On appeal from the Supreme Court.
For the appellant, Nathaniel Weltchek.
For the respondent, Samuel Press.
The opinion of the court was delivered by
WELLS, J. The defendants in this case were stock brokers having their main office in New York city and a branch office
in Newark, New Jersey. The plaintiff was carried on their books as a customer. On June 14th, 1930, defendants deducted $1,180.78 from plaintiff's account for reasons hereinafter stated. This precipitated the present suit and the question involved was whether the action of the defendants in deducting this amount from plaintiff's account was legal.
There was testimony offered in the case tending to show that sometime in the month of June, 1929, the plaintiff ordered one hundred shares of the common Tungsol lamp stock, and that the defendants executed this order, but through a mistake, there were delivered to the plaintiff sixty-six and two-thirds shares of common stock and thirty-three and one-third shares of the preferred stock, that these certificates of stock were made out in the name of the wife of plaintiff by direction of the plaintiff himself, but that they were delivered to the plaintiff, who, in turn, delivered them to his wife.
The plaintiff's testimony clearly indicated that the account the plaintiff had with the defendants was in reality his wife's account; that the money in this account belonged to her; that the securities purchased were paid for by her checks, and that the plaintiff was her agent in these stock transactions; that the account was handled in this manner because of the refusal on the part of the defendants to carry a margin account in the name of a woman. The defendants, however, take the position that so far as they were concerned, their dealings were with the plaintiff and that any arrangements which existed between him and his wife were not matters of concern to defendants.
Testimony on the part of the defendants tended to show that upon the discovery of the mistake in the delivery of the thirty-three and one-third shares of preferred stock to the plaintiff, they notified him and tendered to him the thirty-three and one-third shares of common stock and demanded that he return to them the thirty-three and one-third shares of preferred stock, which had been delivered to him by a mistake, and that plaintiff refused to deliver this stock, admitting that the stock was in the possession of his wife and that defendants could have it if they could show that it belonged to them;
that upon the refusal of the plaintiff to surrender the thirty-three and one-third shares of preferred stock, the defendants notified him that unless he did surrender this preferred stock within a specified time, they would go into the market and buy thirty-three and one-third shares of preferred stock to take the place of the stock which he had thus unlawfully retained and converted to his own use. At the expiration of the time specified in the notice, defendants bought in the open market thirty-three one-third shares of preferred stock of the Tungsol Lamp Company and deducted from the plaintiff's account the price thereof, amounting to $1,180.78. The plaintiff thereupon brought the present suit against the defendants, claiming that they had unlawfully deducted this money from his account and alleging that he had not authorized the purchase of the shares of stock, and sought a money verdict against the defendants for the amount thus deducted by the defendants from his account.
To the complaint, defendants filed an answer and counter-claim, and tendered in court for plaintiff the thirty-three and one-third shares of common stock which defendants had originally purchased for plaintiff. While the pleadings in this case are inartistically drawn, the gist of the defense and the counter-claim was that the defendants were justified in the deduction of the amount expended by them in the purchase of the thirty-three and one-third shares of preferred stock, in that the plaintiff by the refusal to surrender the thirty-three and one-third shares of preferred stock had converted this stock, and that the defendants, under the law of the state, had the option of going into the market within a reasonable time after the ...