Alamaris v. Jno. F. Clark & Co

• Decision Date: 13 February 1933
• Docket Number: 30425
• Citation: 166 Miss. 122,145 So. 893
• Parties: ALAMARIS v. JNO. F. CLARK & CO
• Court: Mississippi Supreme Court

145 So. 893

166 Miss. 122

ALAMARIS v. JNO. F. CLARK & CO

No. 30425

Supreme Court of Mississippi

February 13, 1933

Division B

1. APPEAL AND ERROR.

In considering propriety of peremptory instruction, truth of appellant's evidence will be assumed and only inferences favorable to him will be made.

2. GAMING.

Contracts for future delivery are valid only where parties intend actual delivery of goods and payment of price therefor.

3 GAMING.

Where parties use contracts for future delivery as means of speculating on market fluctuations by settlements of differences in cash, such contracts are void.

4 GAMING.

Legislative reversal of settled public policy of state against wagering by means of dealing in futures will not be admitted in absence of statute free from reasonable doubt.

5 GAMING.

Notwithstanding statute relating to contracts for future delivery of commodities according to rules of boards of trade or exchanges, formal contract is not conclusive where other evidence discloses that it was used as a means of dealing in futures (Code 1930, sections 1828, 1830).

6 GAMING.

Intention of both parties to contract for future delivery that transaction was to be closed by settlement of difference between price when made and price at time of closing may be shown by what parties said and did in respect of contract (Code 1930, sections 1828, 1830).

7. GAMING.

Where there is substantial evidence that will support inference that both parties did not intend actual delivery under contract for future delivery, question is for jury (Code 1930, sections 1828, 1830).

8. GAMING.

Where evidence of seller of corn for future delivery on board of trade tended to show that neither seller nor brokers intended actual delivery but that cash settlement of difference between contract price and market price at time fixed for delivery should be made, direction of verdict for brokers was error (Code 1930, sections 1828, 1830).

HON. W. J. PACK, Judge.

APPEAL from circuit court of Forrest county, HON. W. J. PACK, Judge.

Action by John F. Clark & Co., against P. G. Alamaris. From judgment for plaintiffs, on directed verdict, defendant appeals. Reversed and remanded.

Reversed and remanded.

Geo. W. & E. J. Currie, of Hattiesburg, for appellant.

Such contract is only valid when the parties really intend and agree that the goods are to be delivered by the seller, and the price to be paid by the buyer, and if under guise of such a contract the real intent be merely to speculate in the rise or fall of prices, and the goods are not to be delivered, but instead one party is merely to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, then the whole transaction constitutes nothing more than a wager, and is null and void.

2 Elliott on Contracts, sections 995 and 996, pages 298 and 299.

Dealing in futures, or contracting to buy or sell commodities of any kind, to be delivered at a future day, without agreeing and intending that the commodities are to be actually delivered in kind, and the price paid, has long been against the public policy of this state, and expressly declared to constitute a criminal offense, punishable by fine and imprisonment.

Laws of 1882, page 140; Code of 1892, sections 1120, 1121; Code of 1906, sections 1201, 1202; Code of 1917, sections 931, 932; Code of 1930, sections 958, 959.

Where an act is made illegal and criminal, no right of action can arise therefrom.

Lemonious v. Mayer, 14 So. 33; White v. Eason, 15 So. 66.

One engaged in transactions similar to those in the present case is dealing in "futures" and subject to attachment.

Dillard v. Brenner, 18 So. 933; Isaacs v. Silverberg, Parry & Company, 39 So. 420.

A contract for the payment of differences in prices, arising out of the rise and fall in the market price above or below the contract price, is a wager on the future price of the commodity, and is therefore invalid, and this is true no matter what guise may clothe the transaction.

Gray v. Robinson, 48 So. 227; S. M. Weld & Company v. Austin, 65 So. 247; Cohn et al. v. Brinson, 73 So. 59.

The buying of cotton futures is a wager.

Clay v. Allen & Co., 61 Miss. 426; Campbell v. National Bank. 74 Miss. 526. 21. So. 400. 23 So. 25; Gray v. Robinson. 95 Miss. 1. 48 So. 226: Ascher & Baxter v. Moyse & Company, 101 Miss. 36, 57 So. 299; Falk v. J. N. Alexander Mercantile Co., 102 So. 843.

It has long since been the public policy of the state of Mississippi not only to condemn contracts commonly known as "future contracts" by the enactment of the various laws specifically condemning these transactions and making it a misdemeanor to so engage therein, but, in addition thereto as far back as 1892 made the dealing in futures a ground of attachment. The condemnation --indeed, the prohibition--of dealing in futures has become a great public policy in this state. The withering, blighting curse of these speculations has lured the rich and the poor, the princely merchant and the impecunious clerk, the erstwhile honest and trusted employe. The dealing in futures is the begetter of poverty, the companion of embezzlement, the associate of degradation, and it scourges every one whom it touches. Its thirst is unquenchable; its maw insatiable.

Ascher & Baxter v. Edward Moyse & Co., 57 So. 299.

In considering the remedy provided by sections 2 and 3, chapter 304, Laws of 1928, brought forward as sections 1828 and 1829, Code of 1930, it is apparent that what the Legislature of 1928 intended to do was to provide that any person, firm or corporation engaged inbuying or selling commodities should not only agree and intend that the commodities were to be actually delivered in kind, and the price paid, but that even though such agreement and intention existed for the actual delivery of the commodities in kind, and the actual payment of the price, that such person, firm or corporation should, in addition to meeting the requirements and prohibitions of sections 958 and 959 meet and comply with the provisions of sections 2 and 3, chapter 304, Laws of 1928. as brought forward in sections 1828 and 1829, Code of 1930.

There is no difference between the Federal decisions and the State decisions, to the effect that in a future transaction, where there is no bona fide intent to actually deliver the commodity in kind and pay the price therefor on the day of delivery, that the alleged contract is unenforceable, illegal and wholly void as a gambling transaction.

Gettys v. Newburger, 272 F. 209.

Intention, at the time of contracting, is the factor that does and will determine whether a contract for future delivery of a commodity is legal and hence binding, or void, because of being a wager upon market fluctuations and therefore unenforceable. If the intention of both the parties, at the time of contracting, be that no property in the commodity shall pass, or that no delivery in kind shall be made, the engagement is illegal, for it is a wager upon the fluctuations of the market.

Fenner & Beane v. Phillips, 130 So. 892.

If, however, at the time of entering into a contract for a sale of personal property for future delivery it be contemplated by both parties that at the time fixed for delivery the purchaser shall merely receive or pay the difference between the contract price and the market price, the transaction is a wager, and nothing more. It makes no difference that a bet, or wager is made to assume the form of a contract. Gambling is none the less such because it is carried on in form or guise or legitimate trade.

Mullinix v. Hubbard, 6 F.2d 109; Chickasaw Cotton Oil Co. v. Chapman et al., 4 F.2d 322: Hyman & Co. v. Hay, 227 F. 898; 27 Corpus Juris, 1053; Andrews v. George M. Shutt & Co., 44 F.2d 337.

Where there is evidence as to whether both parties did or did not intend that the contract in question would result in the actual delivery of the commodity dealt with, and a phase of the evidence furnishes substantial support for a finding that it was contemplated by both parties or intended that there would be no actual delivery, the question is one of fact for the determination of the jury.

James v. Clement, 223 F. 385; Alex Hyman & Co. v. Hay, 277 F. 898; Hobrook v. Shepard, 279 F. 193; Sharp v. Stalker, 63 N.J.Eq. 596, 52 A. 1120; Benson Stabeck Co. v. Reservation Farmers' Grain Co., 62 Mont. 254, 205 P. 651; Clark v. McNeil, 25 F.2d 247; Andrews v. George M. Shutt & Co., 44 F.2d 337.

Paul B. Johnson, and F. M. Morris, both of Hattiesburg, for appellees.

This suit is based upon the authority contained in Section 1828, Chapter 32, Code of 1930.

The courts take judicial knowledge that the Chicago Board of Trade is operated under the general supervision of the United States Department of Agriculture under the provisions of the Federal Statute known as the Cotton Futures Act.

United States Statutes, large volume 39, par. 1, page 479; Maxwell Planting Company v. A. P. Loveman, 212 Ala. 228; G. H. Arnold & Company v. Gibson, 216 Ala. 314.

Section 1828. Mississippi Code of 1930, is a conformity act to the United States Cotton Futures and United States Grain Futures Acts, and by said act our legislators have recognized the validity of a contract for future delivery when made in conformity to the law above mentioned.

A contract far future delivery of agriculture commodities, made on the floors of recognized exchanges, in keeping with the provisions, terms and conditions promulgated by the United States, Secretary of Agriculture under the Grain and Cotton Futures Act is valid.

Fenner & Beane v. Phillips, 130 So. 892; T. S. Faulk & Company v. Fenner & Beane, 127 So. 673.

Notwithstanding the evidence...