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3F.(20) 97 Under date of July 10 the defendant tele- quirements elsewhere. Moreover, under the graphed plaintiff:

custom shown in the trade, concerning which “Answering letter, have no hams coming evidence was properly admitted, an offer to from you. Bought one car same has been buy or sell, not otherwise limited by its own delivered."

terms, expires at the opening of the marThis reference was to the car shipped on ket the next day, apparently at 9:30 a. m. July 1 and accepted as above noted. On the Under this custom, Handy's offer of June same date (July 10) plaintiff telegraphed 26 was dead before on June 27, at about defendant to the effect that it had sold and noon-Bartlett in effect rejected it. confirmed to defendant five cars of hams on [2] But the trouble grew out of Winchell's June 28, and that if confirmation mailed was unauthorized telegram, sent to Cross to buy not in accordance with purchase through these hams at 10 p. m. on June 27, eight broker, defendant should have advised plain hours after Handy, Sr., had told Bartlett tiff immediately by wire or letter; that there that he had filled his requirements elsewhere. fore plaintiff must insist on defendant's ac-' Cross telephoned this order on June 28 to cepting sale in accordance with terms of the plaintiff, not then disclosing the name sale, and that the second car was going for- of the purchaser. But the confirmation from ward that day.

Cross dated June 28 showed plaintiff that Plaintiff received no answer to this tele- defendant was the customer; and the sale gram and telegraphed again on July 12 to was then booked and a confirmation sent the effect that it had received and was ship through the mail by plaintiff to defendant ping the third car on July 12, and fourth in the usual course of business. But, as and fifth cars, according to its confirmation. Cross had, through Winchell, no real authorThis also was not answered. On the same ity to bind the defendant, there was no conday, July 12, a letter was written by plain- tract. Plaintiff did not rely on any ostensitiff to defendant:

ble authority; it knew nothing of the rela"We shipped you yesterday from Omaha tion of the parties except that Cross, a brocar MRL-10735 containing green skinned ker, said he had an order from Handy for hams sold through Cross, Roy and Saun- these hams. There was no holding out by ders.”

defendant to plaintiff of Winchell or Cross No reply was received to this and the next as defendant's agent. Plaintiff booked the the plaintiff learned was from a telegram order at its peril as to actual authority in from their branch manager at Springfield,- Cross to bind the defendant; but plaintiff that the defendant had refused to take the acted in good faith and in the usual course second car. Defendant relied on Bartlett of that line of business. and Winchell to fix the matter up and ignor- The situation on the evening of June 28, ed plaintiff.

then, was that plaintiff and defendant, with[1] We turn to the legal results:

out fault on the part of either, had been Of course the burden is upon the plain- put by the erring broker into the false positiff to show that it contracted with the de- tion of apparent seller and purchaser of fendant through an agent, duly authorized; about $40,000 worth of hams on a market or, that in some way any unauthorized act that shortly dropped. was ratified by the defendant. We ágreeW as there evidence for the jury of a ratiwith defendant's counsel that Bartlett and fication? Bartlett took up the situation over Winchell had, on June 26, only strictly lim- the telephone with Handy, Sr., on the evenited powers as defendant's agents to buy the ing of June 28, at Handy's home. Handy described bams at 261 cents; that when said he did not want the hams, and told Winchell telegraphed that he thought he Bartlett (who for legal purposes was Wincould not get them at that price and Bart- chell) to call him the next morning at his lett (naturally enough) interpreted this as a office after he had looked over his stock. refusal of that offer—and at noon on June This was a tentative arrangement to consid27 so stated to Handy, Sr., and tendered er ratification. But when, the next morning, him another assortment at higher prices- Bartlett called up (as stated above), he Handy's offer was dead. Bartlett was Win- found and talked with Handy, Jr., who had chell's general agent in this regard; if Bart- before him Bartlett's night letter, sent by lett was wrong in construing Winchell's tele- Bartlett after his talk with Handy, Sr., and gram this became Winchell's error. Handy beginning, “Confirming telephone conversaassumed and had a right to assume, at noon tion have bought you five cars," etc. This on June 27, that he had no outstanding nego- unexplained document left Handy, Jr., with tiations with or through Bartlett and Win- but little option; be arranged for a week's chell for the five cars; and be filled his re- delay, and agreed to take the hams.

But, on this record, we think the jury fendant's duty to return this confirmation, would not have been warranted in finding accepted or rejected, its failure so to do that the defendant corporation thus ratified might be held a ratification,-like silence the acts of the intervening brokers.

when there is a duty to speak. Foster v. . [3] We agree with plaintiff's counsel that Rockwell, 104 Mass. 167; Union Gold-Minthere was evidence for the jury of sufficient ing Co. v. Rocky Mountain Nat. Bank, 96 authority on the part of Handy, Jr. He had U. S. 640, 644, 645, 24 L. Ed. 648; 2 C. J. the title of manager; he had charge of the 505, and cases cited. plant in his father's absence; indeed, his fa- . We think that this issue should have been ther seems to have assumed that his son had submitted to the jury under carefully guardauthority to act in the matter. But we agree ed instructions as to the existence and scope with defendant's counsel that the record of such custom. shows that the acts of Handy, Jr., were with [5] Apart from this confirmation from out the requisite knowledge of the material the plaintiff and the custom relating therefacts. The burden was upon the plaintiff to, the defendant's officers (that is, Handy, to show, not only acts of ratification by a Sr., and Handy, Jr.) both knew on June 30, duly authorized agent of the defendant, but after the elder's return from New York, that acts with full knowledge of all material Handy, Jr., had, in form, ratified the purfacts.

chase. They knew, or were bound to know, The plaintiff's case is fatally defective that Bartlett had conveyed information of in that regard. Bennecke v. Insurance Co., this ratification, through Winchell and Cross, 105 U. S. 355, 26 L. Ed. 990; Combs v. to the plaintiff; for it was a condition of Scott, 12 Allen (Mass.) 493, 496, 497. There the putative ratification that shipment should was, then, on this record, as matter of law, be delayed one week, and the defendant no ratification on June 29 by Handy, Jr. knew that that condition was accepted by

[4] But on June 30, Handy, Sr., who was the plaintiff. back at his office, took up the situation with The status thus created also presented a his son and with Bartlett, finding fault with question of fact for the jury. The evidence Bartlett for sending the night letter contain- on this point, again, is not as clear and exing the language "confirming the telephone plicit as might be desired. But we think conversation," etc., supra. He also received enough appears so that the question should from the plaintiff the formal confirmation have been submitted to the jury as to whethmailed him by the plaintiff on June 28; but er the defendant's failure to disaffirm the he did not return this confirmation, accepted authority given in form by Handy, Jr., to or rejected, nor did he take any action, ex- Bartlett, on June 29, did not amount to raticept by complaining to Bartlett, to repudiate fication. See A. Blum, Jr.'s, Sons v. Whipthe ratification made, in form, by his son on ple, 194 Mass. 253, 257, 80 N. E. 501, 13 A. June 29.

L. R. (N. S.) 211, 120 Am. St. Rep. 553; Considering first the matter of the con- Harrod v. McDaniels, 126 Mass. 413, 415. firmation: There is uncontradicted evidence A minor exception by plaintiff is to the that it is a custom of the trade for the buy- exclusion of two letters written by Winchell er to return such confirmation direct to the to Cross on July 1, containing, inter alia, seller. True, the evidence on that point is instructions as to the week's delay in shipnot as clear and explicit as might be desir

ping, pursuant to the arrangement made by ed. But, as we understand it, there was

Handy, Jr., and Bartlett on June 29. As we enough to indicate that the interchange of

have held that there was an issue 'of fact as such confirmations is an understood part of

to ratification growing out of the defendant's the trading machinery with which this kind

failure seasonably to disaffirm the acts of of business is carried on. The business is one in which prices fluctuate substantially

Handy, Jr., we think these letters should and rather rapidly; it is largely carried on

have been admitted. They tend to show through brokers, naturally zealous to earn

what was done in reliance upon the authorcommissions, and therefore prone to put a ity emanating from Handy, Jr., on June 29. broad construction upon any authority given Winchell's telegram on July 18 to Bartthem. The interchange of confirmations is lett, was properly excluded.. apparently a device intended to prevent just T he judgment of the District Court is resuch "mix-ups” as occurred in this case. versed and the case is remanded to that court Clearly, if there be such custom, it is a wise for further proceedings not inconsistent with and trouble-saving device. It follows that this opinion; plaintiff in error recovers costs if, under the custom of the trade, it was de- in this court.

cart. denied

26760269 L Ed. é12, 15 derel ŞMALE V. UNITED STATES

101 4 o . 3F.(20) 101 SMALE et al. v. UNITED STATES.* roll. He denied making such a statement. (Circuit Court of Appeals. Seventh Circuit. At the close of defendants' testimony, Igoe December 5, 1924.)

was called as a witness by the government, No. 3454.

and, against the objection of himself and

defendant Smale, directed to relate the state1. Witnesses Em 199(1)-Communications to ment made by Smale to him which Smale attorney expected to be employed, and statements made under erroneous belief relation had denied making. exists privileged.

When arrested and taken to the marshal's Though relation of attorney and client must office, Smale sent for his lawyer, and deordinarily exist before communication is privi- fendant Carroll, who was also apprehended leged, communications by client to attorney ex- at the same time, sent for his attorney, Igoe. pected to be employed, notwithstanding attorney may find it impossible to accept retainer,

Igoe arrived shortly before Smale's counand statements made under belief relation ex sel, and was conferring with his client, when ists, are privileged.

Smale, who was in the same room, went vol2. Witnesses 199(I)--Voluntary communi.

untarily to Igoe and in substance said that cation to codefendant's attorney not privi. he had not been in Carroll's saloon for six leged, in absence of joint defense.

months, which, if true, disproved the govCommunication voluntarily made to code- ernment's theory that the conspiracy to corfendant's attorney, whom defendant never in

rupt the juror was hatched, and in part eftended to employ as his attorney, is not privileged, in absence of joint defense.

fectuated, in Carroll's saloon a few days be3. Witnesses

fore. On cross-examination, and without w223-Doubt whether state

objection, Igoe stated that he told Smale ment privileged should be determined prelim. inary to its admission in evidence.

that his client, Carroll, had told him a difAs respects issue of privilege, doubt as to ferent story, and that he (Carroll) was govoluntariness of defendant's statement to co- ing to tell only the truth. defendant's attorney, or existence of joint de We may pass the pertinent query whethfense, or of confidential nature of communication, should be determined by court preliminary

er the prejudice arising from this testimony to admitting testimony thereof.

did not lie in the statement which Igoe made

without objection on cross-examination in In Error to the District Court of the favor of his client, Carroll, rather than in United States for the Eastern Division of the information which the government elicthe Northern District of Illinois.

ited respecting Smale's statement to him. Edward Smale, Jr., and another were con- There may have been some prejudice to victed of conspiracy to influence juror. and Smale's cause, however, in the reception of to obstruct and impede the due administra- the testimony thus given on direct examtion of justice, and they bring error.Af- ination, and, as an appropriate objection firmed.

was made, its admissibility must be deter

mined. Everett Jennings, of Chicago, Ill., for

[1] The general rule which excludes prirplaintiffs in error.

ileged or confidential statements is so well Jacob I. Grossman, of Chicago, Ill., for recognized that it needs no restatement. It the United States.

is because the present is a somewhat unusual Before ALSCHULER, EVANS, and situation that controversy has arisen. That PAGE, Circuit Judges.

the relation of attorney and client must or

dinarily exist before the communication is EVAN A. EVANS, Circuit Judge. Plain- privileged must be admitted. 28 R. C. L. tiffs in error were convicted under an in- 553; 40. Cyc. 2363; York v. United States, dictment charging them and one Carroll 224 F. 88, 138 C. C. A. 356; Collins v. Hoffwith conspiracy to influence a juror, and man, 62 Wash. 278, 113 P. 625, Ann. Cas. to obstruct and impede the due administra 1913A, 1; In re Davis' Estate, 142 Minn. tion of justice. Numerous errors were as- 187, 171 N. W. 778; Gronewold v. Gronesigned in support of the writ of error, but wold, 304 Ill. 11, 136 N. E. 489. But when on oral argument all were waived or aban- does the relation begin? When does it terdoned save one, which dealt with the admis- minate? What showing is necessary to ession of evidence.

tablish the relation? Who determines it? The objectionable evidence was elicited on Some of these questions become questions of rebuttal. A privileged communication was fact. The communication of a client to an the asserted basis for the objection. De- attorney whom the client expects to employ fendant Smale was without objection inter- falls within the rule notwithstanding the atrogated concerning a statement by him made torney may find it impossible to accept the to one Igoe, attorney for the defendant Car- retainer. McNamee v. Bank, 88 Or. 636, *Certiorari denied 45 S. Ct. 462, 69 L. Ed. -

172 P. 801. - Statements made under an er- 2. Associations 20(2)—That action by reroneous impression that the relation exists ciprocal insurance association may be cum

bersome and embarrassing does not vest its should be protected. 28 R. C. L. 555.

attorney in fact with authority to sue in its · [2] But here Igoe never was employed by own name. Smale, and there is nothing to indicate that That action by reciprocal insurance assoSmale ever intended to employ Igoe, or that ciation in names of all subscribers might be Igoe led Smale to believe he would serve

cumbersome and embarrassing does not vest

its attorney in fact with authority to prosecute any defendant other than Carroll. In fact,

by such action in its own name. Igoe's answer clearly negatives the suggestion that Smale considered the testimony

In Error to the District Court of the confidential, or that Igoe would treat it as

United States for the Northern District of such.

the Eastern Division of Illinois. It is also urged that, in a joint defense, communications by one defendant to anoth

Action by the John L. Walker Company er defendant's attorney should be privileged. against the National Underwriters' ComTo what extent such communication may be pany. Judgment on demurrer for defendprivileged we need not determine, for it is ant, and plaintiff brings error. Affirmed. apparent that at that time Carroll's prep- Murphy 0. Tate, of Chicago, Il., for aration for defense' was separate and dis- plaintiff in error. tinct from that of Smale, and Igoe was not Frederick A. Brown, of Chicago, Ill., for then engaged in any joint defense. We con- defendant in error. clude from all the evidence that Smale made Before ALSCHULER. EVANS. and the statement voluntarily to Igoe, who was

PAGE, Circuit Judges. not then nor thereafter his attorney, that Smale never intended to employ him, and the necessity as well as the wisdom of Igoe's ALSCHULER, Circuit Judge. Electing appearing solely for his client Carroll is to stand by its amended declaration, to which apparent throughout the record.

the court had sustained a demurrer, judg131 If there existed doubt as to the vol- ment was rendered against the plaintiff in untariness of the statement, or the existence the action, John L. Walker Company, which of the joint defense, or the confidential na- judgment the writ of error attacks. ture of the communication, it was for the The declaration charged the defendant, court to have determined it preliminarily to the National Underwriters' Company, with admitting the testimony. 28 R. C. L. 555. publishing an alleged libelous article conUpon the facts presented by this record, the cerning plaintiff, a corporation. The charge trial judge could not have found any issue

is that plaintiff carried on business of inof fact in favor of Smale. The testimony surance as "the authorized attorney in fact was therefore properly admitted.

for the Ft. Dearborn Casualty Underwriters The judgment is affirmed.

and other insurance carriers, and in the regular course of business had built up a large and comprehensive insurance clientéle, writing multiple line insurance, including auto

mobile, plate glass, and workingmen's comJOHN L. WALKER Co. v. NATIONAL UN.

pensation coverage upon the 'self-insurers' DERWRITERS' CO.

or reciprocal plan, the rates and premiums

considerably below the rates and premiums (Circuit Court of Appeals, Seventh Circuit.

charged by the so-called conference and December 8, 1924.)

stock companies”; that it had acquired a No. 3450.

reputation for sound business judgment, and 1. Libel and slander Em77-Under Illinois that it had built up a large business in plac

laws, action for libel of reciprocal insurance ing such insurance, and had always dealt association may not be maintained by its at. fairly and honestly with the public, whereby torney in fact in own name.

it acquired large gains and a growing profitUnder Act June 20, 1921 (Laws Ill. 1921, p. able business in placing such insurance, par492; Smith-Hurd Rev. St. Ill. 1923, c. 73, 88 443468), providing for reciprocal or inter insurance

ticularly the business of placing workingexchanges doing business through an attorney

men's compensation insurance; and that by in fact, section 14 (section 456) of which pro- the publication plaintiff was greatly damvides for service on attorney in fact in actions goed. against such organization, but contains no provision for suits by organization itself, action for

A reading of the entire article complained libel of such organization could not be main- of, which is quite lengthy, makes it appartained by the attorney in fact in its own name. ent to us that the alleged libel was of and

3 F.(20) 102 concerning the organization known as the commerce of the state, and that such service Ft. Dearborn Casualty Underwriters alone. shall be binding upon all subscribers. It is conceded that, if the relation between It will be observed the attorney is not in the plaintiff and the Ft. Dearborn concern any respect a party to the suit, but is only was only that of principal and agent, any the instrumentality through which service of damage accruing from the alleged libelous process is had on all the subscribers, and article would be recoverable by the Ft. Dear- that whatever judgment is rendered would born organization or its members, and not be, not against the attorney in fact, but by its agents; indeed, there is nothing in the against the defendants to the action, the declaration to indicate special damage to the subscribers, who, notwithstanding their place plaintiff which did not wholly accrue to of residence, are by the terms of the act those for whom the plaintiff was acting. bound by the serving of process upon the at

But the contention is made that plaintiff's torney in fact or upon the designated state right to maintain this action is given by the officer. With the failure of the statute to laws of Illinois creating such concerns as indicate how a claimant may ascertain the the Ft. Dearborn Casualty Underwriters names of all the subscribers, and the very and providing for the peculiar relation be- possible difficulty of making all of them tween it and its attorney in fact. Laws Ill. parties defendant to the action, we are not 1921, p. 492 (Smith-Hurd Rev. St. Il. 1923, here concerned. There is no provision whatc. 73, 88 443-468), an act concerning the ever for suits by or on behalf of the exbusiness of reciprocal or inter insurance, ap- change; but we cannot assume that a cause proved June 20, 1921, in force July 1, 1921. of action may not arise in its favor, nor that The act undertakes to provide for insur- it would fail for lack of statutory indicaance whereby an aggregation of policy hold- tion of the manner in which it shall be ers becomes liable for losses incurred by any brought. It is at least plausible to say that of them. Each pays a stipulated sum or the same practice would prevail as with any rate, certain reserves must be kept on hand, voluntary body of persons unto whom an acand if amounts paid in are more than suffi- tion may accrue. Doubtless all the subscribcient to meet the losses and keep up the re- ers might join in bringing it, and we need serves the surplus may be refunded, or low- not consider whether any less cumbersome er rates may be charged, and if the amounts method is authorized by law, where there is are not sufficient the policy holders must no statutory provision on the subject. make up the difference. Business is trans- [1,2] In all this we find nothing to supacted by and through a duly constituted at port the contention that a cause of action torney in fact for the subscribers or policy arising in favor of the exchange is in any holders, which attorney may be an individ- way vested in the attorney in fact. The act ual, partnership, or corporation. The leaves room for a wide variety of agreements agreement between the attorney and the between such body of subscribers and its subscribers must be filed with the state in- attorney. If such agreement included a prosurance department, and is, with the statute. vision whereby the attorney might in its own the basis of the relation between them. Sub

name and for itself maintain an action arisject to the provisions of any such agree

ing in favor of the exchange, such agreement, the attorney fixes and collects the

ment would have to be dealt with when as

serted; but the declaration does not set up rates, accepts the risks, issues policies, pays

such an agreement between this attorney the losses, and, in short, transacts the busi

and the exchange in question, nor indeed ness.

any agreement between them, and it will not The body of subscribers is required to

be presumed that such provision exists. take a name whereby it is designated, in the Nothing appearing to the contrary, we must case before us the name being as stated, but assume that this attorney in fact is, like the statute does not create it a corporation, every other attorney in fact, an agent with calling it an "exchange.” There is no limit those powers only that are stipulated in the ed liability of subscribers as in a stock cor- undertaking. The fact that the maintenance poration, and the provision respecting suits of an action on the part of such an exchange is at least peculiar. Section 14 (section might be cumbersome and embarrassing does 456) provides that action may be brought in not tend to vest that right in the attorney the county where the claimant resides in fact. against all the subscribers, and that service We need not consider the contention for of process may be had upon the attorney defendant in error that the article comin fact, or upon the director of trade and plained of is not libelous, as it is our view

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