38 F. 635 | U.S. Circuit Court for the District of Southern Ohio | 1889
(orally charging jury.) The plaintiff sues to recover from the defendant $15,667.14, with interest from July 6,1887. The petition sets forth three distinct causes of action. The general allegations applicable
The defendant, by his answer, denies each and every allegation of the plaintiff’s petition, and sets up affirmatively that he had several transactions in the spring of 1887, made in Cincinnati, and to be there adjusted with M. S. Forbus & Co. only, — a firm doing business in Cincinnati, Ohio, — -by way of dealing in futures in grain, and to speculate upon the rise and fall of prices therein, with no delivery of said grain, but one party to pay the other the difference between the contract price and the market price of the said grain at the time fixed for the execution of said pretended contracts. The said transactions were mere wagers and speculations upon the rise and fall of the market; -were illegal and void. He denies all indebtedness of any and every kind to the plaintiff, and alleges that he is not indebted in ,any sum whatever to the plaintiff, and asks to be discharged with costs. The reply is a general denial of the matter set forth in the answer.
Something has been said on both sides with reference to what is called the burden of proof in this case. The party upon whom the burden of proof devolves in a civil case is required to make out his case by a fair preponderance of the evidence, and by a fair preponderance is not meant the larger number of witnesses, but the greater weight of testimony, judged by the impression wdiich it makes upon the jury, and from the manner of the witnesses, the circumstances attending the transactions, and the character of the testimony itself. Now, in this case, the plaintiff alleges that he made actual purchases of the grain referred to.
Now, with reference to what is gambling in grain and what is legitimate dealing, I will say, first, generally, that the simplest and clearest case of buying is that which occurs when a man buys for his own use in his family, or, if he is a farmer, for feeding his stock. Of course there can be no possible question about the validity of such purchases. Then come purchases for manufacture, as by a miller; or for resale, as by a dealer. Those, too, go unquestioned. Now, there is another class of purchases, actual purchases, neither for use nor for manufacture, nor are they for resale in the ordinary course of business, but exclusively for speculation; that is to say, the purchaser does not buy because he is in need of the corn, or because he intends to receive and keep it, for he has no need of it, and he has no such intention, but he buys simply and only that he may reap a profit out of the transaction. Now, gentlemen, if that be a real purchase, — an actual buying, — it is quite as legitimate in the eye of the law as- a purchase for actual use. The dealer who buys to sell again buys that he may sell at a profit. The speculator buys that he may sell again, risking upon his hopes of an advance in prices. Now, these are the three kinds of purchases which the law sanctions, and which are perfectly legitimate. . When it comes to a purchase upon speculation, it is of no sort of consequence in determining upon the validity of the transaction whether the purchase be large or small; whether the speculator be keeping within moderate bounds or whether he is running wild, actuated by his hopes and fancies. Now, for instance, suppose that a man having money and credit barely sufficient to enable him to buy 1,000 barrels of pork makes the purchase. He immediately hypothe-cates that 1,000 barrels of pork for enough money to buy 950 barrels more, hypothecates that 950 for enough money to buy 900 more, and so continues down to 500, and then on down, hypothecating that 500 so as to buy 475, and so on down; you will find by counting up that that man, having an actual capacity to buy 1,000 barrels of pork, has, by contrivances which are perfectly legitimate, bought and secured the payment of 13,000 barrels of pork, and if pork advances $1 per barrel he makes a profit of $13,000; if it advances $4 per barrel he makes a profit
But now we come to the other side. No matter what the form of the contract, no matter how many colorings of reality and of genuine dealing are thrown about the transaction, if, piercing all these disguises, the court or the jury see that these forms are mere shams, and that there was in fact no actual dealing in the article itself, but that the forms were adopted as a more semblance to deceive and to evade the law, it is the duty of the court and the jury to tear away the disguise, and treat the transaction as it is. And, looking at it in that light, if they find that there is nothing genuine or real about it, the whole thing descends from the plane of legitimate dealing to the mere condition of gambling, and falls under the condemnation of law, and there can be no recovery upon it. To invalidate the transaction, however, it is not sufficient to show that either party to the contract intended that it should be merely a gambling transaction. Every contract has two parties at least, and, if it be said
You have also had the testimony of witnesses. Two witnesses — the plaintiff and defendant — have each a very large interest in this case. It is the full amount in controversy, somewhere between fifteen and twenty thousand dollars, and in weighing the testimony of these two witnesses that circumstance is to be taken into account. Naturally, where a witness has an interest in the controversy, the inclination is to scan his testimony more carefully, and so it is in order to look to his manner on the witness stand, whether he is frank, open, and sincere, or whether he is guilty of evasion, or stumbles and shuffles, -whether his story is probable, whether he is corroborated by other evidence in the case; and that is a very important consideration, gentlemen, because sometimes the only practical way to test the evidence of the witness is to compare it with the circumstances of the ease, and, if you find it contradicted here and there and elsew'here, if you find it contradicted wherever it comes in contact with any other testimony, you feel inclined to place far less reliance upon his testimony. On the other hand, if you find him corroborated, not only by the probabilities, but by the other evidence in the- case, you will give greater credence to his story. The documentary evidence also comes into play, and is to be taken into account, and the
The next point in the case was, what was the relation of the several parties to each other? There was Edwards, the plaintiff; Forbus, the broker; Englehorn, the solicitor; and Hooffinghoff, the defendant. Edwards, according to the testimony, is a commission grain merchant at the city7 of Chicago, doing business upon the floor of the board of trade. A commission merchant is one who buys or sells goods or merchandise consigned or delivered to him by his principal for a compensation commonly called “commission.” He differs from a broker in that he may buy and sell in his own name, and very frequently does, without disclosing the name of his principal, while the broker has no right to buy or sell, excepting in the name of his principal. The commission merchant is intrusted wdth the management and control or disposal of the goods to be bought or sold, and he has a special property in them, and a lien upon them for his charges, advances, and commission. The broker is one who negotiates the purchase or sale for the principal. He is not responsible for anything except bad faith. He has no control of the
How, with relation to the offsets. You have heard the rule of the board of trade read, and therefore I need not read it again to you, providing that, where cross-trades exist between commission merchants under such circumstances that they can be canceled, that shall be done; one shall be offset against the other, and new contracts substituted. Such a rule, to be binding upon the customer, must be known to him, as I understand the decision of the supreme court of the United States. But if it is known to his broker it is the same thing as though known to him, because he makes his broker his agent, and the knowledge of the broker therefore is chargeable to him, and he is bound by it, so that if he made Mr. Forbus his agent, and Mr. Forbus, as he testifies, knew of this rule, Mr. Hoeffinghoff' is bound by it.
How, I do not remember, gentlemen, anything else on the general charge. I will now take up the special charges. I am asked to give you this, and I will do so: ’“The jury, in reaching the intention of the plaintiff in carrying on these transactions as he claims for the defendant, have the right to consider the character of the plaintiff’s business as. shown by his books, the amounts involved, and the closing out of other transactions with the defendant, as shown by the evidence and from all the attending circumstances surrounding the transaction; and if the jury are satisfied from all the evidence that the defendant did not expect to receive grain, nor the plaintiff or Forbus to deliver it, but only to make wagers upon the rise and fall of the market, and to settle by difference, then the plaintiff cannot recover.” That I give to you, gentlemen, while at the same time I will say this to you: If the orders were bona fide, and were executed by actual purchase, the circumstance that the defendant afterwards and before the day of delivery sold out his contract does not affect the validity of the contract, — does not affect the validity of the transaction. Now, for instance, a man may go out
Something was said during the progress, of the testimony or argument with reference to an account current, and the force and effect of rendering it, and its reception in silence. 1 will give you fhis charge on this subject: An account current is an open or running account between two or more parties. When rendered, and not objected to within a reasonable time, it has the force of an account stated; that is to say, it will be taken as correct until shown by the parties to whom it was rendered to be incorrect. But this rule does not apply if, when the account was sent, the parties had already come to a disagreement, and therefore assent from silence could not reasonably be inferred. Now, there is testimony with reference to making an account, and with reference to the sending of the account b.y Mr. Edwards to Mr. IioeffinghoiF. If he sent it, and at that time there was no open, express disagreement between the parties, and Mr. Hoeffinghoff kept that account for two or three days, — for, when the facts are clear, what is a reasonable time is a matter of law for the court, — if he kept that account without expressing dissatisfaction, then it is fair to presume that the account is all right; that is to say, it will stand until it is shown by Mr. Hoeffinghoff to be wrong. On the other hand, if the account was furnished after the parties had fallen into disagreement, and after it was. perfectly understood by Mr. Edwards that Mr. Hoeffinghoff did not intend to pay this money, the mere sending of the account soles to Mr. Hoeffinghoff ivould amount to nothing, because it is unreasonable to suppose that Mr. Edwards would bo misled by it.
I will give you this charge: “If you find that the defendant authorized Englehorn to give orders to Forbus to buy the corn and wheat in question without designating the place at which, or a person of or through whom, the grain should be bought, and Forbus & Co. received the orders through Englehorn'and transmitted them to the plaintiff at Chicago, to be executed on the board of trade of that city, then the plaintiff was authorized to execute them, and defendant is bound by his (plaintiff’s) acts in purchasing said grain. If the jury find that the defendant authorized Englehorn to give orders to Forbus & Co., as brokers, to buy the corn and wheat in question at Chicago, either with or without designating the board of trade of that city as the place, or the plaintiff as the person, to execute the orders, and that Forbus & Co. received the orders,
I’also give you this charge asked by the plaintiff: “In determining whether the defendant knew that the orders to purchase the grain in question were executed in Chicago on the board of trade, subject to the rules of that board, and through the plaintiff, the jury yvill consider the defendant’s previous transactions in grain, and his opportunities to learn where and through whom they were conducted; also such statements of accounts as you may' find the defendant received, either directly or indirectly, from the plaintiff, — that is, either from the plaintiff or through Forbus. If he retained these statements without objection within a reasonable time within which he should have returned the same, and made known his objections thereto, that is to be considered as evidence tending to show that he was advised thereof, and con
The next I have already given. There are one or two others here, but I understand I have already given them, and I do not care about reading them.
Judge B'tshee. The commissions, instead of being a quarter of a cent for the purchase, and quarter of a cent for the sale, were only a quarter of a cent for the purchase and sale.
The Court. I think you have it the other way in the petition. (To the jury:) Gentlemen, I need scarcely say to you that your determination of this case should be upon the evidence and upon the evidence alone. Whatever feeling of sympathy on the one hand", or of prejudice on the other, either court or jury may be inclined to, should bo put entirely aside. It is nothing but a cool, clear-cut question of fact and of law, and you and the court are alike under oath to so decide the case, without reference to any other consideration from any source whatever.
I will say this in reference to the hooks: These books contain the accounts of other transactions, and now, being in the custody of the court for the time being, they will be committed to your charge. The entries in these books are confidential, and the court is bound to respect them as such, and so you will be; that is to say, whatever you find there relating to transactions not involved in this case, is to be held as though you had never found it.
EXCEPTIONS.
Mr. Stephens. The court told the jury that if Edwards made the contracts in July, substantially, that we were bound by that.
The Court. I did not intend to say that.
Mr. Lincoln. Another matter was, you say “that if the contracts were not made.” I think the jury may misunderstand that. Suppose the parties did enter into contracts, and intended to fulfill them as they entered into them, but that the agreement was that no grain was to be delivered, then it would be gambling; but your honor put it in such a way that the jury may have a feeling that there must be no contracts made for it, whereas, if they wore made, as Hoeffinghoff claims, without delivery of grain, then legally they were not made.
The Court. I tried to make that just as clear and strong as words could
Mr. Lincoln. The .court said in so many words that Forbus was a broker. We claim that, although he was a broker, he could make this contract with.Hoeffinghoff as a principal.
The Court. My recollection of what I said is that Mr. Forbus, according to the testimony, was a broker. I then explained the difference 'between a broker and a commission merchant, and I said afterwards that, if the arrangement was between Hoeffinghoff and Englehorn and Forbus alone, there could,not be any recovery in this case.
Mr. Lincoln. You said also, if I remember it correctly, that Forbus was a mere broker, and had nothing to do with buying and selling. Now, although Forbus is in his profession a broker, there is no reason why he may not have made this contract with Hoeffinghoff, and they should have the thing settled here with Forbus. That’s what I thought was likely to be misconceived.
Mr. Stephens. I don’t know whether you intended to tell the jury that these books and- the other accounts in them as to the method in which Mr. Edwards did his business was for them to consider or not. You said that you had ruled out of the evidence for certain reasons what others did, and I did not know whether you meant by that what others did with Edwards, or what others did on the board of trade.
The Court. The only thing was as to this cash wheat and .cash corn, and that the jury might go through the books and see if there were any entries to show cash wheat, and see if that was exceptional.
Mr. Stephens. To the charge concerning the general transactions of Edwards with other people, where there are these things on his books, we want to take an exception; and also as to the special charges giyen for plaintiff; and we also want to take an exception to each modification of each of our special charges, and also want to take an exception to each special charge refused. In your charge, referring to the plaintiff, you said: “He. produces the bought and sold notes, he produces checks given in payment for grain, and produces evidence of transfers of grain and insurance receipts, receipts for storage, etc. If you believe that testimony .you must believe those purchases actually made.” I do not know these are the exact words, but it is to that sentence I desire to take an exception.
Mr. Warrington. Did your honor understand that those three charges that I asked the first day, and you refused, were excepted to?
The Court. The first two were refused at the time, and the exception goes in at that time, and the last was covered by what is in the general charge.
Mr. Stephens. I want to take an exception to all those matters relating to the agency of Mr. Forbus for us, and all matters relating to what was said by Forbus, and as to his knowledge as a broker, and what relates to our being bound by these rules of the board of trade and giving these orders, and matters of this kind in the general charge, and I think we
The Court. You can do that.
The jury, which had retired before the exceptions were stated, were then recalled and further charged as follows:
“Gentlemen, the charge 1 gave you was altogether oral, excepting the statement of the case, and some matters that I meant to refer to I omitted, or at least there seem to have been some things that were not exactly understood. One is, that it must have been intended when the contracts were made that there should be a bona fide purchase and delivery of the grain. If Mr. Edwards made the contract without then intending to buy or deliver the grain, and afterwards, when Hoeffinghoff began to sheer off, went in and bought the grain, so as .to make a show of fulfilling the contract, that would not do. You must be satisfied that the intention was to fulfill the contract at the time the contract was made. I thought I stated as much in the charge. If I did not, I state it now. If the form of the contract was for the purchase and delivery, but the understanding was that there was to be no delivery, the understanding controls over the form. That I thought I said also. I stated to you that, according to the testimony, Mr. Forbus was a mere broker. So he was. But it does not follow from that that he had not the capacity to make the contract as principal himself with Hoeffinghoff; and, as I told you in another part of the charge, if you find that that was the real transaction, — that is to say, that Hoeffinghoff had no transaction with Forbus excepting as a principal, as set up in his answer, — then the plaintiff has no case. As to the books which you have, or will have, íhe court permitted an inspection of the books — other accounts in the books — upon certain matters. You will remember that the corn or the wheat which were closed out in July, that there is an entry in that long book — cash-book or whatever it was — of cash corn, cash wheat, cash grain; and Mr. Stephens insisted that those were the only entries of cash grain in the book within those months. Now, the whole range of those books is open to your inspection on that point. What I meant to say was that general transactions between Mr. Edwards and other parties cut no figure- in this case, and I only permitted an examination of those entries to aid you in determining whether there was anything exceptional or illegal in selling that wheat for cash, or whether the fact that no other entry of the sort appears in the books, if that be the fact, tends to show that Mr. Edwards was not conducting a legitimate business.
“There are a good many matters in testimony to which I have not referred. I intended to turn the testimony over to you. I did not intend to express any opinion whatever about the facts. I did not want the jury to think the court was one side or the other, because the court is not on any side, and so I did not refer to the testimony given by Mr. Hoeffinghoff, relating to the settlement which he claims he made when he gave his note, — in June, I think it was, — and said that that should be*650 the end of it, or words to that effect. It is claimed that that was the settlement and closing up of the transaction. That depends altogether upon' the testimony and what you find from the witnesses, and, of course, if he settled then, that is the end of it.”
Mr. Lincoln. As I understand the charge of the court, the jury might have got an impression that if Mr. Edwards did in fact buy in Chicago this grain, that that bound the defendant. The charge of - the court seemed to be based upon the theory that if they find that Edwards did in fact buy the grain in Chicago that then we were bound for it, and I don’t think the court intended that.
The Court. I do not think counsel understood the charge as well as the jury. I did not intend to convey that impression. I have all the time referred to the contract between the'parties, and the contract between parties is when the.minds meet. That, in a written contract, is when they sign the papers; in an oral contract, when they come to an understanding. It is the understanding when the contract is made that governs. If the understanding then was that there should be an actual purchase', and an actual delivery and receipt of the grain, the contract is binding, notwithstanding they may have subsequently concluded to sell out, or even to settle differences. If the contract was á tona fide one for the actual purchase and sale, it was good. If it was not good when it was made it could not be made good by subsequent purchase; that is to say, Mr. Edwards could not be permitted to tack and change his course and get into shape to claim to be in the position of a bona fide purchaser of grain unless you are satisfied that that was the agreement at the time the' contract was made.
Mr. Lincoln. My point was simply, the mere fact that Mr. Edwards did buy it up there did not bind us.
■ The Court. I have tried to say that. I do not see how I could make it any more clear.