Gregory v. Wendell

• Decision Date: 15 October 1878
• Court: Michigan Supreme Court
• Parties: Henry B. Gregory and Arthur A. McHardy v. John H. Wendell and Henry O. Clark

39 Mich. 337

Henry B. Gregory and Arthur A. McHardy v. John H. Wendell and Henry O. Clark

Supreme Court of Michigan

October 15, 1878

Submitted June 21, 1878

Error to Superior Court of Detroit.

Assumpsit. Plaintiffs bring error.

Judgment reversed with costs and a new trial ordered.

Atkinson & Atkinson for plaintiffs in error.

Otto Kirchner and Ashley Pond for defendants in error cited as to the legality of "option deals" Clark v. Foss, 10 Chic. L. News, 211; Wolcott v. Heath, 78 Ill. 433.

OPINION

Marston J.

Plaintiffs reside in Owosso, and in 1877 were engaged in the purchase of grain and other farm products. Defendants were commission merchants in the city of Detroit.

On the 26th of April, 1877, one of the plaintiffs had a conversation with one of the defendants in the city of Detroit about speculating in corn and wheat. It resulted in plaintiffs directing defendants to purchase for them 20,000 bushels of corn, deliverable at Chicago in June following. It was claimed that defendants thereupon telegraphed to certain commission merchants in Chicago directing the purchase, and received a few minutes thereafter a telegram announcing the purchase of the quantity mentioned and at prices therein named. It was at this time agreed that plaintiffs should send defendants $ 1000 as a margin upon this purchase, which was done within a few days thereafter. The receipt thereof was acknowledged by defendants and credited to plaintiff's account.

Other correspondence was had between these parties in reference to this purchase and the condition of the grain markets.

On May 17th plaintiffs wrote defendants suggesting a change from June to July corn, and on the 18th defendants wrote plaintiffs that they had sold the June corn and purchased July corn, and enclosed a statement of account showing a loss to plaintiffs. The receipt of this letter by plaintiffs was on the next day, and a hope expressed that the loss sustained on the June would be got back on the July corn. The market continued to decline. Farther margins were called for but not made. Two car loads of wheat were shipped by plaintiffs to defendants, and by them sold on commission and the proceeds credited to plaintiffs on account.

Action was brought to recover the amount received for this wheat and to recover back the $ 1000 margin. There was no dispute as to the wheat or its value, and judgment was recovered for the amount thereof. The court charged the jury that no part of the $ 1000 could be recovered. In this it is claimed the court erred, and also in not submitting the question to the jury whether any corn was ever actually purchased.

Gregory, one of the plaintiffs, testified that he never saw any of the corn and that none had ever been delivered to him.

He also testified that in July certain parties called at his office; that they had an envelope, the contents of which he declined to examine, and there was evidence tending to show that they were there and offered to make him a tender of warehouse receipts for July corn. There was evidence tending to show that before the commencement of this action defendants were called upon, in the plaintiff's interest, and requested to produce and show the telegrams in reference to the purchase of the June corn, but that although search was made, they were unable to find them, although such were produced on the trial. A Mr. Thomas, a broker on 'change for Cooley & McHenry of Chicago, testified that he purchased twenty thousand bushels of corn on April 26th; that he and the party from whom he purchased made the usual memorandum of the transaction, which was afterwards, in accordance with the custom, reduced to formal entries on their respective books. The original memorandum and entries were not produced, and the witness was unable to give the name of the person from whom he purchased the corn, or where it was at the time, or to whom he afterwards sold it. Other evidence was given which it was claimed tended to show that no actual sale of corn had been made.

It seems to me that the real questions thus raised in the case were,--was there an actual bona fide sale of corn intended by the parties or any of them, to be delivered and received? Or did the parties intend that no corn should be purchased, delivered, received, but that a settlement should be made upon a basis of the market price of corn at the time mentioned for delivery?

Some nice distinctions have heretofore been drawn as to the right of a person to sell personal property not at the time owned by him, but which he intended to go into the market and buy,--or as was said, that which he hath neither actually nor potentially. Courts must however, from necessity, recognize the methods of conducting and carrying on business at the present day, and applying well settled principles of the common law enforce what might be called a new class or kind of agreements, heretofore unknown, unless they violate some rule of public policy. The mercantile business of the present day could no longer be successfully carried on, if merchants and dealers were unable to purchase or sell that which as to them had no actual or potential existence. A dealer has a clear right to sell and agree to deliver at some future time that which he then has not, but expects to go into the market and buy. And it is equally clear that the parties may mutually agree that there need not be a present delivery of the goods, but that such delivery may take place at some other time; and that there need not be an actual manual possession given, but a symbolical one, as by the delivery of warehouse receipts according to custom, is also beyond dispute.

In these cases there is something actual and tangible sold although not then owned or...