
    Adolph H. Lazare, Appellant, v. Henry Allen and Edward L. Norton, Respondents.
    
      Stockbrokers cannot buy[ in stock for a customer, operating upon a margin,, until they have made a reasonable demand, for. additional-margin—- when the questions of fact are tobe decided by the court—how considered on appéal. '
    A broker who has sold Stock “ short ” for a customer, upon a “ margin-,” cannot, where a rise in the stock has made more margin requisite to secure him against ^ loss, without'the customer’s order or consent, close the transaction by buying in stock for the customer’s account, without giving him: a reasonable notice to -. furnish more margin: ; ...
    The reasonableness of the notice is dependent upon the circumstances of the particular case. ; .
    Where both parties request the direction of . a verdict in their favor, and neither 1 requests 'the submissioh of any question to the jury, the questions of fact áre ¡ for the court and are to be determined, upon appeal, in support of the verdict' . directed. ' ¡ ‘
    . - • Appeal by the plain tiff, Adolph H. Lazare, from a judgment of .the Supreme Court iff favor of the defendants, entered in the office of the clerk of the coiun.ty of New York on the 29th day of November, 1895, upon the verdict of'a jury directed by the court: •'
    ( This appeal-.was transferred from the. first department to.-the. second department. !'-
    ■John R. Dos Pasaos [Edmund Francis Harding with him on the brief], for the appellant:
    
      William P. Quin, [John D. Kernan with him on the brief], for the respondents. ;
   Bradley, J.:

; The defendants were brokers in the city of New York, doing busi7 ness in the firm name'jof Henry Allen &" Co., -The plaintiff became, their customer in a transaction by which 300 shares of the capital stock of the Louisville and Nashville Railroad Company were sold short on his account, ajbout September 12, 1893 (200 of the shares at 54f, and 100 shares, at 54¿), on a margin, for which the plaintiff deposited with the 'defendants' $1,000.

This was a speculative venture of the plaintiff, to be consummated by buying in the stocks, through the agency of the defendants, uppnthe direction of the plaintiff. They by their relation to the business undertook to obey his orders in that respect if he kept them protected by a sufficient fund to adequately cover the margin. It was within the contemplation of the parties to the contract that if the plaintiff, upon reasonable notice, should faff to do so, the defendants would be at liberty to; purchase' on his account for their own protection. On September twenty-sixth the plaintiff sent his order to the defendants to make the purchase of the stock to cover the sale short "before mentioned. The price of the stock had then fallen to fifty-one arid one-half on the market. A purchase at that price would have given the plaintiff a profit of $925. For the alleged failure of the defendants to obey that order the plaintiff seeks to recover as damages that sum, together with the,amount so deposited ■ with the defendants as margins. Upon such a state .of facts the plaintiff would have been entitled to recover the amount claimed. (Campbell v. Wright, 118 N. Y. 594; Rogers v. Wiley, 131 id. 527.)

But on the part of the defendants it is claimed that the plaintiff was in default in not furnishing money to make good and take care of the short sale; that as a consequence they had, on September twenty-second, bought in the stock on the plaintiff’s account at fifty-six, which purchase left to his credit only, sixty-four dollars and thirty-five- cents, and that he was entitled to recover only that amount. The purchase was made without any order from the plaintiff, and to support it as made on his account it was essential to the defense that it be made to appear that there was occasion to call upon the plaintiff to make further deposit for. the protection of the defendants, and that he failed to do so after having reasonable notice prior to the purchase to funish the money. (White v. Smith, 54 N. Y. 522.) This was the implied provision of the contract pursuant to which the sale of the stock short made by the defendants was to be taken care of by them on the plaintiff’s account and for which they remained responsible until the short sale was covered by purchase. There were no special stipulations in the arrangement between the, parties to take the transaction out of the general rule applicable to such ventures as between a principal and his broker’s agency.

On the part of the defendants evidence ‘was given tending to prove that on September eighteenth the' price óf Louisville and. Nashville Railroad Company’s stock ranged from fifty-three afid three-eighths, the lowest, to fifty-six at the highest; and that-on that day the plaintiff was informed by the defendants that the stock had advanced' to fifty-six, and that they would have to have more money immediately on that account or they could not carry it any longer; that the ¡plaintiff neither put up .any more money nor promised to do so; that on the next day the price, of the stock ranged from fifty-four and onedialf to fifty-five and one-eighth, and .Qfi September twentieth from fifty-four and' oneffourth to fifty-five; and that on each <bf those days the like notice and request were given and made upon him in behalf of the defendants with the same results; that on September twenty-second the price, of the .stock opened in thp market at fifty-six and three-eighths; that to .purchase'the stock ¡at such price would require a sum in excess of that then to the plaintiff’s credit in his account with the defendants, and that the apparent condition was such when the stock stood at fifty-six and three-eighths that the plaintiff was indebted to them. They gave evidence to the effect that between ten and half-past ten in the forenoon of that day (September twenty-second) their agent, who wás sent to the' plaintiff, called on him at his office, which was about a block distant from their office, and told him that the defendants wanted additional margins!right away; 'that the plaintiff then said''that :“he would go up and see his friend and would bring the money down at once, immediately, if his friend was-in; ” that the stock was • purchased by the defendants about twelve o’clock, noon, of that day, and notice of the purchase sent to the plaintiff’s office; that about half-past twelve o’clock the plaintiff appeared at defendants’ office, was then advised of the purchase made on his account, he having stated that he had not been at his office since the notice was sent there. Afterwards, on the same day, the plaintiff returned the notice, with a note to the defendants that he would not accept it as he had given no order to cover, and that he was ready to.put!up additional' margin. The plaintiff does not adopt as true the evidence on the part of the defendants relating to' the interview' with him on. the eighteenth and nineteenth days of September; says he has no recollection of such conversations, and denies that he was then asked- to put up more margin. His evidence also is that after the interview with defendants’ agent on September twenty-second, he was at the- defendants’ office, at half-past eleven o’clock. This was about an hour after he was notified to furnish more money to defendants. Whether that is a reasonable notice to justify a broker to cover a transaction and close the deal with the customer without his order or consent, depends upon circumstances. (Gamer on v. DwrTcheim, 55 N. Y. 425.) In any view which may be taken of the occurrence of the twenty-second of September, standing alone, the notice to supply more money prior to the purchase which the defendants assumed to make on the plaintiff’s account, cannot well be deemed to. have been reasonable in point of time. While the stock opened at fifty-six and three-eighths, the price had dropped to fifty-six when the purchase was made, and no circumstances appear which fairly justified the defendants, for their protection, in making the purchase to cover the sale within an hour and a half. It is true that, according to the evidence on their part, the defendants were not advised that the plaintiff--would be able to supply the margin required. He seems not tó have had means himself, but was dependent upon his friend, from whom he sought to obtain it. His evidence is that when he went to defendants’ office, following such notice on that day, he had arranged for the money, and that he then advised them that the check would be there in a few moments to be put up. The evidence on the part of the defendants is that they offered to take the money from the plaintiff and replace the stock at the price at which they had purchased it, replace Mm in the same position he was in at and immediately preceding the time of the purchase. This he declined. The only evidence that he had made arrangements to get the money and that it was ready and would be there for the purchase, was in the testimony of the plaintiff alone. He says that he had no money of his own, and that his only chance of getting it depended upon somebody else. It is said not to be unusual for such to be the condition of persons who, like the plaintiff, have had a long experience in dealing in futures. He. says that for about forty years he had been engaged more or less in stock transactions, búying and seMng long and short, on margins, and understood the nature of the business. The- evidence tends to prove that the condition of the stock market was a matter of his daily observation.

Now, to go "back to the occurrences of the eighteenth and nineteenth of-September, as represented by the evidence on the part of the defense, it appears that the plaintiff inanifested.no purpose to comply with* the notice and request to supply further . margin. There was on those days an upward tendency of the stock;' and as . the defendants had ;to borrow the stock from day to "day and pay the current premium, and as the fund deposited for margin was hut .a ■ small percentage, it! cannot be seen that they were ■ not justified for their protection in calling" on those days upon the plaintiff, for more money. _ Whether he was so: called upon was a disputed question of fact, for the jury, add.if they found upon it in the .affirmative,;they may. have declined .'t:o find that he had the money ready for use on September twenty-second,, and, as hearing upon the question .of his purpose, in. that resjpect, his refusal to permit the. defendants to restore him.to.the position in which he was at;the time of the purchase might, not have been entirely without significance. .'It "would seem to follow that yhether or.not the plaintiff, after reasonable and ■ proper notice, to furnish money for margin, was- in default in that, respect, was a question of fact upon the evidence. As the appeal is, from the judgment alone, .that question is not here for consideration^ and as .the plaintiff as well as the defendants requested the .direction, of.; á verdict, and requested no submission to the jury, any. question, of fact is deemed to have been treated as for the court, and determined "in support of the verdict .directed. (Koehler v. Adler, 78 N. Y. 287.)

.■ .These views lead to the conclusion that the. judgment, should be affirmed. .....

All concurred,

Judgment affirmed with Costs.

Note.—The rest of the cases of this term, willbe found in'the next volume, 21 App. Div.— [Rep.  