Conolly v. Foster , 186 Minn. 8 ( 1932 )

I dissent. The majority opinion virtually concedes that it was for the jury to say whether plaintiff traded with defendants in their St. Paul office under the oral agreement he made with Mr. Byrne, defendants' manager there. Plaintiff testified that the only arrangement he made with Byrne was this:

"If I open this account here I expect to trade quite a bit, and it will be an open account. Now, in regard to the matter of protection, marginal requirements and so on, I will expect ample protection from you and your company in this St. Paul office." To which proposition Byrne responded: "Al, you can absolutely depend upon that. Any time your account needs bolstering I will give you ample time to protect yourself."

That they acted under this oral agreement is evidenced by the fact that when the market broke on October 29 Byrne telephoned plaintiff, who was ill at home, to lighten somewhat on his Stewart-Warner stock, pledged with other stock for margins. It was then agreed that 500 shares should be sold, and Byrne did sell and at once report for $32 a share. The market rose thereafter on that day to $37 at noon, but fell in the afternoon, closing at $31 1/4. The next morning it opened at $34, rose to $39 before noon, and closed at $44 7/8. On the 31st it advanced to over $50. The jury found by their verdict that there was a conversion; but evidently determined the damages as of the 30th, the day when plaintiff was first informed of the unauthorized sale and when he emphatically repudiated the same. It would appeal to anyone that plaintiff ought to have as damages for conversion the highest price reached by the stock on the day of its conversion. The rule applied, known as the New York rule, is:

"The rule is that a person whose stocks have been converted is entitled to a reasonable time after notice of the conversion within which to determine whether he will purchase other stocks in the place thereof and that he may use as a basis for his claim of damages resulting from the conversion the highest prices which have prevailed during such reasonable period." Mayer v. Monzo, 221 N.Y. 442, 446, 117 N.E. 948, 950.

A few cases only need be cited following this rule. McKinley v. Williams (C.C.A.) 74 F. 94; Wilson v. Colorado Min. Co. (C.C.A.) 227 F. 721; Galigher v. Jones, 129 U.S. 193,9 S. Ct. 335, 32 L. ed. 658; Newburger Cotton Co. v. Stevens.167 Ark. 257, 267 S.W. 777, annotated 40 A.L.R. 1279, 1282; Vos v. Child, Hulswit Co. 171 Mich. 595, 137 N.W. 209,43 L.R.A.(N.S.) 368; Gervis v. Kay, 294 Pa. 518,144 A. 529, annotated 63 A.L.R. 297, 305; Western Sec. Co. v. Silver King Cons. Min. Co. 57 Utah, 88, 192 P. 664. See also Hall v. Paine,224 Mass. 62, 112 N.E. 62, 112 N.E. 153, L.R.A. 1917C, 737, which suggests that the verdict rendered might be justified even under the rule prevailing in that state.

The jury also had a right to find that plaintiff when he first learned of the conversion at once repudiated the deal. It could accept plaintiff's testimony as true, that at about noon on the 30th he was telephoned that defendants had sold 4,400 shares of the Stewart-Warner stock, and he at once demanded to know upon whose order, and was told upon Byrne's. He was connected with Byrne and said to him:

"Man, that stock is rising! Why sell it without my authority? You cancel immediately any unsold orders on any stock still unsold. 'Well,' he said: 'I don't know, it may be too late, but I will wire them anyway to cancel selling orders.' 'Now,' I said, 'I rely on that, and you let me know.' "

Byrne did not let plaintiff know, but contrary to his promise did, during the afternoon of the 30th, give several selling orders of this stock in blocks of 500 shares.

It seems to me the jury could, from the above, find that a definite repudiation occurred on the 30th of October. And there being once such repudiation, it might well be found that what thereafter transpired in the way of statements of account, receiving back the remnants of the money and stock, and directing it to be transferred to another broker did not render the repudiation nugatory or amount to a ratification of the unauthorized sale or conversion. It is plain that the transfer to another broker was because plaintiff considered his boyhood friend, Byrne, had wronged him. This issue of ratification by the rendering of a statement, by drawing some money, by transferring the account to another broker, and by acquiescence was submitted so fairly and clearly to the jury that no fault is found with the language in which it was submitted. And taking the evidence as a whole, I am convinced that the issue was for the jury and not for the court. The cases cited in the majority opinion involve agents and principals, where an agent or broker has undertaken to buy or sell stock for immediate or future delivery and some question arises as to his authority. A principal, when he learns that his agent or broker has dealt in his behalf, must at once repudiate the transaction if he considers it to have been unauthorized. Mere silence after full knowledge of the purported act of his agent, or the acceptance of any benefit therefrom, will ratify or adopt the transaction.

It seems to me the conversion of pledged stock stands on a different basis, in this, that the acceptance or recovery of some of the stock or of some of the proceeds of the unlawfully converted stock does not as a matter of law approve the conversion. Not to speak of the immediate repudiation as testified to by plaintiff herein, if defendants were guilty of conversion and were informed by plaintiff that he would not sanction it on the day it took place, defendants are not now in a good position to insist that plaintiff has lost his rights by what has occurred subsequent to the repudiation. Berberich's Estate, 257 Pa. 181,101 A. 461. 26 R.C.L. § 58, p. 1145, speaking of estoppel — which may be said to be a legal consequence of ratification — states:

"However, the mere receipt of the proceeds derived from an unauthorized sale of the plaintiff's property will not necessarily estop him from treating such act as a conversion. Even though he knows of the sale at the time of such receipt, it must be remembered that he is entitled to compensation by reason of the conversion and he may therefore treat such payment as part compensation for his loss."

The same thought is expressed in Allen v. American B. L. Assn. 49 Minn. 544, 52 N.W. 144, 32 A.S.R. 574; Hughes v. Barrell, 167 Ill. App. 100.

I think the evidence justified a submission of all the issues to the jury and supports the verdict rendered.