Layton v. State, (No. 6000.)

• Decision Date: 16 November 1927
• Docket Number: (No. 6000.)
• Citation: 140 S.E. 847,165 Ga. 265
• Parties: LAYTON. v. STATE.
• Court: Georgia Supreme Court

165 Ga. 265

140 S.E. 847

LAYTON.

v.STATE.

(No. 6000.)

Supreme Court of Georgia.

Nov. 16, 1927.

Rehearing Denied Dec. 17, 1927.

(Syllabus by the Court.)

[COPYRIGHT MATERIAL OMITTED]

Error from Superior Court, Fulton County; John D. Humphries, Judge.

B. L. Layton was convicted under an indictment charging the maintenance of an office to engage in dealing in futures on margin and for maintaining a gaming house, and he brings error. Reversed.

B. L. Layton and others were indicted on two counts for a misdemeanor. Count 1 charged that the accused "did establish, maintain, and operate an office and place of business for the purpose of carrying on and engaging in a business commonly called 'dealing in futures on margin, ' and did then and there, in said office and place of business established for the purpose aforesaid, maintain and operate and engage in a business commonly called 'dealing in futures on margin, ' contrary to the laws of said state, " etc. Count 2 charged that the accused "did keep and maintain a gaming house, contrary to the laws of saidstate, " etc. The defendant filed a demurrer to the indictment on the ground that the two counts improperly joined two separate and distinct offenses. The court overruled the demurrer, and the defendant excepted pendente lite. After trial and conviction he moved for a new trial on the general grounds, amending later with 38 special grounds. The motion was overruled, and the defendant excepted, assigning error upon the two rulings just stated.

The first count of the indictment was brought under the act of August 20, 1906, prohibiting "dealing in futures" (Acts 1906, p. 95), particularly sections 1 and 2 (Civil Code 1910, §§ 4257, 4258. Section 4257 is:

"It shall be unlawful for any person, association of persons, or corporation, either as principal or agent, to establish, maintain, or operate an office or other place of business in this state for the purpose of carrying on or engaging in the business commonly called 'dealing in futures on margins'; and any person violating the provisions of this section shall be guilty of a misdemeanor."

Section 4258 is:

"Every contract or agreement, whether or not in writing, whereby any person or corporation shall agree to buy or sell and deliver, or sell with an agreement to deliver any wheat, cotton, corn, or other commodity, stock, bond, or other security, to any other person or corporation, when in fact it is not in good faith intended by the parties that an actual delivery of the articles or thing shall be made, is hereby declared to be unlawful, wheth-ed made or to be performed wholly within this state or partly within and partly without this state; it being the intent of this section to prohibit any and all contracts or agreements for the purchase or sale and delivery of any commodity or other thing of value on margin, commonly called 'dealing in futures, ' when the intention or understanding of the parties is to receive or pay the difference between the agreed price and the market price at the time of settlement: Provided, that nothing herein contained shall be construed to apply to transactions by mail or wire between a person in this state and a person outside this state, where the person outside this state is not represented in this state by any broker, agent, or attorney in said transaction."

Section 4259 makes violation of the preceding section a misdemeanor. Section 4260 refers to witnesses in such cases. The next three sections read as follows:

"§ 4281. * * * On any prosecution under the four preceding sections, proof that a defendant was a party to a contract, as agent or principal, to buy or sell and deliver any article, thing, or property, specified or named in said sections, or that he was the agent, directly or indirectly, of any party in making, furthering, or effectuating the same, or that he was the agent or officer of any corporation or association of persons in making, furthering, or effectuating the same, and that the article, thing, or property agreed to be sold and delivered was not actually delivered, and that settlement was made or agreed to be made upon a difference in value of the said article, thing, or property, shall constitute against such defendant prima facie evidence of guilt of the offense or offenses prohibited in said sections."

"§ 4262. * * * Proof that anything of value.agreed to be sold and delivered was not actually delivered, and that one of the parties to such agreement deposited or secured, or agreed to deposit or secure, what are commonly known as 'margins, ' shall constitute prima facie evidence of a contract declared unlawful by the terms of the preceding sections."

"§ 4263. * * * Proof that any person, association of persons, or corporation, either as principal or agent, has established an office or place where are posted or published from information received the fluctuating prices of cotton, grain, provisions, stocks, bonds, or other commodity or thing of value, or either of them, shall constitute prima facie evidence of guilt of the offense or offenses prohibited in section 4257."

The court gave in charge to the jury the three sections last above set out. Error is assigned thereupon in three grounds of the motion for new trial. These allege sections 4261 and 4262 to be violative of article 1, § 1, par. 3, of the Constitution of Georgia (Civil Code 1910, § 6359), providing that no person shall be deprived of life, liberty, or property, except by due process of law; and of the Fourteenth Amendment to the Constitution of the United States, which provides that no state shall so deprive any person. Section 4263 is alleged to be violative of article 1, § 8. par. 3, of the Constitution of the United States (section 6644) declaring that Congress shall have power to regulate commerce among the several states. It is alleged that due process was violated, because "the presumption and prima facie case of guilt declared by and arising under said section of said act is arbitrary and wholly unreasonable, especially in that said presumption and prima facie case of guilt arise against the defendant irrespective of his good faith in the transaction, and arise from acts beyond his control, viz., where he is acting as agent, and either his principal or his principal's principal' or the opposite party to the contract breaches it and refuses to make delivery, or where his principal or his principal's principal and the opposite party make a settlement based upon difference in value of the article;" and arbitrary and unreasonable because "the element of failure of delivery is an act of third persons over whom the defendant has no control, and in that the element of depositing or agreeing to deposit margins is a requirement made for the purpose of guaranteeing performance of the contract and in no wise tends to indicate an intention not to perform." The ground with respect to section 4263 alleges that it was inapplicable to the case, because void in that the business operated by the Arm of Fenner & Beane, for whom defendant was shown to be an agent, consisted in collecting and recording information with regard to prices on cotton and other commodities coming over telegraph wires to the office of said firm from exchanges in New York and New Orleans, outside the state of Georgia, all of which was a part of interstate commerce, over which the lawmaking power enacting said law had no control or authority.

Another ground of the motion assigns error upon the refusal of the court to charge the jury that, under the United States Cotton Futures Act (26 USCA § 731 et seq.; U. S. Comp. St. § 6300a et seq.) and the amendment thereof of March 4, 1919 (40 Stat 1351):

Congress has undertaken "the regulation of every contract of sale of any cotton for future delivery made at or in any exchange, board of trade, or similar institution and of the methods of delivery thereunder; that if you find from the evidence that all contracts for future delivery of cotton made by Fenner & Beane for their customers, whose orders were transmitted from their Atlanta office, were made at, on, or in any exchanges and were made in compliance with the fifth section of the act of Congress just referred to, the defendant could not be convicted for any participation in the solicitation of, the furtherance of, or the making of such contracts, or for maintaining an office for the carrying on the business of dealing in such contracts; that under article 1, § 8, of the Constitution of the United States, upon the passage of said act of Congress, the statute of the state of Georgia under which the defendant stands indicted in the first count of the indictment, became null and void in so so far as it relates to contracts for the sale of cotton for future delivery made at, on, or in any exchange in pursuance of section 5 of said act of Congress, because said act of Congress, being a regulation of commerce in cotton among the several states, is, under the clause of the Constitution just referred to, exclusive, and the effect of its passage by Congress was to render said statute of this state unconstitutional, null, and void, so far as it relates to the same subject."

Another ground assigns error upon the court's charge that if the jury considered that the defendant was guilty under count 1, under the evidence and instructions as to the law, the same state of facts under the law would justify a conviction under count 2.

The voluminous evidence in the case varies, there being direct testimony offered by each side to establish its contention. The state introduced a number of witnesses who testified they had placed business with Fenner & Beane for contracts for the future delivery of cotton while the defendant was manager. Several of these witnesses testified that they placed orders for stated numbers of bales of cotton from time to time, but that they never expected any actual delivery to them, nor did they ever expect to make any actual delivery to...