Parker v. Moore

• Decision Date: 22 October 1901
• Citation: 111 F. 470
• Parties: PARKER et al. v. MOORE.
• Court: U.S. Court of Appeals — Fourth Circuit

111 F. 470

PARKER et al. v. MOORE.

United States Circuit Court, D. South Carolina.

October 22, 1901

Duncan & Sanders and Cothran & Cothran, for plaintiffs.

Stanyarne Wilson and Heyward, Dean & Earle, for defendant.

SIMONTON Circuit Judge.

Counsel have requested that the court put in writing the reasons governing it in ordering a nonsuit in this case.

The plaintiffs are cotton brokers in the city of New York, both of them being members of the New York Cotton Exchange. The defendant, a small farmer in Spartanburg, S. C., employed them in the purchase of cotton futures for him. This relation began about a year before the first of the transactions which are the subject-matter of this suit, and during that period the defendant made money out of them. The transactions sued upon here resulted in a loss. It seems from the evidence that, when a person instructs his broker to buy or sell futures for him under the rules of the Cotton Exchange of New York, such purchases or sales must be made in the name of the broker making them, his principal not being disclosed. The purchases or sales are always made on putting up a certain sum of money as a margin, and that margin must be kept up to meet the fluctuation of the cotton market. Under the rule of the New York Cotton Exchange, the broker who made the transaction must protect the margin. He does so to protect his principal. Whenever the defendant gave his orders to plaintiffs, in executing them they notified him that they had done so, and that the whole transaction was governed by the rules and by-laws of the New York Cotton Exchange. He received every such notice in writing, and did not reply one way or another. He first put some money in their hands himself. This was exhausted, and plaintiffs repeatedly made margins good, notifying the defendant each time of this fact and requesting repayment. When he failed to do this at their reiterated requests, they closed out the transactions, and now bring their action for recovery of these advances. There is no doubt that the money was advanced by plaintiffs for the use of defendant, and at his special instance and request and under ordinary circumstances, ex aequo et bono, he should repay them. He sets up his defense that the money so advanced for him was used in a gaming transaction, and that under the law of South Carolina such a transaction is immoral, illegal and void.

The statute law of South Carolina (Rev. St. 1893, Sec. 1859 and those following) declares void every contract, bargain, or agreement, whether verbal or written, for the sale or transfer at any future time of certain articles enumerated including cotton, unless the party contracting to sell or transfer the same at the time of making the contract be the owner thereof, or the authorized agent of such owner, or unless it is the bona fide intention of both parties to the contract at the time of making the same that the said article (in this case cotton) so agreed to be sold be actually delivered in kind to the party contracting to deliver, and be actually received in kind by the party contracting to receive, the same, at the period in the future specified in said contract. The next section (1860) provides that in any and all actions brought in any court to enforce such contract, or to collect any note or other evidence of indebtedness or any claim or demand whatever founded on such contract, the burden of proof shall be on the plaintiff to establish that at the time of making said contract the party making it was the owner of the goods agreed to be sold, or the duly-authorized agent of such owner, or that at the time of making the contract it was the bona fide intention of both parties thereto that the goods so agreed to be sold should be delivered by the one in kind, and be received in kind by the other. The plaintiffs, in a carefully prepared case, proved every step necessary to sustain their demand. As part of their proof they introduced the rules and by-laws of the New York Cotton Exchange, and sustained it with the testimony of expert witnesses, who explained the transactions under these rules. These rules expressly provide that a purchaser of cotton for future delivery can demand the delivery of the cotton in kind at the time fixed in the contract, and that the seller could tender and enforce the acceptance by the buyer of the cotton in kind, and, further, that all the contracts for future delivery...