Opinion
No. 34181.
October 14, 1940. Suggestion of Error Overruled, November 25. 1940.
1. MORTGAGES.
Evidence established that note and trust deed securing it were not accommodation papers but were given to secure an account carried on the books of partnership and its corporate successor.
2. APPEAL AND ERROR.
Decisions of the chancellor based on conflicting evidence are binding on the Supreme Court.
3. APPEAL AND ERROR.
Where there are two or more reasonable theories to be deduced from testimony, the chancellor is entitled to draw the conclusion and his judgment thereon is binding on the Supreme Court unless manifestly wrong.
4. GAMING.
A contract under which owner of cotton delivered cotton to partnership and its corporate successor which were engaged in mercantile business, with understanding that title would pass to partnership or successor, and that price of cotton would be fixed on basis of market price of cotton on such day as owner should select to have settlement and finally close out the sale of cotton, was neither against "public policy" nor violative of laws relating to gambling contracts and dealings in futures, even though one or other of the parties might gain or lose by reason of the fixing of the price on a particular day, because of variance from market price on day cotton was delivered.
5. COMPROMISE AND SETTLEMENT.
Evidence sustained chancellor's finding of existence of a compromise by partnership, or its successor corporation through its manager, by which a debt, shown by the books of the partnership and corporation, and by a prior note and trust deed, was compromised and settled by taking of secured note upon which suit was brought.
APPEAL from the chancery court of Scott county, HON. ROBERT G. GILLESPIE, Special Chancellor.
Colbert Dudley, of Forest, and A.B. Amis, Jr., of Newton, for appellants.
An agreement that price of cotton actually delivered should be fixed by New York cotton quotations during specified time was not illegal.
Burgson Co. v. Williams, Smithwick Co., 155 Miss. 351, 121 So. 817.
The price may be left to be fixed in such manner as may be agreed upon the contract or sale, such as by the market price of the commodity or thing being sold, at a certain time and place, or by any other method by which it can be determined or ascertained with reasonable certainty, and without further negotiations between the parties in relation thereto.
55 C.J. 70, 71.
In the case at bar, no future date was designated, nor was a time limit set, nor a reasonable time understood. This difference makes the agreement, as found by the chancellor to exist in the case at bar, fatally defective as a contract for the present sale of the cotton, the price to be determined at a future day.
Where there is a present sale for a price to be determined by future conditions or at a future date, this date must be designated, or a time limit be set, or a reasonable time be understood; and if the date or time of such determination is not designated or ascertainable the agreement, as a contract, is void for uncertainty, lack of mutuality and absence of consideration.
55 C.J. 71.
The provision of the agreement as found by the chancellor to have been the agreement between Stroud and the Loper Mercantile Company was utterly void in its provisions as to fixing of the price so that we have to deal with a contract of sale of cotton where there has been a delivery coupled with the intention of both parties to pass title, but with no valid nor enforceable agreement as to the price.
55 C.J. 224; Jensen v. Turner Brothers et al., 16 S.W. 743; Stout v. Carruthersville Hardware Co., 131 Mo. App. 520, 110 S.W. 619.
A sale "on call" is to be distinguished from a sale for future delivery in that the sale "on call" is made by one who is the owner of the cotton and the delivery is made upon the execution of the contract of sale; whereas in a contract for future delivery the seller may not even own any cotton and may have to go into the market and buy same before the day of delivery.
Baucum and Kimball v. Garrett Mercantile Co. (La.), 178 So. 259; Burgson Co. v. Williams, Smithwick Co. (Miss.), 121 So. 817.
It is the contention of the appellant that this was simply a wager or gambling device and no matter in what language it may be clothed or expressed to give it the semblance of legality that it was the plain intention and purpose of the parties to gamble on the future price of cotton and that the consideration for the notes and deed of trust, upon which this suit is brought, is based on these illegal transactions, making them wholly void.
Alamoris v. Clark (Miss.), 145 So. 893; Burgson Co. v. Williams, Smithwick Co. (Miss.), 121 So. 817; Faulk v. J.N. Alexander Mercantile Co., 138 Miss. 21, 102 So. 483; Cohn v. Brinson, 112 Miss. 348, 73 So. 59; Ascher Baxter v. Moyse, 101 Miss. 36, 57 So. 298; Isaacs v. Silver Parry Co., 87 Miss. 185, 39 So. 420; Campbell v. N.O. National Bank, 74 Miss. 526, 21 So. 400.
Appellee is not entitled to recover, even as a holder "for value" without notice of the illegal consideration for which this note and deed of trust was given.
Skinner Mfg. Co. v. Deposit Guaranty Bank (Miss.), 133 So. 660; Dixie Rubber Co. v. Catoe et al. (Miss.), 110 So. 670; Elkin Henson Grain Co. v. White, 134 Miss. 203, 98 So. 531; Gray v. Robinson, 95 Miss. 1, 48 So. 226; Montjoy v. Delta Bank, 76 Miss. 402, 24 So. 870.
The finding of facts of the chancellor was against the overwhelming weight of the evidence and was manifestly wrong. The first error made by the chancellor was not so much an error of facts as it was of law dealing with facts and with an agreement or contract which was absolutely void because of the failure to fix a reasonable time within which Stroud was to make the price certain, and for the further reason that it was a violation of the law of the State of Mississippi denouncing and out-lawing gambling and wagering contracts and dealing in cotton futures. The chancellor treated this agreement found by him to be the contract, as a valid, legal and binding agreement between Stroud and the Loper Mercantile Company. From this initial error the chancellor plainly, by deduction, arrived at his further conclusion of facts.
There was no settlement of the account between Stroud and the Loper Mercantile Company. There is no evidence to support this proposition or finding of facts by the chancellor. And if there had been such a settlement or compromise, it was error for the chancellor to have treated it as such when it was clearly apparent that the contract on which this settlement was based was an illegal and void contract.
O.B. Triplett, Jr., of Forest, for appellee.
The sales contract between Loper Mercantile Company and appellant Stroud was not a gambling contract.
Burgson Co. v. Williams, Smithwick Co., 155 Miss. 351, 121 So. 817, 818.
The cotton was actually delivered by appellants to appellee; the absolute title to the cotton passed from the appellants to the appellee; the only thing left open for future adjustment was the price. The price of a commodity sold need not be definitely fixed at the time of the sale, provided the contract of sale contains an express or implied provision by which the price may be rendered certain in the future.
23 R.C.L. 1277, 1278, sec. 94; Burgson Co. v. Williams, Smithwick Co., 155 Miss. 351, 121 So. 817, 818.
In the present case Stroud was the only party who had the right to call for the market price, and this privilege had no time limits placed thereupon; but insofar as the element of gambling is concerned, it would be no more of a gambling contract to grant the seller an unlimited period of time than it would be to permit the seller to have a limited period of time. The only question which could be raised by this distinction in the facts would be whether or not the grant by the buyer to the seller of an unlimited period of time would render the contract unenforceable.
The contract between Loper Mercantile Company and appellant, Stroud, was not void for uncertainty or indefiniteness.
Burgson Co. v. Williams, Smithwick Co., 155 Miss. 351, 121 So. 817.
While the price at which the cotton was sold or to be sold, as the proof shows, was not definitely fixed or named at the time of the sale, yet it is shown that the parties did, at the time the contract was made, settle upon a method by which the price was to be determined with certainty.
Jones Cotton Co. v. Snead et al., 169 Ala. 566, 53 So. 988; Mechem on Sales, sec. 210; McBride v. Silverthorn, 11 Up. Can. O.B. 545; McConnell v. Hughes, 29 Wis. 537; Shaw v. Smith, 45 Kan. 334, 25 P. 886, 11 L.R.A. 681; Ross on Vendors, 51; Ames v. Quimby, 96 U.S. 324, 21 L.Ed. 635.
There was no uncertainty or indefiniteness of the prices for the reason that this essential element in the contract was not left open for future agreement or adjustment, but was left for determination and fixation by Stroud and by Stroud alone. He could call for his money and fix the price of all the cotton delivered by him on any date by accepting the market price on the date of his demand.
The compromise agreement in 1931 was a final determination of the cotton contract and fixed appellant's future liability. We submit that if there had been any uncertainty or indefiniteness in the cotton contract between Stroud and Loper Mercantile Company, this factor disappeared when the parties came together and agreed upon the price and compromised the amount of the indebtedness due Loper Mercantile Company.
The appellee, complainant in the court below, filed a bill in the Chancery Court for foreclosure of the deed of trust, and collection of the debt secured thereby, with interest and attorney's fees. This note and deed of trust were executed by W.Q. Stroud and his wife on July 13, 1935, in the principal sum of $1,500, due on October 15, 1935, payable to Loper Company, a partnership. After execution of the note it was assigned as collateral security for a note executed by Floyd Loper and his wife, Nona B. Loper, to the First National Bank of Meridian, Mississippi. Among other collateral assigned as security was a policy of insurance on the life of Floyd Loper with his wife as beneficiary. Floyd Loper, a member of the firm of Loper Company, died in 1938, and the policy of insurance on his life in favor of his wife, which had been assigned to the bank as collateral security, was paid to the bank, and the indebtedness of Floyd Loper and his wife, Nona B. Loper, was paid therefrom. The note for $1,500, assigned as collateral, as above stated, was by the bank transferred to Mrs. Floyd Loper without recourse on the 18th day of April, 1938.
It appears from the record that many years prior to the execution of the above note W.Q. Stroud had been a customer of the firm of Loper Company and the Loper Mercantile Company, the latter being a corporation conducted by Floyd Loper and others, which had taken over the business of Loper Company, or incorporated it, and had become possessed of the assets, and assumed the obligations of the firm. Afterwards the business was reorganized so as to again become a partnership, in which Floyd and Dewey Loper were partners, the latter having been the bookkeeper of the Loper Mercantile Company, but not a stockholder.
Prior to 1924, and up to 1931, W.Q. Stroud had business dealings with the Loper firm, both partnership and corporation, and delivered cotton to Loper, for the said Loper business, in each of said years, on an understanding that the title to the cotton would pass to Loper Company or to the Loper Mercantile Company, to be dealt with as it should determine, title and possession being delivered to the said Loper Company or Loper Mercantile Company with the understanding that the price of the cotton would be fixed, as between Loper and Stroud, on the basis of the market price of cotton on such day as W.Q. Stroud should select to have the settlement, and finally close out the sale of cotton.
Between the years 1924 and 1931 the price of cotton varied, reaching in some of these years a price considerably in excess of the price in 1931, when the transaction was closed out between Stroud and Floyd Loper, manager for the said firm or corporation. During this period Stroud had purchased various goods and merchandise from Loper Company or the Loper Mercantile Company, which were charged on the books of Loper Company or the Loper Mercantile Company. Had the cotton been closed out during some of the previous years the price would have considerably exceeded, at some period, the amount of the account due by Stroud to the Loper Company or the Loper Mercantile Company.
During this period between 1924 and 1931 Stroud and his wife gave to the Loper Mercantile Company, or to Loper Company, notes secured by a deed of trust upon the property owned by Stroud, one of the notes being for the sum of $5,000, which note had been assigned as collateral security to the First National Bank of Meridian, to secure a debt due by Loper Company or the Loper Mercantile Company to the First National Bank. It was the contention of Stroud that the $5,000 note and deed of trust was given as accommodation paper, and that he did not owe Loper Company or the Loper Mercantile Company anything during the period in which the respective concerns were doing business; but that Floyd Loper sought his accommodation paper to strengthen his credit since he was at the time in financial difficulties; offering proof to show by others than himself that this was accommodation paper, and not a debt as between him and Loper Company or the Loper Mercantile Company, but was a binding obligation in favor of the bank, which was a purchaser for value without notice.
There was evidence sufficient to show, as the chancellor found, that the note and deed of trust in question were not accommodation papers, but were given to secure the account carried on Loper's books against Stroud under the circumstances stated. The testimony in the case is voluminous, and it would be difficult to epitomize it in an opinion. The testimony is conflicting; and the rule is well settled that decisions of the chancellor on conflicting evidence are binding on this court; also, where there are two or more reasonable theories to be deduced from testimony, that the chancellor is entitled to draw the conclusion, and his judgment thereon is binding, unless manifestly wrong.
It is contended by the appellant, and was contended in the court below, that the agreement with reference to the price of cotton, above stated, was void and of no effect, because it was a gambling transaction, violating the laws of the state against dealing in futures; and was also void because no reasonable time was fixed in the contract by Stroud in regard to the price.
In the case of Burgson Co. v. Williams, Smithwick Co., 155 Miss. 351, 121 So. 817, there was an agreement of sale of cotton, with actual delivery thereof, the final price to be fixed by either party within a specified time, based on New York cotton quotations for the same grade of cotton, which was held to be not illegal under sections 2300 and 2303, Code of 1906, having reference to gambling contracts and future dealings in cotton. It was also held that the price of the commodity need not be definitely fixed at the time of sale, provided the contract of sale contains an express or implied provision by which price may be rendered certain in the future.
In the contract here involved the price could be fixed at any time by W.Q. Stroud on the basis of the market price of cotton on the day named by him for so doing. It was therefore a matter which could be made certain and binding without future negotiations, or additional understandings between the parties to the contract, as Stroud had the absolute right to fix the price on the day selected by him, without regard to the consent of Loper Company or the Loper Mercantile Company. The contract price was capable of being made certain by his mere demand for the price of all the cotton delivered on the day named. We do not think this violates any statute or public policy of the state.
It is true that one or the other of the parties might gain or lose by reason of the fixing of the price on such day, because of a variance from the market price on the day the cotton was delivered; but that is immaterial. The evidence was sufficient to support the chancellor's finding as to the agreement, and the validity of the agreement as found by him is supported by the authority above stated. There was also evidence sufficient to support the chancellor's finding that there was a compromise by Loper Company or the Loper Mercantile Company, through Floyd Loper, by which the debt shown by the books of Loper, and by the previous note and deed of trust, was compromised and settled by taking the note above mentioned, upon which the suit was brought, for $1,500. Indeed, this settlement was stated by Stroud in a letter to the First National Bank, and is shown by ample evidence in the record to support the chancellor's finding. We have examined all the contentions of the appellant, and do not find any ground sufficient to cause a reversal of the judgment of the court below. The judgment is affirmed.
Affirmed.