Johnston v. Miller

• Decision Date: 18 November 1899
• Citation: 53 S.W. 1052,67 Ark. 172
• Parties: JOHNSTON v. MILLER
• Court: Arkansas Supreme Court

53 S.W. 1052

67 Ark. 172

JOHNSTON v. MILLER

Supreme Court of Arkansas

November 18, 1899

Appeal from Crawford Circuit Court JEPHTHA H. EVANS, Judge.

Judgment reversed and remanded.

Oscar L. Miles, for appellant.

By sending the order to appellant, appellee conferred upon him the right to deal according to the rules and usages of the New York Cotton Exchange, and such rules and usages enter into the contract of sale in this case. 149 U.S. 481. The burden was on appellee to show that the contract was a gambling transaction, and that both parties so understood the transaction. Ib. The appellee is bound to repay appellant for his necessary losses and expenditures incurred in the performance of the agency. Ib. Further on the point that the gambling intent must be mutual, see 79 Ill. 351; 36 F. 54; 6 Mo.App. 269; 108 U.S. 269; 30 F. 197.

E. B Pierce, for appellee.

The question in all such cases as this is the intention of the parties. 47 Ark. 194; 110 U.S. 511. The circumstance that appellant was willing to purchase cotton to the value of $ 25,000 merely upon the order of a stranger who had deposited only $ 500, and about whom he knew nothing, raises a strong presumption that no actual purchase and delivery of cotton was contemplated. 3 S.W. 152; 8 Am. & Eng. Enc. Law, 1008. The case at bar does not fall within the rule announced in 149 U.S. 481, because in that case the evidence failed to show that either party intended the contract as a wagering or gambling transaction. In an illegal transaction, the agent can recover neither advances or commissions. 141 U.S. 490; 11 U.S. 499, 510; Story, Ag., §§ 330, 340; 56 Ark 307. Appellee was the real vendor, and one of the principals in the transaction. 38 N.J.Eq. 229; L. R. 7 H. L. 530. As to application of usages of board of trade, as between the broker and his customer, see: L. R. 7 H. L. 802, 828.

OPINION

BUNN, C. J.

This is an action in the Crawford county circuit court, by the appellant, R. J. Johnston, against the appellee, R. J Miller, for services rendered and money paid out at his request, amounting to the sum of $ 618.75. The cause was submitted to the court sitting as a jury, and upon the facts in evidence the court held the law to be with the defendant, and adjudged accordingly, and the plaintiff appealed.

This is a suit, in brief, in which the defense is a dealing in futures, or that the contract was a wagering contract. The defendant, Miller, resided in Arkansas, and authorized the plaintiff, Johnston, a cotton broker in New York City, to buy for him a certain number of bales of cotton, to be delivered in the future, or, as the defendant claims, not in fact to be delivered, but that the differences in values or margins should be kept up until the time set for the pretended delivery, and then the contract to be closed on settlement of this difference, the expenses, and so forth.

The complaint is as follows, viz.: "Comes the plaintiff, R. J. Johnston, and complaining of the defendant, R. J. Miller, says: That on the ___ day of __________, 1895, the plaintiff, R. J. Johnston, was doing business in the city of New York, as a broken, cotton factor, and commission merchant, and that on that day defendant, in the regular course of business, became indebted to the plaintiff in the sum of $ 618.75; that defendant became so indebted to the plaintiff for labor done, services rendered, and for money paid out by plaintiff during the month of __________, 1895, at the instance and request of defendant; that such sum is now due and unpaid. Wherefore, plaintiff prays that he have judgment for said sum of $ 618.75, and his costs in this behalf laid out and expended."

And the defendant answered as follows, viz.: "(1). Now comes the defendant, R. J. Miller, and for his answer to plaintiff's complaint says that he denies that he is indebted to the plaintiff in the sum of $ 618.75, or in any other sum, and denies that said plaintiff, during the month of __________, 1895, or any other months, rendered him any service, performed any labor for him or advanced any money for defendant at his instance or request. (2). The said defendant says that the claim presented against him by said plaintiff is a false charge, made solely for the purchase of future cotton sold, in which the said R. J. Johnston was never authorized to make advancements or perform any labor for said defendant, and any advancement so made or labor so performed were without authority, and the same was for a simple speculation in cotton market results, and never contemplated any delivery of cotton, but was simply a wager, contrary to law, and cannot be enforced, because against public policy and contrary to law. (3). That any advancements so made by the plaintiff were made on his own responsibility and for his own benefit, and without the knowledge or authority of said defendant, and any losses accruing, if any, were caused by carelessness, negligence and lack of skill on the part of said plaintiff. (4). Said defendant further says that, even if said advances had been made and labor performed for defendant at defendant's request, as alleged by plaintiff (all of which said defendant specifically denies), and if said transaction was not contrary to law and against public policy, the said plaintiff could not recover from said defendant, because, under that theory of the case, said plaintiff was combining within himself the opposite interests of a purchasing agent purchasing from himself without the knowledge or consent of his principal."

It is unnecessary to discuss this last proposition, as the evidence shows the relation of plaintiff to defendant, and the true character of the transaction all through. Whether the contract was a legitimate or illegitimate one, whether it was allowable under or prohibited by the law, it is manifest, in so far as the services rendered and money expended, the value of the same is established by the evidence, and is correctly stated. There is no question on that point, except that it is contended by appellee's counsel that, by reason of the delay of plaintiff in closing out the deal after being instructed to do so, great loss accrued to defendant. The telegram from defendant to plaintiff reached the latter on Sunday evening, and he obeyed it on Monday as soon as the exchange opened, as is shown in the evidence. This can hardly be considered an unreasonable delay, especially in view of the fact that plaintiff had been for some days previously endeavoring to get instructions from defendant but without success.

The evidence shows that this contract was of such a nature that it was not possible for defendant to cease to perform his part of it at any time, and at any stage, and thus relieve himself of liability, for in attempting to do so he would probably repudiate the responsibility the plaintiff had properly assumed for him, and such a course would greatly damage plaintiff. The truth is there is really but on question at issue in this case, and that is, whether or not the contract was in fact one made in violation of law, or contrary to public policy, as alleged in the defendant's answer, especially in the second paragraph thereof.

Was the contract in violation of the laws of this state, or contrary to its public policy? Whether or not it was contrary to public policy need not be discussed here, for the question is altogether one of positive law in this state, for we have a statute (Sand. & H. Dig.) on the subject which reads as follows, viz.: "Sec. 1634. The buying or selling or otherwise dealing in what is known as futures, either in cotton, grain, or anything whatsoever, with a view to profit, is hereby declared to be gambling." And the next section of the Digest makes "dealing in futures" a misdemeanor, and fixes the punishment; and it thus devolved upon the courts to declare what is "dealing in futures," under this act.

In Fortenbury v. State, 47 Ark. 188, 1 S.W. 58, which was the first case in this court in which said statute was construed, we said (quoting from the syllabus): "The act of March 30, 1883, to prohibit dealing in futures is not in restraint of trade. It does not prevent contracts for future delivery, when entered into in good faith and with an actual intention of fulfillment, but is intended to suppress mere speculations upon chances, when the grain, cotton, or stocks dealt in exists only in the imagination, and where no delivery is contemplated, but the parties expect to settle upon the difference in the market."

In Preston v. Cincinnati, C. & H. V. R. Co., 36 F. 54, it was held that a mere dealing on margins in the board of trade is not sufficient to show a gambling transaction.

It makes little difference what may be the express terms of the contract, for it is the real intention of the parties in carrying it out that becomes the subject of injury. Whether a real or fictitious delivery is to be made is what we are endeavoring to discover, for this makes the contract lawful or unlawful, as the case may be; and this question, of course, can only be determined by the evidence--by the facts in each case.

The evidence in the case at bar shows, substantially, that the defendant, a citizen of Arkansas, desiring to purchase some cotton futures in the city of New York, to be delivered on a future day, entered into a correspondence with plaintiff on the subject, and this correspondence resulted in an agreement between them that plaintiff would buy 500 bales of cotton for defendant, to be delivered in December following, and this was accordingly done, the defendant depositing $ 500 in the local banks for the purpose of the purchase. This purchase was made under the rules and regulations of the New York Cotton Exchange, which are in conformity to the statute...