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Franklin v. Hoadley

Supreme Court of New York, Appellate Division

June 9, 1911

WILLIAM B. FRANKLIN and GEORGE ISHAM SCOTT, Respondents,
v.
JOSEPH H. HOADLEY and JOSEPH LEITER, Appellants, Impleaded with CYRUS FIELD JUDSON, Defendants.

Page 229

SEPARATE APPEALS by the defendants, Joseph H. Hoadley and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 13th day of April, 1909, upon the verdict of a jury, and also from respective orders entered in said clerk's office on the 16th day of April, 1909, denying the defendants' respective motions for a new trial made upon the minutes.

COUNSEL

George S. Graham, for the appellant Hoadley.

Alton B. Parker, for the appellant Leiter.

Edmund L. Mooney, for the respondents.

MCLAUGHLIN, J.:

The plaintiffs are stockbrokers and the action is brought to recover damages sustained by them in a stock transaction. 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 controlling the market price of the stock of the International Power Company by means of purchases and sales, and 'whereby it was further agreed that the whole or greater part' of such purchases and sales '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 'on April 20, 1902, the defendants, acting through the defendant Judson as aforesaid, duly employed the plaintiffs to make various purchases and sales of the said stock and opened an account with them designated 'Cyrus Field

Page 230

Judson, Special; "' and that 'on April 29, 1902, at the request of the said Judson, acting as aforesaid, the plaintiffs purchased' certain shares of stock which Judson failed to take up and pay for, and which they sold, sustaining the loss complained of, for which a recovery is asked. The defendant Judson appeared in the action, but did not answer. The appellants answered separately and put in issue the allegation of the complaint as to the existence of the pool or partnership and the authority of Judson to represent them in the purchase of the stock. The action has been tried three times. On the first trial judgment was entered in favor of the plaintiffs against the three defendants on Judson's default and on a verdict against Hoadley and Leiter. On appeal the judgment was reversed as against Hoadley and Leiter and a new trial granted, on the ground that the court erred in admitting certain evidence. ( Franklin v. Hoadley, 115 A.D. 538.) On the second trial the plaintiffs again had a verdict against Hoadley and Leiter, upon which judgment was entered, which, on appeal, was reversed on the ground that the court erred in refusing to instruct the jury that the declarations of Judson that Hoadley and Leiter were his partners and interested in the pool were not competent to establish the partnership. (Franklin v. Hoadley, 126 A.D. 687.) On the third trial the plaintiffs had another verdict against Hoadley and Leiter, upon which judgment was entered, from which they separately appeal.

This judgment must also be reversed because the trial court did not follow the rule laid down on the former appeal. On the last trial there was but a single issue to be tried, viz., the existence of the partnership or Judson's authority to represent Hoadley and Leiter in the purchase of the stock in question. At the beginning of the trial counsel for both Hoadley and Leiter stipulated that the plaintiffs purchased, upon the order of Judson, the stock alleged in the complaint at the time and price named, and by reason thereof they sustained the loss for which a recovery is asked. Having made this stipulation, the only possible issue left to be tried was whether or not Judson had authority to represent Hoadley and Leiter in giving to the plaintiffs the orders to purchase. That this was the only issue was further emphasized when the plaintiffs sought to prove

Page 231

Judson's declarations to the effect that a pool or partnership had been formed by Hoadley, Leiter and himself, and in purchasing the stock in question he represented the pool. Counsel for Hoadley and Leiter, in stating their objections to the admission in evidence of such declarations, said: 'If Cyrus Field Judson, as matter of fact, was acting for these two defendants when he gave that order, we must respond; ' the 'only issue in the case' was whether the purchase by Judson 'was a transaction done for Leiter and Hoadley within the terms of his authority; ' and there was 'no controversy with the plaintiffs as to the fact that on the day in question they received from Cyrus Field Judson' the orders to purchase. These declarations were clearly inadmissible and should have been excluded under the rule laid down by a majority of this court on the second appeal (126 A.D. 687). It was there said: 'Where the existence of a partnership is in issue, the declaration of one party that another is his partner is not competent to establish the partnership. Nor do such declarations for that purpose become admissible after prima facie evidence of the existence of the partnership has been given. The existence of the partnership cannot be strengthened, fortified or bolstered up in this way. All that is meant by the authorities and text books in saying that such declarations become admissible when prima facie evidence has been given of the partnership is that they may be received for the purpose of binding the partnership, assuming, of course, its existence can be found solely from the other evidence. And whenever such issue is presented at a trial before a jury, then specific instructions should be given to this effect.'

We again state Judson's declarations to the plaintiffs cannot be received for the purpose of establishing the partnership, and that he represented Hoadley and Leiter in giving the orders to purchase the stock in question; that if such declarations are received to establish, either directly or indirectly, such fact, then a judgment for plaintiffs against Hoadley and Leiter, so far as this court is concerned, will not be permitted to stand.

I am also of the opinion that the trial court erred in submitting the case to the jury on the theory that they might find for the plaintiffs ...


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