Holbrook v. Shepard

• Decision Date: 01 March 1922
• Docket Number: 3791.
• Citation: 279 F. 193
• Parties: HOLBROOK v. SHEPARD et al.
• Court: U.S. Court of Appeals — Fifth Circuit

279 F. 193

HOLBROOK v. SHEPARD et al.

No. 3791.

United States Court of Appeals, Fifth Circuit.

March 1, 1922

Samuel Nesbit Evins, of Atlanta, Ga. (Jones, Evins & Moore, of Atlanta, Ga., on the brief), for plaintiff in error.

S Holderness, of Carrollton, Ga., and Edgar Watkins, of Atlanta, Ga. (Watkins, Russell & Asbill, of Atlanta, Ga., on the brief), for defendants in error.

Before WALKER, BRYAN, and KING, Circuit Judges.

BRYAN Circuit Judge.

Defendants in error, as plaintiffs, recovered judgment against plaintiff in error, as defendant, for commissions and for losses on divers contracts entered into on the New Orleans Cotton Exchange, and subject to its rules and regulations, for the purchase and sale of cotton for future delivery. The petition alleged that defendant requested plaintiffs to advance, and promised to pay them, the sums of money thereafter lost on these contracts.

Demurrers to the petition, based upon its failure to allege that the contracts were in writing, and therefore within the statute of frauds, and attacking the contracts as mere wagers and unenforceable, under section 4258 of the Georgia Code, were overruled; but, inasmuch as the petition failed to allege from and to whom purchases and sales were made, the court limited plaintiffs to proof of defendant's express promise to pay. Defendant did not plead the statute of frauds, but compliance with its provisions was shown by the evidence. Defendant's answer denied the promise to pay and affirmatively alleged that it was not the intention of either plaintiffs or defendant that actual delivery of cotton should be made, thereby raising the question, unsuccessfully sought to be raised by demurrer, of the validity of contracts for future delivery.

Plaintiffs were brokers at New Orleans, and members of the New Orleans Cotton Exchange. Defendant lived at Atlanta, and there gave orders to a local agent of plaintiffs for the purchase and subsequent sale of 2,000 bales of cotton for future delivery. The losses sued for were sustained by plaintiffs in executing these orders. Upon the issue of defendant's promise to pay, the evidence was in direct conflict. The Atlanta agent of plaintiffs testified that defendant requested him to have plaintiffs make the advances, and two of the plaintiffs testified that the defendant promised them to pay the amounts lost after, but on the same day, they were advanced. On the other hand, defendant testified the advances were made without his authority, and that he did not promise to pay the losses incurred.

Upon the issue of the intention of the parties to make or accept actual delivery of cotton, the defendant testified that he had no such intention, but was merely speculating on the rise and fall of the market price. He did not communicate that intention to plaintiffs, and, if he had done so, their Atlanta agent testified that he would not have accepted the orders. The plaintiffs themselves testified that actual delivery of cotton would have been made to defendant, or accepted from him, as the case might be, if the contracts had been kept in force, and if such delivery had been tendered or demanded. The rules and regulations of the New Orleans Cotton Exchange filed in evidence provide for the actual delivery of cotton on contracts entered into between its members. Bought and sold slips, exchanged between plaintiffs and other members of the Exchange, evidencing purchases and sales for defendant's account in pursuance of his orders and requiring delivery, subject to these rules and regulations, were filed in evidence, as were also letters from plaintiffs to defendant notifying him of each purchase or sale, and stating that 'all orders for the purchase and sale of any article are received and executed with the distinct understanding that actual delivery is contemplated and that the party giving the orders so understands and agrees. ' Plaintiffs testified that they had no intention other than as disclosed by their contracts with other brokers and by their letters to defendant, and that their broker's commissions constituted their only interest in the transactions.

No exception is shown to have been taken to any evidence admitted, and no special requests to charge the jury upon the law or the facts were made by either party; but at the close of the evidence plaintiffs and defendant each moved the court to direct a verdict. In response to these motions, the court directed a verdict for the plaintiffs.

Error is assigned upon the order overruling the demurrer. The contention that the petition disclosed a gambling contract is untenable. A similar petition was held good in Bond v Hume, 243 U.S. 15, 37 Sup.Ct. 366, 61 L.Ed. 565. It does not appear from the...