Allen v. Sams, (Nos. 14420, 14421, 14434.)

• Decision Date: 10 December 1923
• Docket Number: (Nos. 14420, 14421, 14434.)
• Citation: 120 S.E. 808,31 Ga.App. 405
• Parties: ALLEN. v. SAMS et al. (three cases.)
• Court: Georgia Court of Appeals

31 Ga.App. 405

120 S.E. 808

ALLEN.

v.SAMS et al. (three cases.)

(Nos. 14420, 14421, 14434.)

Court of Appeals of Georgia, Division No. 2.

Dec. 10, 1923.

(Syllabus by the Court.)

Error from City Court of Hall County; W. B. Sloan, Judge.

Three separate actions by S. H. Allen against L. R. Sams and others. Judgment for defendants on demurrer in each case, and plaintiff brings error. Affirmed as to two cases, and reversed, with directions, as to the other.

B. P. Gaillard, Jr., and H. H. Perry, both of Gainesville, for plaintiff in error.

Greene F. Johnson, of Monticello, and Carl N. Davie, of Gainesville, for defendants in error.

BELL, J. S. H. Allen filed three suits, designated in the court below as Nos. 548, 549, and 550, against L. R. Sams & Co., a partnership. He has excepted to the sustaining of a general demurrer to his complaint in each case. Our decision in case No. 550 will dispose of all the questions presented in Nos. 548 and 549 save one, and the several cases will be treated together. The petition in No. 550 (omitting formal parts alleges as follows:

"4. That said partnership is indebted to petitioner in the sum of $15,837.44, besides interest as hereinafter shown.

"5. That on the 18th of November, 1921, petitioner sold and delivered to said partnership 100 bales of cotton; that the number and weight of each of said bales is correctly set forth in a copy of the contract or purchase of same by said partnership hereto attached, marked 'Exhibit A, ' as part of this petition.

"6. That the aggregate weight of said bales was 42, 263 pounds.

"7. That said cotton was actual cotton and was actually delivered by petitioner to said partnership in Gainesville, Ga., on said date, and recovered and taken possession of by said partnership and converted to the use of said firm.

"8. That said cotton was sold by petitioner to said partnership on the following terms: That said partnership would pay on said cotton only as a partial payment of the purchase money of said cotton $4,976.82 in cash, and would make the payment of the balance to petitioner of said purchase money whenever petitioner should call upon them for said balance; the entire 100 bales to be then paid for at the price of 115 points on the July cotton price and quotation on the cotton exchange of New Orleans with 200 points off good middling on the day petitioner called upon them for a settlement. A copy of said contract or purchase is annexed hereto, marked 'Exhibit A, ' as a part of this petition.

"9. That the partial payment of the purchase money of said 100 bales of cotton, amounting to $4,976.82, which was duly paid by said partnership, but the balance of said purchase money has never been paid.

"10. That on the 20th day of June, 1922, petitioner, exercising his rights under the aforesaid contract, called upon said partnership for a settlement for said cotton, for the payment of said balance.

"11. That on said 20th day of June, 1922, the price and quotation of cotton on the cotton exchange at New Orleans for July was 23.08 cents a pound, to which, if 115 points be added [to] the purchase price per pound, would be 24.23 cents, and taking off 200 points on grading from good middling made the price 22.23 cents per pound, and the price of the whole weight, to wit, 46, 263 pounds of said 100 bales, at said 22.23 cents per pound, was $10,284.26.

"12. That deducting the sum of $4,976.82 paid by said partnership as aforesaid as a partial payment, there was due to petitioner, as the balance of the purchase money of said 100 bales, according to the said contract, on said 20th day of June, 1922, the sum of $5,307.44.

"13. That said balance of $5,307.44 is now due and unpaid, and on said sum petitioner is entitled to interest at 7 per cent. per annum from said 20th day of June, 1922, until it is paid.

"14. That on the date of the above purchase and the date of said contract the aforesaid partners were engaged in the business of buying and selling cotton as partners, and so continued until and on said 20th day of June, 1922.

"15. That from October 18, 1921, until February 2, 1922, said partnership being engaged in buying and selling cotton, on call, on prices to be fixed by the price and quotation of price of cotton on the New York and New Orleans cotton exchanges at the date of call, in order to protect themselves against the possible fall of prices, from time to time made contracts for the purchase or sale of cotton through brokers on or in the cotton exchanges aforesaid, or during business on or through said exchanges, and, in order to keep said contract alive, were required to put up what are called 'margins, ' or certain percentages of the contract prices on their various contracts, and obtained from petitioner various amounts of money, either in cash, cheek, or draft, as hereinafter itemized, which amounts were furnished said defendant at their request.

"16. On October 8, 1921, petitioner wired to Hubbard Bros., New York, $500 for account of J. M. Hulsey for said partnership, at the request of J. M. Hulsey, on contract for 100 bales of March cotton.

"That on November 1, 1921, petitioner wired J. D. Haywood & Son, cotton merchants, New Orleans, $1,000 at the request of L. R. Sams for said partnership.

"That on November 11, 1921, petitioner sent direct to said partnership $2,000 at their request, to be used by them as a margin aforesaid.

"On November 12, 1921, petitioner, at the request of L. R. Sams, for said partnership wired to J. D. Haywood & Son at New Orleans $1,000 for said partnership of L. R. Sams Company.

"On November 18, 1921, petitioner wired to J. D. Haywood & Son, New Orleans, $1,500 for said partnership of L. R. Sams Company.

"On January 26, 1922, petitioner paid for said L. R. Sams Company, $3,500 to J. D. Haywood & Son, New Orleans, paid through H. K. Stanford of Atlanta; said amount being paid by petitioner at the request of L. R. Sams for said partnership.

"On February 2d, petitioner wired J. D. Haywood & Son, at New Orleans, for said L. R. Sams Company, and at their request, $2,000.

"The above amounts aggregate $12,500.

"The said L. R. Sams Company repaid to petitioner on account of the foregoing on December 2, 1921, $1,000, and on December 23, 1921, $500, and $500 on February 18, 1922, aggregating $2,000, leaving due to petitioner on foregoing advancements the sum of $10,500, which he prays to recover from said defendants with interest from February 18, 1922.

"Wherefore petitioner prays, " etc.

The contract, attached to the petition as Exhibit A, was as follows:

"No. —— Gainesville, 11—18—1921.

"Invoice of 100 bales of cotton bought by L. R. Sams Co.

"From S. H. Allen, against sales 100 B/C reported 11—17—21.

"Limit 115 points on New Orleans July basis G. M.

"Marks 51 B/C AA 49 B/C XX.

"(At this point in the contract is a descrip-tion of the cotton by the serial numbers and the weights of the several bales.)

"Above-described cotton averages 200 points off good middling, and there being advanced $4,-976.82, balance to be paid at option of S. H. Allen, as above stated, light weights already deducted; it being understood said option to be kept fully margined. Total weight 46, 263.

"L. R. Sams Co., by L. R. Sams."

1. The contract with reference to the sale of the cotton does not appear upon its face to be illegal. The fact that it provides that the plaintiff should keep it "margined" does not alter this conclusion. A contract containing such a feature was held prima facie good in Robson v. Weil, 142 Ga. 429, 83 S. E. 207. See, also, Virginia Bridge Co. v. Crafts, 2 Ga. App. 126 (3), 58 S. E. 322. Where the illegality of a contract does not appear upon its face, it will not be declared invalid on demurrer. See the case last cited and others therein referred to.

Defendant in error insists that although the cotton was actually delivered, the contract is nevertheless a wager, because the plaintiff, on the sale and delivery, parted with all interest in the cotton and was only concerned thereafter in the "optional feature, " by which on his call the price would be determined on the basis of New Orleans quotations for July, and that thus the parties were gambling with reference to the price of a commodity as to which the sale and delivery was complete. Two cases by the Civil Court of Appeals of Texas are cited in support of this contention, namely, Bumey v. Blanks, 136 S. W. 806; Wolfe v. Anndrews, 192 S. W. 266. The contracts there involved were in some respects similar to the one now before us. In the first of these cases the court said:

"Though the cotton was actually delivered at the time of the sale, the agreement was void as a wagering contract, since, except under the optional provisions thereof [referring to the fixing of the price by a future condition of the market], which constitute the wagering feature, only the plaintiff has any real interest in the cotton after its sale and delivery."

And further:

"The mere fact that there was specified property about which the transaction occurred would make no defense. Parties may as effectually gamble with reference to actual property as with reference to the prices of different kinds of property. The cases do not turn upon that point, but upon the actual intention of the parties."

While we have stated that the contracts in those cases were similar to the one involved here, there is one material difference. The Texas court construed the contract in each instance as showing the value of the cotton on the date of its delivery and the receipt by the plaintiff of full payment; not only so, but that the parties actually intend ed that the sale should be complete to all practical intents and purposes, and thus that the future gain or loss upon the basis of a future condition of the market was a contrivance for speculation, without respect to an actual sale. The language of the contract before us does not authorize such a construction, and for this reason we think that the cases cited are inapplicable...