Syllabus
by the Court.
Evidence
examined, and held to establish clearly and
unmistakably that the transactions involved in the contract
upon which recovery is sought constituted "dealing in
futures" such as are denounced by the statutes of this
state.
This
state is not obligated by any principle of comity to
recognize and uphold as valid contracts made in another state
which are violative of our penal statutes, or obnoxious to
our express public policy; and, regardless of the validity of
such contracts in the state where made, the courts of this
jurisdiction will refuse to aid in their enforcement.
Commissioners'
Opinion, Division No. 3. Error from District Court
Washington County; R. H. Hudson, Judge.
Action
by Coffe & Carkener, a partnership, composed of W. C. Coffe
and another, against Ola Wilhite. Judgment for defendant, and
plaintiffs bring error. Affirmed.
BLEAKMORE
C.
This
action was commenced in the district court of Washington
county on August 29, 1912, by the plaintiffs in error against
the defendant in error to recover a balance alleged to be due
upon an open account for advances made and services rendered
by plaintiffs for defendant. The itemized account attached
and made a part of the petition is as follows:
"Kansas City, Mo., Aug. 4, 1910. Ola Wilhite,
Bartlesville, Okla. in Account with Coffe & Carkener, 101-102
Exchange Bldg. Kansas City, Mo. Debits. July 25, 1910, bought
30,000 bu. Dec. corn at .64 3/4 .. $19,425 00 July 25, 1910,
bought 20,000 bu. Dec. corn at .60 ....... 12,000 00 July 25,
1910, to commission ................................ 37 50
July 25, 1910, to commission ................................
25 00 ---------- $31,487 50 Credits. June 24, 1910, by sold
10,000 bu. Dec. Cgo. .58 .......... $5,800 00 June 24, 1910,
by sold 10,000 bu. Dec. Cgo. .58 1/8 ....... 5,812 50 June
25, 1910, by check ..................................... 500
00 June 27, 1910, by sold 10,000 bu. corn, (Dec. Corn) K. C.
.53 5/8 .................................................
5,362 50 June 27, 1910, by check
..................................... 300 00 July 12, 1910,
by sold 10,000 bu. Dec. cn. Cgo. .56 3/4 ... 5,675 00 July
12, 1910, by sold 5,000 bu. Dec. cn. K. C. .51 3/4 ... 2,587
50 July 12, 1910, by sold 5,000 bu. Dec. cn. K. C. .52
....... 2,600 00 July 18, 1910, by draft
..................................... 500 00 July 20, 1910,
by Ck ........................................ 300 00 July
20, 1910, by draft ..................................... 450
00 _________ $29,887 50 --------- Balance due
........................................................ $
1,600 00
Interest
at 6 per cent. from Aug. 4, 1910."
Defendant
answered by way of denial, and alleged:
"The defendant says that, if at any time the plaintiffs
did buy any corn and did render any services for the
defendant, said buying of said corn and rendering of said
services was for the purpose of gambling on the Board of
Trade in Kansas City, Mo., and that the plaintiffs intended
to gamble on said board, and the defendant intended to gamble
on said board, and that no records of said transactions were
kept as required by the laws of the state of Missouri, and
the plaintiffs in this case were running a bucket shop in
Kansas City, Mo., at the time of the transactions referred
to, and were engaged in the practice of buying and selling
options, and in furtherance of their designs and in violation
of the laws of the state of Missouri, in violation of the
laws of the United States, and in violation of the laws of
the state of Oklahoma, the transactions relied upon were had,
and it was the purpose of the defendant and of the plaintiffs
both to gamble on grain."
The
answer was later amended by setting forth certain provisions
of the statute of the state of Missouri, but the same were
not introduced in evidence.
At the
close of the evidence on behalf of plaintiffs, a demurrer
thereto was sustained, and judgment rendered for defendant.
This action of the court is assigned as error.
Plaintiffs
were commission brokers and members of the Board of Trade of
Kansas City, Mo., and Chicago, Ill. The defendant is a
resident of this state. The transactions involved in the
account sued on consisted entirely of the purchase and sale
of corn on the Board of Trade at Kansas City and Chicago,
made by the plaintiff upon instructions of defendant.
The
testimony is voluminous, and we shall refer only to portions
thereof showing the general character of the transactions
which form the basis of this action. One of the plaintiffs
testified:
"A. Well, Mr. Wilhite was short of this corn, and
towards the latter part of the month of July, contrary to his
expectations, the corn market commenced to advance, and as it
did so he remitted and we made drafts on him to supply the
needed margin on this account, and he took care of them very
promptly, and we assumed that he would continue to do so if
necessary. We had nothing to the contrary to indicate that he
would not. Now on-- The corn market commenced to get very
excited along about that time, and on, for instance, on July
20th, the closing price of December corn at Chicago was 59
3/4 cents to 7/8, and Kansas City 55 5/8. These figures I am
reading, you can verify by the price card there, and on the
next day it closed at 59 3/4 to 7/8 in Chicago. That was up 1
1/4 cents or 3/4 to 7/8 in Chicago, and in Kansas City it
closed 57 1/4 to 3/8, which was up about 1 1/2 cents, and
that was the day on which we made draft on Mr. Wilhite for
$1,200.
On July 22d, the corn market broke. It went down as much as
it went up the day before, and a little bit more--closed at
59 3/8 to 3/4 in Chicago, and 55 3/8 in Kansas City. On July
23d, which was Saturday, it closed at 60 3/4, 1/4 to 3/8 and
56 3/8 to 1/2 in Kansas City. On that day I had a
conversation with Mr. Wilhite over the 'phone, and he
explained about this draft having gone to protest, and he
gave me an order that in case Kansas City December corn went
to 57 1/8 we were to buy to this Kansas City December corn an
equal amount to what he had sold, and in case Chicago
December corn went to 61 1/8 we were to buy in an equivalent
amount to what he was short in that market which I believe
was 30,000 bushels.
Now the price of corn had not reached that figure as embodied
in these orders on Saturday, July 23d. In the meanwhile this
draft had been protested, and Saturday was a short day, the
market closing at 12 o'clock, that left something like
about a net credit of $437 in order to protect this open line
of corn. So there wasn't anything
we could do except to watch the market and, if necessary, buy
corn in at that order price. Now, from Sunday, over Sunday
the weather was extremely hot, and the market went into one
of those convulsive conditions such as I have rarely
seen--unfortunate for everybody concerned in this, and the
market opened up in Chicago on Monday morning from 62 to 65
cents, that was up all the way from 1 3/4 cents to 4 3/4 a
bushel. In Kansas City it opened from 59 3/4 to 60 cents.
That was up 3 to 4 5/8 cents a bushel. There was nothing for
us to do but execute these orders at the best possible price
we could get, and we did so with the result of this account
for which we are bringing this action. * * * Q. Did you know
Mr. Wilhite had any corn? A. I didn't know anything about
Mr. Wilhite. I assumed maybe he had. He was represented to me
as a gentleman who had more or less property; I didn't
know. Q. Did you make any inquiry to ascertain whether he had
any
corn? A. No, sir; I did not. * * * Q. Now, what are you to do
for that 1/8 cent? I believe you are charging, say $60. What
do you do for Wilhite for that 1/8 cent? A. I was to go in on
the floor and make this sale for his account, and I was to
buy it in whenever he ordered me to buy it in, and if I did
so that would complete the transaction, and for which we
would charge him 1/8 cent per bushel. Q. When he puts up this
margin, what are his rights about closing the transaction on
any market day? A. He has the privilege to do that whenever
he elects. Q. To do so? A. Yes, to order me to do so. Q. Yes.
And if he elects so to do, how do you close it for him? A. By
making a purchase in the same way; in the same manner that I
made the sale. Q. By another? A. Buying a similar contract,
contract to buy similar grain. Q. And to keep sufficient
margin to buy that makes these--and to keep up sufficient
margins to buy, it is that he makes these deposits, is it,
and puts up your commission for so doing? A. Yes, sir. Q.
Well, after you have bought on the market an offset to this
stuff that Mr. Wilhite is supposed to have sold to you, then
the matter is closed, as I understand it? A. Yes. Q. And if
there is a profit to Mr. Wilhite, you send it to him? A. Yes,
sir. * * * Q. If you had closed out on the 23d, he would have
lost merely what he put up. A. Not quite what he put up; it
would have been closed on the basis of the closing market
that night. Then he would have lost what he put up less
$437.50. Q. How much margin in all did you get Wilhite to put
up? A. $2,050. Q. And you are now suing for $1,600 more? A.
Yes."
Plaintiff
also stated that the Board of Trade maintained a clearing
house similar to that employed by banks, and, as illustrative
of its operation, testified:
"A. I may have 100,000 bushels of December corn bought
for A., B., C., and D. and I might have 150,000 sold for E.,
F., G., and H. Therefore my net
...