Wiggin v. Fed. Stock & Grain Co.
| Decision Date | 04 January 1905 |
| Citation | 77 Conn. 507,59 A. 607 |
| Court | Connecticut Supreme Court |
| Parties | WIGGIN et ux. v. FEDERAL STOCK & GRAIN CO. |
Appeal from Superior Court, Hartford County; William S. Case, Judge.
Action by George W. Wiggin and wife against the Federal Stock & Grain Company for breach of contracts. Plaintiffs had judgment, and defendant appeals. Reversed.
There were 22 of these contracts, all in writing, and in most respects similar in form. They were made between May 1, 1901, and December 5, 1902. The following is a copy of one of them:
(15)
Not Transferable Except on the Books of the Company.
Buyer's Contract. No. 532. [20c. Stamps Canceled.]
Accountant's
Date of
Stop
Deposit.
Signature.
Deposit.
Limit.
$10.00
1st
R. C. B.
4/7
93
1st
$10.00
2nd
"
4/11
92
2nd
$17.50
3rd
"
4/19
90 1/4
3rd
$10.00
4th
"
5/17
89 1/4
4th
$10.00
5th
"
5/21
88 1/4
5th
$10.00
6th
"
6/11 7/18 10/21
87 1/4
6th
$17.50
7th
"
85 1/2
7th
$17.50
8th
Div.
83 3/4
8th
$20.00
9th
R. C. B.
11/13
81 3/4
9th
$
10th
10th
P. full.
Hartford, Apr. 7, 1902.
On three days' notice we promise to deliver to Mrs. M. E. Wiggin 10 U. S. Pf. at 94, and the holder of this contract agrees to receive the same; or upon surrender of this contract, we agree to pay the holder of it a sum equal to the then advance in the market price of said commodity or stock.
All deposits shall become the absolute property of ourselves to the amount of the decline in the market value of said commodity or stock when this contract is closed, either by further order of the holder, or when the decline in the market value of said commodity or stock shall equal the sum of all deposits, whereupon this contract terminates.
The holder of this contract agrees to the above terms.
R. C. B.
In this paper, and in some of the others "Protect in full," "Protect to full," or "Protect," had, it was conceded, the same meaning, but there was a controversy as to what that meaning was. The plaintiffs claimed that they made it the defendant's duty to give immediate notice to the plaintiff whenever the margins on her contracts became exhausted, and to allow her a reasonable time to deposit additional margins. The defendant claimed that they meant that the plaintiff would, on the day following notice that her margin was exhausted, make it good by a deposit. Six of the contracts contained no such words. The term "Div." referred to dividends paid on the stock named in the contract; all of which were regularly credited to the plaintiff, and entered in the column headed "Deposit." Several of the contracts related to stock on which no dividends were paid, and contained no credits on dividend account. The contracts, up to December 15, 1902, were treated independently, and payments when made by Mrs. Wiggin were made and received upon each separate contract, and each payment was minuted as a credit upon the particular contract to which it applied, On December 15, 1902, the defendant closed out all of the 22 contracts. The plaintiff's margin on 15 of the contracts was at that time exhausted; on the other 7 it was not exhausted either then or at any time up to January 10, 1903, inclusive. On the latter day the plaintiff instructed the defendant to sell the stocks dealt with by her contracts, and account to her for the proceeds. When the contracts were entered into, the plaintiff advanced a commission to the defendant of one-quarter of 1 per cent. half of which was compensation for the purchase of the stock by the broker, and the other half stood for compensation for any future sale of the stock by the broker upon the customer's order, and was to be refunded if no such sale was made.
J. Gilbert Calhoun, for appellant.
William F. Henney and Harrison B. Freeman, Jr., for appellees.
BALDWIN, J. (after stating the facts). The complaint averred that under the contracts, which were annexed to it, it was the defendant's duty to advance any moneys necessary to cover declines in the market value of the stocks named in each, notifying Mrs. Wiggin, who was then to repay such advances on demand; that there was a sharp decline, but, instead of so doing, the defendant thereupon sold out all the stocks, without notice, whereby she was damaged to an amount equal to the sum of her deposits; that as soon as she learned of this she tendered it a sum equal to any deficiency which existed in her deposits, demanding that the defendant carry out the contracts or return her deposits; and that the defendant refused to do either. This was demurred to on various grounds. One was that the parties to the contracts contemplated a mere payment of differences between the market price of the stocks on the day of closing the contract and the agreed price, and it was not alleged that they intended an actual delivery or that the defendant ever owned such stocks. The contracts do not appear upon their face to be gambling ones. Bach was headed "Buyer's Contract." It stipulated for the delivery by the defendant to the plaintiff, on three days' notice, of certain shares of stock at a price named, and required her to receive them, unless she elected to surrender the contract, in which case the defendant was to pay her "a sum equal to the then advance in the market price" of the stock. In case of a decline in the market price equal to the amount of all the deposits, the contract was to terminate, and the deposits become the absolute property of the defendant. When the terms of an executory contract are so expressed as to leave it uncertain whether the purpose to be accomplished and the things to be done are legal or illegal, illegality will not be presumed, but the contract will be so construed "ut res magis valeat quam pereat." Hamden v. Merwin, 54 Conn. 418, 424, 8 Atl. 670. In addition to her deposits, the plaintiff, at the date of each of the contracts in question, paid to the defendant a brokerage commission on the purchase of the stock named in it, and also a commission of the same amount for selling such stock should she order a sale. Should she not order it, the latter payment was to be refunded. These provisions were either a device to conceal the real nature of an illegal transaction or a proper mode of compensation for services to be performed. The plaintiff was entitled, on the demurrer to the complaint, to have them treated as the latter. Thus construed, they were not inconsistent with the other terms of the contract, and the contract was not inconsistent with the law. It follows that it was not necessary to insert in the complaint an averment that an actual delivery of the stocks was intended; still less one that the defendant owned them. Any one may lawfully agree to deliver in the future what he has not now got, if it be a thing which he may get. Porter v. Viets, 1 Biss. 177, Fed. Cas. No. 11,291.
Another ground of demurrer was that it did not appear that the defendant ever owned the stocks specified, or came under any obligation to buy them, until it received three days' notice from the plaintiff. This assumes that it is unlawful for one to give to another an option to call for goods not then owned by the former at a future time upon tender of a certain price. On the contrary, a bona fide contract of this nature is unexceptionable. Story v. Salomon, 71 N. Y. 420.
Further causes of demurrer were assigned to the effect that, even if the contracts were valid, no breach of duty on the part of the defendant was shown. It is true that no duty to make any advances to anybody or under any circumstances was thrown upon it by the contracts, so far as can be determined from their face. But, in addition to setting up such a duty, the plaintiff averred that the defendant, without notifying her, sold out all the stocks at a time when there had been a sharp decline in their values, whereby she had been damaged to the extent of her deposits. It could not, under the provisions contained in any of the contracts, have sold them unless they were under its ownership or control, nor unless the amount of the decline was equal to that of all the plaintiff's deposits previously made on account of them. The complaint did not show that such a decline had occurred. The plaintiff was not bound to deny that it had. Without it, the contract could not be treated by the defendant as terminated, nor the deposits as its own property. Nor could it be assumed as matter of law that a sale of such stocks on which the plaintiff had an option, and for the purchase of which by the defendant it had received from her a broker's commission, could be made without such notice as would give her a reasonable opportunity to protect her interests. That her option had not been exercised; that she had never surrendered her contracts, nor asked for an accounting, nor ordered a sale at any particular price; and that it did not appear that the stocks had ever advanced in value—was all immaterial. None of these things excused the defendant from treating her reasonably and fairly in respect to any action affecting her title to her deposits.
The particular paragraph in which the duty of the defendant to make advances was alleged was demurred to as a mere statement of a claim of law. While it is not necessary to allege matters of law, it is not always improper. Bliss on Code Pleading, § 212; Wills v. Wills, 34 Ind. 106. Whether any such duty existed or not depended on the proper construction of the contracts pleaded. To state the construction in this respect on which the plaintiff relied was a mode of applying the law to the facts, which was helpful, rather than harmful, to the other party. Gould on Pleading, 111, § 15. If it was an unwarranted construction, a demurrer for that cause would have been well grounded. That filed, however, was not for that cause, and was properly overruled.
Nor was the fourth paragraph demurrable for the cause specified, namely, that it was made up of statements of fact and of law so...
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