Bailey & Graham v. Phillips

Decision Date15 January 1907
PartiesBAILEY & GRAHAM v. PHILLIPS et al.
CourtU.S. District Court — Southern District of Georgia

On Motion for New Trial, December 3, 1907.

Gaming 12

Olin J Wimberly, for plaintiffs.

Merrill P. Callaway and T. J. Hendricks, for defendants.

SPEER District Judge (charging jury).

The issues offered in this case for your determination are on two actions brought by Bailey & Graham, members of the New York Cotton Exchange, one against P.D. and the other against T. E Phillips. The claim in each case is the sum of certain amounts alleged to have been paid by the said plaintiffs on account of the particular defendant sued. In the case of T. E. Phillips, it is claimed that he is indebted to the plaintiffs in the sum of $2,950.32, besides interest from June 17, 1904, at 6 per cent. per annum. This sum is alleged to be due upon an open account for commissions, for services, and for money paid and advanced by the plaintiffs for and at the request of T. E. Phillips in selling for his account, and as his agents, cotton for future delivery according to the rules and regulations of the New York Cotton Exchange, in the city of New York. A copy of the account is annexed, and the petition proceeds to set out in detail the nature of the demand. The other action is brought by the same plaintiffs against P. D. Phillips, and the amount claimed is the sum of $8,625.54, for work and labor done, services rendered, and money paid out and expended by the plaintiffs at the instance of the said P. D. Phillips, with interest at 6 per cent. from the date above mentioned. This is on similar account to that already stated.

There is no question made by the defense as to the accuracy of the account sued for, nor is there any doubt as to the right of the plaintiffs to recover a verdict for the full amount with interest on each action, unless the defense pleaded and set up by the defendants shall be held, in view of the evidence, to be supported by the law, and therefore meritorious. This issue you must determine from the evidence, which has all been submitted to you (none of it as I recall having been excluded), in view, also, of the instructions of law which it shall be my duty to give for your assistance. In other words, since the plaintiffs have produced their account, and given testimony to the effect that it is correct, they are entitled to a verdict therefor, unless, in view of the facts, the plea and defense is sufficient to defeat it. The plea is, in a word, that these claims originated in a transaction for the sale of cotton futures, which is contrary to law and to the public policy of the state of Georgia. Under the law of this state there are certain contracts upon which no recovery can be had. These are contracts which are against the policy of the law. They are such as tend to corrupt legislation, or the judiciary, contracts in general restraint of trade, contracts to evade or oppose the revenue laws of another country, wagering contracts, and contracts of maintenance or champerty.

It is not necessary that I should explain to you all of these contracts which are against the policy of the law. It will be sufficient, for the purposes of your duty, for me to point out that gaming contracts are void, and all evidences of debt, or incumbrances or liens on property, executed upon a gaming consideration, are void in the hands of any person. For instance, under the law of Georgia, a note for illegitimate cotton futures is a gambling contract, and void in the hands of a bona fide purchaser even. A broker who is privy to a wagering contract cannot recover for his services or his losses. Losses in buying or selling futures for his principal, when they are in fact wagering contracts, cannot be recovered. These questions have many times been before the Supreme Court of the state, and there is no doubt as a matter of law that a gambling contract cannot be enforced, and that losses, or services rendered by one who is a party thereto and understands its character, likewise cannot be recovered. The law simply refuses its assistance to the enforcement of such a contract, for the reason that it is contrary to the general welfare--that is to say, to the public policy-- and the courts leave the parties where they find them.

It is, however, true that it is not every agreement for the future sale of commodities that is a gambling contract. The law upon this subject may be expressed as follows: An agreement for the sale of stocks, grain, cotton, or any other commodity is a gambling contract, where the parties do not intend an actual delivery, but agree that at the time fixed for delivery they shall settle by one of them paying the other the difference between the price agreed upon and the market price at the time of delivery. This is a mere bet or speculation on the rise and fall of the price of the article, and is illegal, not only under the statutes, but in most states even independently of any statute. It is illegal by the express statute of this state, and is now so clearly inimical to the public policy of the state that brokerage establishments, known as 'bucket shops,' are expressly denounced by the statute law.

The policy which forbids contracts of this character is easily discoverable. The commonest form of this disguised gambling in modern life is the contract for the purchase or sale of property in the future, without the intention upon the part of either party to deliver or receive such property; the mutual intention being to settle the contract at the period of maturity thereof, by paying or receiving the difference between the market price and the contract price of the property bargained for. The temptation to those who do not own the property in which they thus deal to engage in such ventures, by which they imagine that large profits may be won at a minimum expenditure, is deemed by the lawmaking bodies to be of such character as to demand statutory protection for the people. This is probably ascribable in large part to the fact that the small and inexperienced dealers in villages and rural communities are wholly incompetent to trade on equal terms in such illegal ventures with the alert and trained intelligences who gather in the great marts of commerce in our country and who devote their powers to this illegal trading. In addition to this, the excitement of such ventures tends to divert the mind of the farmer or small tradesman from those productive enterprises for which he is really capable, and not infrequently to afford a more irresistible and dangerous temptation to those persons who are intrusted with funds for other purpose, which are diverted, at whatever hazard to the true owner, for the possibility by their use of personal gain to the trustee. It is probably true that no practice prevalent in the trade conditions of the present time does more to unsettle legitimate business, to degrade the probity of individuals engaged therein, and to bring unanticipated loss upon what otherwise would be stable and prosperous lines of trade.

It is however, by no means true that all speculation is gambling. Merchants and manufacturers...

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8 cases
  • Ascher v. Edward Moyse & Co.
    • United States
    • Mississippi Supreme Court
    • January 29, 1912
    ... ... Powe, 71 ... A. 421; Ward v. Vossburg, 31 F. 13; Bangs v ... Hornick, 30 F. 97; Bailey v. Phillips, 159 F ... 535; Richardson v. Shaw, 52 Law. Ed. 840; Booth ... v. Illinois, 48 ... ...
  • Lamson Bros. & Co. v. Turner
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • December 27, 1921
    ... ... v. Moore ... (C.C.) 125 F. 807, 808; In re Trion Mfg. Co ... (D.C.) 214 F. 161; Bailey & Graham v. Phillips ... (C.C.) 159 F. 535, 539; Gettys v. Newburger ... (C.C.A.) 272 F. 209, ... ...
  • Lawton v. Carpenter
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • February 15, 1912
    ...engaged therein, and to bring unanticipated loss upon what would otherwise be stable and prosperous lines of trade. ' Bailey v. Philips (C.C.) 159 F. 535. I discussed the record upon the principle which I understand prevails in this country, that independent of statutes as, a matter of publ......
  • Becher-Barret-Lockerby Co., a Corp. v. Sjothun
    • United States
    • North Dakota Supreme Court
    • October 18, 1935
    ... ...          It is ... not true that all speculation is gambling. Bailey v ... Graham, 159 F. 535 ...          When ... the parties do not contemplate a ... ...
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