Clark v. McNeill

• Decision Date: 04 April 1928
• Docket Number: No. 4948.,4948.
• Citation: 25 F.2d 247
• Parties: CLARK et al. v. McNEILL.
• Court: U.S. Court of Appeals — Sixth Circuit

25 F.2d 247 (1928)

CLARK et al. v. McNEILL.

No. 4948.

Circuit Court of Appeals, Sixth Circuit.

April 4, 1928.

W. J. Webb, of Mayfield, Ky., for plaintiffs in error.

Bunk Gardner, of Mayfield, Ky. (J. W. McDonald, of Mayfield, Ky., on the brief), for defendant in error.

Before DENISON and KNAPPEN, Circuit Judges, and ANDERSON, District Judge.

KNAPPEN, Circuit Judge.

During May, 1924, Jesse McNeill, a farmer and lawyer, living near Hickman, Ky., gave to defendants, who were brokers having their principal office at New Orleans, La., orders to sell on the New Orleans Cotton Exchange, for October delivery, an aggregate of 800 bales of cotton, depositing with defendants from time to time margins totaling $7,500, including $4,000 deposited May 24 and 26, 1924. On May 31st defendants called on McNeill for $2,500 additional margin, which he declined to pay, for the reason hereinafter stated, and defendants "took him out of the market," by purchasing 800 bales for October delivery, charging the loss against plaintiff's margin, which left to his credit on their books — after taking into account certain charges for services and revenue taxes — a balance of $3,317.02, which was later paid to McNeill on his draft therefor.

In this suit McNeill sought recovery on two alternative theories: First, that it was understood by both parties that there was in fact to be no delivery of cotton, but that the transaction was a mere wager, by which the loser should pay to the winner the difference between the contract price of the cotton and the market price at the time the transaction should be closed. On this theory of wager contract, McNeill's recovery would be the difference between $7,500 deposited by him with defendants as margin and the $3,317.02 returned to him if he was closed out, viz. $4,182.98.

The other theory of asserted liability is that defendants had contracted with McNeill to carry him (not close him out) so long as he had a net credit margin of 50 points, and that, when taken out of the market, he had a net credit thereon of more than 81 points. On this theory, McNeill's recovery would be the difference between the contract price and the market price on the day defendants took him out of the market, in spite of his contention of a 50-point contract limitation, viz. $3,930.22.

McNeill died before the trial, and the suit was revived in the name of his widow as administratrix. On trial to a jury, plaintiff recovered verdict for the last-named sum, and judgment was entered thereon, which this writ is brought to review. The errors assigned relate to the refusal of the court to direct verdict for defendants, to the exclusion of an item of testimony offered by defendants, and the admission of certain testimony for the plaintiff.

1. At the conclusion of plaintiff's testimony, the defendants requested direction of verdict in their favor for lack of evidence to sustain the cause of action, and at the conclusion of all the testimony "defendants again renewed their motion in writing to direct a verdict in its favor."

Defendants were not entitled to such direction if there was any substantial evidence reasonably tending to support the recovery by plaintiff on either of the two theories already stated. We are disposed to think there was such testimony as to each theory. In determining this question, we must take that view of the proof most favorable to the plaintiff. Worthington v. Elmer (C. C. A. 6) 207 F. 306-309, and cases cited; Crucible Steel Forge Co. v. Moir (C. C. A. 6) 219 F. 151, 153. While one of the defendants testified that it was the intention of defendants that actual delivery of the cotton under the contracts bought and sold for future delivery was to be made, and although the printed form of confirmation of orders sent plaintiff by defendants contained the statement that "all orders for the purchase and sale of any commodity are received and executed with the distinct understanding that the actual delivery is contemplated, and that the party giving the orders so understands and agrees," as also that the transaction was "subject in all respects to the by-laws and rules of the exchange where executed and the United States Cotton Futures Act, § 5 (26 USCA § 735; Comp. St. § 6309e)," it is noticeable that neither this witness nor any other seems to have said that in defendants' business any cotton was ever delivered to or by the customer. Cf. Hyman v. Hay (C. C. A. 5) 277 F. 898; also Dunlap v. Perry, 191 Ky. 290, 230 S. W. 291.

Jesse McNeill seems never to have signed and returned to defendants the forms of acknowledgment of confirmation referred to. His brother, who seems to have had a fair acquaintance with the course of business at the office of defendants' correspondent at Hickman, where the orders here in question were taken, testified that this office "was all the time trying to get people to give John F. Clark & Co. their business. They bought and sold cotton on future delivery and required a margin. * * * He presumably Jesse McNeill dealt with them, and in the course of business men and women came there to deal with John F. Clark & Co., and they were buying cotton on the margin; no cotton was delivered. Men, women, and children and babies dealt in cotton over there and in all transactions that they had there was not an actual delivery of any commodity." While this testimony may have been hearsay in part at least, it was not objected to, and is thus properly before us. Schlemmer v. Railway Co., 205 U. S. 1, 9, 27 S. Ct. 407, 51 L. Ed. 681.

While the jury's verdict was based upon the violation of the 50-point margin agreement,¹ it was not necessarily a rejection (though it was not an acceptance) of the wagering theory. The two theories, while alternative, were not inconsistent, but recovery was naturally limited to one theory. Indeed, recovery on both theories would be practically a double recovery, and not permissible.

But, wholly apart from this consideration, the motion to direct verdict was properly denied, if there was substantial evidence tending to support the alleged 50-point margin agreement. There was such evidence. Two witnesses (D. L. McNeill, a brother of Jesse McNeill, and Goalder Johnson) testified to being present during a conversation between Jesse McNeill and defendant Marks in the Hickman office, at which conversation Marks admitted that there was an agreement between the defendants and Jesse McNeill that the former would not close out the latter unless his margins got below $2.50 per bale.

Unless by the motion for directed verdict (the form of which motion is given above), defendants do not seem to have raised on the trial any question of lack of evidence to support the alleged 50-point margin limitation. We find no request for instruction to that effect, nor any exception in this regard to the charge, which expressly submitted to the jury that theory of recovery. The defendants' motion for directed verdict was properly overruled.

2. To meet the testimony of the two witnesses referred to in the preceding paragraph of this opinion, defendant Marks was produced and offer made to show by him that the alleged conversation between him and Jesse McNeill did not take place. The offered...