Jackson v. Foote

• Citation: 12 F. 37
• Parties: JACKSON, Receiver, v. FOOTE.
• Decision Date: 17 April 1882
• Court: U.S. District Court — Northern District of Illinois

12 F. 37

JACKSON, Receiver, v. FOOTE.

United States Circuit Court, N.D. Illinois.

April 17, 1882

Dent &amp Black and Lyman & Jackson, for plaintiff.

L. H Bisbee and Albion Cate, for defendant.

BLODGETT D.J.

This is a suit on a guaranty of payment by defendant of two promissory notes, of $5,000 each, made by the trustees of the estate of Ira Couch, both dated July 1, 1876, and made payable to defendant,-- one on July 1 and the other on October 1, 1877, with interest at the rate of 8 per cent. per annum.

The plaintiff is receiver of The Third National Bank of this city, and the notes in question were delivered to the bank with the guaranty of defendant written thereon, about December 30, 1876, with other notes, as collateral security for the payment of a note of S. G. Hooker & Co. to the bank for the sum of $13,900, due from that firm to the bank for money loaned on the note of Hooker & Co.; being dated December 30, 1876, payable to the bank in 90 days after date with interest at 10 per cent. per annum.

The defence insisted on at the trial is that the two notes in question were transferred by the defendant to the firm of S. G. Hooker & Co. in settlement of a claim or indebtedness due from the defendant to said firm for certain gambling dealings, conducted by the firm for the defendant, on the Chicago board of trade.

The facts, as developed by the proof, appear to be that in the fall of 1874, and for about two years thereafter, the firm of S. G. Hooker & Co. were brokers and commission merchants, dealing in grain and provisions on the board of trade in this city, were members of the board, and transacted business for their customers under its rules and regulations; that Foote had some dealings on the board through another broker, in which his broker had taken and paid for a large quantity of oats which had been bought on an order of the defendant, but the expenses of storing, interest, etc., had been so large that the defendant had become dissatisfied, and some difficulty occurred in effecting a settlement with his broker. Mr. Hooker, of the firm of S. G. Hooker & Co., was applied to and counselled with by the defendant in securing this settlement, and Hooker, being an old friend of the defendant, advised him that if he wished to speculate or deal any more on the board of trade he had better do it with his, Hooker's, firm. The defendant assented to this, provided he could only trade or deal in differences; that is, Hooker's firm was not to take in or carry any commodities bought, but defendant was only to pay or receive the differences between the selling and buying or buying and selling prices of the commodities dealt in.

In pursuance of this arrangement the defendant from time to time gave orders to Hooker & Co. to buy or sell commodities on the board for his account, and they executed these orders by buying or selling as directed on the board in the usual form of such transactions where the seller had the option to deliver within a certain time,-- as for illustration, during the whole of the next month, or during the first half or last half of the next month, or of the month in which the transaction took place,-- the only option in the transaction being as to the time within which the seller was allowed to make delivery. These dealings continued until some time in May or June, 1876, Hooker & Co. buying or selling grain, pork, or lard as directed by the defendant, and settling the differences; paying the money when the market was against the defendant, and receiving it for him when the market was in his favor; charging to him whatever sums were paid in settling differences when they were against him, and giving him credit when they received differences in his favor. In two or three transactions the firm seems to have taken in and paid for grain and provisions bought for defendant and held them for a short time, and then sold them, charging the defendant with the interest, storage, etc., incident to such transactions. The defendant was also debited on the books of the firm with commissions for transacting the business, and with divers sums of money paid him from time to time, so that, at the time the dealings of the firm for the defendant closed, he stood debited to them on their books in the sum of about $22,000. In payment of this indebtedness the defendant transferred and delivered to Hooker & Co. four notes of $5,000 each held by him against the Couch estate, the payment of which notes he guarantied and two of which are the notes in question, and the firm of Hooker & Co. transferred the two notes now before the court, with the defendant's guaranty of payment thereon, to the Third National Bank of Chicago, to secure their own indebtedness to the bank for money borrowed.

The testimony in the case fully satisfies me that Mr. Hooker when he assumed for his firm to act as the defendant broker in his dealings on the board of trade, did not contemplate or intend to make any different transactions for the defendant than for his other customers. He undoubtedly intended to make purchases or sales where the buyer had an option as to the time within which to make delivery,...