Majority
p. 994Frederick P. Allen, Assignee, etc., App’lt, v. Isaac McConihe, Resp’t. (Supreme Court, General Term, Third Department, Filed December 12, 1890) The following is the opinion of the referee: ., Matthew Habe, Referee.—In the absence of any proof of fraud or mistake, I think that the statements rendered to defendant by the assignors of the plaintiff, and retained by defendant without objection, are to be-taken as true. Defendant’s testimony shows clearly that he. understood in a general way the manner in which Ogden, Calder &' Co. transacted their business. He- understood that the stocks which he ordered were not purchased directly by them, but though their agents, Work, Strong & Co., in New York. Neither he nor Ogden, Calder & Co. had any actual knowledge that the stocks reported to be bought and sold by Work, Strong & Co. were actually so bought and sold. Both understood that for the truth of these statements reliance was placed upon Work, Strong & Co. This acquiescence on the part of the defendant covers, I think, the charges for interest as well as those for principal. Kniclcerbockei' v. Gould, 115 N. Y., 533 ; 26 N. Y. State Rep., 651. It fairly appears, I think, from the evidence, that defendant could have obtained any of the stocks from Ogden, Calder & Co.
Headnote
Stocks—Measure or damages for .disregard or orders to sell.O. 0. & Co., stock brokers in Troy, purchased through their IT. Y. agents, for defendant, certain stocks, upon a margin. Defendant gave to O. 0. & Co., positive orders to sell at a price fixed, which orders O. 0. & Co. disregarded. Subsequently O. C. & Co. failed and their N. Y. agents, to whom they were indebted and who did not know the defendant in the transaction, closed out the stocks at a smallerprice than that fixed. Held, that defendant’s measure of damages was the difference between the price, he fixed and that at which the IT. Y. agents sold.
Appeal by plaintiff from so much of a judgment entered on report of a referee as allowed defendant’s counterclaim.
p. 995at any time before the assignment, by paying up what was due thereon. I hold, therefore, that the plaintiff has established the full amount of his claim, and that he-would be entitled to recover the entire amount claimed in the complaint but for the matters which have been proved by way of counterclaim. I do not see, however, that the defendant has proved that he was damaged by any unlawful or unauthorized sale of stock, if there was any such unlawful or unauthorized sale. The only item as to which defendant is entitled to recover upon his counterclaim, is in my judgment, the failure of Ogden, Calder & Co. to sell the Manhattan stock at 111. The order to sell was peremptory. If Ogden, Calder & Co. chose to disobey it in the hope that the stock would go to a higher figure, this was at their own risk. They were not requested to exercise any such discretion by defendant. Conceding that their intention in failing to obey defendant’s order was to benefit defendant, still it was a voluntary act on their part, and their good intentions cannot protect them from liability for the effect of their failure to obey the orders of their principal. It was part of their implied contract to obejr such orders. Markham v. Jaudon, 41 N. Y., 235 , 239. The only question under this head is as to the measure of damages. The stock did not again reach 111 after ' defendant learned of his brokers’ failure to obey orders, until it was sold by the plaintiff, Work, Strong & Co., at 97. I do not think the rule of damages laid down in Baker v. Drake, 53 N. Y., 211 , has any application to this case. That rule related solely to the case of an unlawful conversion of the stock by sale. In that case it was held that where the customer was advised of an unauthorized sale of stocks, that if he desired further to prosecute the adventure, he had the right to disaffirm the sale and require the broker to replace the stock, and upon a failure or refusal to do this, his remedy was to replace it himself, and that the advance in the market price from the time of the sale up to a reasonable time to replace it after notice of sale afforded a complete indemnity, and was the proper measure of damages. But this is a very different case. Defendant had not fully paid for his stock. Ogden, Calder & Co. held it not only as his agents, but as pledgees. If they had sold as they were ordered to sell, defendant would have at once had the benefit of his order, and would have been entitled to credit in his account with Ogden, Calder & Co. with the proceeds of the sale. When he learned that his brokers had failed to obey orders, I do not think he was obliged to take any further step to secure his rights. He told his brokers, in substance, that he was dissatisfied, and that he did not acquiesce in their omission to obey his order. The stock was then below 111, and continued falling until it was sold without his consent at 97. If he had requested them to sell at a lower figure, that might be construed as a waiver of his previous order, which he had never rescinded. Ogden, Calder &
p. 996I have, therefore, decided that plaintiff is entitled to recover the amount of his claim, $8,841.76, with interest from January 1, 1888, after deducting therefrom the said sum of $4,200, with interest from August 16, 1887, making the amount of the recovery at this date (June 27, 1890), $5,193.79.
Co. knew that they had violated the orders of their principal. They must be presumed to have known that they had incurred a liability thereby. They, were bound to credit their principal with the value of the stock at the price at which they were ordered to sell, as of the time when they could have sold it at that price. The stock after that was, in my judgment, carried by them at their own risk. Defendant had neither possession nor control of it. Perhaps they thought the stock would be up again, and that they could make themselves good; but whatever they may have thought or expected, the order to them not having been rescinded, and their omission to obey the principal’s orders not having been ratified or condoned by him, any loss that resulted was their loss, and not defendant’s. The amount of defendant’s actual damage was the difference between the stock at 111 and the price for which the stock was afterwards sold (97), and which defendant has received by credit in his account. This difference is $4,200, for which, with interest from August 18, 1887, the day on which Ogden, Calcler & Go. could have sold the stock at 111, defendant is entitled to be credited in this action.
Albert Smith, for app’lt; J. K. Long, for resp’t.
Judgment affirmed on opinion of referee.
■ Learned, P. J., Landon and Mayham, JJ., concur.