40 Mich. 432 | Mich. | 1879
Defendants in error are produce brokers and commission merchants in the city of Detroit, doing business under the copartnership name of J. H. Wendell & Co. Plaintiffs in error are dealers in produce, among other things, at Owosso, Michigan, under the firm name of Gregory & McHardy. In April, 1877, Gregory was at the office of Wendell & Co. in Detroit, and made an arrangement for the purchase by Wendell & Co. for them, of twenty thousand bushels of corn on the Chicago market, for delivery in June. In pursuance of this arrangement the firm of Cooley & McHenry, produce brokers in Chicago, were at once by telegraph, as is claimed, directed to make the purchase, and they made it on the same .day, at a fraction over fifty-nine cents a bushel. On the purchase, Wendell & Co. received from Gregory & McHardy one thousand dollars for “margin,” and the price, except as to this, remained unpaid. The price of corn declined from the time of purchase, and on May'18, Gregory & McHardy decided to sell, and the Chicago brokers made sale at a net loss of $1,689. Three days previous to this Wendell & Co. had bought for Gregory & McHardy ten thousand bushels of com through Erskine, another broker, and on May 18th they
After these last transactions the price of corn continued to decline, and on May 21st Wendell & Co. wrote Gregory & McHardy a letter from which the following is extracted:
“ Gents : — We find on figuring up your Chicago deals that you are short of margins some $600, and this is after taking balance of account, and giving you credit for the two cars of wheat at about to-day’s prices. Will you send a draft for the amount, or shall we draw ? Our Chicago parties make prompt demands on us, and we in consequence have to keep dealers well up.”
No reply was made to this letter, nor to a letter and telegram on the same subject, three days later. May 26th, without orders from Gregory & McHardy, Wendell & Co. sold the contracts for July delivery at a large loss. When this sale was reported to Gregory & McHardy, the latter placed the matter in the hands of their attorney, who under date of June 5th wrote Wendell & Co. as follows:
“ Gentlemen : — I am instructed by Gregory & McHardy to say that as you have sold, according to your statement, the corn which you profess to have held for them, thus rendering it impossible for you to fulfill the contract on your part, they will treat it as at an end, and hold you responsible for the amount paid you.”
Immediately, and on the same day, Wendell & Co. replied, addressing their reply to the principals:
“Gentlemen: — As you fail to notify us that you are satisfied with our action in making sale of the corn heretofore purchased by us for your account for delivery in July, you are hereby notified that we shall hold ourselves in readiness to deliver such corn to you at the time you become entitled to such delivery by the terms of your order to purchase.”
At the same time they ordered the purchase of thirty thousand bushels of corn in Chicago for July delivery, and the purchase was made. July 2nd, 1877 Wendell & Co. caused Chicago elevator receipts for this amount of corn to be tendered to Gregory & McHardy at Owosso,
The controversy in the court below was mainly over two questions: First, Whether the transactions out of which the suit sprung were not mere gambling transactions, and therefore opposed to the policy of the law, and incapable of affording a ground of action; and second, Whether plaintiffs, by making sale of the July contracts in May, had not, as the letter to them of defendants’ attorney assumed, put it out of their power to perform on their part, and thereby discharged the defendants. Certain collateral questions bearing upon these were also raised, and some questions of evidence which will be referred to further on.
Defendants in the court below undertook to establish that the transactions between the parties never contemplated any actual sale or delivery of corn; that the supposed contracts were in the nature of wagers on the rise' or fall in the price of corn between the respective days of purchase and the times when the nominal purchasers would receive delivery if the contracts were performed; that the unexpressed purpose was that the contracts should be closed only by the payment of differences, and that for these reasons it was not, and was never intended to be a legitimate business transaction, but was wholly illegal and void.
Another branch of the same litigation was before this court at the October session thereof in 1878, and it was then declared that if these were purely gambling transactions, and so understood by both parties, neither of them could maintain an action against the other in respect to them. Gregory v. Wendell, 39 Mich., —. A like doctrine was laid down in Lyon v. Culbertson, 83 Ill.,
If there is a right to purchase produce on speculation, it may be purchased for future delivery; and this, though at the time the seller may have none to deliver. Cassard v. Hinman, 1 Bosw., 207; Ashton v. Dakin, 4 H. & N., 867; Brua's Appeal, 55 Penn. St., 296; Pixley v. Boynton, 79 Ill., 351. But in this case it was denied that delivery was ever contemplated. The defendant Gregory testified that in the dealings with Wendell & Co. the transaction was talked about and understood as a mere speculation, to be closed up without the delivery of any corn under or because of the nominal purchases. Mr. Clark, on the other hand, the member of the firm of Wendell & Co. with whom the negotiations were had, testified that while the talk and expectation was that Gregory & McHardy would order the corn sold before the time for delivery came, yet that the plaintiffs expected to obtain title to the com for delivery at the maturity of the contracts .if not disposed of sooner. On cross-exami
If a miller from the interior of Michigan were to go to Chicago and there request a produce broker who for a series of years has been engaged in gambling transactions in grain, to purchase for him ten thousand bushels of wheat for future delivery, contemplating at the time
If a contract on its face contemplates illegal dealings, no question of intent can be open as a question of fact. But this contract was not one of that sort. It was perfectly legitimate on its face, and apparently contemplated nothing which was opposed to any principle or policy of the law. Now, if such a contract is susceptible of being carried out in a lawful way, without conflicting in any manner with any common intent which is shown to have been indulged or held by the parties at the time the contract was entered into, we discover no ground on which it can be held to be invalid. It .is not enough to defeat it that it is susceptible of an illegal use, or that one of the parties to it may have contemplated and designed such illegal use, if the other had a right to suppose under the circumstances that the contract was to have effect according to its apparent and lawful construction. This is the view expressed in substance by the Kentucky Court of Appeals in Sawyer v. Taggart, Chicago Legal News for 1879, p. 133, in an able opinion by Mr. Justice Cofer.
In this case the parties were at variance respecting
But the defendants further insist that, under the arrangement as sworn to by Mr. Clark, Wendell & Co. were their agents, and if as such agents they bought corn, it was their duty to make a valid agreement with some one, on behalf of their principals, for the delivery of corn; — an agreement in legal form and capable of being enforced against the actual vendor. If they ever did make such an agreement, it is said, it must still be outstanding in the hands of the man with whom they or their correspondent made it, and it is to him that defendants must respond, and not to these agents. A suit by Wendell & Co., whatever its result, could not bar the demand of an actual vendor against these defendants as actual vendees; and therefore under any view of the facts this suit is not maintainable.
The proposition that Wendell & Co. were to be regarded as agents merely, authorized as such to negotiate certain sales to these defendants, is one that at first blush seems unquestionable. There is no doubt Wendell & Co. were agents: they tvere to buy for defendants, and they were to receive a- commission for buying. As agents they made purchases through Cooley & McHenry, which were entered on the books of the latter firm, and also through Erskine. But this is not a complete statement of the case. If defendants must have contracts with those who were the actual sellers, it is necessary to look further; for Cooley & McHenry and Erskine were only the correspondents of Wendell & Co., and bought for them of third parties. There were thus two intermediate parties between the vendors and the vendees, and the ultimate parties were probably wholly unknown to each other.
Ho doubt the transaction may assume such a phase that the broker must be regarded as an agent merely. If he merely makes the purchase with the understanding, expressed or implied, that the contract is to be at once turned over to his principal, and this is done with the knowledge and consent of the Seller, the broker’s connection with the transaction will then have ceased, and if his commissions are paid, the principal will no longer have claims upon him in respect to it, nor he upon the principal. The buyer and seller will then be relieved of intermediate parties, and must look to each other exclusively for the performance of their respective obligations. And no reason is perceived why, at the election of the purchaser, the transaction may not be made to assume this form in every instance. As a matter of course in such case, the seller, when turned over to a purchaser who may be unknown to him, would be entitled to demand full payment at once, or to be protected by payments as “margins” or otherwise, in ways that he might not have required of the broker through whom the transaction was effected; but if payment is made or the demanded protection given, he cannot object to being turned over to the purchaser himself as the person with whom he must subsequently deal.
But this is not the phase the transaction commonly
The implied understanding in all cases where the purchase and sale is intrusted to the broker is, that the purchaser looks to his broker, the broker looks to his correspondent, and the latter looks to the party who sells to him. If one desires to purchase grain for future delivery, his .broker orders the purchase, but the transaction is represented on the books of dealers, and not by written contracts. The purchase now, when the grain is to be delivered in the future, is not for the purpose of having the quantity set apart to await the time, but it is to fix the price which the purchaser is to account ■for when the transaction is closed. It is never expected that during all the time intermediate the day of purchase' and the day of delivery an amount of grain correspond^ ing to the amount bargained for, will lie in the ware
If a buyer for future delivery must be understood as dealing with the party who sold to his broker’s correspondent, then defendants were consistent and logical in insisting, after Wendell & Co. had sold the July contracts without orders, that no other contracts could be substituted for those so disposed of. No man can be compelled against his will, to accept another contracting party in place of the one he has dealt with, even though a contract with such other party may be equally valúa, ble, and in its results exactly the same. But it cannot seriously be pretended that these defendants expected and understood they were to look to all the several parties from whom Cooley & McHenry and Erskine had bought corn on their account, instead of looking to Wendell & Co., in whose hands they had left the dealings; While they might have required actual contracts from actual sellers, they chose, instead of doing so, to deal exclusively with the parties they knew.- And under these circumstances Wendell & Co., who had assumed responsibilities and paid out moneys in carrying out their directions, were entitled to complete the transaction at the proper time by making delivery. ■ ''
It is said that this view puts the plaintiffs in .antagonistic positions; that it makes them buyers as agents for defendants, and sellers as principals to defendants of the same property; but this is not strictly accurate. They indeed bought as agents, but for their own protection they had the right to make delivery on the purchases, and the • implied undertaking of defendants was to receive
Had the purchases of corn been for immediate delivery, it would then have been the duty of plaintiffs to put themselves in position to make immediate delivery when defendants called for it, — not that they would have been obliged to deliver exactly the same corn which they had bought for defendants (Nourse v. Prime, 4 Johns. Ch., 490: s. c. 7 Johns. Ch., 90; Horton v. Morgan, 6 Duer, 56: s. o. 19 N. Y., 170), but they must deliver, or hold themselves in readiness to deliver, an equal quantity of the same in kind and quality. Had they under such circumstances disqualified themselves by sales from delivering the requisite quantity on demand, the purchasers might either treat this as an unlawful conversion of their property and claim damages, or they might repudiate the sale and demand the corn. Taussig v. Hart, 58 N. Y., 425. In the case now before us the defendants neither affirmed the sale made on May 26th nor repudiated it, but they planted themselves on the ground that the sale rendered it impossible for plaintiffs to complete the contract, and therefore discharged the purchasers from all obligation. This of course assumes either that defendants were entitled to particular lots of corn,— which cannot for a moment be pretended, — or to particular contracts for the delivery of corn; and if we are right in what has already been said, this last position is equally untenable with the other. No more depended on identity in contracts than on identity in kernels of corn. Wendell & Co. having bargained for the future delivery of corn to defendants, under their instructions, and having incurred liabilities in so doing, were entitled to require of defendants the fulfillment of the contract on their part; in other words, were entitled to require them to accept delivery and make payment.
Complaint is made of the rule of damages laid down
Of as little force is the objection that the elevator receipts, which were tendered to defendants at Owosso, were not shown to have belonged to plaintiffs. The evidence was satisfactory that they were such receipts as the corn would have been delivered upon, had the bearer presented them. The defendants could demand nothing more.
The substance of the arrangement between these parties may be stated in few words. Plaintiffs were to bargain for a certain quantity of com at the then ruling prices in Chicago, deliverable there in July following, and defendants were to pay them a commission for making the purchase, and also to receive the corn and pay the price at the time of delivery, unless they should dispose of the contracts sooner. Plaintiffs had a like agreement to receive the com from Cooley & McHenry and Erskine, and these persons from those of whom they bought. It was shown by the plaintiffs that they settled for the purchases with the brokers with whom they dealt, and when they then tendered to defendants receipts representing the requisite quantity of corn in the elevator at Chicago, they had done all that the arrangement required of them, and if defendants refused to receive the com, or the receipts representing it, plaintiffs were entitled to sell it for their own indemnity and to recover for any deficiency.
Some subordinate questions growing out of rulings in
The purchase of ten thousand bushels of corn on May -15th for July delivery was supposed to have been made through Erskine. The evidence of his having made the purchase consisted in what purported to be a telegram announcing it, and two letters in which he notified Wendell & Co. that he had drawn drafts on account of that and other purchases. It might perhaps be a serious question whether these, standing alone, would establish the fact that such a purchase was made; but as plaintiffs immediately reported it, with price, to
We find no error in the record, and the judgment must be affirmed with costs.