254 A.D. 47 | N.Y. App. Div. | 1938
Plaintiff instituted this action against Edey & Gibson, a stock brokerage firm, and one Raymond T. Fish, customer’s man employed by that firm, to recover approximately $600,000 as damages for alleged breach of contract, negligence, fraud and fraudulent conspiracy in respect to plaintiff’s brokerage accounts with defendant Edey & Gibson. Immediately prior to trial plaintiff settled with Edey & Gibson for $4,000, reserving his rights against Fish. The case proceeded to trial before the court without a jury on an amended complaint solely against defendant Fish.
Plaintiff’s theory of action against Fish is that he gave Fish power to handle his accounts during his absence in Europe in 1929 but that he limited the broad authority given under a power of attorney by oral instructions that his account be maintained on a fifty per cent margin and that no more than one hundred shares of any one stock be purchased without specific instructions; and plain
It is obvious the trial court did not accept plaintiff’s testimony with regard to most of the charges made and claims asserted. Hundreds of transactions were involved aggregating the sale of thousands of shares of stock with a value of several million dollars. Out of all these transactions, and out of claims aggregating approximately six hundred thousand dollars, the court found a verdict in plaintiff’s favor only for $18,128, which with interest resulted in a judgment for $24,535.51. It is also manifest that the trial court refused to accept plaintiff’s testimony concerning his alleged oral limitations on defendant’s discretionary authority or his claimed instructions with respect to handling the accounts, for the damages awarded obviously do not repose upon such alleged breaches of duty. From the dates given in the court’s brief memorandum decision, we conclude the court found that plaintiff sustained damages through defendant’s breach of duty only in connection with the following three transactions:
A. $5,875.50 — purchase on October 25, 1929, of 200 shares of Burroughs Adding Machine Company stock;
B. $9,959.50 — purchase on October 26, 1929, of (1) 100 shares of American and Foreign Power; (2) 200 shares of Burroughs Adding Machine Company stock;
C. $2,293 — debit on November 6, 1929, of the purchase price of 22j/2 shares of Tekram Corporation stock.
These transactions will be referred to respectively as “ A,” “ B ” and “ C.”
Plaintiff and defendant Fish, prior to the financial collapse in 1929, had been close friends and both of them speculators in the stock market. On March 19, 1929, defendant became a customer’s man at the brokerage office of Edey & Gibson. This was his first employment in Wall Street. On the same day plaintiff opened with Edey & Gibson an account known as “ J. B. Lynch Regular Account ” and shortly thereafter gave up his employment with the New York Telephone Company and sailed for Europe on April 30, 1929, not returning until December 8, 1929.
All the circumstances indicate that plaintiff did approve at the time all defendant’s acts and that the defendant was entirely justified in believing that he had such approval, and in the emergency that arose during the panic of 1929 defendant apparently in good faith used his best judgment throughout. During the entire period, plaintiff was in frequent communication with defendant by cable and by letter and on November 13, 1929, they had a long transatlantic telephone conversation between New York and London. Like so many similar arrangements made at that time, all went well until the wholly unexpected and calamitous market collapse in October and November, 1929. Even then, on learning of the panic, plaintiff wired defendant “ Mine’s yours.” On
When plaintiff returned to New York on December 8, 1929, he reviewed all of the transactions which had taken place, and although he testified that he complained then of the handling of the accounts, he continued to maintain his account at Edey & Gibson’s and to trade therein until January 30, 1930, when that firm was dissolved, at which time he transferred his accounts to Paige, Smith & Remick, a new firm composed, however, of some of the former partners of Edey & Gibson. The present action was not instituted until April, 1931, a year and a half after plaintiff’s return from Europe. In the broad, sweeping and even reckless charges made against all the defendants, the action is characteristic of similar actions brought by disillusioned speculators against those whose judgment and discretion they had praised without limit while the speculative mania was successful.
The items on which recovery was allowed were apparently predicated on the ninth cause of action based on fraud. After examining the evidence, we reach the conclusion that the record wholly fails to sustain the charges made under that or any of the other numerous causes of action alleged. The theory on which defendant was charged with the loss in connection with transaction “ A” (purchase on October twenty-fifth of 200 shares of Burroughs Adding Machine stock) evidently was that the stock had been originally purchased by defendant for his own account and then transferred to plaintiff’s account when the market declined. This conclusion was apparently based on the fact that the original order slip for 250 shares read “ J. B. Lynch ' K,’ ” defendant’s individual account, and also on the fact that the blotter sheets of Edey & Gibson for October twenty-fifth and twenty-sixth were not produced. The ledger, however, of that firm showed that 200 shares of the stock were purchased for and charged to the J. B. Lynch Regular Account. The ledger was made up from the blotter sheets. It was not shown that defendant had anything whatever to do at any time with the so-called blotter records of Edey & Gibson and, under the facts disclosed in the entire record, the non-production of these particular blotter sheets did not establish fraud against defendant Fish. In view of the vast number of transactions furnishing defendant ample opportunity for fraud if he had been
Transaction “ B ” (purchase on October twenty-sixth of 100 shares of American and Foreign Power and 200 shares of Burroughs Adding Machine stock) is in itself a further proof that the purchase on the prior day was made for the Lynch Regular Account indicating that defendant still believed Burroughs to be a good stock to buy, as he purchased for that account another 200 shares on October twenty-sixth. Again, the ledger entries which constitute the definitive record reflect the transaction as testified to by Fish. He clearly had authority to make the purchases and the only conceivable theory upon which the court imposed liability is again that the defendant was guilty of fraud as alleged in the ninth cause of action. There is no evidence whatever in this transaction that the name J. B. Lynch Regular Account was not furnished to the order clerk.
In the case at bar it must constantly be kept in mind that plaintiff was fully aware that in addition to his own regular discretionary
Transaction “ C ” was one-half the cost of forty-five shares of Tekram Corporation stock which defendant had bought on September 9, 1929, one-half for plaintiff and one-half for himself, the certificate for which at defendant’s direction was entered in the name of John B. Lynch. Again, on November 6, 1929, long before there was any claim or suit, defendant informed plaintiff by letter of this transaction, and when plaintiff returned from Europe he was given the certificate for the forty-five shares and has since retained the same. It is clear that defendant had complete authority to purchase this stock and charge half of it to Lynch’s account.
The burden of proof of establishing the alleged fraud or other breach of duty was on plaintiff. That burden was not sustained.
In view of our conclusions as to the merits of the action, it is unnecessary to discuss the other issues raised.
The judgment herein should be reversed, with costs, and the complaint dismissed, with costs.
Martin, P. J., O’Malley, Cohn and Callahan, JJ., concur.
Judgment unanimously reversed, with costs, and the complaint dismissed, with costs. Settle order on notice.