2 F.2d 214 (8th Cir. 1924), 6593, New Amsterdam Casualty Co. v. Farmers' Co-op. Union of Lyons, Kan.

Docket Nº:6593.
Citation:2 F.2d 214
Case Date:September 17, 1924
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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2 F.2d 214 (8th Cir. 1924)




No. 6593.

United States Court of Appeals, Eighth Circuit.

September 17, 1924

Francis S. Howell, of Omaha, Neb. (Edward P. Smith, William A. Schall, and Frank E. Sheehan, all of Omaha, Neb., on the brief), for plaintiffs in error.

W. W. Stahl, of Lyons, Kan. (Ben S. Jones, of Lyons, Kan., on the brief), for defendant in error.

Before SANBORN and LEWIS, Circuit Judges, and FARIS, District Judge.

SANBORN, Circuit Judge.

This writ of error was sued out to reverse a judgment of $5,000 for alleged errors in the trial of an action on a bond issued by the defendant below, whereby it agreed to indemnify the plaintiff to the extent of $5,000 against the loss of any money or other personal property 'through the fraud, dishonesty, forgery, wrongful abstraction of Lon Prose,' the general manager of the plaintiff. The Farmers' Co-operative Union of Lyons, Kan., was the plaintiff, and the New Amsterdam Casualty Company of Baltimore, Md., was the defendant. The plaintiff's principal place of business was at Lyons. It was by its articles of incorporation empowered 'to purchase and

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sell grain, live stock, and other farm products, both for itself and on commission. ' It owned three elevators, and its business was to buy and sell grain. It bought grain of farmers, put it into its elevators, paid the farmers part of its value, settled with of the grain when the farmer called for the settlement. Its purchases in a season exceeded its storage capacity, and in order to have room it sold wheat which it received before the farmers called for settlements, and bought other wheat to be delivered in the future to protect itself against loss in case the price of wheat advanced. Mr. Prose managed this business, bought and sold, in the name of and for the plaintiff, wheat, corn, and oats from March, 1919, until April 20, 1921, when he ceased his connection with that business.

The plaintiff alleged in its complaint that from August 30, 1920, until May 20, 1921, Prose bought and sold in its name through the Root Grain Company, a member of the Board of Trade of Kansas City, and at Kansas City, grain options, which on the trial proved to be mere contracts to deliver grain to it in the future, and contracts by it to delivery grain to purchasers in the future, and thereby incurred, a loss of about $21,000, and that he did this without the knowledge of or notice to the plaintiff. It alleged that it did not ascertain the full amount of its loss by these transactions until July 18, 1921, and that immediately after the discovery of the loss, and within five days thereafter, it notified the defendant and made full proof thereof. By its answer the defendant admitted the execution of the bond and denied the other averments of the complaint. The case was tried by a jury. There was a conflict between the evidence produced by the respective parties. At the close of all the evidence defendant's counsel moved the court to direct the jury to return a verdict in its favor, the court denied the motion, the defendant excepted, and this and other rulings are assigned as errors. The ruling on the motion to direct the jury, however, presents the serious questions in this case.

The court submitted three questions to the jury: First, did the plaintiff, within five days after it discovered any alleged dishonest act of Mr. Prose, notify the defendant thereof? Second, was the plaintiff ignorant of the fact that Mr. Prose was buying and selling wheat futures in its name while he was acting as its general manager? And, third, were such purchases and sales, under the facts of this case, wrongful as against the plaintiff? And the court instructed the jury that, if they did not find an affirmative answer to each one of these questions, they should return a verdict for the defendant.

Counsel for the defendant assert that the evidence was such that the court ought to have instructed the jury to find a negative answer to each of these questions and invoke an examination of this evidence by this court. The rule in the national courts, pursuant to which this examination...

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