Morgan v. Rose, No. 1367

No. 1367 | Tex. App. | Jun 22, 1933

ALEXANDER, Justice.

J. IV Rose, a broker in the city of Waco, >rought this suit against Jim Morgan and vife to recover the sum of $282.18 alleged to >e due the plaintiff by reason of the failure >f the defendant, Jim Morgan, to make good certain contract by which said defendant nnployed the plaintiff to purchase for his iccount five thousand bushels of wheat on the Chicago exchange. The defendants denied naking the contract. A trial before the court vithout a jury resulted in judgment for jlaintiff against Jim Morgan alone for the mount sued for. Said defendant appealed.

The appellant presents the proposition that ;here was a material variance between the ¡leadings and evidence in that the petition illeged a cause of action to recover on an excess contract to pay the plaintiff the sum of 282.18, whereas the evidence established hat the agreement, if any, was that the defendant would pay the plaintiff the sum of ;300. The plaintiff alleged, in substance, that in the 20th of November, 1931, he, as agent or Jim Morgan, purchased, for his account, hrough James E. Bennett '& Co., brokers in ihicago, five thousand bushels of wheat to be elivered in July, 1932; “that the defendant * * Jim Morgan agreed with the plain-;iff that he would pay him the sum of $282,18 is a guarantee that he would perform his tart of said contract in the purchase of said vheat; ⅜ * * that the said Jim Morgan fid not deposit with the plaintiff herein the aid sum of $282.18, which he agreed to de->osit, and pay to the plaintiff to cover the amount required to carry out said contract agreed upon, including commissions for the purchase of said five thousand bushels of wheat, to plaintiff’s damage in the sum of $300.00, which he has'incurred by reason of the fact that he guaranteed to the said James E. Bennett & Company the payment of said sum by the said Jim Morgan to carry out said contractthat said wheat was purchased at 63½ cents per bushel and thereafter the price of said wheat declined to 57⅝ cents per bushel, and said Chicago brokers on November 25, 1⅛51, sold same for Morgan’s account at a loss of $282.18; that plaintiff, relying upon the defendant’s agreement, guaranteed to the Chicago brokers the faithful performance of the contract on the part of Morgan, and, upon Morgan’s breach of said contract, plaintiff was compelled to pay, and did pay, to said Chicago brokers said sum of $282.18. The prayer was for judgment “for said sum of $282.18, together with interest and-cost, and for general and special relief.”

While the petition does allege a contract on the part of the defendant to pay to or deposit with the plaintiff the sum of $282.18, we think it broad enough in its terms to include an action to recover on defendant’s implied obligation to refund to plaintiff the amount which plaintiff was required to expend in making good the contract on behalf of the defendant. Ordinarily where an agent properly incurs personal liabilities in the 'course of his employment and in the furtherance of his principal’s business, he is entitled to be indemnified therefor by his principal. 2 C. J. 793; 2 Tex. Jur. 620. The effect of the allegations of the petition was that the defendant employed the plaintiff to purchase the wheat in question, and plaintiff, in order to make the contract, guaranteed the performance thereof by the defendant, and, as a result of such guaranty, was compelled to expend the sum of $282.18. Under such allegation he was entitled to recover the amount so expended by him for the use and benefit of the defendant, regardless of whether the defendant agreed to deposit any specific sum with the plaintiff as a guaranty. We overrule this contention.

Appellant’s next contention is that the contract in question was against public policy and void because it was purely a speculative or gambling transaction, in that there was no intention that the wheat should be actually delivered, and because the contract was for the purchase of wheat for future delivery and could be settled by paying a margin or receiving a profit thereon. The trial court found that appellant authorized appellee, Rose, to purchase for him, through the Chicago exchange, five thousand 'bushels of wheat for July delivery; that Rose placed the order with James E. Bennett & Co. of Chicago; that the members of the firm of James E. Bennett & Oo. were members of the Chicago Board of Trade; that the contract for the purchase of said wheat was actually executed by James E. Bennett & Oo. on the floor of said exchange in accordance with the rules thereof; that it was the bona fide intention of James E. Bennett & Co. that said wheat should be actually delivered, and that such wheat would have been delivered had appellant carried out his part of the contract and demanded delivery thereof. The evidence shows that appellant, so far as he was concerned, never intended that the wheat should be delivered. He was merely speculating on the market. On the other hand, the evidence shows that, when James E. Bennett & Oo. received the order for the wheat, the contract was actually carried out on the floor of the Chicago exchange by the purchase of the wheat in accordance with the rules of said exchange. The wheat was purchased from O. Jj. Thomson & Oo. at 63¼ cents per bushel, and, upon appellee’s failure to put up the necessary margins when the price declined, the wheat was sold on the floor of the exchange to P. B. Oarey at 57⅝ cents per bushel. The evidence further shows that under the contract and the rules of the exchange it was optional with the appellant, the purchaser, as to whether he would demand actual delivery of the wheat or allow it to be sold on the -floor of the exchange and pay or receive the difference, and that, if he had performed his part of the contract and demanded delivery of the wheat, he would have received same. There was no evidence that either O. L. Thomson & Co., who sold the wheat, or James E. Bennett & Co., through whom the wheat was purchased, did not intend to deliver the wheat in the event the appellant so demanded.

Prior to the act of 1925, all sales of grain for future delivery were made illegal by the provisions of Revised Statutes 1911, Penal Code, article B39, if the contract, at the option of either party, could be settled by paying a margin or receiving a profit on such contract. However, this provision was repealed by the Acts of 1925, 39th Leg. c. 15, p. 38, and it is now provided in Penal Code, art. 657, that contracts for future delivery of grain are valid if made in accordance with the rules of any board of trade or exchange ahd actually executed on the floor of the exchange by or through a member thereof and ■ performed or discharged according to the rules thereof, excepting only those contracts where it is not contemplated by the parties that there shall he an actual delivery of the commodity so sold. As we understand, when wheat or any other commodity is purchased on the floor of the exchange, the purchaser has a right to demand and receive delivery of the commodity on the date specified. He may, however, sell his contract before the date of the delivery and receive his profit oi pay his loss. If he does-not dispose of his contract prior to the date of delivery and refuses to accept delivery, the commodity is sold for his account on the floor of the exchange and settlement had accordingly When the transaction is thus handled, the commodity is purchased or sold on the pub lie market, and in this way, not only is the price determined thereby, but the sale has its influence upon the market. The change made in the law regulating future contracts by the act of 1925 was intended to legalize such contracts. Mullinix v. Hubbard (C. C. A.) 6 E.(2d) 109; Hoyt v. Wickham (C. C. A.) 25 F.2d 777" court="8th Cir." date_filed="1928-04-19" href="https://app.midpage.ai/document/hoyt-v-wickham-1548646?utm_source=webapp" opinion_id="1548646">25 F.(2d) 777; Johnson v. John F. Clark & Co., 224 Ky. 598, 6 S.W.(2d) 1048.

Penal Code, art. 658, was intended tc make illegal contracts dealing in futures where the contract is not executed on the floor of the exchange in accordance with the rules thereof, and where it is intended tha1 the losses or gains are to be settled accord ing to public market quotations and withoul any intent to make delivery of the commodity sold. The provisions of this article are noi applicable to the case here under considerafl tion. |

There was evidence in this case that! the purchaser never intended that the whea* should be delivered, but such intention on hi» part alone is not sufficient to render the confl tract illegal. 18 Tex. Jur. p. 520, § 8. Thewfl is nothing in the evidence to show that htfl declared such intention at the time the con tract was made, nor that the seller of th< wheat did not intend to make delivery. Th« representatives of the appellee and of th£ Chicago brokers each testified that the whea would have been delivered had appellant ear ried out his part of the contract and demand ed delivery thereof. We do not consider the contract contrary to public policy.

The judgment of the trial court is affirmed