Oliphant v. Markham

• Decision Date: 10 February 1891
• Citation: 15 S.W. 569
• Court: Texas Supreme Court
• Parties: OLIPHANT v. MARKHAM <I>et al.</I>

15 S.W. 569

OLIPHANT v. MARKHAM et al.

Supreme Court of Texas.

February 10, 1891.

Appeal from district court, Walker county.

Abercrombie & Randolph, for appellant. Campbell & Ball and H. J. Brown, for appellees.

GAINES, J.

The plaintiff sued J. S. Markham and Thomas W. Markham upon a promissory note executed by them, payable to her. J. S. Markham did not answer, but Thomas W. Markham appeared and pleaded, alleging, first, that the note was given for an illegal consideration, and was therefore void; and, in the second place, that it was executed by him under duress. In support of the first ground of defense it was alleged that the original consideration of the note was money loaned to and advanced to J. S. Markham by one J. B. Jones, as agent for the plaintiff, under the following circumstances: J. S. Markham had entered into a contract with a firm known as "S. S. Floyd & Co.," nominally for the sale and delivery of cotton and wheat, at stipulated prices, at future dates, while in fact it was understood between the parties that nothing was to be delivered under the contracts, but that at the time the contracts were nominally to be performed there was to be paid or received by the seller, as the case might be, the difference between the contract price and the market price of the commodity on the day of the performance. It was alleged that Jones well knew of the nature of the contracts, and advanced to J. S. Markham money to pay such margins as became necessary to prevent his rights under them from being forfeited. It was also averred that J. S. Markham, after the contracts were executed, transferred his interest in them to Jones; that after the transfer Jones paid two or more margins upon them; and that the money so paid was included in the amount for which the note was executed. The defendant Thomas W. Markham, in the second place, also alleged that in order to secure the money so advanced and paid for J. S. Markham the latter delivered to Jones certain evidences of debt, consisting of notes and accounts belonging to T. W. Markham & Son, (a firm composed of the defendant T. W. Markham and one F. E. Markham,) without authority from the firm or either member thereof that they demanded the possession of such evidences of debt from Jones, and that he refused to deliver them except upon condition that he, the defendant, would execute a note for the balance claimed to be due from J. S. Markham; that the firm of T. W. Markham & Son were merchants; that the claims were owed to them by their customers, and that their retention by Jones was ruinous to their business; and that, the latter having persisted in his refusal to surrender the claims, defendant T. W. Markham executed the note in order to get possession of them, and for no other consideration. The plaintiff interposed a general demurrer to the answer, and, the demurrer having been overruled by the court, now assigns that ruling as error. The demurrer being to the pleading as a whole, if any part of the answer presented a valid defense, either in whole or in part, to the suit, it was properly overruled. The transactions under consideration took place before the passage of the statute which affixed a penalty to the business of dealing in futures, (Laws 19th Leg. 86,) but it was held by this court in Floyd v. Patterson, 72 Tex. 202, 10 S. W. Rep. 526, that such dealings were contrary to public policy, and that contracts for the future delivery of stocks or produce, in which it is contemplated that the commodity should not be delivered, would not be enforced. But it does not follow that every contract which is incidentally connected with or grows out of such a transaction is tainted with its vice. In the case referred to the doctrine was recognized "that the test, whether a demand connected with an illegal act be enforced, is whether the plaintiff requires any aid from the illegal transaction to establish his case." Applying this principle, it is apparent that, in so far as the answer alleges that the consideration of the note sued upon was for money loaned to the defendant J. S. Markham to pay margins upon future contracts, although with a knowledge on part of Jones of the purpose for which the money was borrowed, it presents no defense to the action. If Jones had sued J. S. Markham for the money so lent, when he had proved the loan he would have established his case, and no proof of the purpose for which the money was lent would have been required. But if Jones had undertaken to advance the margins upon the contracts, and had advanced them in order to recover the money so expended, it would have been necessary to prove the necessity for making the payments, and in order to do this he would have had to show not only the request to pay the money, but also the nature of Markham's contract, which gave rise to the necessity. Besides, if Jones acted as Markham's agent in keeping the contract in force, it would seem that such a participation would render him equally as culpable as his principal. If, as the answer alleges, before the contracts between Markham and Floyd & Co. were closed, Jones became interested in them, it is clear that he could not recover of Markham for his proportion of any loss that may have thereafter accrued.

It follows from what has been said that the answer of Thomas W. Markham sets up, in part at least, a good defense to the action, and that the demurrer was properly overruled. But the demurrer raises a question which it is necessary to decide before making a final determination of the appeal, and it will be discussed here. Does the answer show such a state of facts as entitled Thomas W. Markham to avoid payment of the note, although it may be valid against his co-defendant? Does the fact that Jones unlawfully withheld from him possession of the evidences of debt belonging to his firm, and that he executed the note solely for the purpose of regaining possession of them, authorize a holding that the execution of the note by him was compulsory? It seems to be the settled law in the English courts that the detention or threatened destruction of goods will not constitute...