Thoreson v. Hector
| Decision Date | 07 August 1926 |
| Docket Number | 5153 |
| Citation | 210 N.W. 169,54 N.D. 651 |
| Court | North Dakota Supreme Court |
Rehearing denied October 7, 1923.
Appeal from the District Court of Benson County, Buttz, J.
Affirmed.
C. E Brace, for appellant.
"It is the duty of the court to go behind the contract and examine the facts and circumstances which attend the making of it, in order to ascertain its true character." 26 Neb. 326, 41 N.W. 1113.
Dows v. Glaspel, 4 N.D. 251, 60 N.W 60.
"A contract for the sale of grain or other property to be delivered in the future is valid only when the parties really intend and agree that the property is to be delivered by the seller and paid for by the buyer at the contract price." Beidler & R. Lumber Co. v. Coe Commission Co., 13 N.D. 639, 102 N.W. 880.
"When the parties to an executory contract for the sale of property intend that there shall be no delivery thereof, but that the transaction shall be settled by the payment of the difference between the contract price and the market price of the commodity at a time fixed, the contract is void." First Nat. Bank v. Oskaloosa Packing Co., 66 Iowa 41, 23 N.W. 255.
Sinness Duffy & Wheeler, for respondent.
"Sales of commodities for future delivery are presumed to be legitimate and the burden is upon the party asserting the contrary to establish such fact." John Miller Co. v. Klovstad, 14 N.D. 435, 105 N.W. 164.
Plaintiff operates a grain elevator at York, this state; the defendant farms near that place. In November, 1920, the defendant came into a bank at York; he there found one Van Slyk and the plaintiff engaged in conversation. Van Slyk, in plaintiff's presence, told defendant that he had purchased 2,000 bushels of wheat on the Minneapolis Chamber of Commerce and asked him if he would not go into the deal on the basis of fifty per cent. To this the defendant agreed. Later defendant and Van Slyk purchased 5,000 bushels of oats under the same arrangement. The plaintiff wrote the telegrams to the commission firm ordering the oats. Later the defendant asked plaintiff to purchase 1,000 bushels of oats for him. This was done. Plaintiff says that he wrote the telegrams when all these deals were made and guaranteed the accounts. The business was handled this way, he says, because he had an account and credit with the commission house and it was, therefore, not necessary to make any cash payment. A loss having resulted, defendant later executed negotiable paper to the plaintiff to cover the balance, about $ 1,400 having been paid. The plaintiff sued on the note, recovered judgment, and the defendant appeals.
The defendant resists payment on the theory that the consideration for the note was losses sustained in gambling transactions in which the plaintiff knowingly participated. It is not disputed that the losses were charged to the plaintiff and paid by him.
The defendant was farming when the transactions took place; he had lived in town five years, but had returned to the farm. He says Van Slyk suggested that the defendant join in the grain purchase deal; apparently Thoreson did not take part in this conversation. Hector intimates that the first wheat deal had been made in his name; that Thoreson asked defendant if that was all right; and that Hector said it was. Thoreson says all he did was to write the telegrams and that Hector sent them himself--plaintiff says that he merely lent his credit with the commission house and prepared the messages. Hector says that the only conversation he had directly with Thoreson was when he asked the latter to buy 1,000 bushels of wheat for him. He says he never asked Thoreson to write any telegrams, but he does not deny that the messages sent were in fact written by plaintiff. Hector says Thoreson did not ask payment until about 1923; and he says that the real consideration for the note was the loss on the market in 1920. He says he understood that someone had to "go good" for the purchases; and that Thoreson was guaranteeing the account; that he asked Thoreson to buy the grain for him; and, he knew that he (Hector) was buying grain through commission houses; and if there was a loss he knew he would have to pay it and that he did pay $ 1,400, on account of the losses, leaving a balance later evidenced by the note in suit. There was an item of $ 250 for coal included in the note. Defendant testified that he never received any part of the grain purchased.
At the conclusion of the case the defendant offered to prove that Hector did not intend, when the grain was bought, to accept or receive any part of the grain. To this offer plaintiff objected unless it were also shown that this intention was communicated to the other party to the transaction. The counsel for Hector then said: "Well under my theory of the law it makes no difference whether it (the intention) was communicated or not, they all knew what kind of a transaction it was." The court then said:
The Court: It is your contention no difference how innocent Mr. Thoreson may have been in the deal if Hector had a secret intent in his mind not to actually receive the grain, but simply to work out a gambling transaction that that would bind Mr. Thoreson?
Mr. Brace: Yes sir.
The Court: Sustained.
Thoreson's testimony is to the effect that the deal was entirely between Van Slyk and Hector; that, as an accommodation, he wrote the messages and loaned his credit with his firm so that cash need not be sent. Clearly the commission house extended credit to Thoreson with whom, as an elevator man, it had done business. Thoreson says Hector told him he wanted to protect himself--hence this purchase; that he had sold some of his own wheat; in short, that it was a legitimate hedging transaction; and that his firm would not handle a gambling transaction. Hector denies that he made such a statement to Thoreson. Thoreson says that Hector and Van Slyk dealt in grain before November, 1920, and that he had guaranteed their account before.
The defendant tried the case on the theory that if Hector never intended to receive the grain purchased for him, the transaction was one of wager and unenforcible by any party regardless of the fact that the other party to the deal may have intended and assumed a bona fide purchase and sale to be followed by actual delivery. Such, he contends, is the meaning and effect of § 9699, Comp. Laws 1913, and particularly the last proviso therein. The rulings of the trial court were made in view of this theory; and it did not agree with the defendant in this...
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