Dows v. Glaspel
| Decision Date | 03 August 1894 |
| Docket Number | 6731 |
| Citation | 60 N.W. 60,4 N.D. 251 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Stutsman County; Rose, J.
Action by David Dows, Jr., and George B. Cooksey, copartners as David Dows, Jr., & Co., against Samuel L. Glaspel, to recover commissions and advances made by plaintiffs on account of the sale and purchase of wheat by them as defendant's agents in which defendant set up a counterclaim. From a judgment for defendant in the main case, and against defendant on his counterclaim, and also disallowing costs to defendant, both parties appeal.
Modified as to costs, and affirmed.
Affirmed.
Ball & Watson and White & Hewitt, for appellant.
Speculation is a litigimate branch of the commerce of today and speculations in options and futures is legal excepting in the few states where it is prohibited by statute. Smith v Bonvier, 70 Pa. 325; Kirkpatrick v. Bonsall, 72 Pa. 155; State v. Miltenberger, 13 Mo.App. 503; Hatch v. Douglas, 48 Conn. 116; Clark v Foss, 7 Biss. 540. An option contract is one in which there is merely an option given as to the day within a given month, upon which delivery may be made or required. Dewey on Contracts for Future Delivery, 26; Ray on Contractual Limitations, 45. When the contract is bona fide in its inception and contemplates an actual delivery, the manner of its subsequent settlement whether by the payment of differences or otherwise cannot invalidate it. Melchert v. W. U. Tel. Co., 11 F. 193; Williams v. Tiedman, 6 Mo.App. 269; Sawyer v. Taggart, 14 Bush. 727. Brokers on the Board of Trade acting as agents for customers have an implied authority to follow the rules and usages of the board. Dewey 147; Ray 47; Horton v. Morgan, 19 N.Y. 170, 75 Am. Dec. 311 and note; Kingsbury v. Kirwin, 77 N.Y. 612; Rosenstock v. Tormey, 3 Am. Rep. 125; Bibb v. Allen, 149 U.S. 481; 23 Am. and Eng. Enc. Law, 733, note 1.
The burden rests upon the defendant to show the alleged illegal character of the transaction. Bigelow v. Benedict, 70 U.S. 202; Story v. Solomon, 71 U.S. 420; Irwin v. Williar, 110 U.S. 499; Ramsey v. Berry, 65 Me. 570; Whitesides v. Hunt, 97 Ind 191. The defendant must show that the intention to gamble in prices was mutual. Dewey 50; Edwards v. Hoffinghoff, 38 F. 644; Pixley v. Boynton, 79 Ill. 351; Murray v. Ocheltree, 13 N.W. 411; Connor v. Robertson, 55 Am. Rep. 525; Union Bank v. Carr, 15 F. 438. That the defendant intended to resell before the delivery of the wheat to him is not evidence of intent to wager. Sawyer v. Taggart, 14 Bush. 727. Gregory v. Wendell, 39 Mich. 337. The plaintiffs are entitled to recover, even though the transactions were wagers since they were mere agents or bankers of the defendant. They are not in pari delicto. Conner v. Robertson, 55 Am. Rep. 527; Wilkinson v. Tousley, 16 Minn. 299; Lehman v. Strassberger, 2 Woods 554; Durant v. Barthe, 98 Mass. 168; Planters Bank v. Union Bank, 16 Wall. 500; Warren v. Hewitt, 45 Ga. 501; Clark v. Foss, 7 Biss. 540. Where the courts hold wagering contracts invalid, they refuse to assist a party seeking to recover money already paid on such wager. Kahn v. Walton, 20 N.E. 210; Higgins v. McCrea, 116 U.S. 671; White v. Barber, 123 U.S. 392.
Edward W. Camp and S. L. Glaspel, for respondent.
To uphold a written contract for the sale and delivery of grain at a future day, for a price certain, it must affirmatively appear that it was made with an actual view to the delivery and receipt of the grain and not as a cover for a gambling transaction. Barnard v. Backhaus, 52 Wis. 593. Contracts made in pursuance of the customs of the Board of Trade are from the known character of the latter presumptively without bona fide intention. Beveridge v. Hewitt, 8 Bradw. 483. "Dealing in futures" has acquired the signification of a mere speculation upon chances. Fortenburg v. State, 1 S.W. 58; Tantum v. Arnold, 6 At. Rep. 316; Mutual Life Ins. Co. v. Watson, 30 F. 653; Cobb v. Prell, 15 F. 774; Sprague v. Warren, 41 N.W. 1113; Melchert v. Am. U. Tel. Co., 11 F. 193; Edwards v. Hoffinghoff, 38 F. 639; Whitesides v. Hunt, 49 Am. Rep. 441; Mohr v. Miesen, 49 N.W. 862. If under the guise of a contract for the future delivery of grain, the real intent is merely to speculate in the rise or fall of prices and the goods are not to be delivered, but one party is to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the contracts. Then the whole transaction constitutes a wager and is null and void. Irwin v. Williar, 110 U.S. 499; Embrey v. Jemison, 131 U.S. 336. The fact that no wheat was offered or demanded, shows that neither party expected the delivery of any wheat, but that they expected to settle the contract on the basis of differences. Lyon v. Culbertson, 83 Ill. 33, (25 Am. Rep. 353;) Washer v. Bond, 19 P. 323; Myers v. Tobias, 16 At. Rep. 641; Sprague v. Warren, 41 N.W. 1113; Watte v. Wikersham, 43 N.W. 259; Crawford v. Spencer, 4 S.W. 713. Even if the plaintiffs acted as agents and paid defendants losses, yet knowing as they did, that the losses were incurred at gaming, they could not recover. Farvia v. Gabell, 89 Pa. 89; Exrs v. Thomas, 97 Pa. 278. Under statutes similar to that of Minnesota (the place of these contracts) money lost on option deals is recoverable. Lester v. Buel, 30 N.E. 821; Dunn v. Bell, 4 S.W. 41; Pearce v. Foot, 113 Ill. 228; Lyons v. Hodgen, 13 S.W. 1076; Perry v. Gross, 41 N.W. 799; Lucas v. Cavanaugh, 21 N.E. 306; Copley v. Doran, 1 N.Y.S. 888; Peck v. Doran, 10 N.Y.S. 401; Watts v. Lynch, 5 At. Rep. 458; Grew v. Exchange, 4 S.W. 38; Kennedy v. Stout, 26 Ill.App. 133; Elder v. Talcott, 43 Ill.App. 439. The defendant was entitled to recover his costs. Thayer v. Holland, 63 How. Pr. 179; Griffin v. Brown, 35 How. Pr. 372.
The plaintiffs are seeking to recover judgment against defendant for their commissions and for advances made by them on account of the sale and purchase of wheat by them as agents for defendant. Thus far they have been unsuccessful. The case was tried before the court, and judgment was rendered in favor of the defendant. The findings of the court amply sustain the judgment. But it is here urged that the evidence does not justify certain of the findings. The defense relied on was that the transactions in which the plaintiffs claim to have paid out moneys for the defendant were mere wagers on the price of wheat, and that the plaintiffs knew that the sole purpose of defendant was to gamble in wheat options, and not to enter into bona fide wheat contracts in which wheat was to be delivered to or by him thereunder. The plaintiffs were commission merchants in the City of Duluth, Minn., and were members of the Duluth Board of Trade. The defendant was and is an attorney in full practice, residing and carrying on his professional business at Jamestown, N.D. In September, 1885, the defendant commenced shipping wheat to plaintiffs, to be sold by them for him in Duluth. These shipments continued for a time, and finally on October 30 1885, the defendant sent to the plaintiffs the following telegram: "Buy ten May, ninety-eight or better, account of myself, and same account of J. E. Shoenberg." It is undisputed that this telegram was an order for the plaintiffs, as agents of defendants, to buy for him on the Duluth Board of Trade 10,000 bushels of wheat to be delivered in May, 1886, at not exceeding 98 cents a bushel. Thereafter defendant continued to send similar orders to the plaintiffs until the following June, when the plaintiffs closed him out, he having failed to keep good his margins. From time to time the various purchases made by plaintiffs for defendant were closed out on his orders. They were invariably closed out by the plaintiffs selling, under his directions, for future delivery, the same amount of wheat he had purchased. The first transactions resulted in a small profit to defendant, but, after purchasing 50,000 bushels of wheat for May delivery, the price fell rapidly, and when this purchase was closed out the following June the loss resulting from the transaction over and above moneys received by plaintiffs from defendant for margins was over $ 7,000. Plaintiff's claim that they were compelled to pay out on behalf of defendant in these transactions all the moneys for which they sue except their commissions, and they also seek to recover such commissions in addition to their alleged advances. The trial court found that all the transactions stated in the complaint as purchases and sales of wheat (except the sales of actual wheat shipped to plaintiffs by defendant for sale) were wagering transactions, in which no wheat was to be delivered or received by the parties thereto, and that the defendant employed the plaintiffs to make purchases and sales of wheat for future delivery in the City of Duluth, Minn., with the mutual understanding and agreement that no wheat was to be delivered or received by either party, and that such transactions were to be mere wagers upon the rise and fall of the market price at Duluth; that all such purchases and sales were made pursuant to such mutual understanding; that all of such transactions were to be settled at a future time by the payment of differences, viz. the difference between the contract or purchase price and the market price on the day of settlement, and that neither party to the transaction should be required to deliver or receive any wheat; that all of such transactions involved simply gains or losses dependent upon the future rise or fall of the market price, and that no wheat was demanded, tendered, delivered, or received in any of the transactions. In the first place, we hold that the rights of the...
To continue reading
Request your trial