James H. Parker & Co. v. Moore

• Decision Date: 21 October 1903
• Citation: 125 F. 807
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: JAMES H. PARKER & CO. v. MOORE.

125 F. 807

JAMES H. PARKER & CO. v. MOORE.

United States Circuit Court, D. South Carolina.

October 21, 1903

C. P Sanders and T. P. Cothran, for plaintiffs.

Stanyarne Wilson and A. H. Dean, for defendant.

SIMONTON Circuit Judge (orally charging jury).

The plaintiffs, brokers of New York City, members of the New York Cotton Exchange, bring this action against the defendant. The cause of action is an account for sums of money paid by plaintiffs in keeping good the margins on further contracts in cotton made by them, as brokers, on the account of defendant, and under his instructions at his request. The answer of defendant denies all liability, because these contracts were usurious, and, under the law of South Carolina, absolutely void.

A future contract in cotton is not usurious and void if, under the terms of the contract, one party could insist upon the actual delivery of the cotton, and the other party could insist upon the actual receipt of the cotton. Of course, if this right existed under the contract, either party could waive it, and, instead of insisting on the actual presence of the cotton, could settle on the difference of values in money. The contracts in this case were made expressly under and subject to the rules of the New York Cotton Exchange. These rules contemplate and insist on the actual delivery of cotton under such contracts. So, on their face, these contracts were legal, and money paid on account of them could ordinarily be recoverable. The testimony shows, and it is not disputed, that when plaintiffs made each of the contracts in this case they reported it to the defendant, and each report contained a notice like this:

'Mr W. A. Moore-- Dear Sir: Under your instructions we have this day bought for your account and risk, in conformity with the rules and regulations of the New York Cotton Exchange:

'Quantity and Description:

Price:

'Please take notice that all orders for the purpose of sale of cotton, coffee, grain and provisions for future delivery, are received and executed with the distinct understanding that actual delivery is contemplated, and the party giving the order so understands and agrees. It is further understood that on all marginal business the right is reserved to close transactions when margins are near exhaustion without notice.'

Plaintiffs have put in evidence the rules of the New York Cotton Exchange, and the testimony of several parties, members of the exchange, as to the operation of these rules. Among other things, it appears that, when brokers make contracts on the floor of the exchange, they are personally bound, if they are not closed out, to keep them alive, on pain of suspension from the exchange. The items in the account sued upon are sums paid by plaintiffs on these contracts of defendant-- keeping them alive, it is said, at his instance and under...