56 Ga. App. 823 | Ga. Ct. App. | 1937
Lead Opinion
Eenner & Beane, cotton brokers, sued B. E. Calhoun on an open account for the principal sum of $444.94, besides interest at the rate of seven per cent, per annum from March 11, 1935. A sworn itemized statement of the account was attached to the petition. The defendant pleaded that the suit was based on a “cotton-future” contract entered into by him and the plaintiff, upon margins, and that there was no bona fide intention of either of the parties that such cotton should actually be delivered, but the intention was that, at the time of settlement of such contract, settlement was to be made according to the market price of the
This case involves a marginal contract for the future delivery of cotton. Under the act of 1929 (now embodied in the Code, §§ 20-602, 20-603), such a contract is valid and enforceable, if made in accordance with the rules of any board of trade, exchange, or similar institution, and actually executed on the floor of such institution according to its rules, and where the contract is placed with or through a regular member in good standing of a cotton exchange, or similar. institution organized under the laws of this State or any other State; provided, that a contract of sale for future delivery of cotton must also be made subject to the provisions of the United States cotton-futures act approved August 11, 1916, and any amendments thereto. Under the act, such a contract becomes unlawful only where the parties thereto do not contemplate an actual delivery of the cotton sold or bought, but intend to settle upon the basis of the public market quotations made on any exchange, without having any actual bona flde delivery, and without the carrying out of such contract on the floor of such exchange. Before the passage of the act of 1929, the statute (act of 1906) merely declared that any contract for the purchase or sale of any commodity on margin, when in fact it was
The case of James v. Clement, 223 Fed. 385, cited by counsel for Calhoun, while a Georgia ease, was decided before the passage of the act of 1929. Furthermore, the.customer in that case testified that he did not intend to accept delivery of the cotton, and so told the broker. The broker denied that he had been so told. That conflict in the evidence raised an issue of fact, and the question was properly submitted to the jury. In the instant ease there was no such conflict in the evidence and no issue of fact for the jury to determine. Also, in that case, the evidence showed that
It is true that Calhoun testified that he had no intention of having an actual delivery of the cotton made to him; but there is no evidence in the transcript of the record authorizing-a finding that Fenner & Beane did not intend to make such delivery, or that Fenner & Beane knew that Calhoun did not contemplate an actual delivery of the cotton; and the burden was on Calhoun to show that no delivery was contemplated by both parties, since the undisputed evidence shows that Fenner & Beane had complied with all of the provisions of the act of 1929; and such compliance raises a prima facie presumption of an intent to deliver. The fact that Greene (Fenner & Beane’s agent), when asked whether any contract was ever had with Calhoun where he told Calhoun that no delivery was contemplated, testified that “that subject was never discussed” is insufficient to overcome the prima facie presumption of an intent to deliver, since nothing was said by the parties about not deliver
The instant case is essentially different from the cases cited by the defendant in error. The question here is whether Calhoun, the customer, carried the burden of showing that not only he had no intention of accepting a delivery of the cotton, but also that Fenner .& Beane understood that a delivery was not to be made. The mere facts that Calhoun bought the cotton on margin for future delivery, that it was sold by the broker before the date of delivery, that in two -previous transactions cotton was so sold, that Calhoun did not intend to accept delivery (it not being shown that the broker had no such intention or that it knew of Calhoun’s intention not to accept delivery), are wholly insufficient to overcome the presumption of the validity of the contract, since the undisputed evidence discloses that Fenner & Beane had complied with all the provisions of the act of 1929. Under that act the transaction was legal, unless Calhoun showed by competent evidence that both parties had a mutual ’ox common understanding that no delivery of the cotton was to be made, and this he failed to do. It follows that the general grounds of the motion for new trial showed no cause for another hearing of the case.
A special ground of the motion complains of the admission of the following documentary evidence: “Statement from Fenner & Beane, New Orleans, La., dated Nov..24, 1934, addressed to Mr. B. B. Calhoun, Tifton, Ga., as follows: Dear Sir: In accordance with your order and our telegraphic advice we have this day made the following transactions for your account, for future delivery of cotton, subject in all respects to the by-laws, rules, and conditions of the New York Cotton Exchange, and subject to United States cotton-futures act, section five:
“Bought Sold
Bales Delivery Price . Bales • Delivery Price
100 July 12.38 100 Dec. 12.28
100 July 12.39
“All orders for the purchase and sale of cotton are received and
Judgment reversed.
Dissenting Opinion
Dissenting. Fenner & Beane brought an action against B. R. Calhoun for recovery of $444.94 on a margin account for 200 bales of cotton. The court directed a verdict for the plaintiff. The court granted the defendant a new trial, and on this judgment the plaintiff assigns error. This' being the first grant of a new trial, the judgment should be affirmed, unless the evidence demanded a verdict for the plaintiff. The defendant contends that the alleged debt arose out of a cotton-futures contract between the plantiff and the defendant upon proper margins, that there was no intention that the cotton should actually be delivered, but that settlement was to be'made according to the market price of the cotton, and that such a contract is a gaming contract, unlawful, and unenforceable. Defendant contends further that there was some evidence to show that there was no intention that the cotton
The Code, § 20-603, declares: “Any contract of sale for future delivery of cotton, grain, stocks, or other commodities, where it is not the bona fide intention of parties that the things mentioned therein are to be delivered, but which is to be settled according to or upon the basis of the public market quotations or prices made on any board of trade, exchange, or other similar institution, without any actual bona fide execution and the carrying out of such contract upon the floor of such exchange, board of trade, or similar institution, in accordance with the rules thereof, shall be null and void and unenforceable in any court, and no action shall be maintainable thereon at the suit of any party.” See also § 20-602. The quoted section is a codification of part of the act of 1929; and under that act, as well as preceding acts, if the contracting parties intend that there shall be no delivery, the contract is unlawful and unenforceable.
The record shows that the cotton in question was bought on margin for future July delivery, 1935; and that the cotton was sold, or contract closed out by the plaintiff, on March 11, 1935, without the knowledge of the defendant, and without calling on the defendant for more margin. The defendant testified, in part: “I did not at any time have any cotton delivered on current contracts. . . I have been engaged with Fenner & Beane in the futures market since 1933. I have never settled any contract except on margin. . . These contracts were made with Fenner & Beane through Mr. Greene. Lots of time they were made on the telephone. I would call him up, or he would call me up and tell me that he thought cotton would be a good buy. . . I do not operate a cotton mill, and have no use for a hundred bales of cotton. I just put the contracts up to win or lose. Each contract that I bought I had to put up $500, and on numerous occasions they closed out the contracts and left me in the hole. There was never any occasion when I purchased a contract that they did not require me to put up a margin. . . The July cotton they bought —it was sold without any direction from me. . . With respect to the contracts — they would never reach maturity — they would always call me up and tell me they had closed it out at a certain time, at a certain date. In fact that’s why I didn’t bother about
The issue presented to this court for decision is not whether the evidence would authorize a verdict for the plaintiff, or who had the burden of proving the contract illegal. Conceding that there was some evidence that would authorize a verdict for the plaintiff, that the defendant had the burden of proving that the contract was illegal, and that to render this contract illegal it must be shown that both parties intended that there should be no delivery of the cotton, the sole question for decision of this court is, was there any evidence, regardless of who adduced it, to show that the parties did not intend actual delivery of the cotton? If the parties intended that the cotton should not be delivered, then the contract is unlawful and unenforceable; and if there is any evidence to show that the parties did not intend for delivery to be made, then the case should go to the jury for the determination of this issue of fact. I think there is some evidence to show that both parties understood and intended that this was a mere wagering or gambling contract. The evidence shows that the cotton was bought on margin for future delivery, and was sold without calling on the defendant for more margin. This, though not conclusive, is at least a matter to be considered by the jury. The evidence also shows that the defendant had been engaged in the futures market with the plaintiff since 1933, during which time he had bought numerous contracts, and that during all this time no delivery had ever been made, which tends to show an established custom between the parties which they both understood. The evidence also shows that Mr. Greene, the representative of the plaintiff, would call the defendant on the telephone and tell him “that he thought cotton
In Anderson v. Holbrook, 128 Ga. 233, 236 (57 S. E. 500, 11 L. R. A. (N. S.) 575), where the petition of the brokers was being tested as against a demurrer, the court held that the petition was subject to demurrer, and that “If a broker was privy to wagering contracts for fictitious or option futures, and brought the parties together for the very purpose of entering into such illegal agreements, he .could not recover for advances made by him on account of his principal in forwarding such illegal contracts.” In the opinion in that case the court said: “Pleadings are to be taken most strongly against the pleader. But it is scarcely necessary to invoke this rule in order to see from the terms of the petition that the transactions here involved belonged to that class of gambling contracts commonly known as dealings in futures. .We think the plaintiff’s own pleading is sufficient to make this apparent even to those who claim no intimacy with the ‘ bull ’ rings and ‘ bear ’ pits of finance. A man residing in a small country town in Hart county gave orders to brokers in the City of Atlanta, covering a somewhat widely diversified list of objects, such as ‘ Jan. cotton,’ ‘ Dec. oats,’ ‘ Jan. ribs,’ ‘ Ma. wht.,’ ‘ 10 C. E. I.,’ f 10 H. P.,’ and 190 shares of stock. The brokers dealt with a corporation in a distant city as to a part of the transaction, and as to the balance it does not appear with whom they dealt. The allegations do not disclose that these were purchases for actual delivery (save a general reference in the rejected amendment as to delivery of cotton), or the amount of purchase-money paid or to be paid. It seems quite, clear that the whole matter was simply a speculation in futures, a putting up of margins ' to keep the trades afoot,’ a requirement of more margins when the market declined, and a failure to put up such margins, by reason of which fthe transactions were necessarily closed out.’” In Luke v. Livingston, 9 Ga. App. 116, 120 (70 S. E. 596), it was said: “It is true, . . an unlawful intent'must be present in the minds of both parties; but the intent can be shown by circumstances. It will be for the jury to say, when they have heard all the circumstances, what was the
If the contract in this case was a gambling contract, it is an illegal contract under the act of 1929, p. 245 (Code, §§ 20-601 to 20-606, inclusive). Sections 4257 through 4264 of the Code of 1910 were expressly repealed. Sections 4253 and 4256 of the