McCarthy v. Weare Comm'n Co.

• Citation: 87 Minn. 11,91 N.W. 33
• Parties: McCARTHY et al. v. WEARE COMMISSION CO.
• Decision Date: 27 June 1902
• Court: Minnesota Supreme Court

87 Minn. 11

91 N.W. 33

McCARTHY et al.

v.WEARE COMMISSION CO.

Supreme Court of Minnesota.

June 27, 1902.

Appeal from district court, St. Louis county; J. D. Ensign, Judge.

Action by John F. McCarthy and others against the Weare Commission Company. Verdict for plaintiffs. From an order denying a new trial, defendant appeals. Affirmed.

Syllabus by the Court

1. Action upon an account stated which was based upon certain alleged stock transactions whereby the defendant bought and sold certain stocks for the plaintiffs as their broker and upon their orders. The defendant, by its manager, reported the orders executed in each case. Held that, as to the plaintiffs, the orders must be deemed to have been executed, and that the statute of frauds does not apply to them.

2. A contract for the sale of goods which the seller can only acquire by purchase is a gambling venture, where the parties do not intend any actual purchase and delivery of the goods to fill the contract, but are merely risking the difference between the contract price and the market price at a future day. The illegal intent of one of the parties will not avail unless the other party knows, or ought to know, of such illegal purpose.¹

3. Rule applied, and held that the instructions of the trial court in this case on the subject were substantially correct.

4. Certain rulings of the court as to the reception and rejection of evidence, and as to refusing certain requests to charge, considered, and held not to be reversible error. J. L. Washburn and W. D. Bailey, for appellant.

Searle & Spencer (L. C. Harris, of counsel), for respondents.

START, C. J.

Action on an account stated. The complaint alleged that the defendant was a corporation engaged in the business of buying and selling grain and stocks, and for that purpose maintained a branch office in the city of Duluth, which was at all times herein stated in charge of George Rupley as its manager, and, further, that between February 1 and May 10, 1901, the plaintiffs and defendant had mutual financial dealings, and on the day last named an account was stated between them, and a balance of $5,611.25 was found to be due plaintiffs from defendant, which it agreed to pay, but has not. The answer alleged that defendant was a broker buying and selling grain, stocks, and bonds on commission, and maintained during the times stated an office at Duluth, in charge of George Rupley, for the purpose of receiving and forwarding orders to its Chicago office for the purchase or sale of such articles, and that he was also engaged in such business upon his own account, which the plaintiffs knew. The answer denied the allegations of the complaint, and alleged, in effect, that the transactions and statement of account alleged in the complaint were had and made, if at all, between the plaintiffs and George Rupley on his own account, with which the defendant had nothing to do, and that all such transactions were gambling contracts. The reply put these allegations of the answer in issue. These issues were submitted to the jury, and a verdict returned for the plaintiffs for $5,725.34, and the defendant appealed from an order denying its motion for a new trial.

The evidence on the part of plaintiffs tended to show that during the times stated in the complaint they gave to the defendant's manager, as such, at Duluth, various orders to buy and sell for them certain stocks,—among others, that of the Northern Pacific Railway Company, amounting in the aggregate to 125 shares, which constituted the real controversy in this case. The defendant's manager, upon receiving an order to buy, would report to the plaintiffs that he had done so. His reports, except as to dates, number of shares, and price and description, were in the form following:

‘All Orders Executed According to the Rules of the Exchange Where Made.

‘To McCarthy Bros., from George Rupley, Manager:

‘Weare Commission Company.

‘Duluth, Minn., 3–22, 1901.

‘We have bought for your account this day:

+---------------------------------------------+
                ¦Quantity.¦Delivery.¦Articles.¦Price.¦Remarks.¦
                +---------+---------+---------+------+--------¦
                ¦         ¦         ¦         ¦      ¦        ¦
                +---------+---------+---------+------+--------¦
                ¦50       ¦         ¦N. P.    ¦88 5/8¦        ¦
                +---------+---------+---------+------+--------¦
                ¦         ¦         ¦         ¦      ¦        ¦
                +---------------------------------------------+
                

‘All transactions made by us contemplate the actual receipt and delivery of the property, and payment therefor.

‘On all marginal business we reserve the right to close transactions when margins are running out, without giving further notice.’

The evidence further tends to show that the plaintiffs gave to such manager three separate orders for the purchase of shares of Northern Pacific stock, amounting in the aggregate to 125 shares, the last of which was given April 22, 1901, and that the defendant reported, in the form stated, that he had executed the orders, and had purchased the stock, and that on May 7, 1901, the plaintiffs ordered such manager to sell the 125 shares, and he reported, in substantially the same form as he did the purchase, that he had sold the stock for $148 per share; that three days thereafter the plaintiffs and such manager met, and the accounts growing out of such purchase and sale of stocks were settled, and the balance stated and agreed upon as alleged in the complaint. The evidence on the part of the defendant tended to show that none of the orders so given to the manager were ever transmitted by him to the defendant in the name of the plaintiffs, and that none of them came to its knowledge until after the time of the alleged statement of account, but that he did buy the stock in his own name through the defendant and sold it prior to May 7, 1901, and, further, that no note or memorandum in writing subscribed by any party was made of any of the orders, except the reports of the manager, nor was any part of the purchase price paid, but the plaintiffs had a credit of $5,000 with the defendant, nor were any stocks delivered to the plaintiffs.

1. The defendant's first proposition is that the alleged transactions between the parties were within the statute of frauds, and cannot be enforced. If the plaintiffs proved the allegations of their complaint, the statute of frauds has nothing to do with this case. Their cause of action rests upon the alleged facts that they employed the defendant as their broker or agent to buy and sell for them certain stocks, that it did so, and that an accounting was had as to such agency. The plaintiffs neither bought stocks of the defendant, nor sold them to it. The action is not to enforce an executory contract, but to recover the fruits of an executed...