Adams v. Hayden

De Courcy, J. The plaintiff dealt with the defendants as his bankers and brokers. In this action he seeks to recover under the provisions of R. L. c. 99, § 4, claiming that, when he ordered the defendants to buy and sell stocks on his account, he intended that there should be no actual purchases or sales, and that the defendants had reasonable cause to believe that such intention existed. The case was submitted to the Superior Court on an auditor’s report and a stipulation as to certain evidence before the auditor; and the judge found for the defendants. The main contention of the plaintiff is that on the facts found by the auditor he was entitled as matter of law to a decision in his favor. He bases this claim on a single statement in the auditor’s report “that the plaintiff gave orders in a few cases to sell securities he did not at the time own, and that in numerous cases he made settlements without the completion of the purchase or sale of the securities ordered to be bought or sold.” This must be considered with reference to the facts on which it is based, and in connection with other findings of the auditor on the same subject matter. At most, by virtue of § 6 of the statute, it was prima facie evidence that the plaintiff did not intend that actual purchases and sales should be effected. After giving due weight thereto, the auditor found on the entire evidence before him “that the plaintiff did not at any time intend that there should not be any actual pinchases or sales by the defendants, of the stocks he ordered bought or sold; that in some cases he intended the stocks should be bought or sold by the defendants as ordered; and in other cases he had no intention as to whether the defendants should or should not make actual purchases or sales in carrying out his orders.” The evidence on which the auditor came to this conclusion is not before us. It must stand unless we can say as matter of law that it is inconsistent with the other facts found by him. The general course of business between the parties, so far as disclosed by the entire report, indicates that genuine purchases and sales were contemplated, and were positively intended.by the plaintiff in all but a few special cases. The dealings began on [458] November 3, 1911, when the plaintiff delivered to the defendants certain certificates of stock. On or before November 13, they had sold all of this stock on order of the plaintiff for $85,575.50. On November 11 he drew from them $10,000 in cash. On November 29 they received from the Exchange Trust Company one hundred shares of Great Northern stock, paying therefor, by order of the plaintiff, $12,000; and on December 16, 1911, by his order the defendants received from said trust company one hundred shares of Reading stock, and paid therefor $5,500. Other orders to buy and sell were given by him. On January 4,1913, this account was closed, and the plaintiff was paid the amount owed. The second account was opened on September 12, 1913, when the plaintiff deposited $5,000; and was closed January 8, 1914. The last account was opened on June 26, 1914, and was closed on March 3, 1917. During the period covered by the declaration, the plaintiff gave orders to the defendants to buy and sell seventeen thousand nine hundred and twenty shares, at a total value slightly exceeding $3,101,000. In some cases the plaintiff paid the full pinchase price, in other cases substantial amounts on account, for the stocks ordered to be purchased. The course of dealings throughout indicates genuine transactions, and not mere wagers under the guise of contracts for the purchase and sale of stocks. The plaintiff received dividends on stocks purchased for him and held in his account; and interest was charged when the balance of the account was against him. The auditor found, "The plaintiff did not intend to demand or receive certificates of the stocks he ordered to be purchased, but to give orders later to sell the same amount of stocks, hoping to make a profit by selling at an increased price.” The statute does not prohibit a broker from carrying on margin the stocks he has purchased for his customer. He further found, " In twelve (12) cases stock ordered by the plaintiff to be sold by the defendants was delivered to the defendants by the plaintiff, or by some one on the direction of the plaintiff, either before or after the order to sell. The plaintiff claims that in fourteen (14) cases he gave to the defendants orders to sell stock which he did not own. In eleven (11) of these cases I find that the plaintiff, at the time the order was given to sell, either owned the stock ordered to be sold or had purchased it of some broker other than the defendants and [459] had it in his control in an account with another broker or a Trust Company.” In only three cases (and these do not appear in the declaration) did the plaintiff order the sale of stocks that he did not own, and in each of these a corresponding order to purchase was given within a few days. We cannot say, as matter of law, that the findings are inconsistent with the conclusion reached by the auditor. The auditor’s report made out a prima facie case for the defendants. At the trial in the Superior Court the plaintiff offered no additional evidence except certain letters. These were before the auditor, and tend to confirm his findings, by showing that the plaintiff intended the actual sale and delivery of the shares therein referred to. In addition to finding generally for the defendants, the trial judge filed a memorandum, in which he affirmed the finding of the auditor as to the plaintiff’s intention, and also found that “the defendants did not have reasonable cause to believe that the plaintiff had any such intention,” (i. e. an intention that there should be no actual purchase or sale of stock.) While this “Memorandum” is no part of the record (Cohen v. Berkowitz, 215 Mass. 68, 71), the general finding for the defendants “imports a finding of all the subsidiary facts essential to that conclusion.” Adams v. Dick, 226 Mass. 46, 53. Assuming then that the auditor’s finding on which the plaintiff relies, as to three alleged short sales, and the settlements made without the completion of the purchase or sale of the securities, created a prima facie case in his favor, under R. L. c. 99, § 6, they were not conclusive; and their effect was overcome in the mind of the auditor by other evidence before him. Apparently he was not satisfied that even in these few transactions the plaintiff intended that actual sales should not be effected, especially in view of the general course of his dealings from the beginning, which indicated that real transactions were contemplated. The trial judge was warranted in finding that the plaintiff had failed to make out a case under the wagering statute. Chandler v. Prince, 217 Mass. 451; S. C. 221 Mass. 495, 506. Zembler v. Fitzgerald, 234 Mass. 236. The facts as found distinguish this from cases like Adams v. Dick, 226 Mass. 46, and Houghton v. Keveney, 230 Mass. 49. What has been said disposes of the plaintiff’s exceptions to the judge’s denial of his motion for a ■ finding, and the refusal [460] to give the requests numbered 1 and 8. Those numbered 9 and 10 relate to damages, and were rendered immaterial by the finding for the defendants. In view of the finding that “the plaintiff did not at any time intend that there should not be any actual purchases or sales by the defendants, of the stocks he ordered bought or sold,” it is unnecessary to consider requests 2, 3 and 7, which are based on the affirmative defence of actual sales. Exceptions overruled.