Fairbairn v. Rausch

Ingraham, J.:

The action was brought to recover the balance of an account due to the plaintiffs resulting from a loss in stock transactions carried on by the plaintiffs, who were brokers for the defendant. The plaintiffs were carrying stocks, including 100 shares of Steel Common, for the defendant on a margin, and on May 9, 1901, sold this 100 shares of Steel Common at $28 per share, from which sale there resulted an indebtedness of the defendant to the plaintiffs of the sum of $1,316.60, to recover for which this action was brought. The defendant repudiated the right of the plaintiffs to sell this stock at the price named, and the evidence shows that if the plain*260tiffs had held the stock for a few hours it would have realized á price largely in excess of that at which it was sold and there would have been no indebtedness. Ho counterclaim was alleged and the determination of the action depended upon, the authority of the plaintiffs to sqll the stock on the 9th day of May, 1901, at $28 per share.

On behalf of the plaintiffs there was testimony to show that on the morning of the 9th of May, 1901, before the opening of the Stock Exchange the defendant had -a. credit balance of $2,300 or $2,400, crediting her with the value of the, stocks she then had on hand at the prices at which they had closed on the previous day. One of .the plaintiffs testified that he spoke to the defendant’s agent on the morning of the ninth of May at" about half-past ten or eleven o’clock; ‘that he told the defendant’s agent that the market was panicky and that the plaintiffs needed additional margin, to which •the defendant’s agent replied that he did not intend to run away •and that the plaintiffs would never lose a dollar by him; that the plaintiffs waited for awhile hoping the market would rally,, but instead of that it continued to go down, and thereupon the defendant’s agent gave to the plaintiffs an order to sell the 100 shares of Steel Common at the market; that the order was transmitted to the Stock Exchange and the stock was sold at $28 a share, and when this sale was reported to the defendant’s husband he made no objection. . This testimony was corroborated by another customer of the ■ plaintiffs who was present and' heard the conversation.

On behalf of the defendant her agent testified that he had charge of this account for the defendant; that he instructed the plaintiffs to -sell this stock at forty-five ; that at that timé the stock .was selling at forty-five and one-half according to the quotations from the Stock Exchange; that the plaintiffs did not execute this order, and when the witness asked one of the plaintiffs whether or not he had sold the stock at forty-five the plaintiff said that he had not, and that the plaintiff then asked the witness for a check. In reply the witness ¡said, “ You know I have no. check with me, but I will get it for you,” when the plaintiff said, “ I will sell you out,” and then went and sold the defendant out, giving her agent no opportunity to get a check or tó put up the margin that' was required, and that the witness did not tell the plain tiff to sell the stock at the. market..

*261Upon this evidence the court submitted the case to the jury, stating that “ there is practically no dispute that if the 100 shares of Steel were sold at 28 the account would show a balance in favor of the plaintiffs, and if the stock was sold at 45 it would not show a balance. So that the only question here for you to determine ■ is whether the stock was sold properly and by order of the defendant at 28, or whether it was improperly sold at that figure; that is, whether the defendant gave an order which is styled by brokers a limited order, that is one to sell at 45 in this case.” The sole question, therefore, was whether the defendant directed the plaintiffs to sell the Steel at the market or whether the order was to sell at forty-five ; for the evidence was undisputed that if the sale was not authorized the stock within a few hours was again selling at about forty-five and that at that price there was no indebtedness to the plaintiffs.

After the court had submitted that question to the jury the learned counsel for the defendant made several requests to charge, to which the court acceded and to which counsel for the plaintiffs; excepted: The only question in this case is as to whether there was. error in acceding to these requests. Counsel for the defendant asked the court to charge that “if the jury believe that said order was. given at or about a quarter to twelve of the morning of May 9, 1901, and that the price at that time was at or about $42 to $45, ■ the plaintiffs are not entitled to recover, and the verdict should be for the defendant.” The court charged as requested and the plaintiffs excepted. I think this was error. The evidence is that on the ninth of May there was a panic on the Stock Exchange and that all stocks were subject to violent fluctuations. If the order was given, as claimed by the plaintiffs, to sell at the market, although at the moment the order was given the market price of the stock was from forty-two dollars to forty-five dollars, if before the order could be executed the price had fallen to twenty-eight, so that that was the best price that could be obtained, there was nothing to show but that' the defendant would be bound by the sale as made. The market meant, the best price that could be obtained for the stock at the time the. sale was made, not the price at which the stock was quoted-gf that, time. According to the defendant, the. only order that was given was to sell at forty-five, and if that was the only authority that thé:x *262plaintiffs had to sell the. stock, as there was no sale at forty-five, the sale at twenty-eight was unauthorized. It was entirely immaterial, therefore, at what price the stock was selling at the time the order was given, and the instruction given would justify the jury in find-, ing a verdict for the defendant,' although they found that the ' defendant did give an order to sell at .twóhty-eight if they found as a fact that when the order was given the stock was selling at from' forty-two to forty-five.

The court also, at the request of the defendant, charged the jury that if they believed that “ when the plaintiffs spoke to the defendant’s agent about and asked him for additional margin, the defendant’s agent said, ‘ Give me a reasonable time and I will get the additional margin,’ or words to that effect, and if they believe that the plaintiffs’.reply was that they would sell her out at once then the plaintiffs are not entitled to recover.” This the court charged'. I think this' was error. ‘ Even if the j ary believed that the .plaintiff made such a. statement, if, at the same time, the defendant did authorize the plaintiff to sell at the market, the plaintiff was authorized to make . such a sale, arid if it was made in good f aith, at the best price that could be obtained, the defendant was bound. These requests authorized the jury to find for the defendant,, although the order to sell at the market was given ; when, if that order wafe given, it was quite .clear that the plaintiffs- were entitled1 to recó ver, because there was' no 'evidence 'to show that they did not make the sale in good faith and for the best price that could be obtained at the time the order was executed. '

It- follows that the judginent and order appealed from must be reversed and a new trial ordered, with costs to the' appellants to abide the event..

Van Brunt, P. J., "Patterson, McLaughlin and Laughlin, JJ., concurred.

Judgment and order reversed, new trial ordered, costs to appellants to abide, event.