Samuel v. Oliver

• Decision Date: 31 October 1889
• Parties: SAMUEL et al. v. OLIVER et al.
• Court: Illinois Supreme Court

130 Ill. 73

22 N.E. 499

SAMUEL et al.

v.OLIVER et al.

Supreme Court of Illinois.

Oct. 31, 1889.

Appeal from appellate court, first district.

Assumpsit in the superior court of Cook county by Webster M. Samuel and others against Joseph B. Oliver & Co. for a ledger balance of $1,368.92, and for damages for defendants' failure to deliver 80,000 bushels of wheat according to agreement. Defendants pleaded a set-off of $2,375 for cash paid in settling losses incurred for plaintiffs in the purchase of said wheat, and $100 for their commissions, and admitted having received $923.75 on plaintiffs' account in such wheat deal. The plaintiffs obtained judgment for $2,192.67, which was affirmed by the appellate court. Defendants appeal.

M. W. Robinson and Overall & Judson, for appellants.

Bisbee, Ahrens & Decker, for appellees.

PER CURIAM.

In the spring and summer of 1882 appellees undertook to run what is known as a ‘corner’ in No. 2 red winter wheat in the St. Louis market, and for that purpose, and to aid them in bringing about the result, employed appellants and eight or nine other brokers of the city of St. Louis, and through these agencies secured contracts for the sale of large quantities of wheat, to be delivered on or before the last day of June, 1882, and aggregating about 1,100,000 bushels. At the same time, through these same agencies, appellees bought up and secured substantially all of that grade of wheat actually in the market. By this means appellees were enabled to compel those whose contracts they held, and had thus secured for the delivery of wheat on or before the day named, to pay in settlement whatever price appellees might be able to fix as the market price, or might demand. Shortly prior to June 27, 1882, appellants, as the brokers of appellees, had sold for June delivery No. 2 red winter wheat as follows: To D. R. Francis & Co., 10,000 bushels at $1.24 1/4 per bushel; to E. A. Kent & Co., 5,000 bushels at $1.25, and another 5,000 bushels for $1.26; and to the Culver Commission Company, 5,000 bushels at $1.28. On the 27th of June, J. B. Oliver, one of appellees, for the purpose of showing an advance in the price of such wheat, and of inflating the market, instructed appellants to purchase for his firm 50,000 bushels, at $1.35 per bushel. At the same time he instructed his other brokers, holding contracts of purchase, to sell to appellants 50,000 bushels of wheat at that price; thus, in effect, buying and selling to himself, and thereby fixing an apparent market price for such commodity, he then having the market therefor under his control. In obedience to such instructions, appellants purchased of D. R. Francis & Co., brokers, selling for appellees, 10,000 bushels at $1.35, but, as Francis & Co. held appellants' contracts of sale, for and on account of appellees, a like amount at $1.24 1/4, the latter, under the rules and usages of the Merchants' Exchange, were compelled to pay to Francis & Co. the difference in the price, amounting to $1,075. Appellants, also under instructions from appellees, bought 10,000 bushels of such wheat of E. A. Kent & Co., at $1.35, which last firm held the two prior contracts of appellant, so that in ‘ringing out,’ as it is called, or settling and adjusting the differences in price, they were obliged, under the rules of the exchange, to pay Kent & Co. $950; and in like manner, on a purchase of 5,000 bushels of wheat from the Culver Commission Company, under like authority, they were compelled to pay said last-named company $350. These three payments, aggregating $2,375, is the sum that appellants insist they have the right to charge appellees on final settlement and adjustment of their accounts, for two reasons: First, because they were compelled to make such payments in order to carry out the instructions of appellees; and, secondly, because such sum was in reality a payment to appellees, they being both buyer and seller, and which sum was accounted for to appellees by their brokers, who received the same from appellants. There was no dispute of the correctness of the ledger balance of $1,368.92 due from appellants to appellees. Mr. Samuel, in his testimony, concedes that indebtedness, and that it accrued in previous transactions, having no connection with the one in controversy. This sum, therefore, was properly allowed in the judgment rendered by the trial court.

It is apparent that the trial court disallowed appellees' claim to damages under the special counts, and properly so, for the reason, among others, there was no evidence of any loss from the failure of appellants to demand margins as a security for the performance of contracts, and because the whole contract of employment was tainted with fraud, and against public policy. No question can arise as to the propriety of the ruling in this respect, for the reason that no cross-errors are assigned. All that appellants can complain of here is the refusal of the trial court to allow them a credit, under the plea of set-off, for the $2,375 they were compelled to pay for appellees in settling the differences in the deals before referred to, and the allowance of $923.75 against appellants for moneys collected by them in settlement of deals entered into by them on behalf of appellees. The set-off of $2,375, claimed by appellants, grows out of the fact that appellants, acting as brokers for appellees, and acting under their instruction, bought 25,000 bushels of wheat on June 27, 1882, at $1.35 per bushel, of parties holding their prior contracts of sale of the same amount of wheat sold for appellees, and to be delivered at the same time, but at a less price. In settling and adjusting these purchases and sales the one was set-off against the other, or balanced, except as to the difference, which in this instance was against appellants, and which they were required to and did pay. It appears that it was the universal custom and usage of the Merchants' Exchange of St. Louis to adjust differences in such cases, and this is known as ‘ringing out.’ This custom is thus stated and explained by Mr. Samuels, one of appellants: ‘Merchants doing business on ‘change’ frequently have contracts for grain sold and grain purchased by the same brokers. It is the custom of the brokers with whom we have such contracts, purchased and sold for the same delivery, to settle between ourselves by paying the difference one way or the other. For instance, if I have wheat sold at $1.20, and afterwards buy the same commodity of the same broker at $1.25, the custom is to settle these transactions by paying the difference in price. In that way Samuels & Sons settled for 25,000 bushels of the 40,000 bought on June 27th for Oliver's account at $1.35.' Oliver is shown to have been upon the floor of the exchange nearly every day in June, 1882, and was familiar with the particular usages and customs of that board. Appellants, dealing in that market, were necessarily required to conform to the general usages and customs thereof. A person dealing at a particular market will be taken to have dealt according to the known general customs and usages of that market; and, if he employs another to act for him in buying or selling at such market, he will be held as intending that the business should be conducted according to such general usage and custom of such market; and this has been held to be the rule whether he in fact knows of the custom or not. Bailey v. Bensley, 87 Ill. 556;Doane v. Dunham, 79 Ill. 131;Lyon v. Culbertson, 83 Ill. 33;Lonergan v. Stewart, 55 Ill. 44;Insurance Co. v. Favorite, 46 Ill. 263; Lawson, Usages & Cust. 47, 284-287. If, in executing the instructions of their principals, it became necessary for appellants to pay out money to adjust differences, they, if guilty of no fraud or violation of law, will be entitled to be reimbursed by their principals for their outlay. The principal is bound to indemnify his agent or broker for losses incurred in executing the principal's order. Whart. Ag. § 313; Story, Ag. § 239.

If appellants had not aided or assisted appellees in cornering the wheat market, and in manipulating that market for an illegal or fraudulent purpose, so as to enable the latter to control the same for their own profit, and to the injury of all persons having occasion or necessity to purchase such wheat, or had no knowledge of the wrongful and illegal purposes of appellees, there could be no reason why appellees should not be required to indemnify appellants for the moneys they were required to pay to appellees' other brokers; and such was, as we understand, the ruling of the trial court. Proposition No. 2, asked by the defendants, and held by the court to be the law, is as follows: ‘(2) Even if it appear that plaintiffs are precluded from recovering in this action because the transactions on which the alleged balance is sought by plaintiffs were made by plaintiffs in furtherance of their [plaintiffs'] operations in producing what is known as a ‘corner’ in the market for wheat in St. Louis in June, 1882; if it also appear that defendants were not knowingly parties to such unlawful purpose of plaintiffs, and had no interest in said operations further than the earning of their commissions in the purchases and sales made by them,-then defendants are not precluded from recovering on their counter-claim such sum as may be proven to be due them for expenses and losses paid by them and commissions earned.' The same principle was substantially held in the third proposition, also asked by the defendants. The court, however, refused propositions 5 and 7 asked by the defendants, as follows: ‘(5) If it appear from the evidence that defendants, in executing plaintiffs' order to purchase wheat on floor of Merchants' Exchange of St. Louis for June delivery, on June 27, 1882, made such contracts of purchase in their own names, under customs of said exchange, from certain other commission merchants who were also selling in...