APPEAL from the Circuit Court of Cook County; the Hon. WILLIAM
BARTH, Judge, presiding.
MR. JUSTICE DRUCKER DELIVERED THE OPINION OF THE COURT:
Mr. JUSTICE DRUCKER delivered the opinion of the court:
Plaintiff brought suit for the return of a $50,000 deposit he had placed with defendant. Defendant answered claiming plaintiff had authorized several commodity transactions resulting in losses over and above the amount of the deposit and counterclaimed for $23,920, the amount of this excess loss. Although the complaint was for a declaratory judgment and other relief, the matter was transferred to the law calendar and tried without a jury. The court entered judgment in favor of plaintiff for $50,000 and costs and dismissed defendant's counterclaim.
Defendant contends: (1) the court erred in allowing an evidence deposition to be used at trial; (2) the court erred in not ruling on certain objections and made inconsistent rulings in the admission of evidence; and (3) that the judgment is against the manifest weight of the evidence.
The testimony of Martin Scanlon, by deposition (objected to by defendant), was as follows: During the relevant period in issue, he was employed by the defendant as commodity broker and manager of defendant's office in Kansas City, Missouri. The deposition was taken December 22, 1970, at which time Scanlon was residing in Leawood, Kansas. At the time of the deposition, Scanlon was unemployed. He had known plaintiff since 1958.
In December of 1969 plaintiff had an account with defendant. During this period plaintiff traded in February pork bellies. The trades turned out to be very profitable and plaintiff gave him roughly one-third of the profit or about $16,000. A Mr. Gene Shapiro had an equity interest in this trade with plaintiff but Scanlon denied having any equity in the trade himself nor was he to share in any portion of a loss, if there had been one. With regard to this trading he had been verbally authorized by plaintiff to execute this trade. Also, he thought he probably advised plaintiff, while the market was open, that orders had been filled for plaintiff's account.
On March 17, 1970, he had a phone conversation with plaintiff concerning commodities in which he suggested that plaintiff trade in pork belly futures. Thereafter, sometime between March 17 and 20, plaintiff deposited $50,000 with defendant. In making his recommendation to plaintiff he used as a factor for his opinion a government quarterly report. This report is made public after the market closes on the day of issuance and was to be released on March 20, 1970.
During the day of March 20 he had several telephone conversations with plaintiff. The first conversation occurred between 9:30 and 10:00 A.M. and concerned the general market conditions relative to pork bellies. During this conversation plaintiff asked to be kept posted on the market. In his next conversation with plaintiff he discussed the margin requirements for pork belly futures and told plaintiff that defendant would require $1000, rather than $700, as a margin for each contract. Plaintiff responded that he wanted to look around and see what margins were required from other commodity houses. After this conversation he also checked the margin requirements at other commodity houses.
From March 17 through and including March 20 plaintiff never specifically placed an order to purchase any commodity, nor was an order placed during any of these conversations. Nevertheless, some time around mid-morning on March 20, he placed orders for plaintiff's account. He felt that "we were in concert to get along on the market." "In concert" meant that he felt both he and plaintiff believed the market would go up. He also thought their thinking was the same with regard to the trading in March 1970 as it had been in December 1969. Although he thought his thinking was the same, plaintiff never told him that it was the same.
In placing the orders he called up defendant and told defendant's employees to buy $50,000 worth of July pork belly futures but did not give them an order to buy 75 contracts, which was the amount eventually purchased. He didn't specifically remember, but he thought defendant would report the fills (executed orders) either to himself or his secretary from time to time during the day. As these reported fills were received, he did not communicate these to plaintiff. He did not speak with plaintiff at any time prior to the close of the market to report that orders had been filled for his account. He did think that other people in the office would have advised plaintiff of the filled orders.
After the market closed on March 20, and some time that evening, he had another phone conversation with plaintiff, which was rather heated, at which time he advised plaintiff of the filled orders. In this conversation plaintiff threatened to sue him and defendant. On the following day he had another phone conversation with plaintiff in which he told plaintiff, "that is the way it was. That is the ball game." On cross-examination it was brought out that one other customer disavowed a purchase of July pork bellies made by Scanlon on March 20, 1970.
Testimony of plaintiff in his own behalf:
On December 23, 1969, while the market was open, he authorized Scanlon by phone to execute trades for him. Later, and before the market had closed, Scanlon called him and advised him that his orders had been filled. The order in December 1969 was specific and was not discretionary. He had requested that Scanlon report fills to him and stated he would require this of anyone. He gave one-third of the profit on the December trade to Scanlon as a gratuity. As far as that trade was concerned, a verbal agreement did exist, in the nature of a three-way division of profits and losses, but only he and Gene Shapiro had made an equity investment in the trade. No similar agreement existed with regard to his March deposit of funds with either Scanlon or Shapiro. Defendant impeached plaintiff by introducing a Commodity Exchange Authority form entitled "Statement of Reporting Trader." In this form plaintiff had checked "no" when asked if other persons have any financial interest in his account, but where next to the question it states, "If yes, give name and address of such person(s)," he listed Scanlon and Shapiro. *fn1 Plaintiff claimed he filed the wrong document by mistake but has never called the Commodity Exchange Authority about the document.
On March 17, 1970, he delivered to defendant a certified check for $50,000. On this day he had a phone conversation with Scanlon about the general market conditions for pork belly futures. Scanlon felt the market was bullish, that it would probably go up. Between March 17 and 19 several other conversations occurred but only concerning "May pork bellies." It is a rule of the houses he has traded with that some money must be advanced before a customer can trade commodities.
Some time in late February or early March he also discussed trading in commodities with Leo Waxman, a friend and business associate. Waxman gave him $10,000 to open an account for him. Authority to execute this account had to come from Waxman although Waxman relied entirely upon him for his investment. No trading was done in this account. With regard to his own $50,000 deposit, no one else had an interest, neither Waxman, Shapiro nor Scanlon.
Right after the opening of the market on March 20, between 9:30 and 10:00 A.M., he called Richard Becker, a vice-president of defendant. He asked Becker's opinion of the market in May pork bellies. Becker was not in favor of a bullish or a long position and did not favor trading on the basis of an anticipated government crop report. He only had one conversation with Becker while the market was open. He also spoke with Scanlon early that morning and asked him about general market conditions. Scanlon said he was bullish, but there was a variety of opinions. In a later conversation with Scanlon he was informed that the margin requirement had been changed by defendant from $700 to $1000. He then told Scanlon that he was disturbed by this change and wanted to call around. He later spoke with Scanlon and told him to do nothing until he called back. On March 20 he never placed an order for pork bellies.
After the market closed and while calling the Kansas City office to arrange a refund of his money, he was first advised that orders had been entered for his account. When he learned his account was charged with these orders, he made a demand for refund of his money. He first called Richard Becker to demand a refund of his money but was refused. He then sent a telegram to defendant in Chicago, time stamped 4:00 P.M., reciting that defendant had no authority to execute any order and again demanding a refund of his money.
In the early evening of March 20 he spoke with Scanlon and again demanded his money back. Plaintiff was asked on cross-examination whether Scanlon had given a reason for not refunding the money and stated he didn't remember. He was impeached by prior deposition testimony wherein he had stated, "He [Scanlon] refused to refund the money. His position at that time was that I had made these orders."
Scanlon could only deal with specific orders as to price and quantity and commodity. Scanlon never had any discretionary authority.
It was brought out on cross-examination that plaintiff spoke with Scanlon a few weeks prior to the trial and that they were friends.
Testimony of Leo Waxman, for plaintiff:
He had discussed trading in commodity futures with plaintiff and decided to join with him in trading. On March 19 he gave plaintiff a check for $10,000. On March 20 he had several conversations with plaintiff. In the first conversation, occurring probably before 9:00 A.M., plaintiff told him that this was the day they would either trade or not. Around noon he had another conversation with plaintiff who told him "Forget it, we are not doing anything today, do what you want to do, go on about your business." Later in the day he had a third conversation with plaintiff. He was then told, "You had better call the broker and find out if they have used ...