Lawrence v. Maxwell

Ingraham, P. J.

Different versions of the contract are given by the plaintiff and the defendant, in their evidence on the trial. According to the plaintiff’s evidence, the pledge of the stock was merely made to secure a margin, and if correct, the case would come within the rule as laid down in Markham, v. Jaudon, (41 N. Y. 239,) and the same could not be used by the broker. According to the evidence of the defendant, he required a margin of 10,per cent. This he expected to receive in money; but after the purchase of the first $100,000, the plaintiff applied to him and inquired if he could not use the stock, instead of the money, and the defendant consented to take it. By the proposition to give the defendant the stock instead of the money, and for its use by the defendant, I think it clear that the intent was that the defendant should use the stock as he might lawfully have used the money, and that for such a course the defendant would not be liable in an action of tort. As these statements were contradictory, it came within the province of a jury to decide which was the contract between the parties; and the judge could not take that question from the jury. The offer to show that before this transaction shares had been deposited with the defendant, and he had hypothecated the same, and that such use of the stock was communicated to the plaintiff, who made no objection thereto, should have been admitted, as showing the construction of the contract by both parties; and was properly for the considération of the jury in determining what the terms of the contract were.

Although by this contract as stated by the defendant, he had a right to use this stock in the same manner as the cash, if that had been deposited, he was bound by his contract to return the stock whenever the plaintiff tendered the amount due to the defendant, for which it had been pledged. When the tender was made, it was the duty of the defendant at once, or within a reasonable time, to have restored the stock. This he failed to do, and the plaintiff was entitled to recover, on the contract, its value. But if the defendant, by the contract, had the right to use the stock, by hypothecation, there was no tort committed by the omission to restore it, and the' plaintiff’s remedy was on the contract, and not for the conversion.

The verdict should be set aside and a new trial ordered.

Geo. G. Barnard, J., concurred.