Sutherland v. Securities Holding Co.

Sutherland v. Securities Holding Co.

Where a margin customer defaults on calls, is notified of the account and sale, and does not timely object, the broker (and their assignee) may lawfully sell the securities according to the applicable custom and recover any deficiency after crediting the sale proceeds.

Citation
(1906) 37 SCR 694
Parties
Appellant / Plaintiff: Sutherland; Respondent / Defendant: Securities Holding Co.
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
12 June 1906
Procedural Posture
Civil Appeal Securities/brokerage / Appeal to the Supreme Court of Canada (final Hearing)
Outcome
Appeal dismissed with costs.
Legal Topics
Margin Purchase, Broker Duties, Notice of Sale, Liability for Deficiency, Assignee Rights
Source Language
English
Securities Contract Agency Margin Purchase Broker Duties Notice of Sale Liability for Deficiency Assignee Rights

Case Brief

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Parties

Sutherland

Appellant / Plaintiff

Securities Holding Co.

Respondent / Defendant

Procedural Posture

Civil Appeal Securities/brokerage / Appeal to the Supreme Court of Canada (final Hearing)

Legal Issues

  1. 1 Whether a broker may sell margin securities without further notice after a margin call default
  2. 2 Whether the customer is liable for a deficiency after the broker's sale
  3. 3 Whether notice of sale and the customer's failure to object precludes liability challenges

Ratio Decidendi

Where a margin customer defaults on calls, is notified of the account and sale, and does not timely object, the broker (and their assignee) may lawfully sell the securities according to the applicable custom and recover any deficiency after crediting the sale proceeds.

Court Disposition

Appeal dismissed with costs.

Orders

  • Appeal dismissed with costs.
  • Judgment of the Court of Appeal affirmed.