Rodgers, McCabe & Co. v. Bell

• Court: North Carolina Supreme Court
• Writing for the Court: HOKE, J.
• Citation: Rodgers, McCabe & Co. v. Bell, 156 N.C. 378, 72 S.E. 817 (N.C. 1911)
• Decision Date: 09 November 1911
• Parties: RODGERS, McCABE & CO. v. BELL.

72 S.E. 817

156 N.C. 378

RODGERS, McCABE & CO. v. BELL.

Supreme Court of North Carolina

November 9, 1911

Appeal from Superior Court, Edgecombe County; Ward, Judge.

Action by Rodgers, McCabe & Co. against J. H. Bell. Judgment for plaintiff, and defendant appeals. Affirmed.

In construing a codified statute, resort may be had to the original legislation.

The written contract, on its face, provided for the delivery of 50,000 pounds of cotton at the depot or boat landing in Pollocksville, N. C., on or before January 1, 1910, and contained a stipulation that, in case the party of the second part failed to deliver said cotton or any part thereof, the damages should be admeasured at the highest price in the above-mentioned market on any day between September 10, 1909 and December 1, 1909, with interest, etc. There was testimony on part of plaintiff tending to show a failure to deliver 29,454 pounds of cotton causing damage, etc., and further that actual delivery of the cotton was intended. The defendant filed verified answer, admitting execution of the written contract and containing averment that, although the contract on its face provided for actual delivery, it was not so intended by the parties, but that same was a gambling contract prohibited by the statute, etc., and offered evidence tending to show that the contract was negotiated by plaintiff's agents, and it was understood between them at the time that no actual delivery was intended or should be required, etc.

Issues were submitted and responded to by the jury as follows "(1) Did the plaintiff and defendants enter into the contract as alleged in the complaint? Answer: Yes. (2) Was the plaintiff at all times able, ready, and willing to accept and receive and pay for said cotton upon its delivery during the time and at the place mentioned therein? Answer: Yes. (3) Was the said contract illegal and void? Answer: No. (4) If not, what damage is plaintiff entitled to recover? Answer 29,454 pounds at 4 1/2 cents per pound, with interest at 6 per cent. until paid from December 1, 1909." Judgment on the verdict, and defendant excepted and appealed, assigning errors, etc.

T. D Warren, Aycock & Winston, and P. M. Pearsall, for appellant.

F. S. Spruill and H. A. Gilliam, for appellee.

HOKE J.

The defendant moved to nonsuit, contending that the contract on its face is a gaming contract avoided by the statute, and this because it contains definite provision for an adjustment of damages on failure to deliver; but the question has been resolved against defendant in Harvey v. Pettaway, 72 S.E. 364, at the present term, holding that this and other stipulations of similar import, appearing in the contract, are not conclusive as a matter of law.

It was also insisted that the court below erred in charging the jury as he did on the third issue, as follows: "Upon this issue the jury is instructed that whether or not such contract is illegal and void is to be settled from the evidence in the case by ascertaining the real underlying intention of both parties to the contract, and the inquiries are to be directed to the question as to whether it was the intention of both parties to the contract that the cotton described therein should not be delivered, and whether it was the purpose and intent of both parties to conceal in the terms of the written contract a gambling deal in which the parties to the contract contemplated no real transaction as to the articles to be delivered." The objection being that, if either party had the intent and purpose not to deliver, though uncommunicated to the other, the contract was prohibited by the statute. Defendant also tendered an issue presenting this view which was rejected. It is true that, in order to constitute a valid agreement, the minds of the parties must have met on the same thing at one and the same time; but this is said in reference to the common intent as contained and expressed in the communications had between them. This may be by words written or unwritten, or by conduct, both or either; but it must be in some way expressed, or it does not bind, and the position may not be allowed that when the parties have made an agreement for valuable consideration, clearly expressing their common intent and purpose in one way, this can be frustrated or altered by the secret and undisclosed intent of one of the parties to the contrary. This is true on general principles. Williams v. Carr, 80 N.C. 294; Anson on Contracts, pp. 2, 3, 4; Clark on Contracts, pp. 2, 3. And on the facts of this case both the statute in question and authoritative interpretation of this and similar enactments here and elsewhere are against defendant's position.

Section 1689, Revisal, being the law by which contracts in futures are declared to be unlawful, provides, in part, "that every contract, whether in writing or otherwise, whereby any person shall agree to sell and deliver cotton, corn, wheat, rye, bacon, salt, etc., at a place and time specified and agreed upon therein," to any other person, etc. When in fact and not withstanding the terms expressed of such contract, it is not intended by the parties thereto that the articles or things so agreed to be sold and delivered shall be actually delivered or the value thereof paid, "but it is intended and understood by them that money or other thing of value shall be paid to the one by the other or to a third party dependent on whether the market price or value of the thing shall be greater or less, at the time and place, etc., *** shall be utterly null and void." It will be noted that the statute avoids the contract when the vitiating purpose is held by the "parties thereto," and, further, "but it is intended and understood by them" that settlement may be had by paying the difference according to the rise or fall of the market or other change in value, and this view has prevailed in the different cases with us construing the law. Harvey v. Pettaway, supra; Edgerton v. Edgerton, 153 N.C. 167, 69 S.E. 53; Burns v. Tomlinson, 147 N.C. 634, 61 S.E. 615; Id. 147 N.C. 645, 61 S.E. 614; Rankin v. Mitchem, 141 N.C. 277, 53 S.E. 854; State v. McGinnis, 138 N.C. 724, 51 S.E. 50; State v. Clayton, 138 N.C. 732, 50 S.E. 866. And authoritative decisions elsewhere are to the same effect. Crawford v. Spencer, 92 Mo. 498, 4 S.W. 713, 1 Am. St. Rep. 745; Scanlon v. Warren, 169 Ill. 142, 48 N.E. 410; Wall v. Schneider, 59 Wis. 352, 18 N.W. 443, 48 Am. Rep. 520; Clark on Contracts, p. 331. In State v. Clayton, supra, it was held: "The test of the validity of a contract for 'futures,' which Laws 1889, c. 221, requires, is the 'intention not to actually deliver' the articles bought or sold for future delivery. No matter how explicit the words in any contract which may require a delivery, if in fact there is no intention to deliver, but the real understanding is that at the stipulated date the losing party shall pay to the other the difference between the market price and the contract price, this is a gambling contract and void at common law and indictable under the statute." In Rankin's Case, Associate Justice Brown, for the court, said: "That being so, the matter is to be settled by ascertaining the real underlying intention of the parties to the contract. Was it the intention of both parties to the contract that the cotton should not be delivered? Was it their purpose to conceal in the terms of a fair contract a gambling deal, in which the parties contemplate no real transaction as to the articles to be delivered? This purpose and underlying intent his honor properly left to the jury; the contract not being a gambling one on its face."

Undoubtedly, if it was understood by both that either party to the contract could be relieved by paying the difference, and that no actual compliance was intended at the time, this would avoid the contract; the language of the statute being that the contract is utterly void if there was no intent "that the thing should be actually delivered or the value thereof paid." It is in this sense that the court said in Burns v. Tomlinson, 147 N.C. 634, 61 S.E. 615: "That a lawful contract was one where actual delivery was intended by both parties"--a correct statement of the burden placed on plaintiff by section 1691 of the statute, whenever the same applies. But it was never held in this case, or any other with us, that, when an innocent party had made a contract valid in its terms, his rights acquired thereunder should be denied him by reason of an undisclosed purpose or intent of the other. To avoid the contract the vitiating purpose or understanding must be shared in by both.

The cases apparently holding a contrary view, to which we were cited by counsel (McGrew v. City Produce Ex., 85 Tenn. 572, 4 S.W. 38, 4 Am. St. Rep. 771, and Connor v. Black, 119 Mo. 126, 24 S.W. 184), were on statutes differing from ours and permitting or requiring, perhaps, a different interpretation. Thus the Tennessee statute in express terms condemns the contract "if either of the contracting parties, dealing simply for the margin or on the prospective rise and fall of prices, had no intention or purpose of making actual delivery." And the Missouri statute of similar import received like construction and seems to have been enacted just after the decision from that state which we have cited in support of our conclusion.

It was further urged for error that the court, after imposing upon the plaintiff the burden of proving the contract a lawful one as required by chapter 36, § 1691, of the Revisal, in a subsequent part of the charge changed this ruling by placing the burden on defendant showing it to be unlawful. On a perusal of the charge of his honor, we doubt if it is subject to this criticism; but, assuming that defendant's...