Donovan v. Daiber
| Decision Date | 15 May 1900 |
| Citation | 82 N.W. 848,124 Mich. 49 |
| Court | Michigan Supreme Court |
| Parties | DONOVAN v. DAIBER. |
Error to circuit court, Wayne county; George S. Hosmer, Judge.
Action by James H. Donovan against Philip Daiber. From a judgment in favor of plaintiff, defendant brings error. Affirmed.
Plaintiff was a member of the Detroit Board of Trade. His business was that of a commission merchant, buying and selling wheat and other produce upon commission. His version of the transactions is as follows:
Defendant deposited with him $200, and gave him orders to trade for him in grain in Chicago. On June 14, 1897, defendant gave plaintiff an order to sell for him in Chicago 5,000 bushels of wheat for July delivery. That he had four or five houses in Chicago with which he dealt. He wired one of these houses to purchase as directed. Received from a Chicago correspondent a telegram stating that he had sold that day at 70 3/8. He showed the telegram to the defendant, and gave him a memorandum of the sale. This memorandum reads as follows:
'We have this day made the following trade for your account upon condition that James H. Donovan & Co. shall have the right to close this contract, at their discretion, whenever the usual margin of ten 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:
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Quantity. Month. Articles. Price. Remarks.
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Sold 5,000 July Wht. 70 3/8 In Chicago."
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On June 15th, defendant ordered plaintiff to buy 5,000 bushels for July delivery. Plaintiff wired one of his correspondents in Chicago, receiving a reply notifying him of the purchase, and showed it to the defendant. Other purchases and sales were made upon the same basis; plaintiff receiving a verbal order from defendant in each instance, wiring one of his correspondents in Chicago, receiving a reply, showing it to defendant, and giving him a memorandum like the above. On some of these deals there were losses, and on some there were gains. On August 12th the market was such that it became necessary for defendant to advance more margins to plaintiff in order to keep his contracts good. Defendant declined to advance, and instructed plaintiff to close the contracts. This the plaintiff did, with the loss of $141.25, for which this suit was brought. Plaintiff had paid this to his Chicago correspondents. Plaintiff kept money with these correspondents to keep any contracts he made for his customers good.
Defendant testified that he went to plaintiff because he had been recommended to him as a sharp broker; that he told plaintiff he had had bad luck, and was almost ruined; that he asked plaintiff if he could make money on the board of trade dealing in or scalping wheat; that plaintiff told him he could; that he gave plaintiff $200, saying this was all the money he was going to invest in the speculation in wheat that he would be glad to make money, but, if he lost it, that was all the money he wanted to lose, and would not be responsible for anything beyond that; that plaintiff assented to this, and gave a receipt for the money. He testified that he told plaintiff he had no wheat to sell; that he just wanted to speculate; that he never knew the names of the parties plaintiff claimed to deal with in Chicago; that he never gave him a statement with the name of the party that plaintiff was dealing with; that he gave plaintiff $40 to hold his deals.
The court instructed the jury that, if they believed the testimony of the plaintiff, and if they found the transactions were legitimate, involving the actual purchase or sale of grain for future delivery, he is entitled to recover. He also instructed the jury that if they found that defendant only agreed to invest the sum of $200, and that the transaction was a gambling one, verdict must be for the defendant. Plaintiff recovered verdict and judgment.
Charles C. Stewart, for appellant.
Chamberlain & Guise, for appellee.
GRANT, J. (after stating the facts).
The case comes squarely within Gregory v. Wendell, 40 Mich. 432, where contracts of this character were ably discussed by the late Justice Cooley, unless the act of 1887 (Comp. Laws, 1897, � 11,373) makes such contracts as were approved in that decision void. The statute is printed in the margin. [1] Under the plaintiff's testimony, he did not know whether defendant had 5,000 bushels of wheat to sell, and did not ask him. A party may make a binding agreement to sell that which he does not have. He may go into the market and purchase it, and he cannot defend, when called upon to perform his contract for future delivery, by saying, 'I did not have the property when I made the contract.' Commission merchants and others make such contracts, expecting to go into the market and buy. The...
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