James v. Clement

• Citation: 223 F. 385
• Decision Date: 25 May 1915
• Docket Number: 2544.
• Parties: JAMES v. CLEMENT et al.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

223 F. 385

JAMES v. CLEMENT et al.

No. 2544.

United States Court of Appeals, Fifth Circuit.

May 25, 1915

Alex W Smith, of Atlanta, Ga., for plaintiff in error.

Hollins N. Randolph, Robert S. Parker, and Spencer R. Atkinson, all of Atlanta, Ga., and John R. Abney, of New York City, for defendants in error.

Before PARDEE and WALKER, Circuit Judges, and MAXEY, District Judge.

PARDEE Circuit Judge.

This case was formerly before this court (185 F. 692, 107 C.C.A 640), and to clearly understand the present aspect it is well to restate from our former opinion what was heretofore decided and to a certain extent became the law of the case, as follows:

'Pardee, Circuit Judge. In substance and effect this suit is one brought to recover specific sums of money paid out by the plaintiffs, Haven & Clement, as agents and brokers for the defendant, James, in purchasing and selling cotton futures; and the defense is that all the transactions for which plaintiffs paid out money were by intention and understanding of the parties, and in fact, gambling transactions; that is to say, only wagers depending upon the fluctuations of futures and the variations of the prices thereof upon the New York Cotton Exchange, with the understanding and intent of both parties that all such wagers should be lost or won according to such fluctuations in the price of futures in the New York Cotton Exchange, and, incidental to such defense, that all transactions in the New York Cotton Exchange for the purchase and sale of cotton for future delivery were under the technical rules of the Exchange providing for 'ringing out' and substituting contracts by the brokers without the knowledge of principals, and in the delays and technical notices and other formalities thrown in the way of any actual delivery, were, in fact, wagering transactions.

'As to this incidental defense, we notice that, under the evidence admitted on the trial of the case (all of which is found in the transcript), the particular transactions wherein Haven & Clement claimed that they purchased and sold cotton futures for the account of James for which they paid out moneys and now ask judgment were under the rules of the Exchange and otherwise so 'rung out,' substituted, arranged, and settled that the interests of no other or third parties are involved; and the validity of the transactions must stand or fall according to the actual agreements and intentions of the parties to this suit without reference to the character and manner of the business carried on in the New York Cotton Exchange, further than it is useful in throwing light upon the actual understanding and agreements between Haven & Clement on the one side and James on the other. * * *

'The bill of exceptions shows that prior to the charge of the court counsel for the defendant requested the court to give the jury the following instruction, to wit: 'I charge you that speculating or wagering contracts are void, and a broker or commission merchant cannot recover for advancement made on account of customer on account of such contracts. If there was no intention of buying or selling cotton, but the contract was only speculative in the present case, there can be no recovery'-- and that the court declined to give the said request to the jury. Also, that counsel for the defendant requested the court to charge the jury as follows: 'I charge you further, gentlemen, that no rights can arise in favor of either party to a contract of agency where the agency was created for an illegal purpose. If the plaintiffs and defendant contracted one with the other and the purpose of the contract was to play the market in cotton futures, the agency was illegal, and neither party would have the right to sue the other for losses or profits growing out of such agency'--which also was refused.

'In each the trial judge certifies that 'the same is not covered by any portion of the charge to the jury.' These specially requested charges seem to be sound in law, and their application to the case in hand is beyond question. They certainly were not in unambiguous terms given to the jury, and it seems with the mass of evidence in the case, mainly devoted to the collateral, but not controlling, issue, involving the character of the rules and proceedings of the New York Cotton Exchange, these or similar distinct instructions bearing on the main issue in the case should have been given to the jury. * * *

'The bill of exceptions further shows that prior to the charge of the court counsel for the defendant requested the court in writing to charge the jury as follows: 'I charge you further, gentlemen, that, even if it should be true that the defendant promised to pay this claim, yet if the claim arose by reason of a wagering, illegal, or immoral contract, the promise of payment would not be binding.' The defense was that the transactions insisted upon by the plaintiffs as entitling them to recover were wagering and illegal. The plaintiffs adduced evidence tending to show a promise on the part of defendant to pay the amount claimed. The instruction seems to be good in law, and, as it was applicable to the case, we are of opinion that it was prejudicial error to refuse it because, under the case as presented by the transcript, we cannot say that the evidence given of the defendant's promise to pay was not a controlling factor with the jury in reaching the verdict rendered. * * * The charge of the trial judge is before us because it is incorporated in the bill of exceptions duly allowed and signed.

'As heretofore pointed out in discussing the pleadings, and also in considering the nineteenth, twentieth, twenty-first, and twenty-third assignments of error, the controlling issue in the case was whether or not the amounts sued for by the plaintiffs below were for moneys advanced at the request and for the benefit of the defendant on wagering contracts. The transcript shows that there was evidence offered and admitted tending to show that they were illegal wagering contracts within the knowlege and intent of both parties, and also that there was a large mass of all kinds of evidence bearing upon the collateral issue in respect to the character of dealings upon the New York Cotton Exchange, and some bearing on other minor issues. Under these circumstances, and to the end that the jury might correctly apply the evidence, it was incumbent upon the trial judge to clearly and specifically instruct the jury on the law bearing on the main and controlling issue. The charge thereon was as follows: 'It is next claimed by the defendant that the evidence shows that Mr. James and the plaintiff's representative, Mr. Tate, had an express understanding that this arrangement made by Mr. James with the plaintiff firm was a mere wagering arrangement, and that both parties so understood it. If what he says about that-- he told you about that on the stand-- that there was to be no delivery of cotton, that is, it was simply taking-- I do not remember the exact expression he used, a 'flier,' or something like that, but you will remember what he said, and that Mr. Tate so understood, that he told Mr. Tate that. And you heard what Mr. Tate said. He denied it. If there was an agreement made between Mr. Tate and Mr. James, and if Mr. Tate was to do the business as he described it, and Mr. James, and to make this sort of an agreement, of course, these contracts would fail and could not be enforced at all. If the arrangement Tate had with James was that it was to be a mere wagering contract, and no delivery contemplated at all, the contracts could not be sustained. That is for you to say. But my understanding of Mr. James was upon the line indicated by me heretofore that Mr. James wanted Mr. Tate to understand that: 'This thing I am to do with you has nothing to do with my business at Blakely. It is entirely separate and distinct.' Of course, he may have intended it differently, but that is the impression I got. If you understood it differently, and if you believe they had the understanding here claimed by the defendant and his counsel, it would render these contracts invalid.'

'It is contended that this is involved and argumentative, and does not sufficiently point out the importance of the issue presented although it is admitted that its real meaning is that, if the jury found that the arrangement between the parties was understood by both of them to be a mere 'wagering' contract, plaintiffs could not recover. Certain it is that the charge does not refer to section 3668 of the Code of 1895 of Georgia, which controls in suits in that state on wagering contracts, and declares such contracts to be against the policy of the law and not to be enforced, nor does it otherwise advise the jury as to what are wagering contracts and the public policy relating thereto. The charge deals with the issue as though there was no other evidence thereon than that found in the conversations between Tate, the plaintiff's agent, and the defendant, James, while the bill of exceptions shows the course of dealing between the parties which throws much light on the subject, and shows other pointed facts and circumstances directly bearing on the issue and tending to show mutuality in the understanding that no actual delivery of cotton was contemplated.

'Of necessity we have been compelled to read much of the evidence which includes many telegrams and letters passing between the parties, and we cannot resist the conclusion that from James' alleged notice to the agent Tate, and his telegrams and letters to the plaintiffs, and the course of dealings pursued by the parties and other matters shown, the jury might well have found that James did not contemplate actual delivery of any cotton on the future contracts bought or sold for...