Burnham v. Lawson

Ingraham, J.:

I concur in the reversal bf this judgment, 'but.I think that the plaintiff was estopped from questioning the sale of the Union Pacific stock of which he's received notice on the day after it was. sold.. The defendants, in making the sale, of this stock, assumed to act as the agent of the plaintiff and made the sale for his benefit and on his account. -Of that the plaintiff received notice with the reásons which, induced the defendants to make the sale. It seems to me that if the plaintiff wished, to disaffirm this sale ho was bound to .at once notify the defendants. He ceuld not stand by without objeo*393tiou and speculate upon the future course of the market and hold the defendants liable for a breach of their duty If the market went up, but ratify the sale and accept the transaction if the market went down. The price at which the stock was- sold was, in this view, entirely immaterial. He had notice that the stock had been sold, that the defendants had assumed to act in selling it as his brokers and for his account, and that the sale would be an advantage to him, as, in their opinion, he would be able to subsequently repurchase the stock at a lower price.

All of the late cases that have discussed the relation between a broker and his customer in relation to carrying stock on margin treat an unauthorized sale of the stock as a violation of a contract » between the custom'er and his broker to which the usual rules applicable to the relation of principal and agent apply. Thus, in Baker v. Drake (53 N. Y. 211) Judge Papal lo says: “If, upon becoming informed of the sale, he desired further to prosecute the adventure and take the chances of a future market, he had the right to disaffirm the sale and require the defendants to replace the stock. If they failed or refused to do this, his remedy was to do it himself and charge them with the loss reasonably sustained in doing so.” And in the case of Wright v. Bank of Metropolis (110 N. Y. 237) Judge Peckham, in speaking of the case of Balter v. Dralte, says: “The whole reasoning of the opinion is still based upon the question as to what damages would naturally be sustained by the plaintiff in restoring himself to the position he had been in ; or, in other words, in repurchasing the stock. It is assumed in the opinion that the sale by the defendants was illegal and a conversion, and that plaintiff had a right to disaffirm the sale and to .require defendants to replace the stock; ” and the court then applied the rum laid down in Parsons v. Sutton (66 N. Y. 92), which states the rights of the parties arising from a breach of a contract, that ' “ the party -who suffers from a breach of contract must so act as to make his damages as small as he reasonably can. He must not by inattention, want of care, or inexcusable negligence permit his damage to grow and.then charge it all to the other party.” The time within which a party lhust disaffirm an unauthorized sale of the stock, or in which he must repurchase' in case the agent or broker refuses to repurchase the stock after the sale is disaffirmed, *394is not the same. The plaintiff was informed that there had been great uncertainty as to the future of the market; that there had been failures among dealers and other failures were expected, and that in the opinion of the writer of the letter this stock would'go lower, lie was then placed in . a situation in which he was bound to act promptly if he wished to disaffirm'the sale, and he could not lie by .and wait for future developments to see whether or not the sale-would be advantageous, or disadvantageous to him. He received this' notice on the seventh of' August. lie was in reach of the defendants’ office by telegraph ■ or letter, and a communication would have been received by them within twenty-four hours'from the time it was sent; but the- first time that he communicated in 4 any way with them was on the eighteenth of August, more than-' ton days after he received the notice'of sale. It is not disputed ■ but that each day, between August sixth and- August .twelfth inclusive, Hnion Pacific stock sold -lower than the price at which the defendants sold it, and that the highest price at which it sóld during -those days was seventy-two. On the eighteenth day of August the stock had advanced to upwards of seventy-eight, and it was -tliis price that it would appear that the- jury allowed the jda-in-. tiff as the damages caused to him by the-sale of the stock; but I think he was entirely -too late in disaffirming the transaction, ^nd that his delay in disaffirmance waá an implied ratification, and that he cannot now recover for any damages for the sale of this Union Pacific stock. .

Houghton, J., concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event. Order filed.