Jones v. Hoadley

The complaint, alleges that prior to March, 1902, the defendants entered into an agreement with each other whereby they formed a combination known as a pool for the purpose of practically controlling the market price of International Power Company’s stock, whereby it was agreed that the whole or greater part of the trans? actions should be conducted in the name of the defendant Judson individually, and that he should employ all brokers in his own name , but for the benefit of all the defendants jointly; that in pursuance of such arrangement, the defendant Judson, in his own name, but on account of himself and his said associates, employed the plaintiffs to carry on certain transactions in said stock, and that as thé result thereof the plaintiffs bought certain stock upon, the order of Judson, for which he failed to pay; whereupon the plaintiffs duly sold the said shares at a certain loss, and for said loss they brought this action.

The action was tried throughout upon the theory that there was a pool or copartnership, consisting of the three'specified individuals, Judson, Hoadley and Leiter. Judson defaulted in answering and was the principal witness for the plaintiffs, and he testified positively to the. existence of this pool of three and to the purchases ' and transactions made on its account. There was no other issue in the case. There Was no dispute as to-the amount of the stock bought, the price at which it was bought, the price at which it was sold, or the amount of the recovery which should be had, if any. The question was, did the pool, consisting of these three men, exist, and was the stock in issue in this case bought for the account of said three men in said pool.

The learned court charged in the most emphatic way and in various forms as to what the issue was ; for instance, as follows: “If, however, at the time the •defendant Judson gave to the plaintiffs the orders for the purchase of these shares of stock in question *481there was in fact a pool existing between these three defendants, and the orders were given by Judson pursuant to his authority as a member and a broker for the pool, to the plaintiffs, the defendant . Leiter as well as" the defendant Hoadley are liable to these plaintiffs if the pool was for the purpose and upon the conditions which the defendant Judson. has testified to. In other "words, to make the meaning clearer: If there was in fact a pool existent of ■ which these three defendants were members and they had authorized the defendant Judson to buy certain stocks for their benefit and on account of the pool, and if, exercising his discretion, he had bought these shares of stock for the pool from the plaintiffs and had so instructed the plaintiffs when he bought the shares of stock or gave the orders for the purchase of these shares of stock, the defendants would all be liable even though the ostensible, open connection with the order was only that of the defendant Judson himself. It - all resolves itself again to the original proposition : Was there a pool existent in the months of March and April, 1902, for the purpose of trading in this International Power stock, and was that pool ¿omposed of these three defendants ? The liability of these defendants, if there was a pool, is joint to the plaintiffs. "x" "x" * To recapitulate the proposition with respect to these defendants, that there may be no question as to the view that I take upon the law, and that the parties if they are aggrieved thereby may have an exception in the most clean cut manner, the plaintiffs claim that there was a pool between three, Judson, Leiter, Hoadley. To substantiate that claim they produce, in 'addition to such other testimony as there may be in the case, the defendant Judson himself, who swears to a pool between those three existent in the months of March and April, 1902. - The defendants deny the existence of any pool between the three of them at that time. And there is the clean cut issue. Under Judson’s theory of this pool arrangement there was a joint liability, and on my theory of the law in this case there must be a verdict against these three defendants or there must be a verdict against Judson alone. If there was a pool, as Judson claims, it enures to the plaintiffs’ benefit, and the three are held. If there was no pool, blit Judson was pursuing his private business in these purchases, he alone is personally liable.”

*482Here was asserted in the plainest language, and reiterated in the strongest- fashion, "for the express purpose, as the court said, of . allowing to the party aggrieved an exception in the most clean cut manner the theory of the case as it had been developed by the evidence and the arguments of counsel. as it appeared to the learned judge trying it. Ho one listening to the charge could entertain a doubt as to the view of the court upon the issue as presented by the facts and upon the law.

At the conclusion of the main charge the court said to the counsel for the plaintiffs, “ Have you any requests ? ” "to which that counsel answered, “Ho, sir; I have not.” By that answer he announced "his approval of the theory of the case and the issue as announced by the court. If he had objection thereto then was the time clearly to state it in order that the court might pass upon it.

The record shows that the court then proceeded as follows: “I charge at the request of the defendant Hoadley,” and there follow eight requests with the rulings of the court and modifications. Then counsel for thé plaintiffs said : “ I have no exceptions to your Honor’s main charge.” So again wre have the counsel for the plaintiffs in the most formal manner approving the propositions as laid down by the court that the clean cut issue was whether a pool composed of Judson, Leiter and Hoadley did exist, and if it did, then that all three defendants were jointly liable.

Counsel then proceeded : “ But I except to each of the propositions which your Honor has charged upon the request of the defendants.” The 17th request was as follows-: “ Upon the evidence in this case the'defendants Leiter and Hoadley if liable at all, are liable jointly, and the jury are not authorized to find a verdict in favor-of the defendant- Leiter and against the defendant Hoadley,” and the court proceeded, after charging that request, to say, “ which amplifies or which condenses what I said to -you before. The theory of the plaintiffs is that the three of them were in this pool upon equal shares. The defendants Hoadley and Leiter deny they were in the pool at all; the defendant Judson says the three of them were in the pool. If you believe the defendant Judson the three defendants are liable; if you believe the defendants Leiter and Hoadley, none of them is liable except Judson who acted as the broker in giving these orders.”

*483The plaintiff appellants now complain, of that charge of the court upon the ground that they were entitled to have the jury pass upon the question whether either of the defendants Hoadley or Leiter was in the pool and, therefore, responsible for damages, as well as whether or not they were both jointly liable. The difficulty about our considering that question is, as I view the record, that it is in-reality raised for the first time in this' court. The plaintiffs were very glad to, get an instruction from the court as to the joint liability of Hoadley and Leiter, for it is quite evident upon this record that there is far more evidence which might be viewed as tending to establish Hoadley’s - connection with the transaction than there is as to Leiter’s, for Leiter appears to have been out of the country during most, if not1, all, of the time of these transactions, and his personal participation therein was of the slightest, and so when the court in its main charge said over and over again that under the evidence in the case the issue was whether or not there was a pool consisting of these three defendants, he not only stated the fact as the evidence did disclose it, but to the entire satisfaction of the plaintiffs, as is evidenced by the statement.of their counsel that they had no requests to make and had no exceptions to the main charge. As I read the evidence there is no testimony by any of the plaintiffs’ witnesses to establish any other.claim than that of the existence of a pool composed of these three particular people. Judson, an alleged member of it, swore to it directly, and all the evidence was introduced for the purpose of establishing that particular fact and no other. In view of the repeated -presentation of this issue in the main charge and the plaintiffs’ acquiescence therein, he cannot be allowed to take advantage by a vague and general exception “ to each of the propositions which your Honor has charged upon the request of the defendants,” of that particular request which was a mere repetition of a number of statements in the main charge which counsel had approved and accepted. It was his duty, if he did not agree with the view of the court, to have called its attention, under the circumstances disclosed by this record, to the precise point, and to have asked the court to charge that a verdict might be brought in as against one of the defendants, even if the jury were not satisfied that both could be held.

I am of the opinion that not only does he take nothing by his *484exception, for the reasons pointed out, but that upon the evidence the court was entirely justified in its charge. Nothing else was being tried but the existence of a pool of these three men; and if the evidence did not sustain that, it could not be made to sustain anything, because it was direct, specific and confined to that one issue. It was that or nothing. ’ At any rate, the plaintiffs so considered it, and were abundantly satisfied with the charge.

I think the judgment and order should be affirmed, with costs and .disbursements to the respondents separately.

Ingraham and Laughlin, JJ., concurred; Patterson and Houghton, JJ., dissented.

I dissent from the conclusion reached by the majority of the court.

It is true there is much to be said respecting the acquiescence of plaintiffs in the law as laid down by the court in its principal charge. I do not think; however, the plaintiffs so far committed themselves to an erroneous theory of the trial as now to preclude them from taking advantage of an erroneous charge of the court, made.at the request of one of the defendants, to which an exception was properly taken.

At the conclusion of the main charge, after inquiring of plaintiffs’ counsel whether he had any requests, and ascertaining that he had "not, the court took up the requests of the defendant Hoadley, and charged, amongst others," the 11th, the 13th, the 14th and the 17th the 13th in the exact language requested, the 14th only partially, and the other two with amplifications. After the court had concluded with these requests, the plaintiffs’ counsel said: “ I have no exceptions to your Honor’s main charge, but I except to each of the-propositions which your Honor has charged upon the request of the defendants.”

1 understand the court to.be unanimous in the conclusion that as to the actual requests of the defendants which the court charged the exception was sufficient. The exception was practically in the same form as that upheld by this court in Connor v. Metropolitan Street R. Co. (77 App. Div. 384) and was more specific than the exception which was deemed sufficient in Hayes v. Bush & Denslow Manufacturing Co. (102 N. Y, 648).

*485The form of the exception being sufficient, the only question is whether there was anything in any of the requests charged which made the exception good.

The 17th request which the court charged was as follows: “ Upon . the evidence in this case the defendants Leiter and Hoadley, if liable at all, are liable jointly, and the jury are not authorized to find a' verdict in favor of the defendant Leiter and against the defendant Hoadley.”

I suppose it will be conceded that as an abstract proposition, in an action brought to charge several individuals with liability for breach of an alleged partnership contract on the ground that they were members of the copartnership firm making the contract, such a charge would be erroneous. It frequently happens that a contract is entered into with an individual or with a copartnership firm, and that other persons are charged with being members of the firm and are sought to be held liable on the contract. If enough can be shown to prove that two' or more individuals were in fact partners although unknown to the other contracting party, they may be held liable if the contract was made in relation to the partnership business and for the- benefit,of the copartnership. In such a case the issue is, who were members of the copartnership. Many may be charged with being members and the proofs show that only two or three ever entered into any partnership agreement. In order to bring all the alleged partners into' court ,and have the issue tried as to who' constituted the partnership firm, the plaintiff must allege and seek to prove that all had entered into a partnership. He is not defeated in his action, however, if one escapes or two escape, if his proofs show- that two or more entered into such an agreement. Such was the situation in the present case. The complaint alleged, upon information and belief, that the three defendants, Judson, Hoadley and Leiter, entered into an agreement whereby they formed a combination known as a “pool,” for the purchase and sale of International Power stock, to be conducted in the name of defendant Judson individually, he giving direction to brokers, the' profits to be equally divided. This was, in effect, an allegation that these three had entered into a copartnership agreement. Hoadley and Leiter each denied that they ever entered into any such agreement, or that they were members of any such com*486bination. Judson testified they did só ájgree, and certain facts and circumstances were proved tending to corroborate his testimony as to one dr both. Hoadley and Leiter each testified contradicting . Judson, and attempted to explain the circumstances corroborating his. testimony. . • ' '

The issue of the trial was not what was the character of the lia. bility of the parties to the partnership agreement or of the members of the “pool,” but rather whether any agreement to form a partner, ship “ pool ” was made, and, if so, who were the parties that entered into such an agreement. It was not necessary that three persons should so agree. Two might'have done so. The “ pool,” if"any there was, may have been composed of Judson and Hoadley or ' Judson' and Leiter, or of all three. When it was ascertained who constituted its members, then the law took care of their liability and made it joint. • The question was whether there was any “ pool ” at all, or any partnership agreement, and if there was, who constituted it or who entered into the agreement. Judson testified .that both Hoadley and Leiter were members-with himself. The jury were at liberty to believe this, or they might have found from facts and circumstances, which they deemed corroborative, that his testimony was true as to Hoadley, and that he was mistaken or untruthful as to" Leiter, Or that such facts and circumstances' pointed to the fact that Leiter alone made the agreement with him, and that Hoadley did not.

. The rendering of a verdict in accordance with such conclusion as they might reach in this respect was not prevented by the fact that these plaintiffs- alleged and attempted to prove that all three of the defendants made the-agreement. The allegation might have been on information and belief that 'several persons so agreed, and. it would have been ■ entirely proper for such defendants as could to extricate themselves by proving that they had no connection with any such agreement; and it-would have been entirely proper for the jury to render a verdict in favor of some defendants and against ■ others. The liability of those against whom the verdict might be rendered would be joint, but it would be entirely within the province of the jury to say which defendants in fact did make the agreement which fastened such liability upon them.

The request as charged was not only abstractly erroneous, but it *487was erroneous as applied to the facts of this case, and requires a reversal of the judgment unless the plaintiffs did something which precludes them from now taking advantage of the error. Confessedly, all they did do was to permit the main charge of the court to go unchallenged. In his charge the court nowhere expressly told the jury that they had a right to find a verdict against Judson and Hoadley alone, or against Judson and Leiter alone. The nearest" he came to so instructing them was when he said: “ Under Judson’s theory of this pool arrangement there was a joint liability, and on' my theory of the law in this case, there must be a verdict against these three defendants, or there must be a verdict against Judson alone.” I concede that this language comes very close to the request, and that technically it would have been better had the plaintiffs’ counsel excepted to it. When, however, it was repeated in the intensified form of the request he did take an exception. If a court repeats an erroneous charge, an exception is not necessary as often as the charge is repeated. One exception is enough. The plaintiffs took an exception to the last wrord of the court to the jury on this subject, and it seems to me thereby did enough to save their rights and entitle them to a reversal of this judgment. There was nothing in the amplification of the request which modified it and so cured the error.

I do not think there was any error in charging the other specific requests of the defendants. There was, however, error in the amplification of the 11th request wherein the. court, in effect, told the jury that plaintiffs could not recover unless at the time "the transaction was had, they were apprised that Judson was dealing in behalf of the “pool” or partnership of which Hoadley and Leiter were members. The theory of the trial court s'eems to have been that Hoadley and Leiter were not liable unless Judson had informed the plaintiffs when he bought the shares of stock that a “ pool ” or partnership existed of which Hoadley and Leiter were members, and he so instructed the jury in his main charge.. This was an erroneous view of the law. If Judson was in fact dealing with the plaintiffs in behalf of the “ pool ” or partnership, and in pursuance of an existing partnership agreement entered into between himself and Hoadley and Leiter, or either of them, and the stock was actually bought on account of such partnership or “ pool,” it was immaterial *488whetheror not plaintiffs were advised that such an agreement of partnership existed. The whole theory of the law permitting recovery against undisclosed partnership and hidden partners is that the person contracting did not know that there was in fact a partnership or who-constituted it. If .one member of a concealed parnership has dealings respecting the partnership business and breaks his contract, the actual partners^ although unknown to the other contracting party at •the time the transaction is had, are liable for the breach. . Knowledge of the existence of the partnership at the time of the "dealing' is not essential if the partnership in fact exists and the dealings are concerning its business. (Reynolds v. Cleveland, 4 Cow. 282 ; Ontario Bank v. Hennessey, 48 N. Y. 545; Cashman v. Lawson, 73 App. Div. 419.)

I do not think, however, that the plaintiffs raised this point by sufficient exception. The fact that this error was committed to the manifest prejudice of the plaintiffs furnishes a reason why the court should be alert in preserving their fights respecting any other errors upon which it can properly pass.

The judgment should be reversed and a new tidal granted.

Patterson, J., concurred.

Judgment and. order affirmed, with costs. to respondents separately. Order filed.