Wilde v. Sawtelle , 1919 Mass. LEXIS 760 ( 1919 )

Braley, J.

If the plaintiff sought relief on the ground that his commercial dealings with the defendants, for which he asks an accounting, came within the provisions of R. L. c. 99, § 4, concerning the purchase and sale of stock on margins, he should have so framed the bill as to raise this issue. Fishe v. Doucette, 206 Mass. 275. And as there are no allegations of any violation of the statute, the master erred in admitting' evidence in support of a cause of action which had not been pleaded.

But it is unnecessary to order an interlocutory decree sustaining the defendants’ exceptions, ■ for the master’s report, in so far as he admitted evidence and made findings as if the statute were applicable, can be treated as irrelevant, since it appears that all the issues of fact presented by the pleadings were considered. If the allegations relating to certain agreements claimed to have been made with one of the defendants found in the fifth, sixth, seventh and eighth paragraphs of the bill are eliminated, as the plaintiff on the master’s findings concedes that they must be, the plaintiff’s case rests on the remaining allegations which in substance are, that from time to time he deposited with the defendants, doing business as a firm of stockbrokers under the name of Keveney, Sawtelle and Company, certain stocks and bonds to secure them against any liability in carrying out the purchases and sales of stocks which he might order and for advances made on such transactions. And their business dealings having ceased, an accounting is asked for to establish the indebtedness of the defendants with a return of the securities. It is further asked, in the alternative, that, if it appears that the plaintiff still owes the defendants, he may upon payment of the amount be allowed to redeem.

The master reports that the plaintiff gave to one Houghton a power of attorney “to handle any and all cash or securities now deposited to my credit or that may be deposited at any time in the future with Keveney, Sawtelle and Company ... in his discretion; also to buy or sell stocks and bonds for my account as he may elect. Hereby granting unto the said attorney full power and authority to act in and concerning the premises as fully and effectually as I might do if personally present.” And Houghton thereupon delivered the power of attorney to the defendants and opened an account with them in the plaintiff’s name. The master finds that the plaintiff thereafter “left all details of the transactions to Houghton . . . and he was satisfied that in all of the matters in relation to the transactions Houghton should act as his judgment might determine.” The defendants rendered monthly statements to Houghton showing the condition of the account including the moneys paid to him, although his name did not'appear, and the plaintiff is found to have been conversant with this mode of dealing, even if, as the master further reports, “he had no actual knowl- ' edge that Houghton had withdrawn money.” It follows that the defendants who rightly dealt with Houghton as the plaintiff’s agent are entitled to be credited with the payments they made to Houghton. Allen v. Fuller, 182 Mass. 202. McNeil v. Boston Chamber of Commerce, 154 Mass. 277, 285. The plaintiff personally gave the order for the purchase of the shares of stock of the Germany Mining Company, which the defendants thereupon bought and have retained in their possession, together with the shares of stock of the Missouri, Kansas and Texas Railroad Company bought for the plaintiff on Houghton’s order and the bonds and stock deposited by the plaintiff, all of which are enumerated in the report.

The master finds that “the 'short sales’ made upon the account of the plaintiff numbered about twenty and represented over nine hundred shares of various stocks. Some of the transactions netted a profit, while others resulted in losses.” The defendants “have paid to Houghton $1,533.48. They have charged interest against the account in various amounts and have given credits for dividends collected upon certain of the stocks which were the subject of some of the transactions. The method of keeping the account and the basis of the charges for interest were not made to appear and the state of the account was not made to appear other than that” the defendants “claim that as a result of the moneys paid to Houghton and the losses sustained- by the series of transactions the plaintiff is indebted to them in the amount of $6,625.24 as of December 11, 1916, and they claim the right to sell the securities and apply the proceeds to the debt of the plaintiff to them with interest thereon.” But no finding whatever is made whether this is a valid claim, the amount of which in whole or in part should be charged. against the plaintiff. It is true that in the eleventh paragraph the plaintiff says he “is desirous of obtaining the said securities, but that the defendants have refused to deliver the same to him, unless the plaintiff will pay to them all the moneys that the defendants claim to have advanced to the said Houghton, and all the losses which they claim to have sustained because of the transactions of the said Sawtelle, and also all the losses which the defendants claim the plaintiff has sustained because of the plaintiff’s individual transactions having been closed out by the defendants.” And in the fourteenth paragraph the plaintiff alleges that, “although the plaintiff believes that nothing is due from him to the defendants, he hereby offers to pay to the defendants or to pay into court as the court may order all moneys, if any, which the court may find to be due from him to the defendants for which the defendants are entitled to hold the 'said securities as collateral.” But this is not an admission of any indebtedness. The plaintiff only offers to pay the balance, if the accounting finally goes against him. Goldthwait v. Bay, 149 Mass. 185, 187. The defendants, however, respectively aver in their answers that “On or about December 11,1916, the amount due to the defend-, ants by the plaintiff was $6,625.24” and that “Under the terms of the agreement by which they hold said securities they have a right to sell the same in order to pay themselves the amount due by the plaintiff.”

It is settled that in a-suit in equity for an accounting both parties are actors and the defendant may have a decree in his favor without the aid of a cross bill. Braman v. Foss, 204 Mass. 404, 411. A claim of indebtedness is not proof of indebtedness. If the defendants contended that, notwithstanding the payments already made, there still remained charges against the plaintiff for the satisfaction of which the stocks and bonds could be applied, it was for them to introduce evidence proving their side of the account. But, not having done so, their rights must be determined by the report as it stands.

The plaintiff accordingly, upon reimbursing the defendants for the amount of $414.50 with interest which they paid for the stock of the Germany Mining Company and the Missouri, Kansas and Texas Railroad Company, less any dividends received thereon after December 11, 1916, is entitled to a decree that the bonds and stocks be delivered to him and for his costs.

So ordered.