Crawford v. Spencer

• Decision Date: 20 June 1887
• Parties: Crawford v. Spencer et al., Appellants
• Court: Missouri Supreme Court

4 S.W. 713

92 Mo. 498

Crawford v. Spencer et al., Appellants

Supreme Court of Missouri

June 20, 1887

Appeal from Jefferson Circuit Court. -- Hon. Jno. W. Emerson, Judge.

Reversed and remanded.

Given Campbell for appellants.

It is hardly necessary to cite authorities to prove that, being a member of the exchange, respondent is charged with notice of its rules. Morawetz on Corp., sec. 370, and cas. cit. in note; Simeral v. Ins. Co., 18 Ia. 322; Coles v Ins. Co., 18 Ia. 431; Mitchell v. Ins. Co., 51 Pa. 402. We do not believe that any authority can be shown where a court of equity would undertake to require an innocent third holder of negotiable paper, for value, to surrender the same up for cancellation. Judge Treat, in the case of Bank v. Harrison, 10 F. 253, referring to negotiable paper given for option contracts, says: "It is obvious the law may be evaded by giving negotiable notes and having them indorsed to innocent parties, but the remedy is with the legislature." The case of Collins v Merrell, 2 Met. [Ky.] 163, cited by respondent, was decided under a statute; and we think an examination of the case of Knight v. Gregg, 26 Tex. 506, also cited will show that it has no application to this case.

George D. Reynolds, Dinning & Byrns and W. H. H. Thomas for respondent.

(1) The bill of exceptions is not properly before the court. The testimony in the case is not preserved by the bill of exceptions, and, consequently, is not before this court for review. United States v. Gamble, 10 Mo. 459; Christy v. Myers, 21 Mo. 114; Blount v. Zink, 55 Mo. 455; Jefferson City v. Opel, 67 Mo. 394; Ober v. Railroad, 13 Mo.App. 84; Morrison v. Lehew, 17 Mo.App. 633. (2) There is no error in the record proper to the prejudice of appellants, or entitling them to a reversal. The transaction was a gambling device, a wager contract, and the note and security taken were null and void. In this case, no such state of affairs exists as is disclosed by the record in Cockrell v. Thompson, 85 Mo. 510. Irwin v. Williar, 110 U.S. 499; Cunningham v. Bank, 71 Ga. 400; Downing v. Ringen, 7 Mo. 585; Hayden v. Little, 35 Mo. 418; State v. Lemon, 46 Mo. 375; Porter v. Jones, 52 Mo. 399; Kitchen v. Greenabaum, 61 Mo. 110; Waterman v. Buckland, 1 Mo.App. 47; Williams v. Tiedeman, 6 Mo.App. 269; Kent v. Miltenberger, 13 Mo.App. 510; McLean v. Stune, 15 Mo.App. 317; Ream v. Hamilton, 15 Mo.App. 577. These wager contracts are gambling devices. Relief against such contracts has always been granted by courts of equity. Bunn v. Richer, 4 Johns. 426; Mount v. Waite, 7 Johns. 434; Jeffrey v. Ficklin, 3 Ark. 227; Vischer v. Yates, 11 Johns. 30; 1 Jones on Mort., sec. 617, and cas. cit.; 1 Story's Eq. Jur. [10 Ed.] secs. 298, 303; Rucker v. Wynne, 2 Head. [Tenn.] 617; Skipworth v. Strother, 3 Randolph [Va.] 24; Tramwell v. Gordon, 11 Ala. 656; Baker v. Callahan, 5 Ala. 708. Equity did often relieve against gambling contracts, previous to any legislation on the subject. Lyon v. Respass, 1 Littell [Ky.] 133; Moffeet v. White, Ib. 325; Gill v. Webb, 4 T. B. Mon. 299; Finn v. Barclay, 15 Ala. 626; Collins v. Merrell, 2 Metc. [Ky.] 163; Knight v. Gregg, 26 Tex. 506. The petition is not multifarious. McGlothlin v. Henry, 44 Mo. 350; Clark v. Ins. Co., 68 Mo. 272. There was no misjoinder of defendants. Barbour on Parties, p. 455; Brinkerhoff v. Brown, 6 Johns. Ch. 138. Francis & Brother took the note to secure an antecedent indebtedness; no new consideration moved them. They, therefore, did not take it for value, but hold it subject to all the equities subsisting between the original parties to the note. Story on Bills, sec. 194; Swift v. Tyson, 16 Peters, 1; Stalker v. McDonald, 6 Hill, 9; Coddington v. Bay, 20 Johns. 637; Anderson v. Nichols, 28 N. J. 600; Brown v. Tabor, 5 Wend. 66; DeWitt v. Perkins, 22 Wis. 475; Hunt v. Sandford, 6 Yerg. 387; Goodman v. Simond, 19 Mo. 106; Hamilton v. Monks, 52 Mo. 78; Logan v. Smith, 62 Mo. 455; Skelling v. Bollman, 73 Mo. 665; Brainard v. Reaves, 2 Mo.App. 490; 12 Cent. Law Jour. 26; 14 Cent. Law Jour. 462. Francis & Brother were proper and necessary parties, and were properly joined. If this court finds that the evidence is before them for review, we trust to an examination of that to sustain the decree. It is true that all the parties who are claimed to be the ones with whom the deals were made testified that they, of course, intended a delivery or receipt of the hundreds of thousands of bushels of grain pretended to be bargained for. But, under cross-examination, the true nature of these transactions is brought out. That can always be done in such a case. 4 Black., sec. 158. "It is for the jury to determine whether the parties really meant to purchase or sell, or whether the transaction was a mere bet upon the future price of the commodity." Addison on Cont. [Morgan's Ed.] bk. 1, chap. 3, sec. 276. "Oral evidence may be given, and the parties themselves be examined, to show that a contract, purporting on the face of it to be a contract of sale, was a mere gaming contract, void ab initio, although the contract is in writing or under seal." Collins v. Blantern, 1 Smith Lead. Cas. [5 Ed.] 310. "In option contracts, where there is a doubt as to intent of parties as to delivery, the burden of proof is on the party claiming under it, to show that delivery was intended." Cobb v. Prell, 16 Cent. Law Jour. 452; S. C., 15 F. 774. Parol evidence is admissible. Foster v. Reynolds, 38 Mo. 553. The true intent, below all disguises, is to be sought for, and what that was is a question of fact. In this case, the lower court found the intent against appellants, and its finding is entitled to stand in this court. The presumption is that it is right. Goode v. Crow, 51 Mo. 212. Even in equity cases the appellate court will, with extreme reluctance, disturb a decree rendered by the trial court, on which there was conflicting evidence. Sharp v. McPike, 62 Mo. 300; Davis v. Fox, 59 Mo. 125; Cornett v. Bertelsmann, 61 Mo. 118; Hendricks v. Woods, 79 Mo. 590; Ford v. Phillips, 83 Mo. 523.

OPINION

Black, J.

The plaintiff brought this suit to enjoin the proposed sale of real estate, under a deed of trust, given by him to secure his note, dated the ninth of November, 1881, for five thousand dollars, due in one hundred days, and payable to the order of Harlow, Spencer & Company. The members of this firm were made defendants, by the petition, but it appearing that the note had been assigned to D. R. Francis & Brother, the members of that firm were brought in by amendment, and the suit proceeded against all these parties, and the trustee, to a final decree, as prayed for by the plaintiff.

The ground for relief is, that the note grew out of alleged gambling contracts, for the purchase and sale of wheat and corn. The evidence shows that the plaintiff, who resided at De Soto, in this state, had been, for some months prior to the date of the note, speculating in option deals in grain, through Harlow, Spencer & Company, brokers, at St. Louis, and, through them, he became a member of the Merchants' Exchange. At the date of the note, the brokers called upon the plaintiff for two thousand dollars margin, in addition to what he had before paid. At that time, they were indebted to him in the sum of $ 2,536, on account of closed transactions, but they were then carrying unclosed deals, upon which margins were due to them. On the entire account, it is clear that plaintiff owed them as much as two thousand dollars, and, perhaps, as much as five thousand dollars. Plaintiff was about to leave the state, on matters connected with his business as railroad contractor, and he states that he gave the note and deed of trust to them that they might use it to raise money if it became necessary so to do, on account of pending or future deals. Harlow, Spencer & Company say the note and deed of trust were given to them to secure them against loss, as the plaintiff desired to use his money in other business; and this, we conclude, was the real nature of the transaction, for it cannot be claimed but the brokers, at the date of the note, were entitled to at least two thousand dollars, on account of the face of the then past and pending transactions.

Harlow, Spencer & Company failed, on the tenth of February, 1882. They then had contracts for twenty thousand bushels of May corn, and thirty thousand bushels of May wheat, which they had bought for plaintiff. They instructed the persons from whom they had purchased the grain to close out the deals, which was done, and an account rendered for the loss, which was settled by the brokers. Harlow, Spencer & Company then rendered an account to the plaintiff, showing a balance due to them of $ 7,128. When Harlow, Spencer & Company failed, they owed D. R. Francis & Brother, who were also brokers, some twenty-six thousand dollars, and they turned the plaintiff's note over to the latter firm, on account of that indebtedness.

There is much conflict in the direct evidence of the plaintiff and the members of the firm of Harlow, Spencer & Company, as to the real character of these transactions. The plaintiff says he became acquainted with a member of the firm, and, after frequent conversations as to the speculations then going on he concluded to make some deals; that it was the distinct understanding between him and the brokers that no grain would be delivered or received, but that differences only would be settled, and in this he is corroborated by the evidence of Mr. Norton, who was interested with the plaintiff in some of the early transactions. Harlow, Spencer & Company say there was no such understanding, and that the deals were to be, and were, all made in good faith, and contemplated an actual delivery of the commodity, though delivery might be...