Thorn v. Browne

• Decision Date: 22 March 1919
• Docket Number: 5083.
• Citation: 257 F. 519
• Parties: THORN et al. v. BROWNE.
• Court: U.S. Court of Appeals — Eighth Circuit

257 F. 519

THORN et al. v. BROWNE.

No. 5083.

United States Court of Appeals, Eighth Circuit.

March 22, 1919

Ira D Oglesby, of Ft. Smith, Ark., and Joseph E. Johnson, of Atlanta, Ga. (Oglesby, Cravens & Oglesby, of Ft. Smith, Ark on the brief), for plaintiffs in error.

James B. McDonough, of Ft. Smith, Ark., for defendant in error.

Before SANBORN and CARLAND, Circuit Judges, and MUNGER, District judge.

SANBORN Circuit Judge.

The plaintiffs, Thorn & Maginnis, a partnership, were cotton brokers and members of the New Orleans Cotton Exchange, and the defendant Browne was a resident of Sebastian county, Ark. They sued him for the balance of an account of $23,215, which they alleged he owed them on the purchase and sale of 2,000 bales of cotton, and for commissions on such purchases and sales, which they bought and sold for him on his telegraphic orders between January 24 and February 2, 1917, subject to section 5 of the United States Cotton Futures Act (Act Aug 11, 1916, c. 313, 39 Stat. 476 (Comp. St. Sec. 6309e)) and the by-laws, rules, and conditions of the New Orleans Cotton Exchange. By his answer the defendant denied every allegation of the plaintiffs' complaint, except an averment therein that the plaintiffs had in their possession $6,760 of his money on February 1, 1917. He alleged that any contracts of purchase or sale the plaintiffs made on his orders were illegal and criminal under the Cotton Futures Act, that the alleged transactions were gaming transactions, and that he was entitled to recover of the plaintiffs $6,760, for which he pleaded a counterclaim in his answer.

The trial proceeded in this way: Over the objections of the defendant that the testimony was incompetent, irrelevant, and immaterial, and that the only competent evidence of the purchases and sales were the alleged written contracts required by the Cotton Futures Act, and with leave to the defendant to move to strike out the evidence, the plaintiffs proved, by telegraphic orders that they received from Browne, that he ordered them to buy and sell the 2,000 bales of cotton to be delivered in the following May, and they proved by the testimony of witnesses who knew the facts that they did buy and sell these 2,000 bales of cotton for Browne in accordance with the telegraphic orders he had sent them, that by contracts, settlements, and ring settlements they paid for the cotton which they bought for Browne the amounts charged to him in their account with him, and credited him with the amounts they received from him and from the sale of cotton, all of which he ordered them to sell on February 1, 1917. They proved by the testimony of one of the members of their firm that they sent to Browne a statement of the account between them, showing the amounts of their purchases and sales for him, and the balance for which they sued, that after he received this account he admitted to one of the members of the plaintiffs' firm that he sent the telegraphic orders, and that the account was correct. When the trial had reached this point, the plaintiffs produced, identified, and offered in evidence the sellers' slips or contracts of sale of the 2,000 bales of cotton which they bought for Browne, which slips were signed by the respective brokers who sold these 2,000 bales of cotton to them, and they also offered in evidence the buyers' slip of the 2,000 bales which they sold for Browne, which was signed by the brokers who bought them, and they offered to prove by the testimony of witnesses that they signed and delivered to each of the parties from whom they received one of the sellers' slips a buyers' slip containing the same words as the corresponding sellers' slip, except that the word 'bought' in the former was in place of the word 'sold' in the latter, and the bought slips were signed by them and ran in favor of the brokers who sold the cotton, and that they delivered to the brokers who gave them the bought slip a corresponding sellers' slip mutatis mutandis which was signed by them. To the introduction of these sellers' slips and of the bought slip signed by the parties respectively to be charged by the plaintiffs and their principal, Browne, defendant objected on the ground that they were invalid and were incompetent evidence, because they were not signed by both parties to the transactions out of which they arose, and because the corresponding buyers' slips and sellers' slips signed by the plaintiffs were not offered in evidence, and they objected to the parol evidence offered to the effect that the latter were delivered to the sellers and purchaser respectively by the plaintiffs when the respective transactions were made, on the ground that it was incompetent, because the written slips signed by both parties to the transaction were the only competent evidence of the transactions of purchase and of sale, and the court sustained all these objections, ruled out these slips, held that the contracts required by the Cotton Futures Act could not be proved without the introduction of the sellers' slips and the buyers' slips relating to each transaction, ruled out all evidence subsequently offered, and on motion struck out all evidence previously offered, on the ground that it was all irrelevant and immaterial, in the absence of the buyers' and sellers' slips of each transaction, and then, as no evidence remained in the case, instructed the jury to return a verdict for the defendant, before the latter offered any evidence.

Although many minor questions are suggested, the ruling which threw this case was that a broker's sellers' slip or buyers' slip, duly signed, was insufficient to prove a valid contract of sale or purchase of cotton futures under sections 4 and 5 of the Cotton Futures Act, unless that contract was signed by both the parties to the transaction, or the corresponding buyers' or sellers' slip was also introduced in evidence. The portion of the statutes by which this issue must be determined is the first sentence of section 4 of the act, which reads in this way:

'That each contract of sale of cotton for future delivery mentioned in section 3 of this act shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. ' Comp. St. Sec. 6309d.

It is provided by rule 47 of the New Orleans Cotton Exchange that:

'It shall be the duty of the seller, on the day on which transactions in contracts take place, or at not later than 9 a.m. on the following day, to furnish a contract or slip, and deliver his own already signed, and the opposite one in blank to the buyer; the latter shall then sign his contract, or slip, and return it to the seller.'

Testimony was offered that this rule was complied with in the case of each of the purchases made by the plaintiffs for Browne and in the case of the sale they made for him. Here are copies of two of the sellers' slips offered in evidence at the trial below:

'New Orleans, La., Jan. 25, 1917.

'Sold to Thorn & Maginnis, of New Orleans, La., and agreed to deliver them subject to the by-laws, rules and conditions of the New Orleans Cotton Exchange and subject to the United States Cotton Futures Act, Sec. 5:

'C. P. Ellis & Co., Cotton Exchange Bldg., sold to Thorn & Maginnis, of New Orleans, La., and agreed to deliver them subject to the by-laws, rules and conditions of the New Orleans Cotton Exchange and subject to the United States Cotton Futures Act, § 5:

At Cents Per Pound

Bales Cotton Delivery. for Middling.

One hundred May 16.70

Three " " 16.83

Two " " 16.83

One " " 16.90

Two " " 16.81

One " " 16.84

"C P. Ellis & Co., of New Orleans, La." Is a writing or written memorandum signed by both the parties to a contract of sale of cotton futures, or two writings or written memoranda of the contract, one signed by each of the parties to the transaction, indispensable to the proof of a writing or written memorandum 'signed by the party to be charged or by his agent in his behalf,' under section 4 of the Cotton Futures Act?

It is a general rule of law that a written contract signed by both parties to it is valid, and that a written contract between two parties signed by one of them is likewise valid and enforceable against him who signed it by the other party to it, who accepts and seeks to enforce it, although he has never signed it. If Congress had intended to require every transaction in the sale of cotton futures to be evidenced by a writing or by written memoranda signed by both parties to it, it would naturally have required the writing of which it treats to be signed by the parties to it or their agents in their behalf, and not 'by the party to be charged or by his agent in his behalf' only. This provision of the statute states clearly and without ambiguity that the contract must be signed by the party to be charged or his agent in his behalf. The selection of one party is the exclusion of the other, and the strong legal presumption is that the Congress intended what it so plainly declared, that the statute ought to be held to mean what it expresses, and that the signature of no one but the party to be charged is requisite to it to evidence a valid contract. Brun et al. v. Mann, 151 F. 145, 157, 80 C.C.A. 513, 12 L.R.A.(N.S.) 154; Grainger & Co. v. Riley, 201 F. 901, 904, 120 C.C.A. 415, 418; United States v. Alamogordo Lumber Co., 202 F. 700, 706, 121 C.C.A. 162, 168.

When a legislative body selects and uses in a statute words or clauses which before the enactment of the law had acquired by judicial interpretation or common consent and use...