Ramsay v. Miller

Soott, J.: Appeal from a judgment for plaintiff entered upon a verdict directed by the court. The plaintiff was a resident of Washington, D. C. Defendants, a firm of stockbrokers, maintained a branch office in Washington, [504] of which one Ludwig was general manager.. On January 28,1907, plaintiff opened an account with defendants by depositing $1,000 with Ludwig and ordering the purchase of 100 shares of the common stock of the Steel corporation. He received a notice from defendants’ main office in New York advising him of the purchase of'the stock. From time to time plaintiff paid other sums into the branch office and ordered further purchases of Steel stock, until lie had finally paid in all about $6,000. Ludwig transmitted this money, as it was received, to. defendants. He did not, however, transmit, plaintiff’s orders as to the purchase of stock, but, on the contrary, transmitted in plaintiff’s name a great number of orders to buy and sell various stocks, all of which were executed by defendants, who believed them to be plaintiff’s orders and entered them on Iris account. Plaintiff was in ignorance of these transactions^ and in July, 1907, ordered the sale, of all of the Steel" stock which he supposed he had bought, Ludwig then confessed to plaintiff that .he had misappropriated his money. Ludwig said: “ If you will just be quiet and will not do anything about it I will readjust this matter, and pay you your money.” To which plaintiff replied: “ Very well, Mr. Ludwig, I have no disposition to be hard, on you. If you have made a mistake, and if you have done a wrong thing, I am the last man. when you are down to kick you further.” It' does not appear that plaintiff at this time knew the state of his' account- on defendants’ books. He had .received no statement except the first one showing the purchase of 100 shares of Steel.. In accordance with his promise to Ludwig, plaintiff kept silence until .early-in'November, 1907, when he wrote to defendants asking for a copy of his account, and when it was received he at once disavowed it. Upon this state of facts we think that the court below was right in directing a verdict for the plaintiff. The situation of the parties, when plaintiff and Ludwig had the conversation above mentioned, was that defendants owed plaintiff the amount of money he had paid, and Ludwig in turn owed defendants the same sum.' .The conversation between plaintiff and Ludwig did not amount to a novation, because it indicated no intention or disposition on plaintiff’s part to release his claim against defendants, and accept Ludwig as his; debtor in defendants’ place. All he did was to agree to keep silence for an unspecified time in order to étiable Ludwig, if [505] he could, to satisfy the defendants’ debt to plaintiff. All that plaintiff did, or agreed to do, was to keep silence. Mere silence, no prejudice resulting therefrom to the defendants, does not estop plaintiff from recovering from defendants. (Norden v. Duke, 120 App. Div. 1.) There was no election of remedies, for plaintiff never attempted to pursue Ludwig’s promise to readjust the matter. The defendants rely chiefly upon what they claim to have been a ratification of Ludwig’s acts by plaintiff’s silence. The doctrine of ratification is usually applied as between principal and agent, when the principal, through some form of acquieseencé, is held to have ratified and adopted his agent’s unauthorized -acts, and the many, cases cited by defendants are in the main of this character. There are difficulties, however, in the way of applying that doctrine to the present case. In the first place, Ludwig was the general agent of ' the defendants, and in no sense an agent of plaintiff. His breach of trust was a breach of the duty which he owed to defendants. It would be inaccurate, therefore, to speak of plaintiff as ratifying the acts of defendants’ agent. If anything were to be claimed in that regard it must be that he adopted them as his own, and of that there is no evidence. But even if we could consider Ludwig as in any sense the plaintiff’s agent and speak of a ratification by plaintiff of Ludwig’s acts, it would be impossible to find such ratification in the present case, because it does not appear that plaintiff knew the whole extent and nature of Ludwig’s acts. On the contrary, the evidence is that he did not. “ Before a principal can be held to have ratified the unauthorized act of an assumed agent he must have full knowledge of the facts, so that it can be said that he intended to ratify the act. If 1ns knowledge is partial or imperfect he will not be held to have ratified the unauthorized act, and the proof of adequate knowledge of the facts should be reasonably clear and certain, particularly in a ease like this where, so far as the record discloses, no substantial harm has come to the defendant from the delay or the acts of the principal.” (Trustees, etc., v. Bowman, 136 N. Y. 521, 526.) The judgment and order appealed from are affirmed, with costs. McLaughlin and Houghton, JJ., concurred; Ingraham and Laughlin, JJ., dissented.