Boyd v. Hanson

Decision Date04 February 1890
Citation41 F. 174
PartiesBOYD et al. v. HANSON.
CourtU.S. District Court — District of Minnesota

Ralph Whelan, D. M. Kirton, and O'Brien & O'Brien, for plaintiffs.

Wm. S Moore, for defendant.

NELSON J., (charging jury.)

This is an action in which the plaintiffs seek to recover for alleged advances on account of the defendant, made at his request and also for agreed commissions for services rendered on his account. Plaintiffs, during the years 1888 and 1889, when this alleged indebtedness accrued, were brokers and commission merchants, doing business in the city of Chicago and connected with the Chamber of Commerce of that city where they bought and sold for persons who employed them. They had a branch office in the city of Minneapolis, and a manager in charge. The defendant is a merchant and wheat-dealer residing at Benson, in this state; and the alleged advances, it is claimed, were made on his orders, for the sale and purchase of wheat in Chicago, for future delivery, from the Minneapolis office. The time during which these transactions occurred commenced in August, 1888, and were concluded, and the whole transaction finally closed up, in June, 1889. The plaintiffs claim that the defendant applied to the Minneapolis office, to employ them to sell and purchase wheat for future delivery; that he inquired of the manager the commission to be charged, and was informed of the rate, and also told by the manager in charge that it was a good time to make some 'scalps;' but what that term means has not been developed by the testimony. It is claimed on the part of the plaintiffs that he was informed of the rate of commission for their services; that the contracts made for him would be subject to the rules, usages, and regulations of the Chamber of Commerce of the city of Chicago, and that in all cases actual wheat must be purchased and sold, and the margins kept up, to protect them against loss. The defendant transacted business through the plaintiffs from August, 1888, until June, 1889, according to the plaintiffs' evidence, when all the contracts were closed. The defendant testifies that no particular agreement as to how the business was to be conducted was made at the time of his interview with the manager in Minneapolis, in August; but he admits that the plaintiffs made advances for him previously, and up to February 6, 1889, and testifies that the only transactions of his open and unsettled at that time were a contract of 40,000 bushels of wheat for May delivery, and one of 25,000 bushels for July delivery. The first of these defendant claims, was transferred, without his order, from May to June wheat; and, before proceeding to speak about the chief controversy in the case, I will call your attention to this transaction. The testimony of the defendant is that he never gave any orders for, or consented to, such transfer, and that the plaintiffs, if they so made it, assumed the burden of the transaction. The evidence of the plaintiffs with regard to the authority to make the transfer on defendant's account is circumstantial. But evidence is introduced tending to show a ratification by the defendant of what had been done, not only by direct admission of the whole indebtedness, a part of which is made up of losses on the contract of transfer from May to June, but also by evidence that the defendant was informed of the fact of the transfer, and that a report and statement were made to him on the 29th day of April, when the change was made, and that no objection was made to the correctness of the statement of account so made and rendered.

Now, if you find from the evidence that the plaintiffs, about April 29, 1889, informed the defendant by letter that the 40,000 bushels of May wheat in question could be at that time changed to June wheat, and that the defendant made no answer thereto; and if you further believe from the evidence that said May wheat was changed over into June for and on account of the defendant, and that the plaintiffs rendered an account, a report, and statement to defendant that said change had been made, and the defendant received such report and statement, and retained it, and made no objection to said change of said May wheat to June,-- then such facts amounted to and were a ratification on the part of the defendant of the acts of the plaintiffs in making such change.

The chief controversy in this case is about the character of the transactions between the plaintiffs and the defendant, which is the basis of this suit. It is urged by the defendant that all these transactions were wagers, and that no wheat was ever in any instance intended to be received or delivered by him; that the plaintiffs so understood it, and that the evidence and the reports of sales and statements made to him show that fact; and that these transactions were in violation of the statutes of the state of Illinois, which were read to you by counsel for the defendant. The plaintiffs' theory is, and evidence has been introduced tending to sustain it that they were employed by defendant, through the Minneapolis office, as brokers and commission merchants, to purchase or sell wheat for future delivery on his account, and that such sales and purchases were to be made on the Chicago Board of Trade, with the members thereof; that such contracts were to be governed by the rules and usages of such Chamber of Commerce; and that in every instance actual delivery of wheat was intended by the parties to the contracts made for the defendant's account; and that these contracts were closed and settled up by the plaintiffs in accordance with these terms, and at the defendant's request, and advances were made, and their own money paid out, for his benefit. The purchase and sale of wheat to be delivered at a future time, the day of the months for the delivery being optional, is a fair contract, if the intention of the contracting parties is to deliver the wheat, although the wheat is not in the possession of the seller at the time of the contract of sale, but if the contract does not contemplate a delivery of wheat, but both parties thereto intend a settlement of the contract at the market price, then the transaction is illegal, within the law of the state of Illinois. Such a contract is gambling, contrary to public policy, and demoralizing to legitimate trade. All optional contracts, however, are not illegal under this statute, which was read to you. If the option is to sell or purchase at a future time, then it is illegal, and a wager; but if the option consists merely of a delivery within a specified time, the contract is valid. And what was done by putting up margins amounts to nothing, unless the contract itself is illegal. The validity of an option contract depends upon the mutual intention of the parties thereto; and if a sale or purchase of actual wheat for future delivery is intended, it is valid. If the contract is lawful, the putting up of margins to cover losses which might accrue from fluctuations in prices in final settlement of the transaction, according to the rules and usages of the Board of Trade of the city of Chicago, is entirely proper and legitimate. These rules have been read to you by counsel for plaintiffs, and there is nothing in those rules, on their face, that indicates that they are in violation of the laws of Illinois, or...

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2 cases
  • Ascher v. Edward Moyse & Co.
    • United States
    • Mississippi Supreme Court
    • January 29, 1912
    ... ... 605; Kendall v. Fries, 58 ... A. 1090; Hacker v. Western Union Tel. Co., 34 So ... 902; Drouilhet v. Pinkard, 42 S.W. 136; Boyd v ... Hanson, 41 F. 174; Tel. Co. v. Little-john, 72 ... Miss. 1025; Beidler & Robinson v. Coe Commission ... Co., 13 N.D. 645; Waite v ... ...
  • Lamson v. Beard
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • May 19, 1899
    ... ... 'futures.' The intent governs. Irwin v ... Williar, 110 U.S. 499, 4 Sup.Ct. 160; Boyd v ... Hanson, 41 F. 174; Insurance Co. v. Watson, 30 ... F. 653; Kirkpatrick v. Adams, 20 F. 287; Embrey ... v. Jemison, 131 U.S. 336, 9 ... ...

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