J. H. Arnold & Co. v. Gibson

• Decision Date: 14 April 1927
• Docket Number: 7 Div. 650
• Citation: 113 So. 25,216 Ala. 314
• Parties: J.H. ARNOLD & CO. v. GIBSON.
• Court: Alabama Supreme Court

113 So. 25

216 Ala. 314

J.H. ARNOLD & CO. v. GIBSON.

7 Div. 650

Supreme Court of Alabama

April 14, 1927

Rehearing Denied June 2, 1927

Appeal from Circuit Court, Etowah County; O.A. Steele, Judge.

Action by J.E. Gibson against J.H. Arnold & Co. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Goodhue & Lusk, of Gadsden, for appellant.

Hood &amp Murphree, of Gadsden, for appellee.

BROWN J.

The case was submitted to the jury on the third count of the complaint; the other counts being eliminated by the affirmative charge for the defendant. The writing declared on, and set out in this count in haec verba, is in the form of a letter addressed to the plaintiff by the defendant, and indorsed "Accepted" by the plaintiff, in the following words:

"As per your instructions, we have this day transfered your consigned cotton (101) bales, which was based one hundred (100) points off May N.Y. basis middling, to twenty-five (25) points on July N.Y. basis middling. This agreement signed in duplicate this day. Of course it is understood that in case the market declines to where margin is needed on said one hundred and one bales, we reserve the right to close the cotton out unless ample margin is furnished."

The breach alleged is that the defendant on the 24th day of June 1924, "closed out his (plaintiff's) contract in reference to said cotton, without his consent or agreement at the then market price of 28.19 cents per pound, to his damage," in that during the month of July cotton advanced to the price of 35 cents per pound and plaintiff lost the right to have the cotton sold at the advanced price.

The words "your consigned cotton" as used in the writing, in the absence of explanation, imports that the cotton was delivered to the defendant for care or sale, the title to remain in the consignor until it was disposed of, or held at his will, until the market declined and the plaintiff failed to advance needed margins. 12 C.J. p. 525; 1 Words and Phrases, Second Series page 906.

It appears from the face of this writing and the averments of the count that there had been some previous dealings between the parties with respect to this particular cotton, not disclosed in the paper pleaded as the contract between the parties, and the writing is clothed in such language as to render its terms obscure and ambiguous. In such cases, in the absence of general custom or usage in relation to such transactions, of which the courts may take judicial notice, it is incumbent on the pleader to plead the facts, if such there be, as will remove the ambiguity and render the contract certain so that the court may judge of the right of the parties, and, in the absence of such averments, evidence explanatory of the writing is not admissible, and the contract will be held void. Elmore, Quillian & Co. v. Parrish Bros., 170 Ala. 499, 54 So. 203; 27 R.C.L. 195, § 40.

The courts take judicial notice that the New York Cotton Exchange is operated under the general supervision of the United States Department of Agriculture, under the provisions of the federal statute known as the "Cotton Futures Act" (U.S.Stat. at Large, vol. 39, part 1, p. 479; U.S.Comp.St. §§ 6309e, 6309i). Maxwell Planting Co. v. A.P. Loveman & Co., 212 Ala. 288, 102 So. 45. And it may be that the courts would take judicial notice of the custom and usage there prevailing in respect to contracts made with reference to such custom and usage, but the rules of good pleading require that appropriate averments showing that the contract pleaded was so made is essential to invoke the application of such judicial notice. We are therefore of opinion that the court was in error in overruling the demurrers to the third count of the complaint.

The plea was the general issue, in short by consent, and, under the issues thus formed, it was the defendant's right to show accord and satisfaction, and he now insists that this was shown by the undisputed evidence, and that he was entitled to the affirmative charge.

The undisputed evidence shows that, under the original consignment of the cotton to the defendant, plaintiff had received from the defendant an advance equal to 80 per cent. of the then market price on the entire lot of cotton consigned, and on the decline of the market had advanced to the defendant margins, so that at no time did the amount he had retained exceed 80 per cent. of the market value of the cotton. Plaintiff's contention is that, by the contract made between the parties on the 25th of April, 1925, the defendant had engaged to carry the contract through July, giving the plaintiff the right to fix the price at any time during that month on the basis of twenty-five points in advance of the market price of cotton as fixed on the New York Cotton Exchange, and call for a settlement on that basis; that the defendant, without his consent, closed the contract on June 24, 1925, on the basis of 28.19 cents per pound, the market price of cotton of that date, and thereby deprived plaintiff of his right to fix the price of the cotton under the terms of the contract; that the price continued to advance immediately following June 24th, and continued through July until it reached 35 cents per pound.

The defendant's contention is that the consignment was made in accordance with a well-established local custom and usage relating to cotton transactions in that immediate territory and, under the consignment, construed in the light of this custom and usage, plaintiff's right to fix the price of the cotton was limited to a time prior to the first call day for delivery under July contracts, which was June 25th, and, in the event the plaintiff failed to exercise his right before the call day, it was then defendant's right to close the contract, based on the market price as fixed on the New York Cotton Exchange on the...