The appeal complains of the charge and rulings of the trial court upon the question of the defendants' right to sell the stocks and securities on the 10th of June, and upon the question of damages.
Upon the first question the defendants asked the court to charge the jury in substance that upon the pleadings and evidence they had the right to call for the $10,000 additional margin, and, upon plaintiff's failure to furnish it, to sell the stocks and securities to protect themselves; and that there was no complaint in the pleadings that the notice of the requirement of further margin was not reasonable; that the defendants had the right to refuse to accept the fire insurance stock, and that unless the jury should find that they actually accepted it for the additional margin demanded, the verdict should be for the defendants, irrespective of any question
whether reasonable notice of the sale had been given. The court charged the jury that if the offer of the fire insurance stock was accepted by Hough as a compliance with the call for margin, the plaintiff was entitled to a verdict, and of this instruction no complaint appears to be made.
Although the complaint is perhaps susceptible of the construction placed upon it by the defendants, we find no error in the refusal of the trial court to charge the jury that the plaintiff could recover only upon proof that the offer of the fire insurance stock was actually accepted. Evidence was received, and apparently without objection, to the effect that on June 9th Hough agreed to accept this stock as a compliance with the call for $10,000 additional margin, and that before that date there had been an agreement that further margin would not be required until that already furnished had fallen to within three or four points of the market price of the stocks purchased, and also evidence of notices given before June 10th, to furnish additional security, and of the conversation between the plaintiff and Hough as to the necessity of furnishing further margin upon such calls. Such proof was not materially variant from the allegations of paragraphs 5 and 7, which were apparently intended as averments that the original contract had been modified as to the amount of margin required, and as to when additional margin must be furnished. Under the complaint as we view it, the plaintiff in order to recover was required to prove either an actual acceptance of the fire insurance stock or an agreement to accept it, or, upon failure to prove either of these facts, that sufficient notice that additional margin was required was not given before the sale was made.
That on the 9th and 10th of June at least $10,000 was required to make the plaintiff's ten per cent. margin good, seems to have been undisputed. An agreement that the fire insurance stock would be accepted as a compliance with the demand to meet such deficiency, involved an agreement that collateral of that kind and of that value (about $8,500) would be so accepted by the defendants. In the absence of an agreement to the contrary, both parties are presumed
to have contemplated that these transactions would be conducted in accordance with the reasonable rules and usages of the New York stock exchange, which appear to have been proved at the trial; Skiff v. Stoddard, 63 Conn. 198,219; and if, under such rules and customs, this collateral was receivable to meet a call for additional margin, the defendants were required to accept it, to the amount of its market value. If it was not receivable under such rules and usages, the defendants were not required to accept it, however great its value may have been, unless they had specially agreed to do so.
As to the claimed insufficient notice, it appears from the evidence offered by the plaintiff that he was notified that his margin was deficient several days before the 9th of June, and that on that day he was expressly notified that unless he furnished additional margin to the amount of $10,000 before the opening of the stock exchange at 10 o'clock the next morning his stocks would be sold. If there was no special agreement made respecting the notice to be given of the requirement of additional margin before the stocks could be sold by the defendants to protect themselves from loss, the parties are supposed to have intended that such notice should be given in accordance with the rules and customs of the New York stock exchange; and, in the absence of such special agreement, the time and character of the notice required to be given was that shown to have been fixed by such rules and usages, rather than that which the jury may have decided to have been reasonable. If there was no proof as to the notice required by the usages of the stock exchange, nor of any special agreement regarding notice, then reasonable notice was required to be given before the sale.
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The appeal complains of the charge and rulings of the trial court upon the question of the defendants' right to sell the stocks and securities on the 10th of June, and upon the question of damages.
Upon the first question the defendants asked the court to charge the jury in substance that upon the pleadings and evidence they had the right to call for the $10,000 additional margin, and, upon plaintiff's failure to furnish it, to sell the stocks and securities to protect themselves; and that there was no complaint in the pleadings that the notice of the requirement of further margin was not reasonable; that the defendants had the right to refuse to accept the fire insurance stock, and that unless the jury should find that they actually accepted it for the additional margin demanded, the verdict should be for the defendants, irrespective of any question
whether reasonable notice of the sale had been given. The court charged the jury that if the offer of the fire insurance stock was accepted by Hough as a compliance with the call for margin, the plaintiff was entitled to a verdict, and of this instruction no complaint appears to be made.
Although the complaint is perhaps susceptible of the construction placed upon it by the defendants, we find no error in the refusal of the trial court to charge the jury that the plaintiff could recover only upon proof that the offer of the fire insurance stock was actually accepted. Evidence was received, and apparently without objection, to the effect that on June 9th Hough agreed to accept this stock as a compliance with the call for $10,000 additional margin, and that before that date there had been an agreement that further margin would not be required until that already furnished had fallen to within three or four points of the market price of the stocks purchased, and also evidence of notices given before June 10th, to furnish additional security, and of the conversation between the plaintiff and Hough as to the necessity of furnishing further margin upon such calls. Such proof was not materially variant from the allegations of paragraphs 5 and 7, which were apparently intended as averments that the original contract had been modified as to the amount of margin required, and as to when additional margin must be furnished. Under the complaint as we view it, the plaintiff in order to recover was required to prove either an actual acceptance of the fire insurance stock or an agreement to accept it, or, upon failure to prove either of these facts, that sufficient notice that additional margin was required was not given before the sale was made.
That on the 9th and 10th of June at least $10,000 was required to make the plaintiff's ten per cent. margin good, seems to have been undisputed. An agreement that the fire insurance stock would be accepted as a compliance with the demand to meet such deficiency, involved an agreement that collateral of that kind and of that value (about $8,500) would be so accepted by the defendants. In the absence of an agreement to the contrary, both parties are presumed
to have contemplated that these transactions would be conducted in accordance with the reasonable rules and usages of the New York stock exchange, which appear to have been proved at the trial; Skiff v. Stoddard, 63 Conn. 198,219; and if, under such rules and customs, this collateral was receivable to meet a call for additional margin, the defendants were required to accept it, to the amount of its market value. If it was not receivable under such rules and usages, the defendants were not required to accept it, however great its value may have been, unless they had specially agreed to do so.
As to the claimed insufficient notice, it appears from the evidence offered by the plaintiff that he was notified that his margin was deficient several days before the 9th of June, and that on that day he was expressly notified that unless he furnished additional margin to the amount of $10,000 before the opening of the stock exchange at 10 o'clock the next morning his stocks would be sold. If there was no special agreement made respecting the notice to be given of the requirement of additional margin before the stocks could be sold by the defendants to protect themselves from loss, the parties are supposed to have intended that such notice should be given in accordance with the rules and customs of the New York stock exchange; and, in the absence of such special agreement, the time and character of the notice required to be given was that shown to have been fixed by such rules and usages, rather than that which the jury may have decided to have been reasonable. If there was no proof as to the notice required by the usages of the stock exchange, nor of any special agreement regarding notice, then reasonable notice was required to be given before the sale.
The court rightly refused to instruct the jury that the rule of damages, in actions of this character, is the value of the stock at the time of the sale, with interest. Although contracts like those in question, for the purchase of stocks of a fluctuating value upon a margin, are speculative in character, they are not for that reason illegal, when there is
a bona fide employment of the broker to make an actual purchase of the stocks to be held for delivery upon payment of the purchase price. Hatch v. Douglas, 48 Conn. 116. Since the plaintiff's contract with the defendants, for the purpose of speculation, is recognized by the law as valid, he may recover, as damages for the breach of it, compensation for the loss of profits caused by the unauthorized act of the defendants, which could not have been averted by the exercise of reasonable prudence and diligence on his part. But the plaintiff was required after notice of the sale to "so act as to make his damages as small as he reasonably can. . . . The law gives him all the redress he should have, by indemnifying him for the damage which he necessarily sustains."Wright v. Bank of the Metropolis, 110 N.Y. 237, 245. The correct measure of the plaintiff's damage was, therefore, the excess, if any, over the price realized (at the sale on June 10th), of the lowest sum for which he could have repurchased the stocks, after notice of the sale, had he given an order to that effect with reasonable promptness; or, in case of fluctuations of market price between the wrongful sale and the latest day to which it would have been reasonable to defer a repurchase, the difference, if any, between the price obtained when the shares were converted and the highest market price, in excess thereof, attained during that period.Wiggin v. Federal Stock and Grain Co., 77 Conn. 507; Galigher
v. Jones, 129 U.S. 193. To enable a customer to recover damages from his broker for such an unauthorized sale of stocks, it is not necessary that the former should have actually repurchased them, or have ordered them repurchased. The question is, when, in the exercise of reasonable diligence and judgment, ought he to have ordered a repurchase if he desired to obtain the benefit of a possible future advance in price. But in determining when the customer had the first reasonable opportunity to replace the stocks sold, his financial inability to do so is not an element to be considered, although, when he has sufficient means, he is entitled to a reasonable time to convert his securities into cash in order to raise the sum required to replace the stocks. Burhorn v. Lockwood, 71 N.Y. App. Div. 301. The trial court therefore erred in instructing the jury that the plaintiff's financial condition was to be considered in determining when the first reasonable opportunity was afforded him to replace the stocks which had been sold.
Proof that after the sale on the 10th of June the price of the stocks advanced, was not admissible under the allegations of the complaint. The goods having been sold upon the market, a subsequent advance in price and a consequent loss of profits were not results which necessarily followed from the unauthorized sale. It is said that such loss of profits is the natural and proximate result of the wrongful act complained of. That is true of all damages, whether general or special, which may be recovered in an action of this character; the difference between them being that the former are such damages as follow as a matter of course from the wrongful act complained of, while the latter include those injuries and losses which are not necessary results of such a wrongful act "but in fact follow it as a natural and proximate consequence." Bristol Mfg. Co. v. Gridley,28 Conn. 201, 212. Proof of the fact that the price of the stock advanced after the sale and before the plaintiff had a reasonable opportunity to replace it, was necessary to enable the plaintiff to recover damages in excess of the market price at the time of the wrongful sale. As such advance did not necessarily follow from the sale, the damages which resulted therefrom to the plaintiff were special and should have been specially alleged in the complaint. Crug v. Gorham,74 Conn. 541, 544; Taylor v. Monroe, 43 id. 36.
As a new trial must be granted, we do not consider the question of whether the trial court erred in denying the defendants' motion for a new trial upon the ground that the verdict was against the evidence.
There is error and a new trial is granted.
In this opinion TORRANCE, C. J., BALDWIN and PRENTICE, Js., concurred.