Bond v. Hume

'This action was instituted in the United States circuit court for the western district of Texas, at Austin, on the 23d day of February, 1910, by Allen Bond and William J. Buttfield, plaintiffs, against J. L. Hume, defendant, to recover the balance due upon an open account for money advanced to defendant, and paid, laid out, and expended for his account, and for services rendered and performed for defendant at his special instance and request at divers times between the 1st day of July, 1907, and the 1st day of June, 1908, at the city, county, and state of New York, in connection with the purchase and sale for defendant's account of cotton for future delivery upon the New York Cotton Exchange, pursuant to the rules, regulations, customs, and usages of said Exchange, and for the amount due upon a certain promissory note executed by defendant, payable to the order of J. W. Buttfield, and by the latter assigned to the firm of Bond and Buttfield.

'The plaintiffs' first-amended original petition contains the following allegations:

"The plaintiffs at the special instance and request of the defendant at the city, county, and state of New York, advanced to the defendant and paid, laid out, and expended for his account divers sums of money, and did and performed for said defendant at the city, county, and state of New York, divers services in and about the purchase and sale of the defendant account cotton upon the New York Cotton Exchange, and in pursuance of the rules, regulations, customs, and usage of the said New York Cotton Exchange, a copy of the rules and by-laws and regulations being hereto attached and marked exhibit A, and asked to be made, etc.

"That the said services were rendered and said money paid out by them to said defendant for and at his request in buying and selling for his said account as his agent cotton for future delivery according to the rules and regulations of the New York Cotton Exchange in the city of New York, a copy of said rules and regulations being hereto attached and marked exhibit, etc.

"Said orders for the purchase and sale of cotton for future delivery were received by plaintiffs and executed with the understanding and agreement between the parties that actual delivery for this account was contemplated, subject to the rules and by-laws of the said New York Cotton Exchange, as hereto attached and marked said exhibit A.

"Plaintiffs allege further that they made said purchase and sales of the cotton for and at the request of the said defendant at the prices respectively authorized by him, and at his instance and request entered into binding contracts of purchase and sale for future delivery in accordance with the said rules and by-laws of the said New York Cotton Exchange, a copy of said rules and by-laws being hereto attached and marked exhibit A, and made a part of this petition.

"Plaintiffs further allege that at the several times they made said purchases and sales for the defendant he well knew that actual delivery was contemplated, and well knew that plaintiffs were to make and did make said purchases and sales under and subject to the rules and by-laws of the New York Cotton Exchange, and were held personally bound for carrying out said contract, as will more fully appear by reference to said rules and by-laws hereto attached and marked exhibit A, and plaintiffs allege that they promptly advised the defendant of the said several purchases and sales, and that said purchases and sales were made in accordance and with his instruction, subject to the rules and by-laws of the New York Cotton Exchange, and that said orders for the purchase and sale of cotton for future delivery were received and executed with the distinct understanding that actual delivery was contemplated, as provided by the by-laws and rules of said Exchange, as will more fully appear by reference to said exhibit A.'

'The by-laws of the New York Cotton Exchange pleaded by the plaintiffs contain the following provision:

"The cotton to be of any grade from Good Ordinary to Fair, inclusive, and if tinged or stained not below Low Middling Stained (New York Cotton Exchange inspection and classification) at the price of ___ cents per pound for middling, with additions or deductions for other grades according to the rates of the New York Cotton Exchange existing on the day previous to the date of the transferable notice of delivery.'

'To this pleading the defendant, in the lower court, interposed the following exceptions:

"I. Now comes the defendant in the above-entitled cause by his attorney, and excepts to plaintiffs' petition herein and says that the same is not sufficient in law to require him to answer, and should be dismissed.

"II. And for special cause of exception defendant shows the following:

"1. It is apparent from the face of plaintiffs' petition that the balance due upon the alleged account sued on arose out of a gaming transaction in cotton futures on the New York Cotton Exchange, that none of the cotton alleged to have been bought and sold was delivered, but the account sued on simply represents the difference in the rise and fall of the market on said Cotton Exchange, and were alleged to have been settled by plaintiffs by paying or receiving a margin or profit on each contract, as shown in said account, and that the alleged balance claimed by plaintiff to be due from defendant consists of said alleged margin or profit.

"2. It appears from plaintiffs' petition that said alleged account sued on arose out of transactions on the New York Cotton Exchange, and pursuant to the rules, regulations, customs, and usages of said Exchange, and does not show or set forth that in the settlement or closing out of said transaction sued on by delivery or tender of any grade or grades of cotton other than the grade upon which the prices were based in the transaction sued on, that the same were settled or closed out at the actual price for spot delivery of such other grade or grades at the time and place of delivery or tender.'

'Upon this record the court below entered the following order:

"Thereupon came on to be heard the demurrers and exceptions of defendant to plaintiffs' amended petition, and the same having been heard and duly considered, it is the opinion of the court that said demurrers and exceptions should be sustained, and it is accordingly so ordered, and the plaintiffs declining to amend, it is further ordered that said cause be and the same is hereby dismissed at the cost of plaintiffs, to which order of the court sustaining said demurrers and exceptions, and dismissing said cause, the plaintiffs in open court excepted."

Messrs. Charles Pope Caldwell and W. D. Caldwell for Bond et al.

No brief was filed for Hume.

Statement by Mr. Chief Justice White:  Mr. Chief Justice White, after stating the contents of the certificate of the court below as above reproduced, delivered the opinion of the court: