Morrissey v. Broomal

• Decision Date: 04 October 1893
• Parties: MORRISSEY v. BROOMAL ET AL.
• Court: Nebraska Supreme Court

37 Neb. 766

56 N.W. 383

MORRISSEY

v.BROOMAL ET AL.

Supreme Court of Nebraska.

Oct. 4, 1893.

Syllabus by the Court.

1. An action to foreclose a lien of certain warehouse receipts on grain in storage, pledged to secure the payment of a promissory note, is a suit in equity.

2. A defendant to an equity suit is not entitled, as a matter of right, to a jury for the trial of a counterclaim for damages, which he has voluntarily pleaded in the case.

3. Ordinarily, where the right to terminate a contract on notice is reserved in the instrument itself, without fraud or mistake, and with the actual knowledge and consent of all the parties thereto, such reservation is valid, and the exercise thereof will be enforced by the courts, if not contrary to equity and good conscience.

4. Where, by the terms of a written contract, a commission merchant in Chicago advances money to a grain dealer in Nebraska, for which the latter agreed to pay interest at the rate of 7 per cent. per annum, and also agreed to pay the commission merchant a stated sum as commissions for the sale of all grain purchased with the money borrowed, whether the borrower sold his grain through the commission merchant or elsewhere, held, (1) that the contract was not, on its face, usurious; (2) that whether it was intended as a cover for usury, or an honest contract for commission business in connection with the use of the money, was a question of fact.

5. Wanzer & Co., commission merchants in Chicago, made a written contract with one Morrissey, a grain dealer in Nebraska, by which they agreed to lend the latter money, to be used by him in the purchase of grain in Nebraska. This contract contained the further provision that the “said Morrissey further agrees to sell through said Wanzer & Co., for future delivery in Chicago market, corn equal to the amount of ear corn purchased with funds furnished by Wanzer & Co., which sales may be changed from month to month, as may be directed by said Morrissey. For the purchase and sale of this grain said Morrissey agrees to pay said Wanzer & Co. one-sixteenth of one cent per bushel per month on all corn on hand at the close of each and every month, which shall cover the charges of change from month to month; and, if purchases and sales of this character are made in any month in excess of the amount of corn on hand, the charges of such purchase and sale, or sale and purchase, shall also be one-sixteenth of one cent per bushel.” Held, (1) the contract on its face was not one from which it appeared that the parties intended to speculate in grain upon the market without actual delivery by settling the differences, and was therefore not a gambling contract; (2) whether the parties honestly intended to deal in actual grain, or use the contract as a cover for betting on the rise and fall of its price in the market, was a question of fact to be determined from what the parties did in pursuance of the contract and other competent evidence.

Commissioners' decision. Appeal from district court, Lancaster county; Hall, Judge.

Action by John C. Morrissey against George Broomal and others for an injunction and other relief. Defendants had decree, and plaintiff appeals. Affirmed.G. M. Lambertson, for appellant.

Lamb, Ricketts & Wilson, for appellees.

RAGAN, C.

March 1, 1889, appellant was a grain dealer in Nebraska, and appellees were commission merchants in Chicago, Ill. These parties entered into a written contract bearing said date, in words and figures as follows: “This agreement, made this first day of March, 1889, by and between Wanzer & Co., of Chicago, Ill., of the first part, and J. C. Morrissey, of Lincoln, Nebraska, of the second part, witnesseth as follows: Wanzer & Co. agree to loan to said Morrissey a sum not exceeding thirty thousand dollars, to be used in the purchase of corn and other grain, seeds, etc., in the state of Nebraska, the rate of interest on the same to be seven per cent. per annum, to be charged monthly, as said Morrissey's indebtedness may appear. Said Morrissey agrees to give his promissory notes at 30, 60, and 90 days, to be renewed from time to time, as may be necessary, for the entire sum so loaned, together with crib or warehouse receipts representing all the grain purchased with such funds, or other grain or produce of fully equal value. Said Morrissey further agrees to sell through said Wanzer & Co., for future delivery in the Chicago market, corn equal to the amount of ear corn purchased with funds furnished by Wanzer & Co., which sales may be charged from month to month, as may be directed by said Morrissey. For the purchase and sale of this grain said Morrissey agrees to pay Wanzer & Co. one-sixteenth of one cent per bushel per month on all corn on hand at the close of each and every month, which shall cover the charge of changing from month to month; and if purchases and sales of this character are made in any month in excess of the amount of corn on hand, the charge of such purchase and sale, or sale and purchase, shall also be one-sixteenth of one cent per bushel. Said Morrissey agrees to ship to Wanzer & Co. all grain, seeds, and other produce purchased by him; Wanzer & Co. to sell the same in the Chicago market in such manner as in their judgment shall best serve the interests of said Morrissey, and the commission charge for such service shall be one-half cent per bushel for corn, and for all other grain or produce one-half the rates provided for by the rules of the Chicago Board of Trade for the shipment of nonmembers of said board of trade: provided, however, that said Morrissey shall have the privilege of selling such grain on track or of shipping it to other markets, having first obtained the written consent of said Wanzer & Co., said Morrissey to pay to Wanzer & Co. the sum of $2.00 per car on every car of grain or seed or produce shipped by him or his agents during the life of this contract, and not handled by said Wanzer & Co., which $2.00 per car shall be in lieu of the one-half cent per bushel above provided for. Said Morrissey shall make a full statement at the close of each calendar month of the amount of the grain on hand and the amount of grain sold or shipped by him during that month other than to Wanzer & Co., and on receipt of said statement of Wanzer & Co. shall make the charges provided for in this agreement. Said Morrisey shall also furnish to said Wanzer & Co., on their request, a full and unreserved statement of his financial condition, as they may demand from time to time. Besides such sums of moneys as are above provided for, Wanzer & Co. agree to pay drafts attached to negotiable bills of lading to nearly the value of the property so represented. Said Wanzer & Co. agree to report daily all sales of property for account of said Morrissey, and to furnish him with such information as he may request concerning such sales, and to make all returns as promptly as possible. Said Morrissey further agrees to pay interest on all sums Wanzer & Co. may deposit as margins on transactions made in his behalf, and said Wanzer & Co. shall notify said Morrissey of the deposit of said margin. This contract shall be terminated on the first day of March, 1890, Wanzer & Co. reserving the right to terminate the same by giving 30 days' written notice; and on the termination of this contract, either by such notice or at the expiration of the time herein agreed, said Wanzer & Co. shall be entitled to collect from said Morrissey a sum equal to one-half the charges said Wanzer & Co. would receive on the grain said Morrissey shall then have on hand, according to the aforenamed rates in this contract. J. C. Morrissey Wanzer & Co.”

Under this contract appellees advanced appellant $19,750, for which appellant gave his notes, secured by warehouse or crib receipts on grain stored in his elevators in Nebraska. In January, 1890, appellees held a note of appellant for $2,000, dated March 15, 1889, due 60 days after date, on which there was due and unpaid $1,230, and some interest, to secure the payment of which appellees held certain warehouse or crib receipts issued to them by the appellant on grain in his elevators. At this date--January, 1890--appellees sent this note and the crib receipts to a bank in Lincoln, Neb., for collection. It appears that while the bank held the note and warehouse receipts, appellant brought this action in the district court of Lancaster county to enjoin the appellees and the bank from transferring or disposing of the warehouse receipts, and from taking possession of the grain covered by them, and to cancel said securities. Appellees filed a cross petition in this action, setting out the contract above, the giving to them by appellant of the note and crib receipts to secure the payment of the same, and that the note was unpaid, and prayed for an accounting of the amount due on it, and a foreclosure of their lien on the grain, and a sale of the same to satisfy the amount found due. Appellant then dismissed his injunction suit, and filed an answer to appellees' cross petition, which, after admitting the execution of the contract and note and crib receipts, set out the following defenses: (a) A general denial of the averments of the cross petition. (b) That the crib receipts sought to be foreclosed had been satisfied by grain shipped and money remitted by the appellant to appellees according to the terms of the contract, and that the grain so shipped was grain purchased with the money borrowed by the appellant of the appellees and the money remitted was proceeds derived from the sale of the grain purchased with the money borrowed of the appellees, and that appellant had no grain in his possession covered by said warehouse receipts. (c) That the appellant was financially responsible, and therefore appellees had a complete and adequate remedy at law, and that the court was without equitable jurisdiction. (d) That the contract between the parties, and the...