Ryan v. Whitney

153 N.E. 449, 257 Mass. 218, 1926 Mass. LEXIS 1319
CourtMassachusetts Supreme Judicial Court
DecidedOctober 14, 1926
StatusPublished
Cited by8 cases

This text of 153 N.E. 449 (Ryan v. Whitney) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ryan v. Whitney, 153 N.E. 449, 257 Mass. 218, 1926 Mass. LEXIS 1319 (Mass. 1926).

Opinion

Wait, J.

The plaintiff seeks recovery of payments made by her to the defendants in stock transactions which she claims were wagering transactions obnoxious to G. L. c. 137, § 4. After a report by an auditor who found for the defendants, the case was tried before a jury upon the auditor’s report and other evidence. At the conclusion of the evidence, the plaintiff elected to abandon her count at common law and to rely solely upon her count under the statute. The judge directed a verdict for the defendants. The plaintiff contends that this ruling was wrong, and that she was entitled to go to the jury upon the issues of her intent that there should be no actual purchases or sales upon her orders to buy or to sell stocks, of the defendants’ reasonable cause to believe such to have been her intent, and of the making by the defendants of actual purchases and sales within the meaning of the statute.

[221]*221In early October, 1922, she deposited fifty shares of American Can Company with the defendants as margin for her transactions and took a receipt which reserved to the defendants the right to transfer, sell, pledge or use those or any other shares of stock in any way without further notice. She was familiar with margin dealings.

There were eight transactions by the defendants upon the account: six upon orders, either to buy or sell stocks, given by the plaintiff, and two, by the defendants in protecting themselves upon a weak market after a failure by the plaintiff to supply further margin upon request. There were no short sales. Other than the original deposit of the Can Company stock, no deliveries of stock between plaintiff and defendants took place. No request therefor was made by the plaintiff and no tender thereof was made by the defendants. In every case the purchase or sale was made in New York by correspondents of the defendants, who knew nothing of the plaintiff; who made no delivery of certificates to the defendants in Massachusetts, and, except the receipt of the Can Company stock, received no certificate from them from Massachusetts; and who entered and settled the various transactions upon general accounts with the defendants, under which at all times during the period covered by the declaration, the defendants would have been entitled to immediate delivery of at least one thousand shares of the stock dealt in. Immediately upon each sale or purchase in New York, the plaintiff was sent a confirmation, and every month she was sent a statement of her account. Each confirmation bore the notice set out by the auditor in his report with which she was familiar and to which she made no objection. There was no evidence in regard to the state of the accounts of the New York brokers with their customers other than the defendants, or of their ability at all times to meet simultaneous demands of all their customers for the delivery of certificates of stock. The auditor ruled such evidence immaterial.

The auditor’s report described in detail each transaction of sale or purchase; showing, in each case, delivery in New York to or by the broker, of certificates for the stock so [222]*222bought or sold and a payment therefor either by specific check or by settlement of money balances in accord with the rules and customs of the exchange and of brokers. The transactions in three instances were the only dealings in the particular stock executed by the broker upon that day.

The auditor found that the defendants understood and the plaintiff intended that the plaintiff’s orders to sell or to purchase stocks should be consummated in accordance with the rules and customs of the New York Stock Exchange, its clearing house, and of brokers, and that actual purchases and sales with deliveries' in accordance with those rules and customs should be made. He further found that all the purchases and sales made by the defendants through their New York brokers were actual bona fide sales or purchases followed by actual deliveries of stock certificates and payment by specific check or by settlement of balances between brokers, in accordance with the rules of the stock exchange, and their customs as described in his report. He found also that the defendants at all times while they were carrying Butte and Superior stock for the plaintiff had in their own possession sufficient of that stock to make delivery to the plaintiff had she demanded it and paid the price; that they did not at all times during the period of the transactions have in their own possession sufficient of any of the stocks which they were carrying for the plaintiff to cover their obligations in the respective stocks to all their customers if simultaneous demands for delivery had been made; and that at all times during such period they had in their own possession and held by their New York brokers subject to immediate delivery and with sufficient credit balance in their account to entitle them to such delivery, sufficient to cover all their obligations to all their customers including the plaintiff if simultaneous demands for delivery had been made.

There was no evidence to contradict or control the auditor’s findings of fact in regard to the method of dealing; the usages and customs of brokers and of the stock exchange; the details of the purchases and sales with the orders, confirmations, statements, transactions of the brokers, deliveries, payments [223]*223and settlements connected therewith. The plaintiff, though called as a witness, did not testify that she intended that there should be no actual purchases or sales. She contends, however, that the provisions of the confirmation notices “that the brokers are not required to have at all times under their control free from all demands of other customers, securities of which, upon payment, the customer may be entitled to demand delivery,” when taken with the other facts found by the auditor, entitle her to go to the jury on the question of her intent that there should be no actual purchases or sales and of the defendants’ reasonable cause to believe that she so intended, in spite of his finding as facts that she intended that actual sales and purchases be made and that the defendants had reason so to believe.

The facts found by the auditor are prima facie true. G. L. c. 221, § 56. They must govern the disposition of the case unless they are contradicted or controlled by other evidence. Title Guaranty & Surety Co. v. Ley & Co. Inc. 238 Mass. 113, 117. The provision in question is an evidentiary fact to be weighed in arriving at the intent of the plaintiff and the reasonable cause of belief of the defendants, but it neither contradicts nor controls findings that the plaintiff intended that actual sales and purchases should be made and that the defendants had reasonable cause so to believe and did so believe. See Adams v. Hayden, 236 Mass. 454. It is consistent with such findings. A broker who has made an actual purchase or sale for a customer may yet be unable at some times while the customer’s account is open to meet simultaneous demands from all bis customers for deliveries of the particular stock. There is nothing to the contrary in Greene v. Corey, 210 Mass. 536, 548, or Fiske v. Doucette, 206 Mass. 275. They deal with the question whether an actual sale or purchase has in fact been made. The provision gains no additional force from the fact that as between the plaintiff and defendants no certificates passed. That is immaterial. Zembler v. Fitzgerald, 234 Mass. 236, 245, and cases cited.

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Bluebook (online)
153 N.E. 449, 257 Mass. 218, 1926 Mass. LEXIS 1319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ryan-v-whitney-mass-1926.