J. B. Lyon & Co. v. Culbertson

• Citation: 25 Am.Rep. 349,1876 WL 10286,83 Ill. 33
• Court: Supreme Court of Illinois
• Decision Date: 30 September 1876
• Parties: J. B. LYON & CO.v.CULBERTSON, BLAIR & CO.

83 Ill. 33

1876 WL 10286 (Ill.)

25 Am.Rep. 349

J. B. LYON & CO.

v.CULBERTSON, BLAIR & CO.

Supreme Court of Illinois.

September Term, 1876.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county.

Mr. LEONARD SWETT, and Mr. JOHN J. HERRICK, for the appellants.

Messrs. DENT & BLACK, for the appellees.

Mr. JUSTICE WALKER delivered the opinion of the Court:

We learn, from this record, that appellees, as partners in the firm of Culbertson, Blair & Co., brought suit against appellants, also partners, doing business under the name of J. B. Lyon & Co., to recover damages for an alleged failure to perform contracts for the purchase of a quantity of wheat.

There were several contracts, alike in their terms, except as to amounts and dates, and they were signed by different persons. This is a copy of one of them:

“CHICAGO, August 14, 1872.

We have this day bought of Culbertson, Blair & Co. 10,000 bushels of No. 2 spring wheat, in store, at $1.57 1/2 per bushel, to be delivered, at sellers' option, during August, 1872. This contract is subject, in all respects, to the rules and regulations of the board of trade of the city of Chicago.

J. B. LYON & CO., C.”

The rules and regulations referred to are embraced in--

“RULE IX. MARGINS ON TIME CONTRACTS.

SECTION 1. On all time contracts, made between members of the association, deposits for security and margin may be demanded by either or both parties; said margin not to exceed ten (10) per cent on the value of the property bought or sold on the day it is demanded. All such deposits to be made with the treasurer of the association, unless otherwise agreed upon by the parties. Said deposits and margins may be demanded on and after the date of contract, and from time to time, as may be necessary to fully protect the party calling for the same. When margins are demanded, the party called upon shall be entitled to deduct from the margin called any difference there may be in his favor between the market price and the contract price of the property bought or sold. Any deposit made to equalize the contract price with the market price shall be considered as a deposit for security, and not margin.

SEC. 2. Should the party called upon, as herein provided for, fail to respond within the next banking hour, it shall thereafter be optional with the party making such call, by giving notice to the delinquent, to consider the contract filled at the market value of the article at the time of giving such notice; and all differences between said market value and the contract price shall be settled the same as though the time of said contract had fully expired: Provided, however, that, when the call is made during the general meeting of the board between 11 A. M. and 1 P. M., the deposit shall be made before 2 o'clock of the same day.”

Under these contracts, deposits and margins were put up by the parties in conformity to the rules, from time to time. On the 19th day of August, 1872, the market for No. 2 spring wheat opened at from $1.55 to $1.57, and declined during the day, closing, after exchange hours, at from $1.44 to as low as $1.38. On the 20th, the market opened at from $1.27 to $1.34, and fell rapidly during business hours. Between 11 and 1 o'clock, it was as low as $1.10 to $1.11 per bushel.

It is claimed that, on the morning of the 20th, appellees became entitled to further deposits, and thereupon, by written notice sent to the office of the buyers, demand was made of Lyon & Co. for further margins, but failing to respond to the demand within the next banking hour, Culbertson, Blair & Co. elected, under the rules, to consider the contracts filled, and charged to account of Lyon & Co. the difference between the purchase price and $1.11 1/2, and notified appellants thereof. This difference is the matter in dispute between the parties. On a trial in the court below, the jury found for plaintiffs the difference as claimed. A motion for a new trial was overruled, and judgment rendered on the finding, and this appeal is brought by defendants.

The contract signed by Anderson has been adjusted, and hence it is not necessary to be considered; but the contracts signed by Templeton, as the purchaser, were admitted in evidence against the objections of appellants. The court excluded evidence offered by appellees to show a usage among the members of the board of trade to demand of the broker the name of his principal at the time of the purchase, and failing to do so, it was regarded as an election by the seller to look alone to the agent for a fulfillment of the contract. The proper foundation for the introduction of this evidence was laid.

Inasmuch as the great mass of commercial business is transacted by men pressed by their affairs, and who are not in the habit, even if time would permit, of reducing their agreements to writing, beyond a mere memorandum, the courts are compelled to look to the usages of trade or business to learn the real intention of the parties. If proof of such usages was not allowed, it is believed that, in a large number, if not the greater portion, of commercial transactions, the intention of the parties would be defeated, instead of being enforced, when differences should occur between them. Where there is a well known usage which obtains in trade, it must be presumed that all who are engaged in that business, where it prevails, contract with a view to it, unless they exclude the presumption by their contract. Hence, it has been repeatedly held by this court that a usage may be proved to interpret the otherwise indeterminate intention of the parties, and to ascertain the nature and extent of their contracts, not from their express stipulations, but from mere implication and presumptions, and acts of doubtful or equivocal character; but to have commercial usage take the place of general law, it must be so uniformly acquiesced in for such a length of time that the jury will feel themselves constrained to find that it entered into the minds of the parties and formed a part of the contract. Dixon v. Dunham, 14 Ill. 324; Crawford v. Clark, 15 ib. 561; Munn v. Burch, 25 ib. 35; Fay v. Strawn, 32 ib. 295; Deshler v. Beers, 32 ib. 368; Home Insurance Co. v. Favorite, 46 ib. 263; Turner v. Dawson, 50 ib. 85. Other cases might be cited in illustration of the rule, were not those referred to amply sufficient for the purpose.

Were it not for the terms and conditions of the contracts as expressed in the rules of the board of trade, the case would be exceedingly simple and free from all difficulty. We presume all persons in the profession know that when, on the face of these agreements, the delivery of the wheat and the payment of the money were concurrent acts, to be performed by the parties at one and the same time, neither party could put the other in default without performing his part of the agreement, or offering to perform it. Had the time elapsed for performance, all know that appellees would have been compelled to tender the wheat, and appellants to have refused to receive and pay for it, before the former could have sued and recovered. Pars. on Cont. vol. 2, p. 189; 1 Chit. Pl. 351. This is illustrated by every well prepared precedent of a declaration on such contracts, whatever may be the form of action.

But the parties having incorporated the rules of the board of trade into their agreement, the question arises as to its effect on the contract. It in terms provides that, when either party shall be in default in putting up margins, after notice and within the next banking hour, the party calling for them shall thereupon have the right to consider the contract filled at the market value at the time of giving such notice, and all differences between such market value and the contract price shall be settled the same as though the time for fulfilling the contract had fully expired. This, in terms, does not require an offer, or an ability or willingness to perform on either part. It only, in terms, requires a mental operation, unaccompanied with any physical act. Until the expiration of the hour, and for a period of time afterwards, the party claiming a default has, by the terms of the rule, the option to consider the contract filled or not, as he may choose.

Had the agreement required the party, before he exercised the option, to have made an offer, or at least have shown that he had the ability to fulfill his part of the agreement, and was willing to do so, then the contract would have conformed to legal principles; but, under the terms of this contract, appellees were not required to have a bushel of grain they could have delivered at the place of performance. It is true, the contract speaks of wheat “in store,” but neither wheat nor warehouse receipts were offered, nor was it shown that appellees had any wheat in Chicago, and it could not have been in the contemplation of the parties to deliver or receive it elsewhere, or it would have been so stated in the contract. The use of the words, “in store,” we understand to mean, that it was, at the time of delivery, to be in store in Chicago.

The fact that no wheat was offered or demanded, shows, we think, that neither party expected the delivery of any wheat, but, in case of default in keeping margins good, or even at the time for delivery, they only expected to settle the contract on the basis of differences, without either performing or offering to perform his part of the agreement; and if this was the agreement, it was only gaming on the price of wheat, and if such gambling transactions shall be permitted, it must eventually lead to what are called “corners,” which engulf hundreds in utter ruin, derange and unsettle prices, and operate injuriously on the fair and legitimate trader in grain, as well as the producer, and are pernicious and highly demoralizing to the trade. A contract, to be thus settled, is no more than a bet on the price of grain during or at the end of a limited period. If the one party is not to...