Brua's Appeal

Decision Date03 July 1867
Citation55 Pa. 294
PartiesBrua's Appeal.
CourtPennsylvania Supreme Court

Before WOODWARD, C. J., THOMPSON and AGNEW, JJ. STRONG and READ, JJ., absent

Appeal by S. M. Brua, from the decree of the Court of Common Pleas of Lancaster county, confirming the report of auditors, making distribution of the moneys in the hands of John Quigley and John Kauffman, assignees of Gideon Kauffman.

COPYRIGHT MATERIAL OMITTED

N. Ellmaker and J. B. Livingston, for appellants, cited Story on Promissory Notes, § 189; Porter v. Gunnison, 2 Grant 297.

T. E. Franklin, A. H. Smith and O. J. Dickey, for appellees.

The opinion of the court was delivered, July 3d 1867, by THOMPSON, J.

Participation in the distribution of the funds in the hands of the assignee of Gideon Kauffman, an insolvent debtor, now deceased, by Swartz, the appellee, was resisted by the creditors of the former, on the ground that the four notes held by him, were given by Kauffman to Hollinger, without consideration, on a wagering contract, and passed to the appellee as collateral security for a debt due him by Hollinger, after maturity.

The auditors to report distribution of the fund awarded to the appellee a pro rata, notwithstanding the objection noticed, and notwithstanding a finding of the facts substantially in accordance with the objection taken.

It appears that Kauffman, by a contract in writing, dated Lancaster, April 25th 1863, "sold and agreed to deliver to J. S. Hollinger, or to his order, twenty-five days from date 200 shares Harlem Railroad common stock, at the rate of $60 per share;" and of the same date, delivered to the purchaser his negotiable note, due simultaneously with the maturity of the contract, for $1000. Three other notes were executed and delivered by him to Hollinger, dated respectively, two of them the 7th and one the 9th of May following, amounting in the aggregate to $3500, two falling due in thirty days from date, and the last of the three on the 1st of April 1864. It became a material inquiry to the creditors of Kauffman, as to what was the nature and character of the consideration moving the drawer to execute and deliver the three notes to the buyer of the stock, and on this point the auditors, after stating the facts in substance as above, say in their original report, "it may be, that the contract" (for the sale of stock referred to) "and note" (of the same date) "formed portions of an operation by Kauffman, known in stock circles as `selling short;' but the vice was simply a moral one, and the auditors are unable to detect in the note anything like a failure or deficiency of consideration."

In an amended or supplementary report by the same auditors, the transaction including the entire series of notes, is more clearly developed, and the consideration of the notes unmistakably disclosed. In concluding their reference to the facts, they say, "doubtless the contract and the four notes, were the component parts of a stock-gambling transaction, in which Kauffman in effect, betted that in twenty-five days Harlem stock would sell at less than $60 per share; but viewed in the light of legal principles and precedents, the contract was one which the parties were free to make, and the obligations created by it and the subsequent notes, are in law untainted by any deceit or want of consideration."

Facts found by auditors are conclusive, unless shown to be in clear mistake; that is not pretended here. But their law is more than doubtful. In one sense it is true that a wager about the prospective price of stocks, is a contract which it may be said parties are "free to make," there being no express prohibition of it; but the obligation created although free from "fraud or deceit," is not enforcible at law on account of the consideration. Betting and gambling contracts have in this commonwealth been uniformly held to be contra bonos mores, and incapable of enforcement at law. Feigned issues in the shape of wagers are the only exceptions, and in these the alleged wager is mere form to ascertain a fact, but not to recover money.

In Edgdell v. McLaughlin, 6 Whart. 176, which was a suit on a check given and staked in a betting contract, about the existence or non-existence of a certain letter or note alleged to have been written by the defendant, to one Baker. Sergeant, J., in delivering the opinion of the court, after referring to the facts that at common law most wagers were recoverable...

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