Parnall v. Paine , 209 Mass. 181 ( 1911 )

Knowlton, C. J.

This case was heard by a judge^* without a jury and there was a finding for the plaintiff upon a count for the conversion of five hundred shares of stock of the North Lake Mining Company. It is reported upon the question whether there was any evidence to warrant the finding.

The plaintiff, a resident of Jackson, Michigan, had an account with A. O. Brown and Company, stock brokers, doing business in New York City, upon which there was a substantial balance to his credit. On August 19, 1908, through their branch office in Detroit, Michigan, where he had been accustomed to do business with them, he ordered them to subscribe for five hundred shares of the capital stock of the North Lake Mining Company on his account. There was an arrangement between this firm and the defendants, who were stock brokers in Boston, that the defendants should do all the business of A. O. Brown and Company in Boston, and A. O. Brown and Company should do all the defendants’ business in New York. A. O. Brown and Company sent an order to the defendants to make this subscription at the office of the corporation in Boston, and after getting a response that the subscription had been made and that the account of A. O. Brown and Company had been charged $4,000 on account of it, they charged this amount to the plaintiff and credited his account with the five hundred shares of stock, and closed tho account by sending him a check for the balance due him. Previously, on the same day, they had sent a telegram to the defendants, which was duly received, but not answered, inquiring whether the $4,000 paid for the stock in full. Later, on the same day, they sent another telegram to the defendants, asking to have the stock transferred to the plaintiff and shipped. The stock was subscribed for at $8 per share and was paid for in full by the defendants, who received temporary receipts for their payment, which were to be surrendered and exchanged for stock certificates; but this exchange could not be made until September 8. Under the custom of brokers, no commission was charged by the defendants for this service.

The findings of the judge were made upon a statement of agreed facts which included long extracts from the book accounts between the parties, from which inferences might be drawn in regard to their course of dealing and the effect of their transactions. Two separate accounts were kept by each party, one relating to the transactions of the defendants in Boston on the order of A. O. Brown and Company, and the other relating to the transactions of A. 0. Brown and Company in New York, on the order of the defendants.

F. N. Nay & F. E. Neagle (of New York), for the plaintiff. C. E. Hellier, (W. P. Everts with him,) for the defendants.

The judge was warranted in finding that these accounts and the transactions referred to in them, were intended to be dealt with independently, as each party would deal with such an account for any other party who was not a broker for whom he was doing business and who had no other account with him. The two accounts were to be considered together at the close of their transactions. The judge might also have found that there was a substantial balance in favor of A. O. Brown and Company on August 19, and immediately before and after that date, upon the account to which this transaction belonged. In the agreement under which the two firms of brokers were acting, there was an arrangement for providing margins as security for liabilities and it was stipulated that payment should be made in cash for purchases of stock at less than $10 per share. On August 20, the day after this order was given, A. O. Brown and Company caused their bankers in Boston to pay the defendants $5,000 on account, and the judge might have found that this payment was understood by the parties as covering the price of this stock. He might have found that the defendants, after the last telegram from A. O. Brown and Company relating to the transaction, and especially after the payment of the $5,000 in cash, were holding this stock as fully paid for and belonging to the plaintiff, although there had been no formal transfer to him and the regular certificates of stock could not be issued until September 8.

The controversy arises from the fact that A. O. Brown and Company failed a few days later, having in their hands a large amount of property that had been advanced by the defendants as margins on their transactions in New York. The defendants then sold the five hundred shares of stock in the North Lake Mining Company and retained the proceeds and applied them in part payment of their claim against A. O. Brown and Company. We are of opinion that there was ample evidence to warrant a finding for the plaintiff.

Judgment on the finding.

* Hardy, J.