Foster v. Murphy & Co.

• Decision Date: 03 February 1905
• Citation: 135 F. 47
• Parties: FOSTER v. MURPHY & CO.
• Court: U.S. Court of Appeals — Second Circuit

135 F. 47

FOSTER v. MURPHY & CO.

United States Court of Appeals, Second Circuit.

February 3, 1905

T Henry Dewey and John T. Abney, for plaintiff in error.

William H. Stayton, for defendant in error.

Before WALLACE, TOWNSEND, and COXE, Circuit Judges.

COXE Circuit Judge.

The plaintiff, at the time in controversy, was a citizen of South Carolina and was a stock, grain and cotton broker, doing business at Greenville in that state. The defendant was a New York corporation engaged in the same business at the city of New York. The defendant owned a private telegraph wire connecting its office with the office of the plaintiff which it rented for $41.67 per month to the plaintiff. By means of this wire the market prices in New York, of the commodities dealt in, were communicated to the plaintiff and the figures were immediately posted on a board kept in his office for the use of his customers. The plaintiff agreed to send all buying and selling orders to the defendant and secure them by the stipulated margins; the margin for cotton being agreed on at $1 per bale. The relation of broker and customer was established. Prior to the 9th of February, 1900, the defendant had purchased for the plaintiff 9,600 bales of cotton which were being held and carried for his account. On that day the fluctuations in the cotton market were violent and rapid and, after calling for additional margins which were not sent, the defendant sold all of this cotton at private sale and without notice to the plaintiff. The sale was prompt repudiated by the plaintiff and this suit was thereafter commenced to recover damages for the conversion.

The questions in controversy were principally questions of fact the plaintiff contending that the sale was made in direct violation of the agreement between the parties; the defendant that it was in exact accord with its stipulations. The cause was tried with great care and attention to detail by the trial judge and, in order to avoid any confusion or injustice which might result from a general verdict, he took the precaution to frame and send to the jury specific questions covering every aspect of the controversy upon the facts. These questions and the answers returned were as follows: 'First: Did the contract between the parties provide that, in the event of a selling out, defendant should be relieved from giving notice of time and place of sale? ' The jury answered this question 'Yes.' 'Second: Did the contract between the parties provide that, in the event of a selling out defendant might sell at public or private sale? ' The answer was 'Yes.' 'Third: Did the defendant give plaintiff reasonable notice of demand for additional margin, and of their intention to sell him out if he failed to respond to or make his margin good? ' The answer was 'Yes.' 'Fourth: Did J. F. Gatins send the telegram to R. C. Foster, saying: 'All right. Deposit $3,100 and figure account, and if you find that we are in the wrong will not call for any more. You have 9,500 bales long. J.F.G.'' The answer was 'No.' We thus have a contract relating to marginal transactions established between the broker and its customer by which, in consideration of lower commissions and other special advantages growing out of the exclusive use of a private wire, the common-law rule governing that relation was modified by permitting the broker to sell the property at public or private sale without notice of the time and place of the sale in case the customer, after reasonable notice, failed to keep his margin good. The jury also found that the plaintiff had reasonable notice of the demand for additional margin and of the defendant's intention to sell his property if he failed to respond. They found, further, that the alleged telegram, which in effect proposed to accept $3,100 as a conditional compliance with the demand for margin, was never sent by the defendant. Unless there was error in submitting these questions to the jury there can be no doubt that the cause was properly disposed of. The answers settled the entire controversy between the parties and the subsequent action of the curt in directing a verdict was simply giving force and effect to the findings of the jury.

It is argued that there was no evidence of a special agreement modifying the original agreement between the parties. We are unable to accede to this view. It appears that the parties had been doing business for some time prior to August or September, 1899, and that the manner in which it had been conducted was not satisfactory to the defendant. In these circumstances an agent of the defendant, clothed with full power to negotiate, visited the plaintiff at his office in Greenville and made definite arrangements with him as to the conduct of the business in the future. The following is his testimony on the subject of margins:

Q. Was anything said with reference to maintaining this margin? A. Yes, to be kept good at all times. Q. Was anything said with respect to the rights of Murphy & Co., or Foster, upon failure to keep the margin good? A. Yes, sir. Q. What was said? A. It was said that we could sell his out instantly if his margin became exhausted. Q. With or without notice? A. Without notice.'

The plaintiff does not deny this conversation so far as it relates to margins; he says only that he does not recollect it, he does say, however, that the subject of selling at public or private sale was not mentioned. The most favorable view of the conversation which the plaintiff could expect was that it presented a question of fact to be passed on by the jury. Manifestly the trial court could not say as a matter of law that there was no evidence of a special agreement when the testimony that such an agreement was made was not even contradicted.

But it is urged that the defendant's agent was unauthorized to act in the premises and that the plaintiff had no reason to suppose that he had authority so to act. The testimony of Phelan, the agent, sufficiently answers this contention. He says:

'I told him in the first place why I had come to see him, that we were dissatisfied with the business and that I wanted to have a distinct

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