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27 Jones & S. 546

Parsons v. Robinson

The Superior Court of New York City

Decided July 2, 1891

The Superior Court of New York City · decided 1891-07-02

<p> Agreement for the purchase of stocks, what is sufficient consideration to uphold an agreement or contract in relation thereto. </p> <p>This action is brought to recover the amount due to the plaintiff under a special agreement as to the purchase and sale of five hundred shares of the re-organization trust receipts of the Texas Pacific Railroad Com- ■ pany. The agreement was that in case the transaction resulted in a profit the plaintiff should be entitled to the profit on two hundred of the shares purchased. The evidence shows that the plaintiff and defendant had previously had a number of similar transactions which had resulted in a profit, and that on each occasion the plaintiff had been • paid his share of such profit. The plaintiff, on account of his position as a broker, had peculiar facilities for obtaining information as to certain stocks. The principal consideration for allowing him to share in the profits was his furnishing this information to the defendant and thus enabling the latter to take advantage of it. These being the relations between the parties, the plaintiff, on the 5th of October, 1886, informed the defendant that they had an opportunity to make some money in Texas Pacific Trust Receipts, if the defendant would carry the stock. The latter agreed to do so and directed the plaintiff to give the order to purchase, and to. send the stock in to Knickerbocker & Co., the defendant’s brokers. The plaintiff did so, and reported the púnchasete the defendant, at the same time saying to him : “ What will my inter'est be, 200 shares as before ? ” to which the defendant responded: “ All right.” The stock was purchased at 18£ and in a short time advanced to between 24 and 25, and the plaintiff then informed the defendant that he feared a break in the market and that the transaction had better be ’ closed out. The defendant instructed the plaintiff to give the order to ; sell out at 24, which order the latter gave to Mr. Rigney, a broker. One hundred shares were sold at this price, and then the order was canceled. Subsequently, defendant sold 100 shares at 28-J- and S00 shares at 28. On the plaintiff demanding his share of the profits, defendant refused to pay.</p> <p>Held, that reliable information as to facts upon which the future price of a stock will depend, is a sufficient consideration to uphold an agreement or contract in relation to such stock. The defendant acted upon information from plaintiff with profitable results. This forms a sufficient consideration for the promise of the defendant. As to the promise being made after the purchase of the stock, we see no value in defendant’s contention; for a past consideration, beneficial to the defendant, to which he afterwards assents, is sufficient to support the action.</p>

Relies on Doty v. Wilson

Decided 1891-07-02

By the Court.—Gildersleeve, J.

¶1Prior to the 5th day of October, 1886, the plaintiff and defendant had entered into a sort of an agreement for the purchase of stocks, bonds, etc., according to the terms of which the plaintiff was to keep watch of the market, and when he heard of a good investment, he was to notify the defendant, who would advance the money with which to make the investment; and then, if it was successful, plaintiff was to share in the gains. A number of such investments were made, and on each occasion plaintiff received his share of the profits.

¶2On October 5, 1886, the plaintiff advised the defendant to buy five hundred shares of the re-organized trust receipts of the Texas Pacific Railroad Company, stating his reasons for such advice. The defendant agreed, and plaintiff ordered the purchase. He then returned and informed the defendant of the purchase, and at the same time asked him, “What will my interest be ? Two hundred shares, as before ? ” To which the'defendant replied, “ All right.” The stock was subsequently sold at a considerable profit, but defendant refused to give *548plaintiff his share; whereupon the plaintiff brought this action, and recovered a judgment of fourteen hundred and thirty-eight dollars and sixty-three cents.

¶3The defendant’s contention is that there was no consideration for the agreement to give plaintiff the two hundred shares, and that the agreement, if made at all, was made after the purchase of the stock.

¶4But reliable information as to facts, upon which the future price of a stock will depend, is a sufficient consideration to uphold an agreement or contract in relation to such stock. See White v. Drew, 56 How. 53. The plaintiff had what turned out to be reliable information, which he imparted to the defendant, who acted upon such information, with profitable results to himself. This forms a sufficient consideration. See White v. Drew, supra ; 3 Parsons on Contracts, 359.

¶5As to the promise to give the plaintiff the two hundred shares being made after the purchase of the stock, we see no value in the defendant’s contention; for a past consideration, beneficial to the defendant, to which he afterwards assents,, is sufficient to support an action. See Doty v. Wilson, 14 Johns. 378.

¶6The evidence, although conflicting, was sufficient to warrant the submission of the question to. the jury, who found in favor of the plaintiff.

¶7To the charge no exception was taken, and we find no exception to the admission or exclusion of testimony that raises a question of sufficient importance to require discussion here.

¶8The judgment and order appealed from are affirmed, with costs.

¶9Dugro, J.. concurred.

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