3 F.(2d) 97 "Answering letter, have no hams coming from you. Bought one car same has been delivered." Under date of July 10 the defendant tele- quirements elsewhere. Moreover, under the graphed plaintiff: custom shown in the trade, concerning which evidence was properly admitted, an offer to buy or sell, not otherwise limited by its own terms, expires at the opening of the market the next day, apparently at 9:30 a. m. Under this custom, Handy's offer of June 26 was dead before on June 27, at about noon-Bartlett in effect rejected it. This reference was to the car shipped on July 1 and accepted as above noted. On the same date (July 10) plaintiff telegraphed defendant to the effect that it had sold and confirmed to defendant five cars of hams on June 28, and that if confirmation mailed was not in accordance with purchase through broker, defendant should have advised plaintiff immediately by wire or letter; that therefore plaintiff must insist on defendant's accepting sale in accordance with terms of sale, and that the second car was going forward that day. Plaintiff received no answer to this telegram and telegraphed again on July 12 to the effect that it had received and was shipping the third car on July 12, and fourth and fifth cars, according to its confirmation. This also was not answered. On the same day, July 12, a letter was written by plaintiff to defendant: "We shipped you yesterday from Omaha car MRL-10735 containing green skinned hams sold through Cross, Roy and Saunders." No reply was received to this and the next the plaintiff learned was from a telegram from their branch manager at Springfield,that the defendant had refused to take the second car. Defendant relied on Bartlett and Winchell to fix the matter up and ignored plaintiff. [1] We turn to the legal results: Of course the burden is upon the plaintiff to show that it contracted with the defendant through an agent, duly authorized; or, that in some way any unauthorized act was ratified by the defendant. We agree with defendant's counsel that Bartlett and Winchell had, on June 26, only strictly limited powers as defendant's agents to buy the described hams at 262 cents; that when Winchell telegraphed that he thought he could not get them at that price and Bartlett (naturally enough) interpreted this as a refusal of that offer-and at noon on June 27 so stated to Handy, Sr., and tendered him another assortment at higher pricesHandy's offer was dead. Bartlett was Winchell's general agent in this regard; if Bartlett was wrong in construing Winchell's telegram this became Winchell's error. Handy assumed and had a right to assume, at noon on June 27, that he had no outstanding negotiations with or through Bartlett and Winchell for the five cars; and he filled his re [2] But the trouble grew out of Winchell's unauthorized telegram, sent to Cross to buy these hams at 10 p. m. on June 27, eight hours after Handy, Sr., had told Bartlett that he had filled his requirements elsewhere. Cross telephoned this order on June 28 to the plaintiff, not then disclosing the name of the purchaser. But the confirmation from Cross dated June 28 showed plaintiff that defendant was the customer; and the sale was then booked and a confirmation sent through the mail by plaintiff to defendant in the usual course of business. But, as Cross had, through Winchell, no real authority to bind the defendant, there was no contract. Plaintiff did not rely on any ostensible authority; it knew nothing of the relation of the parties except that Cross, a broker, said he had an order from Handy for these hams. There was no holding out by defendant to plaintiff of Winchell or Cross as defendant's agent. Plaintiff booked the order at its peril as to actual authority in Cross to bind the defendant; but plaintiff acted in good faith and in the usual course of that line of business. The situation on the evening of June 28, then, was that plaintiff and defendant, without fault on the part of either, had been put by the erring broker into the false position of apparent seller and purchaser of about $40,000 worth of hams on a market that shortly dropped. Was there evidence for the jury of a ratification? Bartlett took up the situation over the telephone with Handy, Sr., on the evening of June 28, at Handy's home. Handy said he did not want the hams, and told Bartlett (who for legal purposes was Winchell) to call him the next morning at his office after he had looked over his stock. This was a tentative arrangement to consider ratification. But when, the next morning, Bartlett called up (as stated above), he found and talked with Handy, Jr., who had before him Bartlett's night letter, sent by Bartlett after his talk with Handy, Sr., and beginning, "Confirming telephone conversation have bought you five cars," etc. This unexplained document left Handy, Jr., with but little option; be arranged for a week's delay, and agreed to take the hams. But, on this record, we think the jury would not have been warranted in finding that the defendant corporation thus ratified the acts of the intervening brokers. [3] We agree with plaintiff's counsel that there was evidence for the jury of sufficient authority on the part of Handy, Jr. He had the title of manager; he had charge of the plant in his father's absence; indeed, his father seems to have assumed that his son had authority to act in the matter. But we agree with defendant's counsel that the record shows that the acts of Handy, Jr., were without the requisite knowledge of the material facts. The burden was upon the plaintiff to show, not only acts of ratification by a duly authorized agent of the defendant, but acts with full knowledge of all material facts. The plaintiff's case is fatally defective in that regard. Bennecke v. Insurance Co., 105 U. S. 355, 26 L. Ed. 990; Combs v. Scott, 12 Allen (Mass.) 493, 496, 497. There was, then, on this record, as matter of law, no ratification on June 29 by Handy, Jr. [4] But on June 30, Handy, Sr., who was back at his office, took up the situation with his son and with Bartlett, finding fault with Bartlett for sending the night letter containing the language "confirming the telephone conversation," etc., supra. He also received from the plaintiff the formal confirmation mailed him by the plaintiff on June 28; but he did not return this confirmation, accepted or rejected, nor did he take any action, except by complaining to Bartlett, to repudiate the ratification made, in form, by his son on June 29. Considering first the matter of the confirmation: There is uncontradicted evidence that it is a custom of the trade for the buyer to return such confirmation direct to the seller. True, the evidence on that point is not as clear and explicit as might be desired. But, as we understand it, there was enough to indicate that the interchange of such confirmations is an understood part of the trading machinery with which this kind of business is carried on. The business is one in which prices fluctuate substantially and rather rapidly; it is largely carried on through brokers, naturally zealous to earn commissions, and therefore prone to put a broad construction upon any authority given them. The interchange of confirmations is apparently a device intended to prevent just such "mix-ups" as occurred in this case. Clearly, if there be such custom, it is a wise and trouble-saving device. It follows that if, under the custom of the trade, it was de fendant's duty to return this confirmation, accepted or rejected, its failure so to do might be held a ratification,-like silence when there is a duty to speak. Foster v. Rockwell, 104 Mass. 167; Union Gold-Mining Co. v. Rocky Mountain Nat. Bank, 96 U. S. 640, 644, 645, 24 L. Ed. 648; 2 C. J. 505, and cases cited. We think that this issue should have been submitted to the jury under carefully guarded instructions as to the existence and scope of such custom. [5] Apart from this confirmation from the plaintiff and the custom relating thereto, the defendant's officers (that is, Handy, Sr., and Handy, Jr.) both knew on June 30, after the elder's return from New York, that Handy, Jr., had, in form, ratified the purchase. They knew, or were bound to know, that Bartlett had conveyed information of this ratification, through Winchell and Cross, to the plaintiff; for it was a condition of the putative ratification that shipment should be delayed one week, and the defendant knew that that condition was accepted by the plaintiff. The status thus created also presented a question of fact for the jury. The evidence on this point, again, is not as clear and explicit as might be desired. But we think enough appears so that the question should have been submitted to the jury as to whether the defendant's failure to disaffirm the authority given in form by Handy, Jr., to Bartlett, on June 29, did not amount to ratification. See A. Blum, Jr.'s, Sons v. Whipple, 194 Mass. 253, 257, 80 N. E. 501, 13 A. L. R. (N. S.) 211, 120 Am. St. Rep. 553; Harrod v. McDaniels, 126 Mass. 413, 415. A minor exception by plaintiff is to the exclusion of two letters written by Winchell to Cross on July 1, containing, inter alia, instructions as to the week's delay in shipping, pursuant to the arrangement made by Handy, Jr., and Bartlett on June 29. As we have held that there was an issue of fact as to ratification growing out of the defendant's failure seasonably to disaffirm the acts of Handy, Jr., we think these letters should have been admitted. They tend to show what was done in reliance upon the authority emanating from Handy, Jr., on June 29. Winchell's telegram on July 18 to Bartlett, was properly excluded. The judgment of the District Court is reversed and the case is remanded to that court for further proceedings not inconsistent with this opinion; plaintiff in error recovers costs in this court. SMALE v. UNITED STATES 2. 3 F.(2d) 101 SMALE et al. v. UNITED STATES.* 101 roll. He denied making such a statement. (Circuit Court of Appeals, Seventh Circuit. At the close of defendants' testimony, Igoe December 5, 1924.) No. 3454. I. Witnesses 199(1)-Communications to attorney expected to be employed, and statements made under erroneous belief relation exists privileged. Though relation of attorney and client must ordinarily exist before communication is privileged, communications by client to attorney expected to be employed, notwithstanding attorney may find it impossible to accept retainer, and statements made under belief relation exists, are privileged. 2. Witnesses 199(1)—Voluntary communication to codefendant's attorney not privileged, in absence of joint defense. Communication voluntarily made to codefendant's attorney, whom defendant never intended to employ as his attorney, is not privileged, in absence of joint defense. 3. Witnesses 223-Doubt whether state was called as a witness by the government, and, against the objection of himself and defendant Smale, directed to relate the statement made by Smale to him which Smale had denied making. When arrested and taken to the marshal's office, Smale sent for his lawyer, and defendant Carroll, who was also apprehended at the same time, sent for his attorney, Igoe. Igoe arrived shortly before Smale's counsel, and was conferring with his client, when Smale, who was in the same room, went voluntarily to Igoe and in substance said that he had not been in Carroll's saloon for six months, which, if true, disproved the government's theory that the conspiracy to corrupt the juror was hatched, and in part effectuated, in Carroll's saloon a few days before. On cross-examination, and without ment privileged should be determined prelim- objection, Igoe stated that he told Smale inary to its admission in evidence. that his client, Carroll, had told him a different story, and that he (Carroll) was going to tell only the truth. As respects issue of privilege, doubt as to voluntariness of defendant's statement to codefendant's attorney, or existence of joint defense, or of confidential nature of communica We may pass the pertinent query whethtion, should be determined by court preliminary did not lie in the statement which Igoe made er the prejudice arising from this testimony to admitting testimony thereof. In Error to the District Court of the United States for the Eastern Division of the Northern District of Illinois. Edward Smale, Jr., and another were convicted of conspiracy to influence juror, and to obstruct and impede the due administration of justice, and they bring error. Af firmed. Everett Jennings, of Chicago, Ill., for plaintiffs in error. without objection on cross-examination in favor of his client, Carroll, rather than in the information which the government elicited respecting Smale's statement to him. There may have been some prejudice to Smale's cause, however, in the reception of the testimony thus given on direct examination, and, as an appropriate objection was made, its admissibility must be determined. [1] The general rule which excludes privileged 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 ordinarily exist before the communication is privileged must be admitted. 28 R. C. L. 553; 40. Cyc. 2363; York v. United States, 224 F. 88, 138 C. C. A. 356; Collins v. Hoffman, 62 Wash. 278, 113 P. 625, Ann. Cas. 1913A, 1; In re Davis' Estate, 142 Minn. 187, 171 N. W. 778; Gronewold v. Gronewold, 304 Ill. 11, 136 N. E. 489. But when does the relation begin? When does it terminate? What showing is necessary to establish the relation? Who determines it? Some of these questions become questions of fact. The communication of a client to an attorney whom the client expects to employ falls within the rule notwithstanding the attorney may find it impossible to accept the retainer. McNamee v. Bank, 88 Or. 636, 2. Associations 20(2)—That action by reciprocal insurance association may be cumbersome and embarrassing does not vest its attorney in fact with authority to sue in its own name. [2] But here Igoe never was employed by Smale, and there is nothing to indicate that Smale ever intended to employ Igoe, or that Igoe led Smale to believe he would serve any defendant other than Carroll. In fact, such action in its own name. Igoe's answer clearly negatives the suggestion that Smale considered the testimony confidential, or that Igoe would treat it as such. That action by reciprocal insurance association in names of all subscribers might be cumbersome and embarrassing does not vest its attorney in fact with authority to prosecute It is also urged that, in a joint defense, communications by one defendant to another defendant's attorney should be privileged. To what extent such communication may be privileged we need not determine, for it is apparent that at that time Carroll's preparation for defense was separate and distinct from that of Smale, and Igoe was not then engaged in any joint defense. We conclude from all the evidence that Smale made the statement voluntarily to Igoe, who was not then nor thereafter his attorney, that Smale never intended to employ him, and the necessity as well as the wisdom of Igoe's appearing solely for his client Carroll is apparent throughout the record. [3] If there existed doubt as to the voluntariness of the statement, or the existence of the joint defense, or the confidential nature of the communication, it was for the court to have determined it preliminarily to admitting the testimony. 28 R. C. L. 555. Upon the facts presented by this record, the trial judge could not have found any issue of fact in favor of Smale. The testimony was therefore properly admitted. The judgment is affirmed. In Error to the District Court of the United States for the Northern District of the Eastern Division of Illinois. Action by the John L. Walker Company against the National Underwriters' Company. Judgment on demurrer for defendant, and plaintiff brings error. Affirmed. Murphy O. Tate, of Chicago, Ill., for plaintiff in error. Frederick A. Brown, of Chicago, Ill., for defendant in error. Before ALSCHULER, EVANS, and PAGE, Circuit Judges. ALSCHULER, Circuit Judge. Electing to stand by its amended declaration, to which the court had sustained a demurrer, judgment was rendered against the plaintiff in the action, John L. Walker Company, which judgment the writ of error attacks. The declaration charged the defendant, the National Underwriters' Company, with publishing an alleged libelous article concerning plaintiff, a corporation. The charge is that plaintiff carried on business of insurance as "the authorized attorney in fact for the Ft. Dearborn Casualty Underwriters 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 automobile, plate glass, and workingmen's com JOHN 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.) No. 3450. 1. Libel and slander 77-Under Illinois laws, action for libel of reciprocal insurance association may not be maintained by its attorney in fact in own name. Under Act June 20, 1921 (Laws Ill. 1921, p. 492; Smith-Hurd Rev. St. Ill. 1923, c. 73, §§ 443468), providing for reciprocal or inter insurance exchanges doing business through an attorney in fact, section 14 (section 456) of which provides for service on attorney in fact in actions against such organization, but contains no provision for suits by organization itself, action for libel of such organization could not be maintained by the attorney in fact in its own name. stock companies"; that it had acquired a reputation for sound business judgment, and that it had built up a large business in placing such insurance, and had always dealt fairly and honestly with the public, whereby it acquired large gains and a growing profitable business in placing such insurance, particularly the business of placing workingmen's compensation insurance; and that by the publication plaintiff was greatly damaged. A reading of the entire article complained of, which is quite lengthy, makes it apparent to us that the alleged libel was of and 3 F.(2d) 102 concerning the organization known as the Ft. Dearborn Casualty Underwriters alone. It is conceded that, if the relation between the plaintiff and the Ft. Dearborn concern was only that of principal and agent, any damage accruing from the alleged libelous article would be recoverable by the Ft. Dearborn organization or its members, and not by its agents; indeed, there is nothing in the declaration to indicate special damage to the plaintiff which did not wholly accrue to those for whom the plaintiff was acting. But the contention is made that plaintiff's right to maintain this action is given by the laws of Illinois creating such concerns as the Ft. Dearborn Casualty Underwriters and providing for the peculiar relation between it and its attorney in fact. Laws Ill. 1921, p. 492 (Smith-Hurd Rev. St. Ill. 1923, c. 73, §§ 443-468), an act concerning the business of reciprocal or inter insurance, approved June 20, 1921, in force July 1, 1921. The act undertakes to provide for insurance whereby an aggregation of policy holders becomes liable for losses incurred by any of them. Each pays a stipulated sum or rate, certain reserves must be kept on hand, and if amounts paid in are more than sufficient to meet the losses and keep up the reserves the surplus may be refunded, or lower rates may be charged, and if the amounts are not sufficient the policy holders must make up the difference. Business is transacted by and through a duly constituted attorney in fact for the subscribers or policy holders, which attorney may be an individual, partnership, or corporation. The agreement between the attorney and the subscribers must be filed with the state insurance department, and is, with the statute, the basis of the relation between them. Subject to the provisions of any such agreement, the attorney fixes and collects the rates, accepts the risks, issues policies, pays the losses, and, in short, transacts the busi ness. The body of subscribers is required to take a name whereby it is designated, in the case before us the name being as stated, but the statute does not create it a corporation, calling it an "exchange." There is no limited liability of subscribers as in a stock corporation, and the provision respecting suits is at least peculiar. Section 14 (section 456) provides that action may be brought in the county where the claimant resides against all the subscribers, and that service of process may be had upon the attorney in fact, or upon the director of trade and commerce of the state, and that such service shall be binding upon all subscribers. It will be observed the attorney is not in any respect a party to the suit, but is only the instrumentality through which service of process is had on all the subscribers, and that whatever judgment is rendered would be, not against the attorney in fact, but against the defendants to the action, the subscribers, who, notwithstanding their place of residence, are by the terms of the act bound by the serving of process upon the attorney in fact or upon the designated state officer. With the failure of the statute to indicate how a claimant may ascertain the names of all the subscribers, and the very possible difficulty of making all of them parties defendant to the action, we are not here concerned. There is no provision whatever for suits by or on behalf of the exchange; but we cannot assume that a cause of action may not arise in its favor, nor that it would fail for lack of statutory indication of the manner in which it shall be brought. It is at least plausible to say that the same practice would prevail as with any voluntary body of persons unto whom an action may accrue. Doubtless all the subscribers might join in bringing it, and we need not consider whether any less cumbersome method is authorized by law, where there is no statutory provision on the subject. [1,2] In all this we find nothing to support the contention that a cause of action arising in favor of the exchange is in any way vested in the attorney in fact. The act leaves room for a wide variety of agreements between such body of subscribers and its attorney. If such agreement included a provision whereby the attorney might in its own name and for itself maintain an action arising in favor of the exchange, such agreement would have to be dealt with when assuch an agreement between this attorney serted; but the declaration does not set up and the exchange in question, nor indeed any agreement between them, and it will not be presumed that such provision exists. Nothing appearing to the contrary, we must assume that this attorney in fact is, like every other attorney in fact, an agent with those powers only that are stipulated in the undertaking. The fact that the maintenance of an action on the part of such an exchange might be cumbersome and embarrassing does not tend to vest that right in the attorney in fact. We need not consider the contention for defendant in error that the article complained of is not libelous, as it is our view |