Sawers Grain Company v. Teagarden
| Decision Date | 12 June 1925 |
| Docket Number | 12,295 |
| Parties | SAWERS GRAIN COMPANY v. TEAGARDEN, RECEIVER, ETC |
| Court | Indiana Appellate Court |
Rehearing denied January 5, 1926. Transfer denied May 11 1926.
From Benton Circuit Court; Burton B. Berry, Judge.
Action by the Sawers Grain Company against Charles Teagarden receiver of the Raub Grain Company and another. From a judgment for defendant named, the plaintiff appeals.
Affirmed.
William Darroch, Fraser & Isham and J. Arthur Miller, for appellant.
Edmon G. Hall, C. V. McAdams and Harry P. Schultz, for appellee.
Appellant filed a claim against appellee as receiver of the Raub Grain Company, the same being based upon an account stated, claiming balance due thereon in the sum of $ 38,751.06, such account being accompanied by two notes of the Raub company to appellant, each in the sum of $ 10,000. These two notes represented part of the said sum of $ 38,751.06, the amount of the same having been charged back for nonpayment according to the custom of merchants. There was no formal complaint other than the account and the notes. Appellee answered in denial; non est factum to the notes; want of consideration; payment; and that the Raub company had employed one Kelley as manager, that appellant was engaged in the purchase of grain options or futures, that before the accruing of the account and the making of the notes, said Kelley, pretending to act for the Raub company, unlawfully and wrongfully entered into contracts with appellant to buy and sell, on the Chicago Board of Trade, options or futures in various kinds of grain in various quantities, that the manager made such purchases and sales in the name of the Raub company, and agreed to pay a commission and all losses sustained, some of which losses he did, from time to time, pay, that it was agreed between appellant and appellee (Raub company) that no grain sold was to be delivered by either party, but that the several contracts were to be settled by the payment of gains or losses, as the case might be, that all of said transactions were so closed by appellant, and that the sole consideration for the notes was in settlement, in part, of these transactions, none of which appeared on the books of the Raub company. There was a sixth paragraph, which was, in fact, a cross-complaint, accompanied by an exhibit to which it refers, in which cross-complaint, it was claimed that appellant had received from the Raub company corn and oats to the amount of $ 8,833.76, which sum was due and owing. Appellee also filed a cross-complaint asking the cancellation of the notes, alleging that its manager made gains and losses in its name and for its account, and that appellee took, accepted, paid and accounted for losses in speculation made by its manager in grain futures, and that the notes sued on were given by its manager in settlement of these speculative accounts and praying that the notes be canceled and declared void. There was an affirmative reply to the affirmative answers and an answer to appellee's cross-complaint; also appellant's cross-complaint to appellee's cross-complaint. As the pleadings are not challenged, we do not need to set them out. There was a special finding of facts upon which the court stated its conclusions of law in favor of appellee, upon which judgment was rendered.
While this cause was pending in the Supreme Court, Josiah L. Portteus was substituted as receiver of the Raub Grain Company, and, as such, appellee herein.
The questions presented in this court are the alleged error of the court in each of its conclusions of law, and in overruling appellant's motion for a new trial. Appellee makes divers objections to appellant's briefs, but, as there appears to be a good faith effort to present the questions involved, and appellant has made its points reasonably clear, and further, as appellee has assured us in his application for extension of time for briefing, that his brief would be upon the merits, we give these objections no further consideration.
It appears by the special finding of facts, which covers twenty-six pages of appellant's brief, that appellant for many years has been a corporation with its principal place of business in Chicago, Illinois, and engaged in the purchase of grain in car-load lots for cash from its customers throughout the middle west grain territory, during and long before the time covered by the issues in this case.
There has been during said time an organization in Chicago, Illinois, known as "the Chicago Board of Trade." Appellant's president and secretary have each been members of such board of trade and had seats in its exchanges, and have been entitled, as such members, to transact business on its floor. During all of the time covered by the issues herein and for many years prior thereto, such board of trade has operated and maintained in said place of business various grain pits wherein its members could and did daily buy and sell options or futures on the prices of all kinds of grain. Appellant was so engaged in buying and selling options and futures, which constituted a large part of its business. The Raub company had its principal place of business at Raub, Benton county, Indiana. It had a capital stock of $ 15,000, owned by farmers and retired farmers in the community. Its business was to buy grain and to store, ship and sell the same. For that purpose, it owned a grain elevator at Raub, the capacity of which was 70,000 bushels, which could ordinarily be turned over about four times annually, thereby handling about 280,000 bushels of grain each year. When the company commenced business in 1915, it employed Lee Kelley as its manager, in which employment he continued until July 1, 1920, when he abandoned the employment without notice. On February 9, 1916, there were 30,000 bushels of oats in the elevator, and when said Kelley left in 1920, there were 29,750 bushels of oats and 6,132 bushels of corn. The amount of grain in the elevator at other dates does not appear by the evidence. The Raub company was conducted largely on borrowed capital, and, at the time said Kelley left, had borrowed about $ 30,000 and was using an additional sum of $ 50,000 furnished by stockholders at that time, the receiver was appointed, who has since been acting as such and is appellee herein. The Raub company is insolvent, and was indebted at the time of trial, in addition to appellant's claim sued on, in the sum of $ 31,934.80, to which must be added expenses of the receivership. Its assets were then $ 24,197.21 excluding appellee's set-off hereinafter mentioned. From time to time during the years from 1915 to 1920, inclusive, the Raub company sold to appellant grain for cash on delivery, which was accepted by appellant, and it paid a part of the purchase money therefor but nothing after November 3, 1919. When the claim herein was filed, the receiver filed his set-off for money unpaid for grain delivered to appellant, in the sum of $ 8,833.76, of which amount $ 845.81 had been credited by appellant on its books and applied on the "futures" account with said Raub company. No part of the $ 8,833.76 has been paid. On February 9, 1916, when, as aforesaid, the Raub company had about 30,000 bushels of oats in its elevator, car equipment was scarce and could not be procured at all times in quantities desired. The directors of the Raub company then directed said manager to sell half of the oats on the Chicago Board of Trade for the purpose of "hedging" the company against loss on account of the fall in price of such grain during the time it was held in the elevator. The minutes of such order were made by the manager, and the secretary's name signed thereto by the manager, and were not read at any subsequent meeting of the board. They were as follows:
This order as recorded is different from the one which the board made. Said Kelley, pursuant to said order as entered, sold a quantity of the oats in the year 1916, which resulted in a loss to the company. In June, 1917, Kelley commenced operations in buying and selling options or futures on the price of grain on the Chicago Board of Trade which continued from that day until June, 1920, when Kelley abandoned his employment. These operations, conducted at divers times during the years 1917 to 1920, inclusive, resulted in total net losses of $ 46,229.88, including appellant's commissions, in the total sum of $ 8,831.91, to which should be added some smaller items of loss which we do not need to mention. During all of these operations, the parties thereto or any of them, did not intend to purchase and receive, or to sell and deliver, the various and divers quantities of grains or any of them represented and comprehended by said several deals, nor did they intend to pay for any of the grains so sold, but intended only to speculate on said Chicago Board of Trade in the "futures" prices of grain, and, in fact, no grain was delivered on account of any such deals or transactions. Said Kelley, during such time, purchased other options or "futures," but they were all speculative and were conducted without any purpose on the part of the Raub company, or its manager, to accept and receive the grain purchased or to deliver the grain sold, and these other operations resulted in a loss of $ 1,175.29, which sum was charged against the Raub company. Another operation resulted in a gain of $ 1,967.36 which sum was credited to the Raub company on its "futures" account. The Raub company drew drafts on appellant for cash grain sold to it in the total sum of $ 7,450, which were charged to it in its account for grain sold,...
To continue reading
Request your trial