99 N.Y.S. 513 | N.Y. App. Div. | 1906
The plaintiff was a cotton merchant doing business in Waco, Texas, and the defendants were cotton, stock and produce brokers, doing business in the city of Rew York. Prior to January 1,1900, there was a correspondence between the plaintiff and the defendants
On December 26, 1899, the defendants wrote to the plaintiff: “ As soon as you can see your way clear to do so, we shall be very glad indeed to receive a portion of your business, and when business between us becomes practicable we shall be obliged if you will kindly advise us of the name of the bank in which you make your deposits so that we may make the necessary arrangements with them for the conduct of the business.” In reply on December thirtieth plaintiff wrote to the defendants asking them to enter into correspondence with the Waco State Bank regarding deposits, as he intended to begin doing some business with the defendants very shortly and continuing: “We would also ask that you please advise us if you intend making no charge for exchange, which is the usual custom on the wire. Our agreement with the other parties with whom we have been operating is that we place money with Waco State Banh when called and you do the same.” In reply on January 3, 1900, the defendants wrote to the plaintiff stating that they were forwarding that day to the Waco State Bank a copy of their private cipher code “for use in connection with the telegraphic advice oE any deposits that they may receive from you for our account. * * * We shall he pleased to waive any exchange charges which may arise in connection with the transmission of funds necessary to the conduct of the business. Such margins as may he required are to he deposited hy you to our credit with, the Waco State Banh and, when re-payments are necessary, we will
This correspondence established the contract under which the business between the parties was to be conducted and under that understanding the plaintiff gave to the defendants orders for the purchase and sale of cotton, and the plaintiff deposited the amount of margin required by the defendants with the Waco State Bank to the credit of the defendants. When the defendants required additional margin they telegraphed to the plaintiff over the private wire. On Saturday, March 10, 1900, the defendants had sold on the order of the plaintiff certain cotton for future delivery in New York. At the price at which cotton was selling on that day the plaintiff should have had a margin of about $3,700. The margin which he actually had was only $509. The Cotton Exchange in New York closed on Saturday at twelve o’clock. At about half-past eleven, New York time, and half-past ten, Waco time, the plaintiff received in Waco the following telegram: “ Deposit $2,500. Answer.” This telegram not being signed by defendants the plaintiff did not recognize that it came from them. He, however, thinking it was from them, commenced to examine his accounts with defendants and told the telegraph operator to see if it was authentic. Before receiving any information about that telegram, and at about five minutes before twelve, he received a telegram with defendants’ signature, asking him to deposit $2,500. This notice he complied, with, making the deposit at thirty-five minutes after twelve; at twenty-nine minutes after twelve telegraphing to defendants that-he was depositing $2,500. In the meantime the defendants without further notice had closed out the plaintiff’s account at twelve o’clock, at which time the Cotton Exchange in New York closed on Saturday. Immediately upon receiving information of this action of the defendants the plaintiff took measures to resell the cotton so as to place him in the position that he was in prior to the closing out of his transactions by defendants, which resulted in a loss to the plaintiff of $1,053.20, for which the plaintiff brought this action,
The learned referee seems from his opinion to have agreed with this conclusion but held that the rights of the parties were changed by certain notices that were printed upon the letters sent to the plaintiff when each order was executed.
It appeared that when the defendants executed an order they sent to their customer a telegram of the transaction followed by a notice by mail known as “a confirmation.” The notices were upon printed blanks filled in to confirm a particular transaction of which notice by telegraph had been given. Upon these printed blanks, there was after the signature of the defendants the following notice printed in small type: “ It is further understood that on all marginal business the right is reserved to close transactions when
The case of Robinson v. Crawford (31 App. Div. 228) is relied upon by the defendants as -sustaining the conclusion arrived at by the learned referee; but the facts in that case are entirely different. It there appeared that the plaintiffs, who were cotton brokers, purchased certain bales of cotton at the personal request of the defendant ; that when this transaction was made a memorandum was signed by the plaintiffs that it was further understood that on all marginal business the right was reserved to close the transactions at the broker’s discretion when margins were near exhaustion, without further notice; that subsequently the market price of cotton declined when efforts were made on the part of the brokers to
In this case the special agreement and the course of business required that there should be a notice for additional margin before an obligation existed on behalf of the plaintiff to furnish it, and in pursuance of this agreement the notice for additional margin was given, but before the customer had an opportunity to comply with it the transactions were closed. Under these circumstances we think the broker was responsible for the damages caused by this unauthorized closing out of these contracts, and the judgment appealed from must be, therefore, reversed and a new trial ordered, with costs to the appellant to abide the event.
O’Brien, P. J., McLaughlin and Houghton, JJ., concurred; Patterson, J., dissented. -
Judgment reversed, new trial ordered, costs to appellant to abide event. Order filed.