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damagestrialappellant
damagesappealappellantappellee

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Klein v. Newburger, Loeb & Co., 151 So.2d 879

Facts

The appellant closed her account with the stockbroker on November 20, 1958, and received a final statement and check. Due to a mix-up with a similarly named individual, the stockbroker inadvertently sent a stock certificate to the appellant, who then sold it on August 3, 1959. The stockbroker discovered the mistake in June 1960 and requested the return of the stock certificate, but the appellant did not respond. The stockbroker subsequently purchased the stock again and filed a suit for conversion in February 1962.

On May 7, 1959, an Ethel Klein of Elizabeth, New Jersey, the same name but not the same person as the appellant, placed a purchase order with the appellee for 100 shares of stock of Lorel Electronics, Inc. The appellee acquired this stock for $2,077.50. Due to the similarity in names, the appellee's employees inadvertently mailed a certificate representing the 100 shares of stock to the appellant at her residence in Miami Beach, Florida.

Issue

Whether the appellant was guilty of conversion of the stock certificate and whether the trial court applied the correct rule of law regarding damages and interest.

The appellant contends (1) that the complaint failed to state a cause of action because it disclosed on its face that the appellant came into possession of the stock certificate through mistake or inadvertence and could not, therefore, be guilty of conversion; and (2) that the court applied the wrong rule of law as to damages and interest in an action for conversion by assessing damages as of the date of the purchase of the new stock certificate by the appellee, and in allowing interest on that amount from May 30, 1959.

Rule

In cases of conversion of corporate stock, damages are generally measured by the value of the converted property at the time and place of conversion, unless a specific rule applies, such as the New York rule which assesses damages based on the highest market price after notice of conversion.

The general rule as to damages in a conversion case is that they are to be measured by the value of the converted property at the time and place of conversion.

Analysis

The court found that the appellant was guilty of conversion as she sold the stock certificate that was mistakenly sent to her. However, it disagreed with the trial court's application of the New York rule for damages, stating that Florida law requires damages to be measured by the value of the stock at the time of conversion, which occurred when the appellant sold the stock on August 3, 1959.

We hold the Florida rule to be that in a case involving the conversion of corporate stock, damages are to be measured by the value of the stock within a reasonable time after the conversion.

Conclusion

The court affirmed the finding of conversion but reversed the damages awarded, remanding the case for a new judgment based on the stock's value at the time of conversion.

The judgment appealed is affirmed insofar as it finds the appellant guilty of conversion.

Who won?

The stockbroker prevailed in establishing that the appellant was guilty of conversion, but the court ruled against the stockbroker regarding the damages awarded.

The judgment appealed is affirmed insofar as it finds the appellant guilty of conversion.

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