Wolcott & Lincoln v. Humphrey

• Decision Date: 23 May 1938
• Docket Number: No. 19241.,19241.
• Citation: 119 S.W.2d 1022
• Court: Missouri Court of Appeals
• Parties: WOLCOTT & LINCOLN, Inc., v. HUMPHREY.

119 S.W.2d 1022

WOLCOTT & LINCOLN, Inc., v. HUMPHREY.

No. 19241.

Kansas City Court of Appeals. Missouri.

May 23, 1938.

Rehearing Denied October 3, 1938.

Appeal from Circuit Court, Jackson County; Albert A. Ridge, Judge.

Action by Wolcott & Lincoln, Incorporated, against W. S. Humphrey, for balance due plaintiff as grain broker on account with defendant. Judgment for plaintiff, and defendant appeals.

Reversed and remanded.

J. C. Hargus and Glenn R. Donaldson, both of Kansas City, J. E. Crook and Ralph P. Johnson, both of Oceola, and Herman Pufahl, of Bolivar, for appellant.

Borders, Borders & Warrick and Wilfred Wimmell, all of Kansas City, for respondent.

CAMPBELL, Commissioner.

Plaintiff's petition alleged that at all the times mentioned therein it was engaged in the grain business and acting as a grain broker in Kansas City, Missouri; that beginning on December 12, 1932, it, upon the request of defendant, began to purchase wheat and other grain on the Kansas City and Chicago markets, for which the defendant impliedly agreed to pay plaintiff the usual commission on purchase and sale in the sums stated therein; that between December 12, 1932, and August 2, 1933, plaintiff purchased and sold grain upon defendant's instruction, and that during said time an account arose between the parties to the action, and that the amount due plaintiff thereon was the sum of $1,814.95, for which judgment was prayed.

The answer was a general denial, followed by allegations sufficient to charge that the sales and purchases mentioned in the petition were inhibited by the provisions of sections 4318-4326, R.S.1929, Mo. St.Ann. §§ 4318-4326, pp. 3004-3008.

The reply alleged that Kansas City and Chicago were contract markets under the Grain Futures Act, 7 U.S.C.A. §§ 1-17, and that the transactions pleaded in the petition were had in conformity to that act.

On trial the plaintiff had a verdict and judgment for $1,650. The defendant has appealed.

The evidence for the plaintiff shows that the Kansas City and Chicago Boards of Trade were contract markets within the meaning of the United States Grain Futures Act, 7 U.S.C.A. §§ 1-17; that plaintiff was authorized to carry on its business on the Kansas City Board of Trade and was engaged in doing a cash grain business, and in buying and selling grain for future deliveries for its customers; that the trades mentioned in the petition and in the itemized account attached thereto were arranged through telephone conversations in which defendant instructed plaintiff to buy or sell a certain amount of grain at the market price or at a named price; that when plaintiff received an order from defendant to buy or sell the order was transmitted to and executed by plaintiff's floor broker "in the pit"; that all of the grain purchased by defendant was sold prior to the delivery date; that plaintiff "would have had to have taken delivery had he gone into the delivery month"; that in the prosecution of its business plaintiff delivered grain by the use of warehouse receipts.

On July 18, 1933, plaintiff, acting under defendant's instructions, bought 5,000 bushels of barley at 90¢ per bushel to be delivered in September. Defendant's check bearing date of July 19, payable to plaintiff for $500, presumably a payment on the barley, was protested. The barley was sold August 2 for its then market value of 57¢ per bushel, resulting in a loss of $1,650.

The evidence for plaintiff further shows plaintiff's records were kept in the form required by the Grain Futures Act. Each purchase and sale was confirmed in a writing sent by plaintiff to the defendant, reading in part as follows:

"All transactions made by us for your account contemplate the actual receipt and delivery of the property and payment therefor. We reserve the right to close these transactions when deposits are running out, without giving further notice. * * * This contract is made under authority of the Act of Congress known as `the Grain Futures Act.'"

The plaintiff's evidence further shows that defendant "never made payment in full on any of" the transactions; that defendant deposited the margin required by the plaintiff and the latter "carried the balance."

The defendant's evidence was to the effect that all of the transactions included in plaintiff's account were directed by him; that it was not his intention to accept delivery of any of the grain; that he told plaintiff he did not intend to take delivery; that it was a gambling proposition and that he thought when his "margin was out I was out, when it run out I figured I would lose what I had up when it went down, and I told Mr. Wolcott (plaintiff's treasurer) to protect themselves; I meant for him to sell the trade out. * * *"

The defendant assigns error to the action of the court in giving plaintiff's instructions Nos. 6 and 8.

Instruction No. 6 told the jury that if it found that beginning on or about December 12, 1932, plaintiff, at the instance and request of defendant, began to purchase and sell wheat and other grain on the Kansas City and Chicago markets, and that defendant agreed to pay plaintiff the usual commission charged by brokers on said markets for making such purchases and sales, and that it was understood and agreed plaintiff would advance all or a part of the purchase price for such grain and that defendant would reimburse plaintiff for moneys so advanced, and that said contracts for the purchase of grain by plaintiff for the account of defendant were made by or through a member of the board of trade which had been designated by the United States Secretary of Agriculture as a contract market and that such contracts were evidenced by records in writing showing the date, parties to the contracts, their addresses, the grain bought or sold, the price and terms of delivery, and that in the purchase and sale of grain by plaintiff for the account of the defendant, plaintiff advanced a part of the purchase money and that the defendant had failed and refused, after demand, to reimburse plaintiff for the money so advanced, then the verdict will be for the balance thereof.

It will be noted the instruction was based on the Grain Futures Act, covered all of the transactions, twelve of which were in Kansas City, and one, the transaction in barley, was in Chicago.

The first question for determination is, does the Grain Futures Act restrict the operations of sections 4318-4326, supra?

In the case of State v. Christopher, 318 Mo. 225, 2 S.W.2d 621, the court said [page 630]:

"We think the purpose of Congress and the effect of the act was not to destroy the police power of the state in such matters, nor to annul the Missouri statute, but to restrict its operations. We accordingly hold, until federal authority declares otherwise, that the effect of the Grain Futures Act was to restrict the operation of state laws, like our section 3574 [now section 4326, Mo.St.Ann. § 4326, p. 3008] so as to make them inapplicable to transactions coming within the" Act. (Italics ours.)

Since the Christopher Case was decided the Supreme Court of the United States in the case of Dickson v. Uhlmann Grain Company, 288 U.S. 188, 53 S.Ct. 362, 77 L.Ed. 691, 83 A.L.R. 492, said [page 365]:

"The Grain Futures Act [7 U.S.C.A. §§ 1-17] did not supersede any applicable provisions of the Missouri law making gambling in grain futures illegal. * * * The Missouri law is in no way inconsistent with the provision of the federal act."

The construction of the federal act by the court of last resort must be followed in ruling the present case. Accordingly we hold the Grain Futures Act does not supersede sections 4318-4326, supra.

Instruction No. 6 was the only instruction which authorized a verdict for the plaintiff; it submitted the case upon the theory the rights of the parties in all of the...