Hecht v. Harris, Upham & Co.

Mr. Hecht died in 1955 and left securities worth roughly $508,000 to his wife, Bertha (plaintiff). After Mr. Hecht died, Bertha formed a close business and social relationship with investment broker Asa Wilder (defendant) and transferred her own securities account and Mr. Hecht’s securities account to Wilder’s then-employer, Hooker & Fay. In 1957, Wilder left Hooker & Fay and became a representative and commodities manager at Harris, Upham & Co. (Harris) (defendant). Bertha transferred the securities account, which at the time was valued at approximately $533,000, to Harris. While the account was at Harris, Bertha regularly received confirmation slips showing each transaction involving the account. Bertha kept the slips and discussed them with Wilder during nearly daily telephone calls and weekly visits. Bertha also received monthly account statements from Harris and discussed gains and losses arising out of the securities transactions with tax accountants. In 1964, Bertha’s tax consultants advised Bertha that the securities account had been substantially depleted. At the time, the account’s net value was roughly $251,308. Bertha sued Wilder and Harris in federal district court, alleging claims including violations of federal securities law. The district court found that waiver, laches, and estoppel precluded some of Bertha’s claims because Bertha knew about the account activity yet apparently acquiesced to Wilder’s and Harris’s handling of the securities account for seven years. However, the district court found for Bertha on other claims and awarded roughly $504,000 in damages. Bertha and Harris appealed.