
    Edwin Burhorn, Respondent, v. Henry B. Lockwood and Others, as Partners Composing the Firm of Lockwood, Hurd & Company, Appellants.
    
      Stockbroker — ratification of an unauthorized sale of stock — it depends on the customer’s intention — measure of damages — thirty days, a reasonable time within which to repurchase the stock.
    
    Where a customer of a firm of stockbrokers informs the stockbrokers that a sale of stock, made for his account, was unauthorized, it cannot be said, as matter of law, that his failure to return an account of the sale subsequently sent to him by the stockbrokers operated as an acquiescence in, or a ratification of, the unauthorized sale.
    As between the customer and the brokers, the question of ratification depends upon whether there was an intention to approve the unauthorized sale.
    The measure of the customer’s damages for an unauthorized sale by brokers, of stock of a fluctuating value, is the difference between the price at which the stock was wrongfully sold and the highest price at which like stock was sold in the open market within a reasonable time thereafter.
    In the present case the court considered that the reasonable time expired thirty days after the unauthorized sale.
    Appeal by the defendants, Henry B. Lockwood and others, as partners composing the firm of Lockwood, Hurd & Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 24th day of January, 1901, upon the report of a referee.
    
      Clarence L. Barber, for the appellants.
    
      Walter I. McCoy, for the respondent.
   Laughlin, J.:

The action is brought to recover damages for an unauthorized sale of stock. The appellants were stockbrokers, and on the 3d day of April, 1899, pursuant to an order from respondent, they purchased on his account 100 shares of stock known as Federal Steel at seventy-four per cent or for $7,400, which, with the exception of $800 received from the respondent, the appellants advanced. The brokers also received from the respondent $250 on April fifth, the same amount-on April sixth, and $1,452 on April eleventh. On the thirteenth of May thereafter, during the panic following the death of ex-Gfovernor Flower, the brokers sold the stock at fifty-one and one half, realizing thereon $5,031.50 after deducting commissions. It is conceded for the purpose of this appeal that the sale was unauthorized.

The first contention on the part of the appellants is that the respondent acquiesced in or ratified the sale and, therefore, was not entitled to recover. After the sale, but on the same day, the respondent was informed of- it by a telephonic message from appellants’ office. The respondent thereupon asked to talk with appellant Kelly, who came to the phone and was asked by respondent why he was sold out, to which Kelly responded that it was on the order of one Peters. The respondent then informed Kelly that Peters had no authority to sell him out and asked why he was not called On for more-margin and if they thought he was not good for the margin, to which Kelly replied that he did not think so and in those particularly turbulent times there was no time to call upon him and they had to protect themselves. On the evening of that day appellants mailed to respondent a statement of the sale showing that it had been made “ on stop order given by D. S. Peters.” This statement was retained by respondent without further communication with appellants until October 21, 1899, when he made a written demand upon them for $1,587.50 damages for breach of contract to purchase and carry the stock. Subsequently, and on the 26th day of October, 1899, he commenced this action.

Since no rights of third parties intervened, ratification depends upon whether there was an intention to approve the unauthorized sale. (Hopkins v. Clark, 7 App. Div. 207, 213; affd., 158 N. Y. 299.) Having distinctly informed the appellants that the sale was unauthorized it cannot be said as matter of law that he was obliged to return the account of sale subsequently received and that for his failure so to do he is to be deemed to liáve acquiesced in or ratified the unauthorized sale. (Minshall v. Arthur, 2 Hun, 662; Stenton v. Jerome, 54 N. Y. 480; Quincey v. White, 63 id. 370 ; Merritt v. Bissell, 155 id. 396.)

The only other question presented by the appeal relates to the measure of damages. The plaintiff has recovered the difference between the price at which the stock was wrongfully sold and sixty-six and one-half per cent of its face value, that being the maximum selling price of the stock on the Kew York Stock Exchange on the 13th day of June, 1899, one month thereafter. It appears that there were daily sales of this stock on the Kew York Stock Exchange ; that between the date of the purchase, and the sale the market price fluctuated almost daily, dropping to fifty-seven and one-half on the the seventh of April, remaining at about sixty for three days thereafter, ranging from April twelfth down to May first from sixty-four and three-eighths as the lowest minimum on April twelfth to sixty-nine and three-eighths as the highest maximum on April seventeenth, when it again dropped to sixty-four and one-half as the minimum, the minimum rising again to sixty-seven and three-quarters on the third, dropping to fifty-eight and one-half on the ninth, rising to sixty-one and one-quarter on the twelfth, and the price ranging from fifty-eight to fifty on the thirteenth; that the fourteenth, was Sunday, and on the fifteenth the maximum price was fifty-eight and the minimum fifty-five and one-half; on the sixteenth maximum fifty-seven and seven-eighths, minimum fifty-six; on the seventeenth maximum sixty-two, minimum fifty-seven and three-quarters, and on the eighteenth maximum sixty-two and seven-eighths and minimum sixty and seven-eighths; that the maximum of sixty-two and seven-eighths on May eighteenth was the highest price at which any of this stock was sold until June twelfth when the maximum was sixty-five and one-eighth; and that between the eighteenth of May and twelfth of June the lowest price was fifty-three and one-eighth on June first and the highest sixty-two and one-half on the tenth, there being a variation of only a few points on the other days.

Cases of this nature have frequently been before the courts, and the rule is now well settled that where an unauthorized sale of stock of a fluctuating value is made by brokers, the customer may recover as damages the difference between the price at which the stock was wrongfully sold and the highest market price at which like stock was sold in the open market within a reasonable time. thereafter. (Wright v. Bank of Metropolis, 110 N. Y. 237; Griggs v. Day, 158 id. 1; Baker v. Drake, 53 id. 211; S. C., 66 id. 518 ; Scott v. Rogers, 31 id. 676 ; Hoyt v. Fuller, 104 Fed. Rep. 192.) This is an exception to the ordinary rule that for the wrongful conversion of personal property the damage recoverable by the owner is its yalue at the time of the conversion. The reason for the exception lies in the fact that stock is of a fluctuating value. The stock market at times becomes panicky and. the customer would be at the mercy of the broker were the latter at liberty without notice or calling upon the customer for additional margin to sell the .stock at a time when the market is depressed.- Such stocks are usually held and in the hands of brokers for speculation, and the measure of damages is what it would cost the customer to replace "the stock within a reasonable time. The customer is given a reasonable time to replace the stock, or rather to determine whether he wishes to or is able to replace it, for replacing it is not a condition precedent to his right to recover damages. (Smith v. Savin, 141 N. Y. 315.) The authorities hold that what is a reasonable time in such case on uncontroverted facts is a question of law for the court, but no case is cited and we find none which lays down any rule as to what constitutes a reasonable time or states the elements that enter into the determination of the. question and, therefore, these precedents are of little or no aid. In Smith v. Savin (supra) it was stated, but not necessarily decided, that from May fourteenth to June twenty-first would have been an unreasonable time. In Colt v. Owens (90 N. Y. 368) it was held that thirty days was a reasonable time. In Randall v. Albany City National Bank (1 N. Y. St. Repr. 592) it was held that a reasonable time elapsed before the expiration of six months, and that the question depends upon the circumstances of each particular case. In Scott v. Rogers (supra) the reasoning of the court would indicate that, inasmuch as the broker is the defaulting party, the customer should be given a liberal allowance of time in which to replace the stock.

The respondent resided in the city of New York and was here at the time. No other facts or circumstances are shown which aid in the determination of the question. In the absence of evidence of special circumstances showing other elements of necessity for further time, we think it may be stated as a general rule that -the customer is entitled to a reasonable opportunity to consult counsel, to employ other brokers and to watch the market for the purpose of determining whether it is advisable to purchase on a particular day or when the stock reaches a particular quotation, and to raise funds if he decide to repurchase. Doubtless the customer’s financial ability would not enter into a determination of the question, but assuming that he had property or securities he should be given a reasonable time to convert them into money or to raise money on their security. Perhaps the most important of these elements is time to reflect and consider what is the tendency of the market and at what price it is advisable to purchase in view of' all the facts and circumstances. If the customer repurchases the stock at a higher figure, which is his right, he is investing his own money and running the risk of recovering it from the broker. On this record it appears that within the twenty-nine days following the unauthorized sale and prior to the twelfth day of June the market price of this stock had become fairly settled again, and that there was within that period ample time and opportunity for the respondent to repurchase if he desired to do so. We are of opinion, therefore, that the reasonable time during which the plaintiff is entitled to the highest price at which the stock sold on the Exchange expired prior to the twelfth day of June, and inasmuch as the highest price at which the stock sold prior to the last-mentioned date and after the unauthorized sale was sixty-two and seven-eighths "on the eighteenth of May that should have been adopted as the basis of the recovery.

It follows, therefore, that the judgment should be reversed and a new trial granted, with costs to appellants to abide the event, unless the respondent shall stipulate to reduce the recovery by the difference between the price of the stock at sixty-six and a half and at sixty-two and seven-eighths, together with interest thereon from the time of the recovery, and in the event of such stipulation being filed, the .judgment as so modified should be affirmed, with costs to appellants.

Yah Brunt, P: J., Patterson and O’Brien, JJ., concurred.

Judgment reversed and new trial granted, with costs to appellants to abide event, unless respondent stipulates to reduce judgment as ■stated iti. opinion ; in which event judgment as so modified affirmed, with costs to appellants.  