Marks v. Metropolitan Stock Exch.

• Decision Date: 04 April 1902
• Citation: 181 Mass. 251,63 N.E. 410
• Parties: MARKS v. METROPOLITAN STOCK EXCH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

181 Mass. 251

63 N.E. 410

MARKS v. METROPOLITAN STOCK EXCH.

Supreme Judicial Court of Massachusetts, Suffolk.

April 4, 1902

COUNSEL

Clarence

W. Rowley, for plaintiff.

I. R Clark, for defendant.

OPINION

LORING J.

The transaction which the husband of the plaintiff testified that he entered into with the defendant corporation in her behalf is the typical transaction aimed at by the first clause of the second section of St. 1890, c. 437. He testified that he went to the defendant's office, and through one Nichols, whom he met there, paid to the defendant $200, and received from it a contract whereby the defendant promised, 'on three days' notice,' to deliver to Nichols 20 shares of the stock of the United States Steel Company 'at 53 1/4, and the holder of this contract agrees to receive the same; or upon surrender by mutual consent of this contract said corporation agrees to pay the holder of it a sum equal to the then advance in the market price of said commodity or stock. All deposits shall become he absolute property of said corporation to the amount of the decline in the market value of said commodity or stock when this contract is closed, either by further order of the holder, or when the decline in the market value of said commodity or stock shall equal the sum of all deposits whereupon this contract terminates.' In addition to the $200 deposited by the plaintiff's husband when the contract was made, he deposited a second $200 a few days later. When the contract was produced in court, there was entered on the left-hand margin the two sums of $200 under the heading 'Deposit,' and on the right-hand margin of the contract, under the heading 'Order Limit,' and opposite the first deposit of $200, there was entered '43 1/4,' and opposite the second deposit, '33 1/4.' That means that on payment of the first $200 the plaintiff was protected until the price of the stock of the United States Steel Company fell to $43.25 a share, and, when the stock of that company declined so as to reach that price, the plaintiff forfeited all the deposits, under the clause of the contract providing that 'all deposits shall become the absolute property of said corporation to the amount of the decline in the market value of said * * * stock when the contract is closed, * * * or when the decline in the market value of said * * * stock shall equal the sum of all deposits.' And so, on payment of the second $200, the plaintiff was protected until the stock fell to $33.25 a share, and on the price of the stock falling to that amount all deposits were forfeited, by the term of the contract stated above. This contract was spoken of in the testimony of the plaintiff's husband as a 'ticket.' Later, the plaintiff's husband came to the office of the defendant with another $300, and on entering the office heard that 'the stock was going down,' and, although he tried to reach the counter, he was prevented from doing so by the crowd, and when he reached the counter he was told that he was too late, that he was 'wiped out,' and the man behind the counter refused to take his money, and the stock went down to 24, and in about two seconds rose again to 32. Nichols, through whom the plaintiff bought the ticket in question, when asked what became of the 'deal,' testified that 'it expired, and the market ran out.' He characterized the contract which we have spoken of as a 'long ticket,' and, on being asked what he did with the $200 handed him by the plaintiff's husband, he testified that he put it in stocks, according to the contract which has been referred to, and that he could not tell 'whether it was a short ticket or a long one.' And, finally, in describing the commission to be paid to him for his services, he testified that he was to receive 'one dollar on twenty shares, from Mr. Marks, if he won.'

The transaction testified to by the plaintiff's husband and by Nichols is plainly a device to make a wager under the guise of a contract for the purchase and sale of shares of stock. If the price of the stock of the United States Steel Company fell below 33 1/4, the price to which the holder of the long ticket was protected by payment of $20 a share margin, the plaintiff lost; if it rose above the price named 53 1/4, before it fell below 33 1/4, he won, and, by calling for fulfillment of the contract, could collect his winnings. The terms of the contract put in evidence contemplate a wager, and the language of both witnesses throughout is the language of a wager, and not of a real transaction. Ballou v. Willey (Mass.) 62 N.E. 1064. The defendant's answer to this is that on the plaintiff's own testimony a real...