How does the docker daemon respond if it's not running?

phantom-docker-daemon.sh

# Ubuntu 14.10
uname -a
## Linux box 3.16.0-41-lowlatency #55-Ubuntu SMP PREEMPT Sun Jun 14 18:59:55 UTC 2015 x86_64 x86_64 x86_64 GNU/Linux
cat /etc/issue
## Ubuntu 14.10 \n \l

# Latest Docker development version
docker -v
## Docker version 1.7.0-dev, build 6a7a757

# Installed latest docker-compose version to hopefully address bug: https://github.com/docker/compose/pull/1349
docker-compose -v
## docker-compose version: 1.3.0rc3
## CPython version: 2.7.8
## OpenSSL version: OpenSSL 1.0.1f 6 Jan 2014

# But docker doesn't like the server version
docker ps
## Error response from daemon: client and server don't have same version (client : 1.20, server: 1.15)

# And latest dev release candidate docker-compose expects 1.18
docker-compose ps
## client and server don't have same version (client : 1.18, server: 1.15)

which docker
## /usr/bin/docker

which docker-compose
## /usr/local/bin/docker-compose

# The docker daemon is using /usr/bin/docker, which is the same binary as above
ps auxf | grep docker
## fish     12653  0.0  0.0  13680  2128 pts/14   S+   09:08   0:00          |       \_ grep --color=auto docker
## root      9346  0.0  0.1 390008 20008 ?        Ssl  09:06   0:00 /usr/bin/docker -d
## root      9450  0.0  0.0 117460 15756 ?        Sl   09:06   0:00  \_ docker-proxy -proto tcp -host-ip 0.0.0.0 -host-port 32768 -container-ip 172.17.0.2 -container-port 29015
## root      9539  0.0  0.1 117460 17124 ?        Sl   09:06   0:00  \_ docker-proxy -proto tcp -host-ip 0.0.0.0 -host-port 32769 -container-ip 172.17.0.2 -container-port 28015
## root      9579  0.0  0.0 109264 13536 ?        Sl   09:06   0:00  \_ docker-proxy -proto tcp -host-ip 0.0.0.0 -host-port 32770 -container-ip 172.17.0.2 -container-port 8080

# But after stopping the daemon, I still get the error message ?!

sudo service docker stop
## docker stop/waiting
ps auxf | grep docker
## fish     12929  0.0  0.0  13680  2140 pts/14   S+   09:09   0:00          |       \_ grep --color=auto docker
docker ps
## Error response from daemon: client and server don't have same version (client : 1.20, server: 1.15)

# Is the error message cached somehow?
# What am I not understanding about the client/server relationship?

And secondly, what combination of docker / docker-compose will allow me to run docker-compose 1.3, with all communicating on the correct client/server version?