Carson v. Milwaukee Produce Co.

'Trial: Questions for jury: Intent: Gambling contracts: Delivery: Evidence: Relevancy: Sufficiency. 1. Ordinarily in an action at law, and in those cases in which the law does not, from the act in.question, conclusively infer the intent, the question of intention is one of fact for the jury. 2. Contracts in form for the sale or purchase of commodities, where neither party intends to deliver or accept the property nominally sold, hut where it is intended hy both parties that the transaction shall he settled hy the payment of the difference in prices according to the rise and fall of the market, are gambling contracts and void. 3. In an action on a contract for the sale or purchase of commodities for future delivery, express evidence hy a party that delivery was intended or was not intended may he overborne by inferences from facts and circumstances. 4. An intention to “settle by the payment of differences,” “betting on future prices,” or “closing up without delivery by the payment of differences,” is equivalent to and means an intention by one who has sold for future delivery to buy for the same delivery, and to offset the purchase against the sale and receive or pay the difference. 5. In an action on a contract for the sale or purchase on the board of trade through brokers of commodities for future delivery, the intention as to actual delivery which is the object of judicial investigation is the intention which existed between both parties to the litigation, and not the intention which might have existed between the two brokers who made the actual contract, although such latter intention is not wholly irrelevant. G. Such intention may be established not merely by the assertions of the parties, but from all the circumstances attending the transaction, and is a question to be determined by the jury, or by the court in trials without a jury. 7. In an action for the balance claimed to be owing as the result of transactions had on a board of trade by plaintiffs as brokers for defendant, evidence of the fact that the transactions were board of trade contracts and that defendant had made prior purchases which were closed out, not by deliveries, but by making sales against the purchase before the day of delivery and by offsetting one against the other, is relevant as tending in some degree to indicate an intention that no delivery was contemplated. 8. In an action for the balance claimed to be owing as the result of transactions had on a board of trade by plaintiffs as brokers for defendant, the evidence; stated in the opinion, is held sufficient to take the case to the jury on the question of the intention of both parties to the transaction, notwithstanding the direct testimony of plaintiffs of their intention to make actual deliveries. 9. In an action involving transactions had on a board of trade by plaintiffs as brokers for defendant, it is held that it was not inconsistent with a gambling intention on the part of the plaintiffs and defendant that transactions on the board of trade may have been perfectly, legitimate as between the brokers, the immediate parties to the transactions.

Appeal from a judgment of tbe circuit court for Milwaukee county: LaweeNce W. Halsey, Circuit Judge. Tbe appeal is from a judgment rendered in an action at law on contract. Respondents, whose partnership name is Carson, Craig & Co., are grain and seed brokers of Detroit, Michigan, and members of tbe board of trade of that city. Tbe appellant is a corporation of Milwaukee, Wisconsin, dealing in wool, products, beaus, etc., having for its president and principal manager one Herman Reel, who is a member of tbe Milwaukee board of trade and familiar with board of trade rules and transactions. Beginning on or about December 31, 1900, tbe defendant made a number of purchases for future delivery of beans through tbe agency of tbe plaintiffs on tbe Detroit board of trade prior to tbe transactions in question. In each of these former cases tbe defendant, prior to tbe last day of delivery, sold through tbe agency of tbe plaintiffs a number of bushels or bags equal to tbe amount of its purchases, and there was no delivery to defendant on any of these prior purchases. The defendant then sold on the Detroit board of trade, through plaintiffs, beans as follows: 1902: Aug. 28. 1,3331-3 bushels at $1.76 to Ferrin Bros. Co., October delivery. Sept. 3. 666 2-3 bushels at $1.73 to Ferrin Bros. Co., Oct. delivery. Sept. 5. 1,3331-3 bushels at $1.68 to Parsons & Hobart, November delivery. Sept. 6. 666 2-3 bushels at $1.69 to C. E. Bums, November delivery. Sept. 8. 1,3331-3 bushels at $1.72 to C. E. Burns, October delivery. Sept. 17. 2,000 bushels at $1,70 to F. J. Simmons & Co., November delivery. Sept. 24. 1,3331-3 bushels at $1.79 to W. W. Murray, November delivery. Oct. 1. 2,000 bushels at $2.05 to J. S. Lapham & Co., November delivery. The defendant from time to time between September 11 and October 4, 1902, deposited with the plaintiffs margins on these sales, aggregating $3,850. The market price of beans rose rapidly on October 3d and following days. The defendant failed and refused to put up further margins, and the plaintiffs bought for defendant’s account against such sales as follows: 1902: Oct. 6. 3,333 1-3 bushels at $2.45 from H. E. Botsford & Co., October delivery. Oct. 8. 4,666 2-3 bushels at $2.35 from Parsons & Hobart, November delivery. Oct. 8. 2,000 bushels at $2.35 from F. J. Simmons & Co., November delivery. Oct. 8. 666 2-3 bushels at $2.35 from W. W. Murray, November delivery. This left a net loss of $6,380.01 on the transactions, and, after applying defendant’s margins of $3,850, left the plaintiffs’ loss $2,530.01, for which sum, with $106.66 commission and some accrued interest, a verdict in favor of the plaintiffs was directed in the circuit court. ■ The sales are made by the brokers in their own name to other brokers, neither seller nor purchaser disclosing his principal if he has one. These contracts between broker and broker in form, both brokers being members of the board of trade, are made under and conformably to- explicit rules of such board bere in evidence, providing for the deposit of margins or securities by the broker, the keeping up of such margins, the closing out by purchase of a like amount for the same delivery in case of defaulted sales, and the closing out by sale of a like amount for the same day of delivery in case of defaulted purchases, i Against the liability thus assumed by the broker he requires from his principal the deposit called a “margin,” which in ■case of a sale is required to be increased as the market price advances, or in case of a purchase to be increased as the market price declines, and the amount of the margin required is fixed by the broker with reference to the commodity dealt in, its market conditions, etc. The Detroit board of trade is organized by virtue of Act No. 166 of the legislature of Michigan entitled “An act for the incorporation of boards of trade and chambers of commerce,” approved March 19, 1863 (Laws of 1863, No. 166). These rules provide, among other things, that deliveries of grain shall be by regular warehouse receipts; that in all sales for present delivery the bills shall become due immediately upon presentation of receipts, and in case of a failure to pay on such presentation the seller may at his option, as declared at the time, call the sale off or resell for buyer’s account on the same day. “On maturity of contracts for future delivery this same rule shall apply.” When any party is called upon for margins and fails to deposit the security or margins called within the next banking hour thereafter, the party making such call shall have the right, if he be the seller, to resell the property for account of the delinquent, such resale to be for the same delivery as was made in the original contract. If he be the buyer, he is to have the right to repurchase the property for the account of the delinquent, deliverable at the time named in the originalpurchase. In either case he must at once communicate to the delinquent the action he has elected to take, and all losses or damages on such defaulted contract are at once due and payable, the same as though the contract had fully matured. In cases where the contract is not made in the prescribed form found in rule 6, and the pr perty contracted for is not delivered at maturity of contract, the purchaser may, if he shall so elect, consider the contract forfeited, or he may purchase the property on the market for account of the seller by 1 o’clock p. m. on the day of maturity. In ease any member of the association acting as a commission merchant shall have made purchases or sales by order and for account of another, whether the party for whom such purchase or sale was made shall be a member of the board of trade or otherwise, and it subsequently appears that such trades may be offset and settled by other trades made by the said commission merchant, he shall be deemed and authorized to malee such offset and settlements, and to substitute some other person or persons for the one from whom he may haw purchased or to whom he may have sold the property originally. The contracts in question here, made between such members, have their inception in a quick and informal bid and acceptance. Thereupon a short memorandum is made on a ticket or card by each party and signed by him, except in case where the offers and bidding so result that there would be between two brokers two or more contracts, in which one of them was buyer in one of the contracts and seller in another. In such case no cards were exchanged, and only the difference, in whosesoever favor this might be, was paid. The sales or purchases thus made were reported by the broker to his principal, in cases in which he was acting for a principal, upon a printed blank containing a column for purchases and one for sales, introduced by the words: “We have the pleasure of confirming the following transactions made for your account and risk todáy.” This blank contained a printed footnote as follows: “We have this day made the above trades for your account, upon condition that Carson, Craig & Co. shall have the right to close this contract at their discretion whenever the usual margin' of three cents a bushel, or such other margin as has been agreed upon, is not kept good with them. Further,, it is understood and agreed that these transactions are made subject to the rules and regulations of the market in which they are made; and it is expressly understood that we solicit and will receive no business except with the understanding-that the actual delivery of the property bought or sold upon orders is in all cases contemplated and understood. Please examine immediately upon receipt, and telegraph if not correct.” The sales in question were reported to the defendant upon such blanks. The plaintiffs’ counsel insists, on the argument, that his clients did not believe that the Milwaukee Produce Company intended to deliver the beans on these contracts of sale, but did intend to leave it to the plaintiffs to buy in on the Detroit board of trade beans with which to make deliveries on the sale contracts made by plaintiffs for the defendant. The plaintiffs having testified to their intention to make deliveries, and the other brokers to whom they made sales or from whom they made purchases having corroborated them by sworn declarations of their intentions, it was claimed that the intention to make delivery appeared as matter of law. Considerable correspondence passed between the parties, all of which is in evidence. At the close of the evidence the plaintiffs moved the court to direct a verdict in their favor, which motion was granted, and to this ruling the defendant excepted. The defendant moved for the direction of a verdict in its favor, but also excepted to the refusal of the court below to* submit the case to a jury on the principal defense made by defendant, which was to the effect that the contracts in question were gambling transactions and unlawful.