Hansen v. Boyd
The action below was instituted by defendants in error to recover from plaintiff in error the amount of payments alleged to have been made for account of defendant between the 24th day of August, 1888, and the 8th day of June, 1889, and resulting from the purchase and sale of certain grain, made for account of the defendant, in the city of Chicago, and also the value of services rendered in connection therewith.

Defendant pleaded that the plaintiffs did not purchase or sell any grain for his account, but that the transactions in question were mere wagering contracts, intended by both as gambling upon the price of wheat, and that the moneys expended by the plaintiffs on account of the matters sued for were advanced at the city of Chicago in paying for wheat options and 'futures'; that the services alleged to have been rendered were performed in connection with such illegal transactions, which, it was averred, were in violation of the statutes of the state of Illinois.

Plaintiffs filed a reply to the answer of defendant, denying that it was the understanding and agreement of the parties that there were to be no actual sales or delivery of wheat, and that settlements were to be made by one party paying to the other the difference in values between the contract price and the market price of the wheat bought, according to fluctuations in the market; and also denied generally all the allegations in the answer to the effect that the transactions were gambling contracts and in violation of law.

The cause was tried by a jury, and the following facts are shown by so much of the evidence as is contained in the bill of exceptions:

On and prior to August 24, 1888, plaintiffs were partners in business at Chicago under the firm name of James E. Boyd & Bro., and were members of, and commission merchants doing business on, the Board of Trade in that city. They had a branch office at Minneapolis, Minn., at which Charles E. Handy was their agent from January 1, 1887, to February 1, 1889, Handy being succeeded on the latter date by George M. Brush. Prior and subsequently to 1888, Theodore Hansen resided at Benson, Minn., a town on the Great Northern Railway, about 120 miles west of Minneapolis, being engaged there in the business of general merchandise and grain, owning and operating a grain elevator and warehouse. Prior to the transactions between Boyd & Bro., hereinafter mentioned, Hansen had sold wheat through brokers on the Board of Trade at Chicago and the Chamber of Commerce at Minneapolis, and had had some 'option deals,' as he expressed it, and was generally familiar with the manner in which business was done on those boards.

Early in August, 1888, as a result of a conversation had with Boyd & Bro.'s Minneapolis agent a few days previously, Hansen called at Handy's office, and gave him an order for the purchase of 5,000 bushels of December wheat. Defendant claimed that in the prior conversation Handy had alluded to losses which Hansen had sustained in 'some trades' about a year prior thereto, and said 'he thought it was a good chance to make something back this fall by making some scalps.' Hansen further testified that he supposed the transactions were to be conducted for him on the Board of Trade at Chicago by Boyd & Bro., but claimed that at none of the interviews between himself and Handy was any allusion made to the Board of Trade or the rules of the Board of Trade. He also testified that it was not his intention to buy or sell any grain on any of the orders given to Handy, but that he contemplated mere speculations on margins. Handy, however, testified that when the first order was given he told Hansen that the commission would be one-eighth of a cent per bushel; that he would have to abide by the rules of the Chicago Board of Trade; and stated that he informed Mr. Hansen what those rules were as concerned the handling of grain on that board, and also informed him that a delivery was contemplated in every trade, either by buyer or seller, which was understood by Hansen; that in case wheat was delivered he must take care of it, and pay the purchase price and interest on the money, etc.

The first order to purchase was given August 10, 1888, and from that time until about April, 1889, occasional orders to buy and sell wheat were given. In none of the transactions was wheat offered or furnished by Hansen, or to him personally, but the purchases and sales were all made on the Chicago Board of Trade, according to the rules of that board. Hansen became delinquent in the furnishing of margins on his contract. On April 16, 1889, 40,000 bushels of May wheat were bought on his account at prices ranging from 109 1/2 to 111 1/4. On April 26th and 29th following, by telegrams, and about those dates, by personal solicitation of Handy, Boyd & Bro. requested authority to 'transfer,' as they expressed it, the May wheat to June wheat. Hansen did not answer the telegrams, and gave no satisfactory response to the verbal inquiry. On April 29th, however, Boyd & Bro. sold the 40,000 bushels of May wheat, on which Hansen was then in default for margins, at 81 1/2, and the loss of $11,500 was charged against Hansen in his account on the books of Boyd & Bro. The firm then bought 40,000 bushels of June wheat at 82 1/4, and sent a memorandum notice of the sale of the May wheat and the purchase of the June wheat to Hansen, together with an account of the loss sustained on the May wheat. On May 4, 1889, Boyd's agent, Brush, wrote Hansen that Boyd & Bro. demanded an immediate settlement of his account. Personal interviews with Brush and correspondence with Boyd & Bro. followed. On June 8, 1889, the when open contracts on the books of Boyd & Bro. with Hansen were closed, and the 40,000 bushels of June delivery wheat, above referred to, were sold on the Board of Trade, and the loss-$1,300 and $50 commission on the transaction was charged against Hansen. A day of two following, an account exhibiting the total indebtedness of Hansen to Boyd & Bro. ($18,248.36) was delivered to Hansen, and payment thereof demanded, which was refused, and the next day this action was brought. There was no controversy at the trial as to the correctness of any of the items of the account, other than as to the legality or illegality of the transactions, with the exception of the loss resulting from the 40,000 bushels of June wheat, asserted by Boyd & Bro. to have been purchased by authority of Hansen, but which Hansen claimed he had never authorized, and hence should not be held liable for the loss thereon, nor for the commission charged.

As to all the items of the account, plaintiffs contended that the transactions were legitimate purchases and sales of wheat under the rules of the Chicago Board of Trade; that deliveries were intended by the parties to the contracts on the Board of Trade; that Boyd & Bro. and Hansen understood that actual purchases and deliveries of wheat were intended. On the other hand, Hansen claimed that no actual purchases or sales of wheat were agreed to be made or were intended, and that the orders given by him were mere wagers upon the prices of wheat,-deals in futures upon the rise and fall in prices of wheat, according to the quotations on the Chicago Board of Trade.

The court instructed the jury very fully as to the law of the case upon the differing contentions of the parties, and the defendant took seven exceptions to the charge of the court. But one instruction was asked on behalf of defendant, and that was given to the jury. It was as follows:

'If you should believe that it was the intention of both parties to this contract that no actual wheat was sold or delivered or intended to be delivered at a future time, and if you should find from the evidence that it was not the intention of either party that a contract should be made by plaintiffs to buy and hold wheat for delivery to the defendant, but that it was the real intention and the understanding of the parties that a contract should be made which should be closed at a future date, not by the delivery of the wheat and the payment of the purchase price, but by the payment of money to one party or the other, the parties to receive the same and the amount to be paid to be determined upon a basis of the difference between the agreed purchase price at the time the purchases were made and the actual market value of the wheat on the day when the contracts were closed, then the jury are instructed that such contracts are illegal in law, and void, and you will find for the defendant.' 41 Fed. 174.

A verdict was returned for the full amount claimed by plaintiffs. Judgment was entered thereon, and the court overruled a motion for a new trial. The case was then brought to this court by writ of error.

Chas. E. Flandrau, for plaintiff in error.

Ralph Whelan, for defendants in error.

Mr. Justice WHITE, after stating the facts in the foregoing language, delivered the opinion of the court. 

Notes
Uncategorized United States Supreme Court decision