Court Opinion

ID: 5414438
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:14:48.964323+00
Date Added: 2024-06-11T08:30:56.878492
License: Public Domain

Lehman, J. (dissenting).
The plaintiff sues the defendants upon a written contract for the sale and delivery of eggs. The contract reads:
“ G. H. Hager sells E. B. Phelps one hundred (100) cases f. g. firsts delivered within 26 days, at 21 cents per dozen.
“ C. H. Hageb,
“ E. B. Phelps.”
E. B. Phelps was at the time an employee of the defendants. He testified: “ I was under a contract whereby I participated in the profits and kept a separate ledger of my own transactions.” The plaintiff seeks to hold the defendants as the principals of E. B. Phelps upon this contract.
There is in my opinion sufficient evidence to sustain a finding that Phelps had at least sufficient apparent authority to bind the defendants to a contract for the sale of purchase of eggs, and in my view the real question in this case is whether he was in fact acting for the defendants in making this contract or whether he was acting for himself, both actually and apparently.
The contract is in form Phelps’ individual contract, and if in fact this contract was made by him for his own benefit, and he did not expressly or impliedly represent that he was acting for the defendants, then the plaintiff cannot hold the defendants. It is claimed by Phelps that he entered into this contract for future purchase in order to provide the eggs for another contract for future sale which he had made, concededly for the defendants’ benefit, or in popular phraseology “ to cover ” the other contract. There is some semblance of probability lent to this story by the fact that the date of delivery of the eggs in the contract upon *422which the plaintiff is seeking a recovery coincides with the date of delivery to be made on the other contract. On the other hand it appears that Phelps did not report to the defendants that he had made this contract “ to cover ” their sale for four days, and in my opinion the whole transaction shows an attempt on Phelps’ part to speculate at the risk of his principals, by claiming this contract as his individual contract if the market went in his favor, with the intention of turning the contract over to the defendants if the market went against him.
Upon this issue we have several very significant pieces of evidence. Of course the most significant fact is the contract itself made in his individual name and to overcome this fact the plaintiff is bound to show some satisfactory reason why the contract was made in this form. Phelps and the plaintiff explain that the reason why the contract was made in this form is “ because all business in the ring between members of the exchange has to be done as individuals, they do not recognize firms.”
It appears that this contract was not made ‘ ‘ in the ring ” at the exchange, but was an unusual transaction made at a restaurant, and, therefore, not subject to the rules of the exchange; yet while the rules of the exchange are not applicable to this transaction made off the exchange, still the custom of the dealings made under the rules of the exchange might well be considered material upon the intent of the parties in transactions made off the exchange. However, a careful reading of the testimony will demonstrate that' neither the rule nor custom of the exchange can help the plaintiff establish bis cause of action.
The plaintiff was asked on cross-examination: “ Why didn’t you write in the name of Henneberger & Herold,” and he answered: “ It is customary'when *423sales are made on the exchange; in the street they are made out in that form, ’’— and Phelps was asked similar questions. While his answers are self-contradictory and evasive, it appears that he was asked in regard to his transactions on the exchange the following question, and gave the following answer: “ The name of Henneberger & Herold do not appear? A. In case of future sales they were signed in pen and ink in that name.” In other words, as I read the testimony, it would appear that the exchange recognizes only its individual members, and requires contracts made under its rules to be signed by them, but the custom is that ‘‘ future ’’ contracts should also contain the name of the firm represented by the individual member.
Even if, however, I have misinterpreted this testimony and it is only fair to say that there are so many contradictory statements on this point that it seems to me quite impossible to determine definitely on this record whait the rules or customs of the exchange require in regard to future sales, yet I still would hold that no custom of the exchange in regard to future sales would affect this transaction.
It is practically undisputed that in sales made off the exchange it is the custom to make the contract in the principal’s name. It would also appear that future sales made under call on the exchange require the deposit of an original margin to protect the parties, and that the question of personal liability is of minor importance. It would seem, therefore, that a custom, if it exists, of not disclosing the principal upon such contracts, could have little materiality in enabling us to determine the intent of parties making a contract for future sale, without deposit of margin and not on the floor of the exchange.
I am therefore constrained to hold that the plaintiff’s testimony that this contract was in fact made for *424the defendants is so contradicted by its form and the circumstances under which it was made that his testimony should not be given any weight. In this connection it is to be noted also that the plaintiff is also an employee of another firm, and that he is claiming the benefit of this contract individually and not for the firm. The entire transaction is quite consistent with the view that these two employees of firms which they represented on the exchange have entered into a gambling contract together, intending that the winner should claim the profits individually, and foist the loss on the firm represented by the loser. The plaintiff claims that the transaction was made in the presence of witnesses, and I think that before he can recover on a transaction bearing such earmarks of fraud he should be required to produce these witnesses to substantiate his story.
The judgment should be reversed and a new trial ordered, with costs to appellants to abide the event.
Judgment affirmed, with costs.