Drake, Riley & Thomas v. Mann

MARKS, J. Respondent is a corporation authorized to do a brokerage business in the buying and selling of stocks on stock exchanges. Appellants were customers of respondent, who acted as their broker in marginal trading in stocks on stock exchanges. Most of the transactions here involved were made on the Los Angeles Stock Exchange. These marginal tradings resulted in a net loss to appellants, which they refused to pay and this suit followed. The action was tried before a jury and a verdict was rendered against them in the sum of $9,899.07. The sole question presented on this appeal is whether the transactions between the parties were illegal and contrary to the provisions of section 26 of article IY of the Constitution. The identical question has been considered by us at length in the case of Griffin v. Payne, ante, p. 363 [24 Pac. (2d) 370], the opinion in which has this day been filed. The issues in the two cases are identical, with the exception that in the instant case there is no question as to the lack of authority of respondent to make marginal purchases or sales for appellants. In Griffin v. Payne, supra, we held that marginal trading in stock, under the *790 facts there appearing, did not violate the provisions of section 26 of article IV of the Constitution. The same conclusion must be reached in this case. Judgment affirmed. Barnard, P. J., and Turrentine, J., pro tern., concurred. A petition by appellants to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on September 15, 1933.