Noyes v. Gold (310 Ill. App. 1, 1941)

On Rehearing.

Mr. Justice Burke

delivered the opinion of the court.

In their complaint filed October 23, 1939, in the circuit court of Cook county, plaintiffs, who are brokers, averred that on October 17, 1938, Ben Gold was the trustee in bankruptcy for George C. Hupka, doing business as George C. Hupka & Company (not Inc.) having* been duly appointed and having qualified as such trustee in the District Court of the United States for the Northern District of Illinois, Eastern Division; that on October 17, 1938, he represented to the plaintiffs that as such trustee, or otherwise, he was the owner and possessed of certain securities; that he then gave to the plaintiffs, as brokers, open orders, good until countermanded, to sell said securities on the open market at not less than certain indicated prices; that plaintiffs accepted the open orders and duly entered the same as open orders to sell the securities for the account of the defendant, Ben Gold, as trustee for George C. Hupka, doing business as George C. Hupka (not Inc.); that plaintiffs acknowledged the open orders by mailing to the defendant a confirmation; that in October and November, 1938, certain stocks covered by the open orders were sold at the prices specified by the defendant, on which transactions the securities were in due course delivered by defendant and the proceeds remitted to him by plaintiffs; that at various times thereafter plaintiffs notified and confirmed to the defendant that plaintiffs had on file for the account and risk of the defendant open orders good until canceled to sell the remaining securities ; that open orders to sell the securities listed were at no time prior to September 5, 1939, countermanded or canceled by defendant; that plaintiffs diligently sought to sell the securities at the prices specified by defendant; that on September 5-, 1939, in accordance with the open orders, plaintiffs did sell on the open-market the following of said securities at the prices indicated:

100 shares Butte Copper & Zinc at 5%

85 shares Butte Copper & Zinc at 5%

600 shares Granby Consolidated Mines at 9 10 shares Granby Consolidated Mines at 9

that plaintiffs immediately notified defendant of such sales and made due demand for the securities for the purpose of delivery thereof to the respective purchasers ; that defendant failed or refused to deliver the securities; that plaintiffs were then successful in canceling the sales of 85 shares of Butte Copper & Zinc and 10 shares of Granby Consolidated Mines; that plaintiffs sought to obtain cancellations of the sales of 100 shares of Butte Copper at 5% and the 600 shares of Granby Consolidated at 9, but were unsuccessful; that plaintiffs, being obliged to deliver such shares to the purchasers thereof, purchased on the open market 100 shares of Butte Copper at 6 and 600 shares Granby Consolidated at 10, and that the difference amounted to $816.03, for which sum plaintiffs asked judgment. Defendant Ben Gold, as an individual and as trustee, answered that in all his dealings with plaintiffs he • acted only in his capacity as trustee and not as an individual ; he admitted receiving from plaintiffs certain confirmations of his orders to sell until countermanded ; stated that the last confirmation he received from plaintiffs was on or about March 29, 1939; denied the allegation that the open orders to sell were at no time prior to September 5, 1939, countermanded or canceled by him and asserted the fact to be that on or about April 1, 1939, he canceled all his outstanding orders with the plaintiffs and advised plaintiffs that he no longer wished to do business with them. He further denied that there was any duty on him to deliver any securities to the plaintiffs after he so canceled all outstanding orders. The case was tried before the court without a jury and resulted in a finding and judgment for the defendant and against the plaintiffs. This appeal followed.

The first point urged by plaintiffs is that the finding and judgment are against the manifest weight of the evidence. Under this point plaintiffs assert that the court erred in finding that they failed to prove their case by a preponderance of the evidence. The position of defendant is that the finding and judgment of the trial judge, who saw and heard the witnesses, is entitled to the same weight as the verdict of a jury, and is supported by the evidence and the law and should be affirmed, and that the court correctly ruled that the burden was on the plaintiffs to prove their case by a preponderance of the evidence, which they failed to do. The general rule that the burden of proof rests on the party having the affirmative of the issue is applicable to actions on contracts and the usual test employed to determine on which side the burden of proof lies is to ascertain which party would be entitled to a verdict if no evidence were offered on either side of the issue. "Where, however, a party having the affirmative of the issue has made out a prima facie case the burden of evidence as distinguished from the burden of proof may shift to the adverse party, but the burden of proof properly so-called, does not shift, and the party having the affirmative when the issues are made up must make out a case by a preponderance of the evidence. One who asserts that a contract has been abrogated or canceled by agreement has the burden of proof. The burden of proving a case by a preponderance of the evidence rests upon the party asserting the affirmative of the issue, and this never shifts during the course of the trial but remains with him to the end. The burden of proof is determined by the pleadings, and at the end of the case the pleader upon whom the burden rests must have sustained his position by a preponderance of the evidence. Plaintiffs cite cases in support of their proposition that the burden of proof to establish the countermanding of the orders to sell was upon the defendant. An examination of these cases discloses that the rulings are based on factual situations where the defendant asserted that the contract on which plaintiff based his action was canceled or abrogated by a subsequent agreement. In the instant case, plaintiffs by the allegations of their complaint, undertook to prove a contract. This contract, according to the complaint, arose when the defendant “gave to plaintiffs, as brokers, open orders, good until countermanded, to sell said securities on the open market at not less than certain indicated prices,” and when the plaintiffs “accepted said open orders and duly entered same as open orders to sell said securities for the account of the defendant, Ben Gold, as trustee for George C. Hupka, doing business as George C. Hupka •& Company (not Inc.).” This contract empowered and obligated the plaintiffs to endeavor to sell the securities until the orders should be countermanded. It also obligated the defendant to deliver the securities when sold. The provision that the open orders were “good until countermanded” was an integral part of the contract. The burden of proof ivas on the plaintiffs to prove the contract and the breach thereof by a preponderance of the evidence. One of the elements of proof required of the plaintiffs was that at the time the orders to sell were executed, such orders had not been countermanded. The plaintiffs recognized the logic of this position in their pleadings and also in the order in which the proofs were submitted. Under the provisions of par. 4, sec. 43 of the Civil Practice Act it is contemplated that facts constituting an affirmative defense must be plainly set forth in the answer. As a general rule this defense is first raised by the defendant. If the plaintiff is convinced that the facts set up do constitute an affirmative defense, he then files a reply in order to arrive at an issue as to such facts. Otherwise, he moves to strike such alleged defense on the basis that in law it does not constitute a defense. In the case at bar plaintiffs did not file a reply, which is a further indication that they considered that the burden was on them to show by a preponderance of the evidence that the orders had not been canceled at the time they were executed. It is manifest therefore, that the court did not commit error in holding that the harden of proving that the open orders were not countermanded was on the plaintiffs.

In order to determine whether the judgment is contrary to the manifest weight of the evidence, it has been necessary for us to carefully read the abstract and the exhibits, having in mind while doing so that the burden of proof was upon the plaintiffs. In 1937 Hupka & Company went into bankruptcy, owing the plaintiffs $50,000 or $60,000, for which plaintiffs held security. When the defendant was appointed trustee of the bankrupt estate in May, 1937, he caused certain of the securities held by the plaintiffs to be sold to pay the debt owing to plaintiffs. After this was done, the balance of the securities held by plaintiffs were turned over to the defendant. In October, 1938, defendant, as trustee of the bankrupt estate, had in his possession certain certificates representing unsold shares of stock which the defendant authorized the plaintiffs to sell under orders “good until countermanded.” Defendant fixed the prices at which the stocks were to be sold. Afterwards, some of the stocks so listed were sold, including North American Aviation. There was considerable delay in transferring the latter stock on the books of that company. Defendant denied he knew the reason for the delay. This incident is only important as a collateral matter in determining the credence to be given to defendant’s testimony. Kelly B. Gilio, an employee of plaintiffs who was in charge of their mailing department, testified that the confirmations dated November 14, 1938, December 12, 1938, January 16, 1939, February 23, 1939, March 28, 1939, May 31, 1939 and July 19, 1939, were regularly mailed by him to the defendant in stamped envelopes from addressograph plates run off by bim and deposited in the United States Postoffice. George C. Gordon, office manager of plaintiffs, testified that he first met the defendant in October, 1938; that he made a-list of the stocks defendant had for liquidation; that he entered all of the stocks as open orders; that between the date of listing the stocks as open orders on October 17, 1938, and the subsequent final sale thereof on September 5, 1939, some of the stocks were sold; that on September 5, 1939, he received the report of the sale of certain of the stocks in the defendant’s account and called defendant on the telephone to give him (defendant) a report of these sales; that the defendant told him he had sold these securities six months before; that when the witness (Gordon) asked defendant why he had not canceled the open orders he had with the plaintiffs, defendant said he did not know anything about “that business”; that defendant wanted to know how long an open order was good and that witness told him an open order was good until canceled. The witness further testified that up to September 5, 1939, plaintiffs had received no cancellation of any of the open orders from the defendant, nor any letters or telephone communications pertaining to the cancellations; that on September 5,1939, he had a second telephone conversation with the defendant; that a few minutes after the conclusion of this conversation he dictated to his stenographer his recollection of the conversation; that she transcribed the same; that in the second conversation he told the defendant he was able to cancel two lots of the stock that were filled, but was unable to cancel the larger ones; that he (Gordon) tallied to defendant on the telephone twice on the next day, September 6, 1939, and had one of his secretaries who could write shorthand listen in on the conversations on an extension; that she afterwards gave him (witness) a correct transcription of the telephone conversations; that the first conversation on September 6, 1939, was in the morning; that the witness told defendant that one of the smaller securities had been canceled and that plaintiffs’ New York office had been able to buy 100 shares of Butte Copper at only % loss, and that on the others he would find out about it and that he would advise defendant later in the day; that defendant said, “O.K., that will be swell”; that later 'in the day witness talked with defendant