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2 Jones & S. 1

Thompson v. Brown

The Superior Court of New York City

Decided December 31, 1871

The Superior Court of New York City · decided 1871-12-31

<p>There was an agreement between the parties, that the plaintiffs should purchase and sell-three hundred shares of stock on the joint account of the plaintiffs and defendants.</p> <p>Plaintiffs purchased the stock, in June, 1868, in accordance with this agreement, and with the approval of the defendants, the plaintiffs furnishing the money. It was also agreed that plaintiffs, as a firm, might sell this stock for the joint account of the parties whenever they should think best or see fit, and the certificates of the shares were deposited in plaintiffs’ safe, and there remained until May or June, 1869, when Henry H. Thompson, one of the plaintiffs, without the knowledge or consent of his partner, and co-plaintiff, or of the defendants, took this stock from the safe and sold the same for his own account at a less rate or sum than the original cost of the same, and applied the proceeds to his own personal use and account.</p> <p>This sale was not known to the plaintiff, Humphrey Thompson, nor to the defendants, for some weeks or a month after it occurred.</p> <p>Meld, that this act of one of the plaintiffs, in taking and selling the stock on his own account, and applying the proceeds thereof to his own account, was not a sale of the said stock pursuant to the agreement between plaintiffs and defendants. If considered as the personal act of that plaintiff, who did the same, it was an unlawful conversion of the property of others. If considered as the act of the plaintiffs, it was a breach of the agreement, for the defendants were entitled to the best judgment and action of the plaintiffs as a firm and of each member thereof in the sale of that stock, and they cannot be held to an account upon such a sale.</p> <p>The subsequent acts of the plaintiffs in' purchasing stock and tendering the same to the defendants, and on their refusal to accept it, selling the same on notice, &c., could not, and did not, affect the result, &c., nor heal this breach of the original agreement. Defendants held not liable for any loss that the plaintiffs sustained in the transaction.</p>

Decided 1871-12-31

By the Court.—Spencer, J.

¶1The only question before this court, arises upon the refusal of this court to direct a verdict for the defendants, and to charge as requested. Assuming the agreement between the parties to have been as claimed by plaintiffs, that plaintiffs should hold and sell the stock at discretion, I think plaintiffs could not recover in this action, because they did not fulfill their agreement. The action of one of the plaintiffs, Henry Thompson, in taking that stock from *5the safe of the plaintiffs, and selling the same, and applying the proceeds thereof to his own. individual account, without, the consent or knowledge of his partner and co-plaintiff, was not a sale pursuant to this agreement. If considered as the personal act of him who did it, it was an unlawful conversion of the property of others. If considered as the acts of plaintiffs, it was a breach of the agreement between them and the defendants to sell on joint account. The plaintiffs, by their subsequent action in the premises, ignored this sale as their partnership act under the agreement, "and sought to replace this stock that had been clandestinely taken and sold on the personal account of one of them. '

¶2The defendants were entitled, under the agreement, to the judgment and action of the firm and each member thereof in the sale of that stock, and cannot be held to an account upon such a sale as made by Henry Thompson. The exceptions to the refusal of the judge to direct a verdict for the defendants, and to charge the jury as requested, in regard to the effect of this sale by Henry Thompson, were well taken, and there was error in those refusals.

¶3I think there is nothing of merit to be considered in the facts attending the subsequent purchase and sale of one hundred and fifty shares of this kind of stock by the plaintiffs, for that display of .broker’s craft could not, and did not, change the situation nor effect the result sought for by plaintiffs.

¶4The judgment and order denying a new trial must be reversed, and a new trial ordered, with costs to abide the event.

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