Garsed v. Sternberger

• Decision Date: 24 May 1904
• Citation: 47 S.E. 603,135 N.C. 601
• Court: North Carolina Supreme Court
• Parties: GARSED . v. STERNBERGER.

47 S.E. 603

135 N.C. 601

GARSED .

v.STERNBERGER.

Supreme Court of North Carolina.

May 24, 1904.

CONTRACTS—FUTURES—ILLEGALITY.

1. Where plaintiff bought cotton "futures" for the defendant and suffered loss, he cannot maintain an action for reimbursement, since the transaction is illegal, especially under Laws 1889, pp. 233, 234, c. 221, §§ 1, 3, 4, prohibiting all dealings in "future" contracts in which there is not a bona fide purchase for future delivery, but which contemplate payment of the difference in price, and providing that no action may be maintained on account of any such contract.

¶ 1. See Gaming, vol. 24, Cent Dig. § 72.

Appeal from Superior Court, Guilford County; O. H. Allen, Judge.

Action by E. T. Garsed against H. Stern-berger. From a judgment sustaining a demurrer to the plaintiff's evidence and dismissing the action, plaintiff appeals. Affirmed.

J. N. Staples, for appellant.

J. A. Long and J. E. Long, for appellee.

CLARK, C. J. The defendant, desiring to engage in buying cotton "futures" without being known, requested the plaintiff to buy them for him through the plaintiff's own broker in New York. Both the plaintiff and defendant lived in Greensboro, N. C. The defendant agreed to furnish all the money necessary for these transactions, and to guaranty the plaintiff against loss. Several of these transactions occurred, the defendant using the plaintiff's name, with his consent, and the orders being sent direct by the defendant to the plaintiff's brokers. After several such transactions, in this particular one the defendant gave the plaintiff a check for $500, and told him he was going to buy 500 bales "June cotton." The defendant sent his instructions direct to the plaintiff's brokers. There was a loss of $626.28 on this contract being closed out, which the New York brokers charged up to the plaintiff. The plaintiff thereupon called upon the defendant to reimburse him the amount ($126.28) in excess of the sum of $500 which had been handed him by the defendant. The defendant did not, after the loss, request the plaintiff to pay the $126.28, nor promise, after such loss, to reimburse the plaintiff, but, on the contrary, denied liability, alleging that the loss was caused by the failure of the plaintiff's brokers to obey instructions. The plaintiff began this action before a justice of the peace to recover the said sum of $126.52, as money paid to the defendant's use. The defendant pleaded that, the transaction being illegal, the plaintiff could not recover. Upon the plaintiff's testimony, as above, the defendant demurred to the evidence. The court sustained the demurrer and dismissed the action. In this there was no error.

In Clark on Contracts, 501, it is said: "If a broker or other agent is employed to carry out an illegal transaction, and is privy to the unlawful design, and by virtue of his employment performs services, makes disbursements, suffers losses, or incurs liabilities, he has no remedy against his principal"—citing Greenhood, Pub. Pol. 110 (where the cases are collected); Harvey v. Merrill, 150 Mass. 1, 22 N. E. 49, 5 L. R. A. 200, 15 Am. St. Rep....