Farless v. Morehead

• Decision Date: 13 December 1912
• Docket Number: 2,205.
• Parties: FARLESS et al. v. MOREHEAD et al.
• Court: U.S. Court of Appeals — Sixth Circuit

201 F. 310

FARLESS et al. v. MOREHEAD et al.

No. 2,205.

United States Court of Appeals, Sixth Circuit.

December 13, 1912

The court below, at the close of plaintiff's testimony directed a verdict for defendants; hence, we must consider as the facts the best case for plaintiffs which their testimony tended to prove. It is this: Plaintiffs lived in Henderson Ky. Defendants lived in Cincinnati, and there conducted a bucket shop, having branches or agencies scattered over Ohio and other states. Gavitt was conducting, in Evansville, Ind a business as a 'broker'; but this was, really, one of defendants' branches. Plaintiffs, persuaded thereto by Gavitt, who told them that he was representing defendants decided to go in together in some 'stock deals' for the purpose of buying and selling on margins through Gavitt and defendants. All parties understood that no stock was to be in fact purchased and received, that plaintiffs were only to put up and maintain required margins, that settlements were to be made only on market differences, and that the transactions were to be really wagers or bets on the fluctuations of the market. The course of business was that plaintiffs, usually by telephone from across the river at Henderson, but sometimes orally across his counter, instructed Gavitt to buy or sell certain stock at a certain price, and mailed or delivered to him their check for the margin; that Gavitt, who had from defendants no authority to close such deals, but only to receive and transmit to defendants offers thereof, would at once communicate with defendants, in Cincinnati, over their private wire from his office, and defendants would either accept or reject. If they accepted, Gavitt would mail or deliver to plaintiffs a bought or sold note in the form of a memorandum that 'M. & Co.' had bought or sold for 'R. & F.' a specified stock at a specified price. The record does not indicate any rejection of any of plaintiffs' deals, or what the course of practice would have been in such event. If the market went against plaintiffs, Gavitt telephoned them that they must put up more margins, whereupon they either mailed their check or dropped out. Defendants maintained a bank account in Evansville, and in this account Gavitt every day deposited to their credit the net receipts of their business through him for the day before; or, if there was a net loss, they authorized its payment to him out of this account. The net money so coming into this bank account, whether kept, as it was at first, in their own name, or, as it was later, in a dummy name, they from time to time caused to be transmitted to their general account in a Cincinnati bank.

Plaintiffs met with some successes, but more losses, and after an experience of eight months they found their net loss to be about $6,500. Thereupon they brought this action in the court below. In the petition they describe themselves as a partnership, and they base their claim upon an Ohio statute permitting recovery of a sum lost in gaming. The case came to trial before the late Judge Thompson and a jury, with the result above stated; and plaintiffs bring error.

H. M. Roberts, of Cleveland, Ohio, and T. B. Paxton, Jr., of Cincinnati, Ohio, for plaintiffs in error.

F. W. Cottle, of Cincinnati, Ohio, for defendants in error.

Before KNAPPEN and DENISON, Circuit Judges, and SANFORD, District judge.

DENISON Circuit Judge (after stating the facts as above).

The court below based its direction upon two grounds: First, that no lawful partnership could exist for the purpose for which plaintiffs associated themselves, and that no such partnership as theirs could maintain any suit; second, that the evidence did not show money lost and paid in Ohio, on a wager made in Ohio, but rather that the wager was made and the money lost and paid in Indiana, and hence that the Ohio statute was not effective.

It is true that the plaintiffs describe themselves as a partnership, and it is equally true that the law will not recognize and give full effect to a partnership formed to engage in gambling; but we think that neither of these facts is controlling here. The existence of a technical partnership, with any of its special, legal attributes, is not involved. The fact that plaintiffs are so described in their petition would not, under the liberal rules of pleading prevailing in Ohio, bar their recovery in the right of any joint interest which they might have. R.S. Secs. 5082, 5096, 5114, 5115; F. & P.M.R. v. McPherson (C.C.A. 6) 105 F. 210, 211, 44 C.C.A. 449. It is immaterial for the purpose of this case whether the mutual agency, the right of survivorship control and the other peculiarities of a partnership did or did not exist. Joint enterprises which are not partnerships are well known; and if plaintiffs, with a joint interest, misdescribe themselves as partners, an amendment would be a matter of course; and, if the peculiar partnership character of the relationship is not material, no prejudice can come from the mistaken description. The statute, as quoted below, applies to 'any person' who has paid money lost in this way. The Ohio statutes have a general provision that words in the singular include the plural (R.S. Sec. 4947); and it would be frittering away this statute to say that it applied to one person who went in alone, and not to two persons who went in together and mingled their funds, even if the mingling went so far that the identity of the funds was lost and that each had only a fractional interest in the net result. Cases like Jackson v. Brick Association, 53 Ohio St. 303, 41 N.E. 257, 35 L.R.A. 287, 53 Am.St.Rep. 638, which deny relief to a partnership engaged in illegal business, depend on the same rule which would deny relief to the loser in a wager; but that rule is abolished by this statute.

To consider the other question involved, a quotation of the entire statute is necessary. It is as follows:

'R. S. Ohio, Sec. 4270. If any person, by playing at any game, or by means of any bet or wager, loses to any other person any sum of money or other thing of value, and pays or delivers the same, or any part thereof, to the winner, the person who loses and pays or delivers may, at any time within six months next after such loss and payment or delivery, sue for and recover the money or thing of value so lost and paid or delivered, or any part thereof, from the winner thereof, with costs of suit, by civil action founded on this chapter, before any court of competent jurisdiction.'

It will be noticed that the statute contemplates, as conditions precedent to a recovery, three things: The making of a bet the losing of money thereby, and the payment of such loss. The case has been argued as though the statute, on its face, provided that one or two or three of these things must have been done in Ohio, in order that this action should be maintainable; but it carries no such express condition. Such limitation can be found only by reading it into the law through the operation of the familiar rule that a statute does not have extraterritorial effect (Endlich on Interpretation of Statutes, Sec. 169; Shaw v. Railway (C.C.A. 6) 173 F. 746, 752, 97 C.C.A. 520); and the problem here is whether plaintiffs can recover without giving to the statute a territorial effect either beyond the power or beyond the presumed intent of the Legislature. If the language of a statute is broad enough to cover a particular transaction, we suppose that whether the Legislature had power to reach that transaction and whether it intended to do so may be distinct questions. The presumption of nonintent would seem to follow from a lack of power, but it is not necessarily true, conversely,...