Opinion
13711
November 6, 1933.
Before SHIPP, J., Charleston, March, 1929. Order affirmed.
Action by L.A. Werle against Charles E. Fenner and others. From an order granting a new trial, the defendants appeal.
The order granting a new trial is a follows:
A motion for a new trial having been heard, the Court filed the following order:
The plaintiff brought this action against the defendants for damages for the conversion of twenty-nine shares of stock of the Standard Oil Company of New Jersey. The defendants answered the complaint, and, by way of affirmative defense, set up a counterclaim involving transactions between the plaintiff and the defendants on the New York Stock Exchange. At the trial I directed a verdict in favor of the defendants for the full amount of the counterclaim set up in the answer. The plaintiff made a motion before me on the minutes of the court for a new trial on the following grounds:
"1. That it was error for his Honor, the trial Judge, to take from the jury the question of the scope and extent of the agency of the brokers, the error being that an agency being proved, and there being conflicting testimony as to its scope and extent, the question of scope and extent is for the jury."
"2. That his Honor, the trial Judge, erred in directing a verdict against the plaintiff in the face of the written admission of the defendant Mayberry `I can't understand his stop loss order never being called,' the error being that the said written admission by the defendant Mayberry of itself constitutes sufficient evidence to take the case to the jury against the defendant Mayberry and the other defendants whom he represented on the sufficiency of the action of the defendants in handling the stop loss order."
"3. That his Honor, the trial Judge erred in directing a verdict against the plaintiff and in not submitting to the jury the question of the liability of the defendants as agents for failing to disclose to the plaintiff as principal the fact that the borrowing against the short sale was made in a stock other than the stock directed by the plaintiff, the error being that the liability of an agent for failure of disclosure is always a jury question."
"4. His Honor, the trial Judge, erred in directing a verdict against the plaintiff for the full amount of the defendants' counterclaim in disregard of the written admission of the defendants shown by the letter of May 29, 1925, introduced in evidence, that the defendants held for the plaintiff fifty (50) shares of Electric Boat that had a value on January 26, 1928, of Seven Hundred ($700.00) Dollars, for which the defendants have never accounted to the plaintiff, the error being that in the face of the said admission, and there being no testimony as to the disposition of the said asset, the Court should have submitted to the jury the question of the amount involved, and particularly the fault of the defendants to credit the said asset on the account."
This matter has given me great concern. In directing a verdict for the defendants, I necessarily held that, when the plaintiff gave an order to the defendants Fenner Beane to sell on his account 100 shares of stock of the Central Leather Company, the defendants Fenner Beane had a legal right to deliver instead of Central Leather stock 100 shares of United States Leather, and that, notwithstanding Fenner Beane delivered United States Leather stock in lieu of stock of Central Leather Company, it was not their duty to notify the plaintiff of their action. I am satisfied that it was error of law to have so held, because ordinarily the scope of the agency of a broker is a question for the jury. It seems to me that, if the defendants Fenner Beane had a right to deliver United States Leather instead of stock of the Central Leather Company, it was their duty to notify the plaintiff that they had done so. If they had so notified him, and he had known that he had a right to replace the stock borrowed by Fenner Beane by tendering United States Leather, he might have recouped his losses. At least it seems to me, after thinking over the matter carefully, that I ought not to have taken these questions from the jury, but that the jury ought to have been allowed under all of the evidence of the case to have passed on these questions.
After carefully considering the arguments for the plaintiff and the defendants, and after looking closely at the quotations made in these arguments from the address of Mr. Whitney, president of the New York Stock Exchange, which was placed in evidence, I am more thoroughly convinced that I committed an error of law in the particulars already mentioned, and I feel that it is my duty to grant the plaintiff a new trial in the case on the first and second grounds of the motion papers. It is therefore ordered that the directed verdict be, and the same is, set aside, and a new trial granted.
Messrs. Mitchell Horlbeck, for appellants, cite: Difference between stockbroker and other broker: 9 C.J., 511; 34 N Y, 417; 95 N.Y., 359. Request for directed verdict: 38 Cyc., 1583; 161 S.C. 328; 159 S.E., 640.
Messrs. Buist Buist, for respondent, cite: Scope of agency question for jury: 73 S.C. 48; 52 S.E., 789; 87 S.C. 194; 69 S.E., 211.
November 6, 1933. The opinion of the Court was delivered by
The plaintiff, L.A. Werle, commenced this action against the defendants, Charles E. Fenner, Alpheus C. Beane, Joseph N. Carpenter, Jr., Charles W. Shepard, and Edward F. Mayberry, in the Court of Common Pleas for Charleston County, March 30, 1929, for recovery of judgment in the sum of $2,407.00. As a basis for the action, the plaintiff alleges, in substance, that he delivered to the defendants twenty-nine shares of stock of Standard Oil Company of New Jersey, under an agreement that the said stock should be held by the defendants to secure the payment of such sums of money as the plaintiff might from time to time owe the defendants, or any of them, and that said stock was so held by the defendants; that on or about the 25th of April, 1928, the defendants, acting through the defendant Mayberry made demand upon the plaintiff for the payment of, "various and sundry sums of money that the defendants claimed to be owing by the plaintiff to them, the said defendants," which claims the plaintiff denied owing, and refused to pay the same, alleging that the said claims were unjust and untrue; that thereafter, after making repeated demands upon the plaintiff, the defendants, on or about May 11, 1928, "appropriated to themselves, converted to their own use" the said twenty-nine shares of stock, the property of the plaintiff, and "sold the same and tortiously deprived the plaintiff of his said property"; that thereafter the value of said stock became $83.00 per share, making the total value of said stock $2,407.00; that, by reason of the acts stated above, the defendants "wrongfully, tortiously and illegally converted and misappropriated the said stock, property of the plaintiff," and deprived him of his right and title to the same to his damage in the said sum above named.
By way of answer, the defendants admitted that the defendant Mayberry is the agent and representative at Charleston, S.C. of the other defendants, and that he is manager of the Charleston office of Fenner Beane, where he receives and executes orders for Fenner Beane, and admitted the delivery to them of the stock in question, and that under an agreement entered into between the parties the said stock was held by the defendants to secure the plaintiff's account with the defendants; that, after making frequent demands upon the plaintiff for payment of his accounts, and payment not being made, the defendants, about May 11, 1928, sold the said twenty-nine shares of stock of Standard Oil Company, pursuant to an agreement under which the said stock was delivered to the defendants and applied the proceeds of sale to the plaintiff's account.
The defendants, in further answer to the allegations of the complaint, and for affirmative relief and a counterclaim, alleged, in substance, that on August 15, 1927, the plaintiff requested the defendant to execute an order to sell for his account one hundred shares of stock of Central Leather Company, which order constituted what is known as a "short sale," and implied that "defendants would execute the order on New York Stock Exchange and that the plaintiff would on demand of the defendants furnish said one hundred shares of Central Leather or in lieu thereof would pay to the defendants the equivalent of the market value of said shares as of date of such demand and so that with these funds the defendants could buy the shares in open market"; that, contemporaneously with the order to sell, "the plaintiff deposited with the defendants 29 shares of the stock of the Standard Oil Company of New Jersey as a security or margin to fulfill his contract," under an agreement referred to hereinafter; that thereafter the defendants, in pursuance of this order, on or about the 15th day of August, 1927, sold for the plaintiff's account one hundred shares of Central Leather at the price of $16.75 a share, the total sum being $1,675.00, which sum, the defendants alleged, the plaintiff owed them on account of said order. Thereafter, October 26, 1927, according to defendants' allegations, the plaintiff gave the defendants an order to buy one hundred shares of the said Central Leather stock at $25.00 a share, for the purpose of closing his account, but at that time the defendants were unable to execute this order on the New York Stock Exchange, "for the reason that the said stock was not available to purchase at that time"; that, according to defendants' allegations, the market continued to rise, and the defendants requested the plaintiff "to deliver to them one hundred shares of stock of Central Leather to fulfill his contract or to deposit additional margin to secure his account, which the plaintiff refused to do," although the defendants requested the plaintiff repeatedly to do so. The defendants further contended, under their allegations, that on or about the 11th of May, 1928, for the purpose of protecting themselves, they were forced to go into the open market and purchase one hundred shares of United States Leather at the price of $48.00 a share, a total sum of $4,815.00, including commissions, to deliver in the place of Central Leather, which the defendant were unable to procure, and, on account of this fact, the plaintiff became indebted to the defendants in the sum of $3,125.00; that on the same date, May 11, 1928, the defendants sold the said 29 shares of Standard Oil stock, and also other collateral for $2,088.00, and applied this sum of money to the balance of $3,125.00, due the defendants by the plaintiff, leaving a balance of $1,037.00 owing the defendants, for which sum the defendants allege they have made repeated demands, but the plaintiff has refused to pay the same. Whereupon, based on these allegations, the defendants asked judgment against the plaintiff in the sum of $1,037.00.
Issues being joined, the case was tried at the November, 1931, term of said Court before Hon. S.W.G. Shipp, Circuit Judge, and a jury, resulting in a verdict being directed for the defendants for the amount of their counterclaim. Thereafter, on motion of the plaintiff's counsel, his Honor, the trial Judge, after due consideration, ordered a new trial on the ground that his Honor erred in not submitting to the jury the question of agency of the brokers (Fenner Beane) as to whether or not it was their duty to notify the plaintiff of their action in delivering one hundred shares of United States Leather stock in the place of Central Leather stock.
From the said order of his Honor, Judge Shipp, granting a new trial, the defendants, pursuant to due notice, have appealed to this Court.
The main question involved in the appeal, while other questions are raised and discussed in the briefs of counsel for the litigants, is whether the presiding Judge erred in ordering a new trial. For the reasons assigned by his Honor, as set forth in his order, which order will be incorporated in the report of the case, we think his Honor properly ordered a new trial, for under our view of the case the same should have been submitted to the jury to decide disputed questions of fact growing out of the testimony. We do not consider it necessary to discuss the other questions referred to by counsel.
The order appealed from is affirmed.
MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES STABLER and BONHAM concur.