John Miller Co. v. Klovstad

Citation105 N.W. 164,14 N.D. 435
Decision Date02 October 1905
CourtNorth Dakota Supreme Court

Appeal from District Court, Steele county; Pollock, J.

Action by the John Miller Company against John A. Klovstad. Judgment for plaintiff, and defendant appeals.


F. B Morrill and A. W. Fowler, for appellant.

A controverted fact should never be taken from a jury where there is a reasonable doubt upon the state of the evidence. Vickery v. Burton, 6 N.D. 245, 69 N.W. 193; McRea v. Bank, 6 N.D. 353, 70 N.W. 813; Cameron v. Gt. N. Ry. Co., 8 N.D. 124, 77 N.W. 1016; Warnken Co. v. Langdon Merc. Co., 8 N.D. 243, 77 N.W. 1000; Pewonka v. Stewart, 13 N.D. 117, 99 N.W. 1080; Slatterly v. Donnely, 1 N.D. 264, 47 N.W. 375.

In option deals, the burden of proof is on him asserting the option. It is very slight and the court will scrutinize the contract very closely. Sprague v. Warren, 41 N.W 1113; Barnard v. Backhaus, 6 N.W. 252, 9 N.W. 595.

Court takes judicial notice that a majority of the transactions on the boards of trade are purely fictitious, speculative and gambling in futures. Mohr v. Miesen, 49 N.W. 862; Dows et al. v. Glaspell, 4 N.D. 259, 60 N.W. 60.

The transaction was a mere gambling one. Dows v. Glaspell, supra.

If an agent disregards his principal's instructions and loss ensues, he is liable for such loss, and if he has made advances, in thus disobeying instructions, he cannot recover them or his commissions. Butts v. Phelps, 79 Mo 302; Fuller v. Ellis, 39 Vt. 345; Whitney v Express Co., 104 Mass. 152; Scott v. Rogers, 31 N.Y. 676; Galigher v. Jones, 129 U.S. 193.

Custom and usage will not authorize a departure from such instructions. Wonless v. McCandless, 38 Iowa 20; Bliss v. Arnold, 8 Vt. 252; Catten v. Smith, 24 Vt. 85; Parsons v. Martin, 11 Gray, 115.

Guy C. H. Corliss, for respondent.

If a principal authorizes a broker to deal upon a known board of trade, such authority is to deal in accordance with the rules and usages of such board unless specifically instructed otherwise. Clews v. Jamieson, 182 U.S. 461; Bibb v. Allen, 149 U.S. 481, 489, 13 S.Ct. 950; 37 L.Ed. 819; Bailey v. Bremsley, 87 Ill. 556; Mechem on Agency, 485; Maxter v. Paine, L. R. 4, Ex. 210; Mitchell v. Newhall, 15 M. & W. 308; Nickalls v. Merry, L. R. 7, H. L. 530; Robinson v. Mellette, L. R. 7, H. L. 805, 826; Cotheam v. Ellis, 107 Ill. 419; Samuels v. Oliver, 130 Ill. 73; Bailey v. Bensley, 87 Ill. 559.

If the principal gives ambiguous instruction, he, not the agent, must suffer, if loss ensues thereby. Anderson v. Bank, 4 N.D. 182, 59 N.W. 1029; Mechem on Agency, sections 314, 315, 484.

An estoppel exists when the party against whom it is urged has been negligent and his negligence has misled the other party. Robbins et al. v. Blanding, 91 N.W. 844; Sterns v. Johnson, 19 Minn. 240; Mechem on Agency, sections 154-157.

The party claiming that a transaction is a wager has the burden of proof. Hill v. Levy, 98 F. 94; Irwin v. Williar, 110 U.S. 499, 28 L.Ed. 225; Boyle v. Henning, 121 F. 376; Johnston v. Miller, 53 S.W. 1052; Ponder v. Jerome Hill Cotton Co., 100 F. 373; 40 C. C. A. 416; Bibb v. Allen, supra; Rountree v. Smith, 108 U.S. 269, 27 L.Ed. 722; Clewes v. Jamieson, 182 U.S. 461, 488, 21 S.Ct. 845, 45 L.Ed. 1183.

The intention of one party not to make or receive a delivery, but to bet on the market, is not sufficient; both must intend to bet. Hill v. Levy, 87 F. 94; Bangs v. Hornisk, 30 F. 97; Ward v. Vosburg, 31 F. 12; Lehman v. Field, 37 F. 852; Parker v. Moore, 115 F. 799; Irwin v. Williar, 110 U.S. 499, 28 L.Ed. 225; Bibb v. Allen, supra; Ponder v. Jerome Hill Cotton Co., 100 F. 373; Clewes v. Jamieson, 182 U.S. 461, 489; Johnston v. Miller, 53 S.W. 1052; Boyle v. Henning, 121 F. 376; Parker v. Moore, 125 F. 807; Bibb v. Allen, supra; Irwin v. Williar, 110 U.S. 49, 28 L.Ed. 225; Parker v. Moore, 115 F. 799; Rountree v. Smith, 108 U.S. 269, 27 L.Ed. 722; Dows v. Glaspell, 4 N.D. 251; Ponder v. Jerome Hill Cotton Co., 100 F. 373; Clewes v. Jamieson, 182 U.S. 461, 21 S.Ct. 845, 45 L.Ed. 1183, Barnes v. Smith, 159 Mass. 344, 34 N.E. 403, 47 Central Law Journal, 172, 130 F. 507-512.

In the following cases it was held that there was no evidence to go to the jury: Ponder v. Jerome Hill Cotton Co., 100 F. 373; Bibb v. Allen, supra; Johnston v. Miller, 53 S.W. 1052; Clews v. Jamieson, 182 U.S. 461, 494, 21 S.Ct. 845, 45 L.Ed. 1183.

Principal must indemnify agent for losses incurred in the course of the agency. Mechem on Agency, section 653; 1 Am. & Eng. Enc. Law, 1117.

FISK, District Judge. ENGERUD, J., took no part in this decision; Judge C. J. FISK, of the First Judicial District, sitting by request.


FISK, District Judge.

Appeal from a judgment rendered by the district court of Steele county upon a verdict directed for plaintiff. The facts necessary to a correct understanding of the questions involved are as follows: During the time covered by the transactions between the parties the plaintiff was a commission broker and member of the Duluth board of trade, engaged in buying and selling grain for other persons upon commission, and the defendant was engaged in operating an elevator at Dwight, in this state, and in buying and shipping grain to Duluth to be there sold. The plaintiff, through its president, John Miller, made arrangements with defendant in the month of August, 1902, whereby the defendant was to purchase grain at Dwight for shipment to plaintiff, at Duluth, to be sold upon the usual commission, the plaintiff to furnish defendant with the necessary funds to carry on such business at a rate of interest agreed upon. It was talked over and understood that the speculative feature of the business, by reason of fluctuations of the market, should be obviated by a system of "hedging," which means that the defendant would, for all grain purchased by him, sell, or, in other words, obtain a contract through his said brokers to sell a like amount to arrive or for future delivery. Selling to arrive and selling for future delivery have a well-defined meaning upon the board of trade and in the business world; the former expression meaning that the vender had fourteen days in which to make delivery of the warehouse receipts, and the latter expression meaning that he has any day during some specified month in the future in which to make such delivery. This system of "hedging" eliminates the risk of loss which otherwise might occur by a decline in the market price during the time necessarily consumed in transporting the grain to market. Of course, in order to make the "hedge" perfect, the grain sold to arrive or for future delivery should at all times just equal the amount of grain purchased by defendant and unsold. As soon as the grain shipped arrives at its destination and is sold, the "hedge" must be taken down; or, in other words, an equal amount of grain must be purchased for delivery at the same time as the grain which was sold for such future delivery is to be delivered, and thus one is made to balance or offset the other. Such "hedging" transactions are consummated through the broker upon the board of trade upon instructions from the principal, and, when the shipment of grain against which there is a "hedge" arrives and is sold, the custom, under the undisputed evidence, is for the broker to remove the "hedge" if the shipment is not accompanied with instructions to the contrary; but, if the shipment is accompanied with instructions to sell on arrival, such instructions, under the universal custom, are equivalent to specific instructions to the broker not to apply such shipment on the outstanding sales for future delivery.

The undisputed evidence discloses that plaintiff, pursuant to instructions from time to time, sold for defendant, upon the Duluth board of trade, 17,000 bushels of wheat for December delivery, presumably intended by defendant as "hedges," and that pursuant to such arrangement between the parties the defendant, from time to time, shipped to plaintiff in the aggregate 21,000 bushels of grain, of which shipments only 4,000 bushels of wheat were applied on these "hedges;" the balance having been sold and the proceeds credited to defendant's account. The remaining 13,000 bushels sold for December delivery not having been delivered by defendant, as plaintiff contends the plaintiff was required, under the rules of the board of trade, to fulfill its contract, which it did by purchasing a like amount for delivery at that time, and in doing so it incurred a loss, which, including commissions and interest, aggregates the sum sued for in this action. The undisputed evidence discloses that operations on the Duluth board of trade are restricted to actual transactions in the purchase and sale of grain, and that dealing in what is commonly called "options," which does not contemplate the delivery of the actual grain, but is a mere gambling transaction on the fluctuations of the market, is strictly forbidden. The evidence also discloses that there is a clearing house connected with the board through which all deals are adjusted each day by striking balances between the broker and such clearing house, also that all transactions upon the board are carried on in the names of the brokers without disclosing their principals, and that each broker becomes personally responsible for the fulfillment of all contracts made by him in behalf of his principal. The evidence discloses that accompanying or preceding each shipment of grain the defendant sent the plaintiff specific instructions as to the disposition of the same, except as to five cars aggregating something over 4,000 bushels of wheat, which shipments were not accompanied or preceded by any instructions or directions as to...

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