Barber v. Ellingwood

Scott, J.:

The plaintiff appeals from a compulsory order of reference. The action is by a customer against a stockbroker. The com*556plaint alleges thq establishment between the parties of the relation of customer and broker, and that between January 15 and 30, 1906, plaintiff deposited with defendants as part purchase money and margin on shares of stock to be bought and sold on plaintiff’s account, the sum of $9,000; that on or.about April 26, 1906, defendants were carrying for plaintiff a specified number of shares of five different stocks or securities ; that on or about-April twenty-sixth, April twenty-eighth and May third, respectively, defendants sold out the several specified stocks at prices which are named, and that all of said sales were made by defendants without notice to and without authority from plaintiff, and that on learning of such sales' plaintiff disaffirmed them. The complaint then alleges the market value of said stocks within a reasonable time after said sales, and making allowance to defendants for commission and interest, asks for a judgment for the net loss. The answer in effect admits all the material allegations of the complaint, except that defendants deny the alleged transactions as to one. of the named- stocks, and deny that they sold the stocks without the knowledge and authority of plaintiff, but, on the contrary, allege that they so sold them at plaintiff’s request.

It is manifest that up to this point there is nothing in the pleadings to justify a compulsory reference, as there is only one item in dispute, besides the question as to defendants’ authority to sell when they did. It is well settled that the referability of an action is to be determined, in general, by the complaint, and that a defendant cannot make an .action referable by pleading a counterclaim embracing the examination of a long account.

The defendants claim, however, that in the present case the determination of plaintiff’s claim will necessarily involve the examination of a long account, because of the nature of the transactions between the parties. .This claim is based upon what is denominated a “ first and separate defense,” and which, although not stated to be pleaded by way of counterclaim, is evidently intended to be so regarded. It is in the usual form of a stockbroker’s complaint agfiinst a customer, alleging that plaintiff opened three accounts with defendants; that numerous transactions were had; that plaintiff failed to keep his margins good; that' monthly accounts were sent to plaintiff; that defendants rightfully sold him out, and that there was left due *557to defendants a balance for which they ask judgment. There is no specific allegation, nor does it appear by necessary intendment that the half-dozen transactions upon which plaintiff sues were included in any of the accounts mentioned in this defense, and if they were, it by no means follows that it will be necessary to go over all these accounts in order to pass upon the plaintiff’s complaint respecting the particular matters which he specifies. We do not consider that the defendants have brought the case within the somewhat stringent rules respecting' compulsory references.

The order appealed from must, therefore, be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

McLaughlin, Laughlin and Clarke, JJ., concurred; Ingraham, J., dissented.