170 A. 135 | Pa. | 1933
Argued December 6, 1933. Defendant engaged in trading in grain futures with plaintiffs, who are commodity brokers, with membership in the Chicago Board of Trade. In the course of his dealings, he deposited with them $18,500 as margins on his transactions. Ultimately plaintiffs sold him out because of his failure to keep his accounts adequately covered and when this was done, he was indebted to them in the sum of $5,695.17, which he refused to pay. Plaintiffs brought suit to recover this sum and defendant filed a counterclaim for the amount of his deposit. On the trial of the case the jury rendered a verdict in plaintiffs' favor for the amount of their claim, with interest. From the resulting judgment defendant appeals.
The attitude assumed by defendant is not any too praiseworthy. He employed plaintiffs as his agents to carry on his speculative transactions on the Chicago Board of Trade. They did so in accordance with the rules of that body. At a time in the course of his dealings when his marginal deposits were not sufficient to protect the purchases which plaintiffs had made for his account, after due notice they sold him out. At his request and upon his undertaking to make his margins good, they repurchased his contracts. He deposited with *579
them $2,000 in cash and gave them a post dated check for a like sum, which was not paid. In asking plaintiffs to reinstate his contracts, he ratified their acts: Clews v. Jamieson,
The course which the transactions took was this: Defendant directed plaintiffs to buy wheat or other grain for him. While plaintiffs were members of the Board of Trade of Chicago, they were not what is known as "clearing members." Actual trading on the Chicago Board of Trade is carried on principally through clearing members. Upon receipt of a buying order from defendant, plaintiffs would telegraph the order to a clearing member in Chicago, without naming their principal. The clearing member then made the purchase and the wheat exchange issued to him a memorandum that the purchase had been made. The clearing broker would inform plaintiffs of this and they in turn notified the defendant in writing. If the clearing-house broker received an order to sell the same kind of grain that plaintiffs' buying order had covered for the same month's delivery, then the purchase order and the sale order were matched or offset against each other by the exchange and the clearing broker would be considered a buyer or seller only as to the difference in the amount of grain. However, under the rules of the exchange, plaintiffs were bound, between the first and the last days of the month in which, under his future contract, he was entitled to receive the grain, to make delivery to defendant of warehouse receipts for the grain which defendant had actually ordered to be purchased. *580
It may not be inappropriate to outline what the Chicago Board of Trade is and its method of conducting business. This has been done by Mr. Justice HOLMES in Board of Trade v. Christie Grain Stock Co.,
It should be borne in mind that we are not here dealing with a situation comparable with the purchase and *582
sale of stocks. Stocks are actually in existence and the broker receiving an order to buy them from a client must make the purchase and receive the certificates in order that the transaction may be vaild: Katz v. Nast, 187 Fed. 529, 535; Cook v. Flagg, 251 Fed. 5, 12;* Greene v. Corey,
Plaintiffs do not conduct a bucket shop. They were not betting with defendant on the rise or fall of the market. All that they received out of the transactions carried on for him was the customary brokerage commission on the purchases and sales made, which commissions they divided with the clearing broker in Chicago. In Wilhite v. Houston, 200 Fed. 390, a case growing out of the purchase and sale of grain, the court said at page 391: "According to the instructions given them the orders for sale and purchase of the grain were executed on the boards of trade at Kansas City and Chicago. . . . . . . The plaintiffs had no interest in the sales and purchases they were directed to make, other than as defendant's brokers; and this relation, as between them, was not affected by the fact that in executing defendant's orders the plaintiffs assumed the position of principals towards those they dealt with: Clews v. Jamieson,
Transactions of purchase or sale on the Chicago Board of Trade are governed as to the legalities of the transactions by the law of Illinois: In re Clement D. Cates Co., 283 Fed. 541, 545; Hoyt v. Wickman,
We have given consideration to all the errors assigned; none has merit.
The judgment is affirmed.