Dowell v. Pumphrey

• Citation: 197 Ky. 59,246 S.W. 157
• Parties: DOWELL v. PUMPHREY ET AL.
• Decision Date: 15 December 1922
• Court: Court of Appeals of Kentucky

246 S.W. 157

197 Ky. 59

DOWELL v. PUMPHREY ET AL.

Court of Appeals of Kentucky.

December 15, 1922

Appeal from Circuit Court, Breckinridge County.

Action by F. R. Dowell against Josephine Pumphrey and husband. Judgment of dismissal, and plaintiff appeals. Reversed, with directions.

Settle J., dissenting in part.

Moorman & Walls, of Hardinsburg, and Moorman & Woodward, of Louisville, for appellant.

Claude Mercer, of Hardinsburg, for appellees.

SAMPSON J.

Appellant Dowell, and appellee Beard were real estate brokers located at Hardinsburg in Breckinridge county. Appellee Josephine Pumphrey was the sole devisee of a large tract of Ohio River bottom land located in Breckinridge county, which land was incumbered by mortgage and other liens to the amount of $14,600 by the devisor, and these had all been reduced to judgment, the land ordered to be sold to satisfy same, and the day of sale fixed for November 25, 1918. Mrs. Pumphrey and her husband, William G. Pumphrey, were persons of very little business experience, and in quite moderate circumstances before the devise of the land to her. The adjudged liens against the land, totaling approximately $14,600, were so great that Mrs. Pumphrey and her husband were much afraid they would be unable to protect themselves and all of the land would have to be sold to pay the mortgage debts, and would leave them nothing from the estate. They advised with their neighbors, and came to the conclusion that they would try to find some person or persons who would be willing to pay off the judgment debts and take less than the whole of the land, thus leaving them a tract of 110 acres, known as the home place, with its improvements. Their lawyer, a man of good repute, advised them not to make such an arrangement, and dissuaded them from entering into such a contract with certain of their neighbors because he thought the land would bring more than the debts. After considering the matter another week, the Pumphreys again made up their minds to enter into a contract with some solvent person or persons who would either take part of the land, and leave them the homestead, or guarantee that a portion of the land would bring the debt and leave them the 110 acres for a home. With this plan in mind they again went to Hardinsburg and consulted their attorney who represents them in this litigation, and he again advised them not to enter into such a contract, for the reason that it was his opinion the land advertised to be sold on the next Monday would bring more than the debt, interest, and cost, and would leave the Pumphreys not only a homestead, but some cash also; and further said to his clients that, if they could not otherwise be reconciled, he believed appellant, Dowell, and appellee Beard, solvent real estate brokers, would enter into such a contract with the Pumphreys, and thus guarantee to the Pumphreys the home place of 110 acres and a sum in cash in addition. Having sought out Dowell and Beard, the Pumphreys entered into a written contract with them, which reads as follows:

"Hardinsburg, Ky. November 18, 1918.

Whereas, in the actions of A. J. Gross' Executor, etc., v. William G. Smart, etc., pending in the Breckinridge circuit court sales of the real estate which belonged to the late A. J. Gross and Sallie Gross, his wife, both deceased, are ordered to be sold at the courthouse door in Hardinsburg, Kentucky, and whereas, Josephine Pumphrey is the legatee or devisee of said real estate and after the payment of the debts against said estates is entitled to the remainder of said land, if it brings sufficient to pay said debts, approximated at $14,600.

In consideration of M. D. Beard and F. R. Dowell's guaranteeing that 494 acres of the land ordered to be sold on Monday, the 25th day of November, 1918, shall bring $16,500.00, leaving 110 acres of said land not to be sold the said Josephine Pumphrey and William Pumphrey, her husband, agree that any sum over and above said $16,500.00 that said 494 acres of land shall bring shall go to said Beard and Dowell, and said Beard & Dowell agree that if said 494 acres shall bring under said $16,500.00 at said sale, to account to said Mrs. Pumphrey for any shortage between what it might bring at public outcry and said sum of $16,500.00.

Josephine Pumphrey.

W. G. Pumphrey.

M. D. Beard.

F. R. Dowell."

Dowell and Beard set about to find purchasers for the land which by the judgment had been laid off into eight parcels, with directions to sell enough thereof to bring the debt, interest, and cost, which was estimated to be about $14,600. On the day of sale two tracts, totaling 300 acres only, were sold, bringing the sum of $18,000, thus leaving unsold, not only the home place of 110 acres, but about 194 acres additional. At the conclusion of the sale it was agreed between the Pumphreys and Beard and Dowell that the former would pay to the latter all the difference in the sale price between that mentioned in the contract, $16,500, and $18,000, or $1,500, and would convey to them the 194 acres which were not sold; but, on being advised by counsel that the contract into which the Pumphreys had entered with Dowell and Beard was unenforceable, they declined to carry out their agreement to convey the balance of the land to Beard and Dowell, or to pay them the $1,500 as commissions on the sale, and Dowell commenced this action against the Pumphreys, joining Beard as a defendant, to enforce the written contract, insisting that he and Beard are not only entitled to the $1,500 as commissions, but to all the excess in the land over and above the 300 acres sold and the 110-acre home place which the Pumphreys were to have. After issue joined by separate answers of Josephine Pumphrey and her husband, the trial court upon a reconsideration of the demurrer to the petition sustained said demurrer, giving as his reason, set out in a written opinion delivered at the time, that "the contract set out in the petition is a wager contract and not enforceable." Appellant Dowell declining to further plead after the demurrer was sustained, the court dismissed his action, and he prosecutes this appeal,

Was the petition subject to demurrer? Whether the contract sued on is one which the law regards as inimical to it and contrary to public policy, or whether it is a guaranty or indemnity undertaking which the rules of equity will enforce, is the question. We have a statute against gaming which reads:

"Every contract, conveyance, transfer, or assurance, for the consideration, in whole or in part, of money, property, or other thing won, lost or bet in any game, sport, pastime, wager, or for the consideration of money, property, or other thing lent or advanced for the purpose of gaming, or lent or advanced at the time of any betting, gaming, or wagering to a person then actually engaged in betting, gaming, or wagering, shall be void." Section 1955, Kentucky Statutes.

Construing this section of the statute we have held that dealing in futures is gambling (Lyons v. Hodgen, 90 Ky. 280, 13 S.W. 1076, 12 Ky. Law Rep. 211; Dunlap & Co. v. Perry, 191 Ky. 291, 230 S.W. 291); betting on an election (Commonwealth v. Leak, 116 Ky. 540, 76 S.W. 368, 25 Ky. Law Rep. 761); betting on horse race ( McDevitt v. Thomas, 130 Ky. 805, 114 S.W. 273); operating bucket shop (Smith v. Western Union, 84 Ky. 664, 2 S.W. 483, 8 Ky. Law Rep. 672); faro bank ( Commonwealth v. Monarch, 6 Bush, 301); pool selling (Smith v. Commonwealth, 11 Ky. 224); playing for treats, cigars, etc. (Marston v. Commonwealth, 18 B. Mon. 490).

It is insisted by appellees Pumphreys that the contract sued on comes within the purview of section 1955, Kentucky Statutes, and is unenforceable. In support of this it is said that the contract clearly evidences a dealing in futures or options which is a species of gambling, but we cannot accede to this insistence. The Pumphreys, without financial backing, and apprehensive lest their entire devise be consumed by the adjudged lien debts, were anxious to and did in effect by the contract engage Beard and Dowell, not only to assist them in finding purchasers ready, able, and willing to take a less number of acres of the land than the whole, and pay not only the lien indebtedness, approximately $14,600, and $2,000, in addition thereto, but to indemnify the Pumphreys against the entire loss of the inheritance. It was in the nature of a contract of indemnity, an original undertaking on the part of Dowell and Beard to make 494 acres of the land adjudged to be sold bring at least $16,500, and thus extinguish the lien indebtedness against the farm and give the Pumphreys $2,000 in cash and leave them an improved home of 110 acres. If an indemnity company had written such a contract, no one would question its validity. In the case of Elliot et al. v. Hayes et al., reported in 8 Gray (Mass.) 164, the action was on a contract whereby one selling stock in a corporation guaranteed that the dividends on said stock would be at least 10 per cent. per year in consideration of the purchaser of the stock giving to the seller all dividends above 10 per cent. earned by the stock. The court said:

"The action is defended on the alleged ground that it is on a mere wager. And if it were on a wager contract, we should not sustain it. But it is not. The contract, not only in words, but also in its plain design and purpose, is a guaranty to the plaintiffs of a certain yearly profit on railroad stock owned by them. And nothing on its face, or in the facts agreed, discloses any illegality or unfairness. We therefore cannot find any reason why the plaintiffs should

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