Griffin

Plunkett-Lilienthal and Company is a copartnership with its place of business in the city and county of San Francisco, transacting a general brokerage business, and is a member of the San Francisco Stock Exchange. Before the commencement of this action it assigned its demand against Le Roy Payne, now deceased, to respondent for collection.

During the year 1928 Le Roy Payne purchased different stocks through the agency of respondent’s assignor, paying cash for the securities and accepted deliveries of them. In the latter part of the year he had a conversation with one Sidney Clark, an employee of the assignor, in which trading in stocks on a margin was discussed. This resulted in Payne and the assignor entering into a written agreement that the assignor would act as broker for Payne in dealing in stocks on a margin. It appears that for a number of months after the execution of this contract Payne had on deposit with his brokers sufficient money and securities so that all of the stocks which he had purchased could have been more than paid for without the sale of any of the stocks purchased on margin. Several months after January 1, 1929, Payne increased his operations so that his…