Heard v. Potter

• Citation: 59 Ga. 25
• Court: Georgia Supreme Court
• Decision Date: 31 August 1877
• Parties: Benjamin W. Heard, plaintiff in error. v. Russell & Potter et al., defendants in error.

59 Ga. 25

Benjamin W. Heard, plaintiff in error. v. Russell & Potter et al., defendants in error.

Supreme Court of the State of Georgia

(August Term, 1877.)

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Equity. Auditor. Practice in the Supreme Court. Practice in the Superior Court. Evidence. Principal and agent. Contracts. Factors. Before Judge Gibson. Richmond Superior Court. October Term, 1876. This case was a bill in equity filed by Heard to prevent Russell & Potter from selling $35,000 of securities which he had deposited with them, as the receipt given shows, "as margin against the purchase of 2, 000 bales of cotton in Liverpool." Heard claimed that his orders had not been obeyed, and that fraud had been practiced on him, by which a large portion of the loss resulted, and that at most he was not liable for more than $23,570 loss, and that also a loss of $8,000 had accrued to him by one single act of disobediencein holding cotton when tendered instead of selling when tendered as ordered. He prayed for injunction, *relief, etc. Leech, Harrison & Forwood, of Liverpool, were also made parties defendant.

The principal errors complained of are these:

The appointment of an auditor in a case where an appointment was unauthorized and illegal, the action of such auditor, the allowance of his report, or rather the overruling the exceptions thereto, the use of such report in the case, the admission of illegal evidence, erroneous charge, and refusals to charge, and a verdict against evidence, etc., the verdict being for over $5,000 for defendants. The entire transaction in Liverpool occurred in 1873, the margins being deposited as follows by Heard:

                ---------------------------------------------
                |January 31, 1873, in stocks        |$10,000|
                |-----------------------------------|-------|
                |March 25, 1873, in stocks and bonds|10, 000|
                |-----------------------------------|-------|
                |May 15, 1873, in stocks and bonds  |10, 000|
                |-----------------------------------|-------|
                |July 2, 1873, in stocks and bonds  |5, 000 |
                |-----------------------------------|-------|
                |Total                              |$35,000|
                ---------------------------------------------
                

The bill made the following allegations, to-wit: That in December, 1873, he (complainant) had received from Russell & Potter notice that certain securities of par value of $35,000, deposited with them, would be sold on 1st Tuesday in February, 1874, and proceeds applied (according to said notice), after deducting expenses of sale, to payment of losses sustained by Leech, Harrison & Forwood on 2, 000 bales of cotton, with expenses incurred by Russell & Potter as his (Heard's) agents, "to cover which losses said securities were deposited with us;" that if said sale is had, great and irreparable loss must and will result to complainant, as immediate consequence of bad faith and fraudulent conduct of Leech, Harrison & Forwood, and want of proper obedience to instructions on part of Russell & Potter. That in consequence of opinions and convictions expressed to him by Russell & Potter as to favorable futures for cotten buyers, who might buy cotten for future delivery, complainant was induced to deposit with Russell & Potter, January 31, 1873, a bonus in bonds to amount of $10,000, *on March 25, 1873, $10,000 more, and on May 15, 1873, $10,000 more, each successive deposit being made on demand of Russell & Potter at the instance (as they said) of "our Liverpool friends, " who had notified them that com-plainant\'s margin was nearly or quite exhausted; that complainant knew nothing whatever of the persons Russell & Potter had employed to represent them in buying and selling the 2, 000 bales, nor does he know (further than the reports of Russell and Potter to him, enclosing statements of Leech, Harrison & Forwood) that ever a single bale was purchased on his account; that Russell & Potter say that the 2, 000 bales were purchased on his account, and that Leech, Harrison & Forwood claimed the right and privilege to sell whenever the margin should be exhausted, or prove not sufficient to cover all loss; that four days after last deposit of $10,000, viz: May 19, 1873, complainant wrote to Russell & Potter to have his cotton held as long as they could upon the $30,000 bonus deposited, for he could and would put up no more; that May 20, 1873, Russell & Potter replied as follows: \'\'We note you do not care to risk anymore than your margin on the 2, 000 bales of cotten in Liverpool, and when it is about consumed, in case the market should decline further, we will telegraph you and be governed by your immediate reply, whether to sell, or hold longer with an additional deposit of margin. As we have agreed, your cotton shall be held as long as you desire, so long as we are secured by proper margin, and in any event should not be sold without previous consultation with you, and giving you an opportunity of holding, if you wish, by deposit of additional margin in case that now in hand should be consumed."

Again, they write as follows, in letter dated June 18, 1873, to-wit: "But, as you stated in a recent letter, that you did not care to lose any more than covered by your present marginal deposit, and, as at present prices, the value of the securities deposited is even now about consumed, and our friends, as you will see by the above extract, expect us to *keep covered against further losses, and the time rapidly approaches when the cotton will likely be tendered, we must ask you to place a further deposit in our hands, or we must be under the necessity (much against our wishes) of informing our friends that you decline to deposit any further margin, and the cotton is with them to sell at their discretion."

Again, on the 4th of July, 1873, they write as follows: "Or, thirdly, if you prefer this course, you can order the cotton for July-August delivery, to be received when tendered, and sold as spot cotton. And, if you will allow us to say it, we think this is the best course for you to pursue."

Further along in same letter, they write as follows, to-wit: "We shall ask the advice of our friends in Liverpool to-night, as to whether it will not be cheaper for you to receive the cotton than to transfer at 3-16d. difference. If they say-it is cheaper, shall we instruct them to receive the cotton when tendered, and sell as received? If, you desire them to adopt the former course, we will understand you ifyou telegraph us thus— \'Telegraph Liverpool receive and hold; I deposit proper margin.\' But if you prefer the latter course, which we advise, we will understand if you telegraph thus—\'Telegraph Liverpool receive and sell.\' There are times when it is best to meet the loss squarely and have done with it—when it is cheaper to pay at once in dollars what seems an inevitable loss, and save in peace of mind the constant care and vexation of spirit that the slow weeks bring." That, accordingly, on July 5, 1873, (the next day) complainant telegraphed to Russel & Potter to receive and sell as spot cotton (that is, cotton on the spot and actually delivered), which dispatch Russell & Potter said they had received, and had "cabled on" to "our Liverpool friends;" that after he had distinctly informed Russell & Potter that he was unwilling to, and would not, lose more than the $30,000 bonus up, he did, on July 2d, 1873, put up $5,000 more to meet any future loss, and not to go to any back loss, if there was any; that thus, after being *notified to receive and sell as spot cotton, they clamor for more margin, giving reasons and offering inducements to Heard to put up more, and when he puts up $5,000 more to cover loss in the future, he is told, two days after, that his margin is gone, and unless $5,000 or $6 000 more is put up, Russel & Potter will notify their "Liverpool friends" to sell to save themselves; that complainant has been informed by Russell & Potter that 2, 000 bales of cotton were purchased for him for future delivery, in January and February, 1873; that, until about July 10th, 1873, Russell & Potter claimed to be complainant\'s agents, but on the 7th day of August, 1873, they wrote to him that they had been acting merely as "inter agents;" that complainant further alleges they could then have sold and saved any loss more than the margin up; that good faith and ordinary diligence were not exercised in this: that complainant\'s cotton was worth, at market price, never less than 8³/₄d, and at times 9d., and yet was sold by defendants at 8¹/₂d., and that when complainant, following the advice of Russell & Potter, telegraphed them to receive when tendered and sell, yet they did not do this, although they had agreed to follow his instructions, but held the cotton that had been tendered, at great expense, and sold that which had not yet been tendered at a heavy loss, amounting to at least $8,000; that defendants refuse to allow complainant to examine his letters written to them; that, although Russell & Potter claim that the cotton was sold in July, yet they furnish no account until October 23d, 1873, and then an imperfect and unsatisfactory account is rendered, not giving name of purchaser, etc., etc.; that, without any authority from complainant, his cotton was sold in July at $—, and a re-investment made at once, at $—, entailing a loss of $—; that complainant instructed Russell & Potter to receive his cotton as tendered and sell at once, but that instead of selling, they held the cotton, whereby a loss of $3,000 occurred, which should not be put against his collaterals, as it was occasionedby disobedience of his instructions; and if not *placed against his collaterals, he had plenty of bonus up, and the sale was unauthorized and unnecessary, and the loss thereby occasioned should not fall on complainant; that, instead of complainant owing defendants, they are indebted to him in the sum of $5,000 plus $6,000 = $11,000 of collaterals; that, by their own admission, Russel and Potter have only paid out $23,000, and...