Kent v. Miltenberger

• Decision Date: 13 May 1884
• Citation: 15 Mo.App. 480
• Parties: ELMER A. KENT ET AL., Respondents, v. E. B. MILTENBERGER, Appellant.
• Court: Missouri Court of Appeals

15 Mo.App. 480

ELMER A. KENT ET AL., Respondents,

v.E. B. MILTENBERGER, Appellant.

St. Louis Court of Appeals, Missouri.

May 13, 1884.

APPEAL from the St. Louis Circuit Court, HORNER, J.

Affirmed.

OVERALL & JUDSON, for the appellant: “Corners” of staple commodities, and contracts in furtherance thereof, are illegal.-- Coal Co. v. Coal Co., 68 Pa. St. 173; Arnott v. Coal Co., 68 N. Y. 558; Craft v. McConoughy, 79 Ill. 346; Raymond v. Leavitt, 46 Mich. 447.

GIVEN CAMPBELL, for the respondents.

THOMPSON, J., delivered the opinion of the court.

This case was before the court at a former term (13 Mo. App. 503; 16 Cent. L. J. 431), on an appeal by the defendant, and, while sustaining the rulings of the circuit court on the other questions involved, we reversed the judgment because the court refused to instruct the jury that the burden was upon the plaintiff to show what the true value was of No. 2 wheat at the end of the month of August, 1880, for manufacturing or consumptive purposes. In so ruling this court used the following language: “It appears that this (August) “deal' was settled according to the ruling market at the end of that month. But this market had been forced up to a fictitious point by a combination of dealers in getting up what is called a ‘corner.’ The evidence upon this point is not conflicting. * * * There was no evidence as to what the value of wheat at the end of August, 1880, was, either in other markets or in this market, for manufacturing or consumptive purposes. The defendant asked the court to instruct the jury that the burden was upon the plaintiffs to show what such market value was, and the court refused so to instruct them. We think that this was error. The plaintiffs were not obliged to settle these transactions upon the basis of a fictitious and manipulated market produced by ‘cornering.’ If they did so, they did so in their own wrong, because they could have avoided this, under the rules of the exchange, by demanding an arbitration. They can not, therefore, rightfully charge up against their principal any loss which they may have sustained, while acting as his broker, in this way, as between him and them; the only market on the basis of which they can claim a settlement or charge losses against him, is an average market for manufacturing or consumptive purposes. It is just as much a part of their case to show what that market was as to show what their contract with the defendant was.”

When the cause went back to the circuit court the defendant amended his answer, setting up therein the two rules of the Merchants' Exchange of the city of St. Louis, upon the terms of which the ruling of this court had been based. These rules were as follows:--

“SECT. 4--Rule 10. In case any property contracted for future delivery is not delivered at maturity of contract, the purchaser may demand a settlement at the average market value of the property on the day of maturity of contract, and in case such settlement is refused, may purchase the property on the market for account of the seller during the same or the next business day, notifying him at once of such purchase, and any loss shall be due and payable at once by the party in default. * * * Nothing in this section shall be construed as authorizing unjust or unreason able claims based upon manipulated or fictitious markets.

SECT. 5. In determining the average market value of any article, the committee named, or, in case of abitration, the committee of arbitration and appeals, shall consider its value in other markets, or for manufacturing or consumptive purposes in this market, together with such other facts as may justly enter into a determination of its true value, to secure justice and equity to all concerned, irrespective of any fictitious price it may at the time be selling for in the market.”

The answer then charged substantially that the deals in controversy were settled by the plaintiffs, not upon a legitimate market, as required by the above rules, but “upon a fictitious and manipulated market, wherein a fictitious and manipulated price for No. 2 red winter wheat for August delivery was produced by manipulation and cornering, so that the quoted market price in the St. Louis market for the said wheat was far in excess of its true value.” The plaintiffs by a denial put these allegations in issue, and it was the only issue contested in the case. Everything else necessary to the recovery of the plaintiffs was either admitted by the defendant or went to the jury without objection. The jury returned a verdict in favor of the plaintiffs for the sum of $2,650.50, the same being, with interest, the whole amount claimed by the plaintiffs, on the basis of the full quoted price of the settlements of August wheat on the day when the plaintiffs closed out the defendant's deals because of his failure to put up more margins. It was the same verdict which was rendered on the former trial. From this verdict the plaintiffs remitted the sum of $155.50, and judgment was given for the residue, $2,495. The grounds on which the defendant, again appealing, asks us to reverse the judgment, will be now considered.

I. The first ground is that the court erred in refusing to give the fourth instruction asked by the plaintiff as offered, and in giving in its stead the same instructions with certain additions. This instruction, as offered, was as follows: “The court instructs the jury that if you find from the testimony that the St. Louis market for August wheat, at the time of the closing out or settlement of the August deals in controversy, was cornered, that is, enhanced in price in excess of the true value by speculative manipulation, the plaintiff must establish by a preponderance of testimony, what was the true value of the wheat at said time, that is, the price at which the wheat would have sold, but for such speculative manipulation and cornering.”

The instruction which the court gave in lieu thereof was as follows, the additions being enclosed in brackets:--

“The court instructs the jury that, if you find from the testimony that the St. Louis market for August wheat, at the time of the closing out or settlement of the August deals in controversy was cornered, that is, enhanced in price in excess of the true value [thereof for manufacturing or consumptive purposes] by speculative manipulation [so as to create a fictitious or manipulated market price], the plaintiff must establish, by a preponderance of testimony, what was the true value of the wheat at said time; that is, the price at which the wheat would have sold but for such speculative manipulation and cornering [for manufacturing or consumptive purposes].”

The court clearly committed no error in refusing the defendant's instruction as offered and in giving it as thus modified. By comparing the instruction as thus modified with the rules of the Merchants' Exchange, above set out, it will appear that the only difference between the two instructions was that the latter was more complete and specific, and embraced all the elements embraced in the two rules, one of which, namely, “the value of the wheat for manufacturing or consumptive purposes” embraced in the second rule, the instruction as offered omitted.

II. The next group of objections is that the court erred in excluding proper testimony.

1. The first of these objections relates to the testimony of Alexander H. Smith. This witness had testified, on his direct examination, that he could have purchased No. 2 red winter wheat at the quoted price on the last day of August, 1880, and made it into flour without loss, or with small profit, on the basis of the then quotations of prices of flour. On cross-examination he was asked the following question, to which the court sustained an objection: “How was that month of the year--the month of August--compared with other seasons of the year in regard to the milling business in St. Louis as regards profits to be expected by the millers?” We do not see the relevancy of this question. Suppose the witness had been allowed to answer it, and had said that the profit had not been as great in the month of August as in other months of the year to the millers, what bearing would it have had upon the issue? What light would it have thrown upon the question whether the ruling market upon the Merchants' Exchange, at the date when these deals were settled, was a manipulated and fictitious market? But even suppose that the answer sought to be elicited would have had some relevancy, in the light of the whole testimony it is entirely clear that the defendant sustained no prejudice from the ruling.

2. On cross-examination of the same witness, the following question was asked by the defendant, and ruled out under objection: “Are you prepared to state what, in your judgment, No. 2 wheat would have sold for on the 31st of August if the market had not...