. | 1930
Lead Opinion
The action is in conversion to recover damages against the appellants, doing business as stockbrokers, for the closing out of plaintiff’s margin account upon allegations of insufficiency of notice to the respondent, as customer, to protect his account.
On the 8th of June, 1927, the respondent, who had previously been a customer of appellants and had dealt extensively with them and other stockbrokers as a purchaser on margin accounts, signed, executed and delivered to the appellants a “ customer’s agreement,” which contained the following provision: “ Upon failure of the undersigned to comply with any of the provisions hereof, or whenever deemed necessary for your protection, you are hereby authorized and empowered to sell, assign and deliver all or any part of the securities, commodities or contracts for commodities pledged hereunder upon any exchange or market or at any public or private sale at your option, and /or to purchase to cover short sales, and without demand for margin, and/or advertisement or notice of purchase or sale, which are expressly waived, and no specific demand or notice shall invalidate this waiver and after deducting all costs and expenses of purchase or of sale and delivery, including transfer and stamp taxes, to apply the residue of the proceeds to the payment of the liabilities of the undersigned to you, returning the surplus, if any, to the undersigned. * * * All notices or demands hereunder may be made by depositing the same in writing in the United States mail directed to the undersigned at the address given below.”
From time to time during the following year the respondent customer made large purchases on margin account through the appellants, as his stockbrokers. The respondent resided in the city of Amsterdam, N. Y., and all of his business with the appellants was through their branch office in the city of Schenectady, N. Y., which is sixteen miles distant from Amsterdam. In early June, 1928, respondent’s margin account, because of the state of the market, became inadequately protected and appellants claim that they tried unsuccessfully to reach respondent by telephone and that they left word at his home for him to call them. On June 8, 1928, having failed to hear from him, appellants claim to have mailed a margin call to respondent demanding that he forthwith deposit $10,000 with appellants to protect his margin account. They claim to have mailed a second demand or margin call to respondent on June 9, 1928. Respondent claims not to have received any of these communications. Having received no response, the appellants, on June 11, 1928, notified respondent by registered letter as follows: “ In as much as you have ignored our previous calls for
Although respondent had received the letter of June eleventh, indicating to him the claim on the part of his brokers that he had ignored calls for additional margin and informing him of the proposed stop loss orders, respondent did not communicate with appellants until shortly after ten on the morning of the thirteenth, when he telephoned to appellants’ office in Schenectady. He says he then asked to have the stop loss orders canceled, that he would be down with the money required. The person who answered said, “ just a moment." She then informed him that it was too late, “ the stocks were sold out this morning at the opening." He replied to her: “ You have no right to do that. I said if I do not get that stock, I will make trouble for you." He did not, however, ask to talk to the office manager, and on June 19, 1928, he received from the appellants a check for $2,000, which he cashed. The amount due was in dispute and the appellants claim that this constituted a ratification of the sale even if the respondent was not bound by the terms of the “ customer’s agreement ” providing that the broker could close out' the customer’s margin account without notice and irrespective of any specific notice given.
We need not consider the question of ratification because we think the respondent was bound by the express terms of the “ customer’s agreement.” The trial court, relying apparently upon what was held in Rosenthal v. Brown (247 N. Y. 479) ruled that
Davis and Whitmyer, JJ., concur; Hill, J., dissents and votes for a reversal on the law and for a new trial unless plaintiff stipulates to reduce the judgment by crediting the $2,000 previously paid; if fuch stipulation is made, the judgment should be so modified and as modified the judgment and order should be affirmed, with costs; Hasbrouck, J., also dissents, with a memorandmn.
Dissenting Opinion
The sale of the plaintiff’s stocks on June twelfth under a stop-loss order instead of an absolute sale resulted in loss to the plaintiff in an amount not to exceed $700. I think the judgment should be reduced to that sum and as modified affirmed.
Judgment and order reversed on the law, with costs, and the complaint dismissed, with costs.