Stenton v. JeromeStenton v. Jerome
- Reporters:
- Before:
- Earl
Defendants, stockbrokers, purchased certain stocks for plaintiff under an agreement by which she was to furnish a specified margin as security, and keep the same good when called upon; in event of non-compliance with such demand, defendants were authorized to close the account by purchase or sale at public or private sale without notice. These stocks they sold without notice; at the time plaintiff‘s margin was reduced below the amount required, but no call or demand for further security was made, nor was there a tender of the certificates and demand of payment therefor. In an action to recover damages, held, that the relation of pledgor and pledgee existed between the parties; that the sale was unauthorized and wrongful, and defendants were liable.
After such sale defendants made up and presented to plaintiff an account crediting the stocks at the prices for which they were sold and showing a balance due them which they demanded; plaintiff complained of the sale, but upon defendants threatening to sell other securities they held belonging to her, which she needed for use, she paid the account. Held, that this was not an assent or acquiescence in the account or sale, and that plaintiff was not concluded by the payment as a voluntary payment.
To make an account stated, there must be a mutual agreement between the parties as to the allowance or disallowance of their respective claims; and to establish such an account, so as to preclude a party from impeaching it, save for fraud or mistake, there must be proof of assent to the account as rendered, either express, or implied from failure to object within a reasonable time after presentation.
Payment of a claim for the sole purpose of releasing property held in pledge by the claimant, and which he refuses to surrender without such payment, is not a voluntary payment and does not preclude the pledgee from questioning the claim.
The action was brought by the plaintiff against the defendants as her stockbrokers, to recover damages upon sale of certain stocks by them without authority.
About the time the plaintiff commenced to deal with the
”NEW YORK, Nov. 28, 1864.
“Messrs. JEROME, RIGGS & CO.:
“Please open an account with me for the purchase and sale of stocks, on which, in consideration of the sum of one dollar, I agree to deposit with you as security twenty per cent on the par value of said stock, and to keep said deposit equal to fifteen per cent, as the same may fluctuate at the stock exchange, whenever called upon so to do; and in the event of non-compliance with such demand, you are hereby authorized to close the account without notice by purchase or sale, at public or private sale, or at the brokers’ board or otherwise, returning to me any balance in my favor, and I agree to pay to you any balance against me on said account.
“LOUISA M. STENTON.
“This to remain in force until countermanded.”
In pursuance of this arrangement she made deposits of money from time to time with the defendants, and upon her order they purchased and carried stock for her. She was not at any time required by them to keep her marginal security as high as the amount mentioned in the above instrument, and whenever they demanded additional margin she furnished it.
On the 11th of January, 1866, the defendants held and were carrying for the plaintiff three lots of stock, to wit: 100 shares of the Chicago and Rock Island Railroad Company, purchased October 18, 1865; 200 shares of Reading Railroad Company, purchased December 16, 1865, and 100 shares of the Fort Wayne Railroad Company, purchased January 3, 1866. On the 11th day of January, 1866, the defendants sold the three lots of stock at the market rates on that day, which were considerably lower than they cost. Plaintiff‘s marginal security had declined to three or four per cent, but no notice thereof was given to her. The sale
Opinion of the Commission, per EARL, C.
EARL, C. The stocks in question were purchased by the defendants, for the plaintiff, under the agreement embodied in the instrument signed by her and delivered to them, dated November 28, 1864. Under this agreement the relation of
But it is claimed that the parties settled before the commencement of this action, and that the plaintiff voluntarily paid the defendants the balance due them upon an account stated, and hence that she could not rightfully recover in this action. This claim must now be examined.
On the 11th day of January, 1866, the defendants made the wrongful sale of the stocks, and notified the plaintiff of it. On the 14th day of January they made up her account with them in reference to her deposits, and the purchase and sale of these stocks, showing a small balance due them, and leaving in their hands, as security for such balance, two United
It is true that an account stated is conclusive upon the parties to it, unless impeached for fraud or mistake. But what is an account stated? It takes two parties to make one, the debtor and creditor. There must be a mutual agreement between them as to the allowance and disallowance of the respective claims, and as to the balance as it is struck upon the final adjustment of the whole account and demands of both sides. Their minds must meet as in making other agreements, and they must both assent to the account and the balance as correct. But this agreement and assent need not be direct and express, but may be implied from circumstances. If one party presents his account to the other and the latter makes no objection, it may well be inferred that he is satisfied with and assents to it as correct. If an account be made up and transmitted by one party to the other by mail, and the latter keeps it for some considerable time without making any objection, he is held to have
Great stress, however, is laid upon the payment by the plaintiff of the balance shown by the account, as rendered, to be due from her. This payment was in one sense voluntary, as she was not compelled by physical duress to pay it. But the defendants held her two bonds, which they threatened at once to sell unless she would pay this balance. She had great need for the bonds and could not well wait for the slow process of the law to restore them to her, and she paid this balance, not assenting to the account and not assenting that it was justly due, for the sole purpose of releasing her bonds. Under such circumstances it is well settled that the law does not regard a payment as voluntary. It was well said by Judge Ruggles, in Harmony v. Bingham (12 N. Y., 117), that “if a party has in his possession goods or other property belonging to another and refuses to deliver such property to that other unless the latter pays him a sum of money which he has no right to receive, and the latter, in order to obtain possession of his property, pays that sum, the money so paid is a payment by compulsion.” In such case the payment is procured by duress of goods, and is no more voluntary in the eye of the law than if procured by duress of the person.
The rule of damages adopted by the referee was doubtless erroneous. He awarded to the plaintiff the amount of all the
It follows, from these views, that the judgment must be affirmed, with costs.
Opinion of the Commission, per REYNOLDS, C.
REYNOLDS, C. The agreement or written order, upon which the account with the plaintiff was opened by the defendants for the purchase and sale of stock on her account, is very explicit in its terms, and the rights and obligations of the parties under it entirely apparent. The plaintiff was never put in default for not providing the margins required by the contract, and the sale of the stocks by the defendants, complained of in this action, was made without notice to the plaintiff in any form that she was required to furnish more money, or that the stocks were to be sold.
It is entirely true that the agreement under which the account was opened might be determined at any time by either party, but this could not be done except upon reasonable notice. Neither party was at liberty, by a secret emotion of mind, to rescind the contract and then proceed to sacrifice or impair the interests of the other without in some form disclosing the determination to close the account. This, I think, the defendants undertook to do in a somewhat arbitrary manner, and it seems very proper that they should respond to the plaintiff for such damages as, by their wrongful action, she has sustained.
It is urged that the defendants’ letter of the 6th of January, 1866, placed the plaintiff in default, but I have been unable to discover it. It simply says that, in consideration of her account with the defendants, she was requested to call at the defendants’ office on Monday, the eighth, at any time that should suit her convenience. It gave no intimation of a determination to close the plaintiff‘s account. She called in pursuance of the request, saw the defendants’ book-keeper,
On or about the thirteenth of January the defendants made out and sent to the plaintiff an account current. On the seventeenth of January some errors in the account current were admitted, and, a small balance appearing against her, the plaintiff was admonished to call and settle or the defendants “would be obliged, unwillingly, to close out the stock we hold against the above balance at your debit” ($170.03). It would seem to be implied from this that the sale of the Fort Wayne, Rock Island and Reading stock, on the 11th of January, 1866, did not in fact, and was not intended to close the plaintiff‘s account, for the defendants still held securities for the small balance of $170.03, which, in value, greatly exceeded this amount, and which they threatened to sell unless the balance was immediately adjusted. It is to be observed that this balance was produced by charging the plaintiff with all the loss upon her stocks wrongfully sold by the defendants on the eleventh of January. After some correspondence the plaintiff paid the balance of the account insisted on, and received from the defendants such securities as they held for its payment. It is now claimed that this payment of the balance was such a final settlement as precludes the plaintiff from recovering damages for the wrongful sale on the eleventh of January. To this we do not agree. The plaintiff had the right to rescue her property from the perils that seemed impending, even by the payment of a sum wrongfully exacted. Even if this were an action to recover back that money, I think it should be sustained. (Astley v. Reynolds, 2 Strange, 915;
The case of Markham v. Jaudon (41 N. Y., 236) is, upon the main question, entirely conclusive against the defendants, and the judgment should be affirmed with costs.
All concur.
Judgment affirmed.