Coy v. E. F. Hutton & Co.

KNIGHT, J.

The plaintiff, Elmer W. Coy, a customer of the Oakland office of the brokerage firm of E. F. Hutton & Company, brought this action for the recovery of damages on account of the sale of corporate stock which the firm had purchased for plaintiff and held pursuant to a customer's agreement. Judgment was entered in favor of defendants, and plaintiff appeals.

The complaint contained two counts. The first was for conversion, and the second was based on allegations of breach of contract. Defendants' demurrer to the second count was sustained; and by written stipulation plaintiff elected not to amend, but to proceed to trial solely on the first count. Besides denying the allegations of conversion, the defendants pleaded several special defenses, among them being the statute of limitations; that plaintiff was a margin customer, that a balance was owing from him to the brokerage firm, and that the sale of the stock was authorized by the specific terms of

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the customer’s agreement; also that plaintiff had ratified the sale and was bound by an account stated.

The stock consisted of two hundred shares of Real Silk Hosiery Preferred, and at the time plaintiff was doing business as a customer with the brokerage firm he was western supervisor of salesmen of the Real Silk Hosiery Company, whose main offices were in Ohio. In April, 1932, plaintiff advised the brokerage firm he was leaving California and returning to Ohio, and on May 11, 1932, the firm received a telegram from Dayton, Ohio, purporting to have been sent by plaintiff, directing that the stock be sold and that a cheek be mailed to him care of 511 Heiss Avenue, Dayton. On the following day, May 12, 1932, in conformity with said telegraphic instructions, the firm sold the stock at current market prices, and on June 7, 1932, mailed its check payable to plaintiff to the address given in the telegram for the balance due him, amounting to $845.85, sending therewith a closing statement of plaintiff’s account. The firm heard nothing further about the matter for over two years, at which time, to wit, in July, 1934, plaintiff called at the San Francisco office of the firm and made inquiry as to the disposal of the stock. He was informed that in accordance with plaintiff’s telegraphic instructions the stock had been sold on May 12, 1932, and a check mailed to him for the balance of the proceeds received from the sale, together with a closing statement of his account. Eight months later, and on March 26, 1935, plaintiff wrote the firm from Columbus, Ohio, giving instructions to sell the stock, pay a certain indebtedness he was owing to a bank, and send him the balance. The firm replied that the stock had been sold in May, 1932, and that his account had been closed, adding, “with all of which matters you are entirely familiar”. Approximately two years thereafter plaintiff made demand for the return of the stock and two days later, to wit, on February 15, 1937, filed the present action.