Jacobs v. Cohn ( 1904 )

Gildersleeve, J.

The plaintiff sues as assignee of the claim of Henry Heintz & Co., cotton brokers, against defendant for broker’s commissions of $30 and $530 as losses alleged to have been sustained by said Heintz & Co. in a certain cotton transaction with defendant. The complaint alleges substantially that on August 13 and August 23, 1902, defendant gave orders to Heintz & Co. to sell January cotton, to the aggregate amount of 300 bales, at the then market price, and deposited $400 as margin against variations in the market; that Heintz & Co. executed said orders; that the price of cotton rose beyond the protection of the margin; that a demand for more margin was made, but no more margin was given; that thereafter and on August 27. 1902, Heintz & Co. purchased 300 bales of January cotton at the then market price; that by reason of this transaction they expended and lost $530 beyond the margin received, for which loss, together with $30 commissions, they demanded payment of defendant, who refused to pay any part thereof; and that they"assigned their claim to the plaintiff. The plaintiff reduced his claim to $500, in order to sue in the Municipal Court.

The answer admits certain transactions with Heintz & Co., but puts in issue the allegations of the complaint. It denies that there was any bona fide sale or purchase of the cotton, and it alleges that the transaction was in violation of the laws against gambling. It also sets tip as a defense the Statute of Frauds.

The theory of the plaintiff’s case is that Heintz & Co. actually contracted with some one for the sale of the 300 bales of January cotton for defendant’s account, on a margin put up by defendant of $400; that the price of cotton rose beyond the margin, and that Heintz & Co., in order to carry out their contract, so made for the defendant with the third party or parties, were obliged to- purchase the 300 bales of cotton at a price which was $530 in excess of the margin put up by defendant. The theory of the defense is that the whole transaction was merely a “ bucket shop ” affair, and amounted to a wager on the price of cotton; that, no sale or no purchase was actually made, nor were they ever intended; that Heintz & Co. never met with any loss at all, but on the-contrary gained the $400 deposited by defendant as margin;' and that the whole affair was purely a gambling transaction.

In order to warrant the court in denying the motion to dismiss the complaint, there must be,some competent evidence of a genuine sale and purchase by Heintz & Co. and of a consequent loss on their part. We find a number of memoranda of telephonic messages, purporting to carry defendant’s orders for the sale to Heintz & Co. and to transmit the same from the office of Heintz & Co. to the Cotton Exchange. We have also memoranda of a return series of telephonic communications from, some one on the Cotton Exchange to Heintz & Co., and thence to defendant of the subsequent purchase of the 300 bales to close the transaction. All this evidence, however, is hearsay, and no positive evidence of either sale or purchase is presented. Neither the broker who sold nor the broker who purchased was called as a witness. The transaction was presumably consummated on the Cotton Exchange, and hearsay evidence, based on telephonic communications, cannot be accepted as proof of what actually occurred. If the contract between defendant and Heintz & Co. were a mere “ bucket shop ” or gambling transaction it could not be enforced. It was incumbent on the plaintiff, in view of the pleadings, to establish a genuine sale and purchase, as we have said. Of this necessary proof, the 'record, so far as we can find, is barren, and we must hold that the court erred in holding the testimony on this branch of the case sufficient- to warrant a submission to the jury and in denying the defendant’s motion to dismiss the complaint.

Some attempt was made to show an account stated, but no such claim is made in the pleadings. Evidence, however, was admitted showing that after defendant had, in a personal interview with a representative of the said Heintz & Co., denied his liability and called the whole transaction a “ bucket shop ” affair, the said Heintz & Co. sent him a statement and letter, to which he made no reply. Hnder the evidence in this case, the mere silence of defendant with regard to the alleged account cannot be regarded as an admission on his part of its correctness. He had put himself squarely on record as disclaiming any liability at all to the said Heintz & Go.

Numerous objections to the validity of the judgment are presented on this appeal, but it is unnecessary to discuss them in view of the fact that the judgment cannot stand for the reasons already stated.

The judgment is reversed and a new trial granted, with costs to the appellant to abide the event.

Freedman, P. J., and MacLean, J., concur.

' Judgment reversed and new trial granted, with costs to appellant to abide event.