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Champion vs. Wilson & Company

Supreme Court of Georgia1879-09
64 Ga. 184

Summary

Holding. The judgment denying the motion for new trial is reversed, and the case is remanded for a new trial because the trial court committed multiple errors in its instructions to the jury on material points, including the law applicable to the contract, the standard for establishing trade custom, and the basis for imposing liability.

Wilson & Company sued Champion to recover money spent purchasing cotton futures contracts in New York. A jury verdict favored the plaintiffs, and Champion moved for a new trial on multiple grounds, but the trial court denied the motion. On appeal, the court identified several instructional errors that warrant reconsideration. The trial court refused to allow New York law to be applied despite the contract being made and performed there, though no evidence of New York law was actually presented at trial. Additionally, the court improperly charged the jury regarding what constitutes a binding trade custom, requiring a degree of universality that would defeat any custom practice. The court also erred in instructing the jury on partnership liability when Champion was sued only in his individual capacity.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether New York law should govern a contract made and executed in New York, and what showing is required to invoke another state's law
  • The proper standard for establishing a binding custom in business or trade
  • Whether a defendant sued individually can be held liable on a partnership theory
  • Whether retention and transfer of stock certificates used as margin collateral constitutes conversion without authority

Procedural posture

Champion appealed from the trial court's denial of his motion for a new trial following a jury verdict in favor of the plaintiffs in an action for money expended on cotton futures contracts.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Jackson, Justice.

J In this case Wilson & Company sued Champion for money ¡expended by them for him in the purchase of cotton futures in the city of New York, where the contract was made and where it was to be executed. A verdict was rendered for the plaintiffs, a motion was made for a new trial on many grounds, it was overruled, and the defendant excepted.

There are many grounds set out in the motion, but all were abandoned or not urged here except a few which we proceed to consider.

The contract being made and to be carried out in New York, it is urged that New York and not Georgia law should prevail, Code, §8 ; 38 Ga., 132; 40 Ib., 553 ; but the defendant gave to the court below no evidence of any law of New York so far as the record discloses. In order to take a case out of our own law, there must be evidence before the court that tried the case of the law of the other state, and the record must show its introduction in evidence. It does not appear from this record to have been introduced as evidence at all. Probably the law of this state, if the contract had been made and was to be performed here, would uphold it. 45 Ga., 501; 59 Ib., 25. Possibly the facts here, as insisted upon by the defendant in his testimony, might make a case too strong and too much akin to betting for our own statute, and might take this case out of the principle controlling those. See Code, §2638. If it were an original question, one might well hesitate,

However, this may be, the law of New York entered into this contract, as it was made and was to be executed there, and our courts will enforce it, whatever it may be; and this contract must stand or fall as the test of that law is applied to it. But as it was not before the superior court, we cannot review any judgment of that court thereon. That court said nothing about it — perhaps for this reason. 57 Ga., 371.

This disposes of the requests to charge the New York law, and to apply it here. When so applied it becomes, as the law of the contract, Georgia law; and it matters not where it came from. For this case — pro has vice — it is our own law. 38 Ga., 129 ; 54 Ib., 613. Still, to make it our law, it must be in evidence before the court.

But it is insisted further by the defendant, that he placed certain collaterals, consisting of railroad stock certificates, in the hands of the plaintiffs, and they changed the title and converted them to their own use, and are responsible for them at their value when converted. If the plaintiffs did convert them without authority, they are certainly responsible for their value at the date when they appropriated them. So that the question is, did they convert them %

The collaterals were certificates of stock in the South Carolina Railroad Company, issued to Zeilin & Company, who seem to have turned them over to defendant to be used with plaintiffs, to cover the margin for the purchase of cotton contracts for futures, and some sort of power or authority to transfer seems to have been indorsed in blank thereon. These certificates were given as collateral to plaintiffs in September, 1871, and in October, 1872, they were given up by them to the railroad company,, the stock was transferred to plaintiffs, and new certificates were issued to them. This may have been done to. guard against third persons acquiring rights without notice, and to protect the stock against such liens acquired by others; or it may have been an assertion of absolute title, as possibly the collaterals, as margin, were exhausted. There is some reason and authority perhaps justifying some such step to guard against loss — see People’s Bank of Bloomington vs. Gridley, supreme court of Illinois, reported in Albany Law Journal, August 8, 1879, p. 123. Ordinarily, however, between the parties themselves, the assignment and delivery of the certificates of stock alone would guard the rights of the pawnees. See 1 Am. Railway Cases, 110 ; Redfield on Bailment, 659-674; Story Eq. Jur., 412-421, and note; 3 Hill, N. Y., 228; 5 Gray, 373; 21 Verm., 353; 6 Conn., 558; 42 N. H., 424; 29 Penn. St., 146 ; 13 Conn., 498; 49 Me., 315 ; 34 Ib., 256 ; 9 Rh. I, 308 ; 12 Gray, 213 ; 17 Ill., 86 ; all cited in the Albany Journal case.

But it is impossible to adjudicate this point from the evidence in this record. The power to assign or transfer is not here. That is the instrument on the construction of which this point must turn. Did it authorize the plaintiffs to change the title on the books and to take the new certificates? It is not in evidence, nor is it described by its contents, so that we can see what authority it gave to plaintiffs. True, if ambiguous or blank, it ought to be construed in the light of all the facts of this case, but without the power itself we grope in the dark. It looks singular that the plaintiffs should have been content to have held the old certificates, with the indorsement thereon for over twelve months, and then make the change. Did they have the power by the indorsement or transfer on the old certificates? If the indorsement gave them the power so to act, the transfer on the books and the new certificates to themselves were not wrongful; if it did not, they were wrongful; if ambiguous or blank, then all the circumstances may aid. Did Champion know of its exercise? Was it done to secure themselves against third parties bona fide towards Champion, or to take absolute title as owners without regard to his rights? Why not have the transfer made and the new certificates made to them for the use of Champion or of Ellis & Brother, as their version is that the stock was always held for Ellis & Brother also? But the great question is, did they have the power? and without the instrument relied on to give it, we cannot move, for if they had it from Champion, his mouth is closed.

The charge was not right on custom. True, our Code says, par. 1, sec. 4, that “ the custom of any business or trade shall be binding only when it is of such universal practice as to justify the conclusion that it became, by im plication, a part of the contract;” but this cannot mean, as the court charged, that it must have been followed “ in every transaction of this sort in New York.” For then one act of one broker would defeat a custom universal but for that act. Nor does it mean “ the whole — every one,” as the court reiterates; but it means, what it says, of such universal practice as to imply that the trade would understand that it went into the contract. It must be rather more than general — much more than the habit of a majority ; but not absolutely unbroken by one single transaction of one tradesman. Such a rule would defeat every custom. The little word “such” before “universal” in the Code qualifies the former, and excludes from the section the meaning given by the judge. In this case, on this point, the evidence appears conflicting, and would hardly have established the custom contended for by defendant, even had the charge been right. Still, as the ease will be tried again, and more light may shine upon the point, the defendant is entitled to the law of his case on this as on all the points he makes.

So too the court erred, we think, in charging on the subject of partnership. Champion was not sued as a partner, but individually, and there could not be a legal recovery against him as a partner. It matters not that the others who were alleged to be his partners were bankrupt; and that the recovery would come out of him in any event. The plaintiffs must sue him as he contracted with them, and recover accordingly. 43 Ga., 587.

The evidence on some of these points is conflicting— sufficiently so to entitle the parties to have the law fully and accurately given to the jury; and as, in our view, that has not been done on every controverted point in the very protracted and complicated case the record makes, the ends of justice require a new trial.

We express no opinion whatever upon the weight of the evidence other than to say that it does not absolutely require the verdict without regard to the law given in charge; and that law as given might have controlled the jury upon material points hotly contested. The judgment refusing the new trial is therefore reversed.

Judgment reversed.