Moritz v. Lumbley

• Decision Date: 11 January 1926
• Docket Number: 25355
• Citation: 141 Miss. 453,106 So. 642
• Court: Mississippi Supreme Court
• Parties: MORITZ et al. v. LUMBLEY. [*]

106 So. 642

141 Miss. 453

MORITZ et al. v. LUMBLEY. ^[*]

No. 25355

Supreme Court of Mississippi

January 11, 1926

Division B

(Division B.).

1. GAMING. In view of specific statutes, general statutes inapplicable to dealing in future contracts.

Enforceability of contracts growing out of dealing in futures being dealt with specifically by Code 1906, section 2303, Hemingway's Code, section 1913; and Laws 1908, chapter 118, sections 2 9, Hemingway's Code, sections 1915, 1922; Code 1906 sections 2300-2302, Hemingway's Code, sections 1910-1912-dealing with contracts growing out of gambling generally, have no application to the former.

2 GAMING. Notes by loser on future contracts, to repay one who has paid losses at loser's request, valid.

Notes given with comaker, by loser on dealing in future contracts to repay one who at loser's request paid the winner, do not involve the illegal contracts; and so are enforceable.

HON. G. C. TANN, Chancellor.

APPEAL from chancery court of Lauderdale county, HON. G. C. TANN, Chancellor.

Suit by Miss Mollie Lumbley against C. E. Moritz and another. From an adverse decree, defendant Moritz appeals. Reversed and decree rendered.

Reversed and judgment here.

Truly & Truly, for appellant.

We have here an employee who steals three thousand five hundred dollars from his employer. His wrongdoing is discovered and he is given an opportunity to make good his theft. He persuades his aunt to execute a deed in trust in order to satisfy the employer and in order to induce the employer to keep the wrongdoer in his employ and give him a chance to repay the money at the rate of one hundred dollars per month. This is a bold statement of the facts in this case. It transpires that this three thousand five hundred dollars which was stolen was used by the employee in gambling. This gambling was entirely unknown to the employer until the money had been lost. Does this constitute a gambling transaction within the meaning of our statute?

Chapter 30, Hemingway's Code, deals with gambling contracts and all our statute law on that subject is found therein. A careful reading of that chapter will show that everywhere the expression "knowingly received" or "knowingly loaned" is used. It cannot, and we are certain will not, be claimed that Moritz "knowingly" let Lumbley have money to gamble with.

Our court and our legislature is always jealous of a gambling contract; the statutes and decisions uniformly refuse relief to any person who undertakes to collect such an indebtedness. This is in line with the modern trend. With this condition we have no fault to find and we are not asking this court to deviate at all from this long-established rule. What we are now urging the court to do is to aid us to correct a greater evil. Hew to the line, but observe the well marked difference between this case and a case for the collection of a gambling debt. Show the gambler that he cannot collect his debts in our courts, but also show the embezzler that he cannot steal from his employer and then raise a smoke screen by trying to bring the question of gambling into the case. We submit, that a distinction does exist between the case before the court and the case of an attempt to collect a gambling debt, and we beg the court to consider and give effect to this distinction.

Amis & Dunn, for appellees.

The single question involved in this case, as we see it, is whether or not the indebtedness of C. S. Lumbley to appellant grew out of gambling transactions. This is a question more largely of fact than of law, and it seems to us that when the facts and circumstances are considered in detail no other conclusion can be reached than that the transactions were gambling in their intent, nature and effect.

In their brief counsel for the appellant have ingeniously constructed a "man of straw" and then proceeded to demolish that gentleman quite effectually with perfectly sound reason and well established and universally accepted law. We have no quarrel to make with their argument except to say that it is based upon a premise that does not exist in their case and for that reason, although able, is without value to the poor cause of the appellant.

The appellant was engaged in a cotton and grain stock brokerage business in Vicksburg and Natchez. The place at Vicksburg was in charge of C. S. Lumbley. It is perfectly manifest from the testimony that the business generally was a cotton and grain future contract business--in other words, a gambling business. In the conduct of that kind of business for his principal, C. S. Lumbley claims that he, through misunderstanding, executed an order for a futures contract in the name of a supposed bona fide customer. He afterwards found he was in error in executing this order and having discovered that a loss had occurred he continued to manipulate the account based on the original order in the hope that the loss would be recovered, but instead of the fickle goddess favoring his venture, matters grew worse until a loss in margins had been sustained amounting to three thousand four hundred dollars. That this loss was the result of gambling in connection with the business of the appellant is too plain for argument. C. S. Lumbley was called on to make the loss good, and he did so by getting his aunt, Miss Mollie Lumbley, to give her notes to appellant for the amount, and to secure the payment of the notes by a deed of trust on a small piece of property, being all that she had, with the understanding that C. S. Lumbley was to continue in the employment of appellant and pay the alleged indebtedness by deductions from his salary from month to month. Lumbley paid, by deductions from his monthly salary thereafter, about one thousand seven hundred dollars when he was let out or discharged and his old aunt was then called on to pay the balance.

Counsel for appellant contend with much earnestness and apparent sincerity that this was not a gambling debt, but represents money stolen by C. S. Lumbley from the appellant. The record furnishes no ground for such contentions. His indebtedness to his employer did not arise from his taking money, which did not belong to him, or to the taking of money or property at all. It arose out of his gambling transactions to which his employer was a party, and if so, the employer cannot recover the loss. If appellant was not a party to the transaction, he was not bound thereby, and has not in legal contemplation lost anything, and in either event, there is no legal consideration for the notes and Miss Lumbley cannot be held thereon.

OPINION

ANDERSON, J.

Appellee filed her bill in the chancery court of Lauderdale county against appellants to cancel and have set aside a mortgage on real estate owned by her and thirty-five notes, for one hundred dollars each, to secure which said mortgage was given. The indebtedness and mortgage were executed by appellee in favor of appellant, C. E. Moritz. The cause was tried on bill, answers, and proofs, and a final decree was rendered granting the relief prayed for, from which appellant, C. E. Moritz, prosecutes this appeal.

The ground relied on by appellee for the cancellation of the indebtedness and the mortgage securing the same was that the indebtedness grew out of a gambling transaction, namely, what is known as dealing in futures.

There is little, if any, conflict in the evidence. The case made is as follows:

Appellant was engaged in the cotton, grain, and stock brokerage business, with an office at Vicksburg; a large part of that business was what is known as dealing-in-future contracts on margin. It was the character of business covered by section 1202, Code of 1906, Hemingway's Code, section 932; section 2303, Code of 1906, Hemingway's Code, section 1913; and sections 1914 to 1926, inclusive, Hemingway's Code. Appellee's nephew, C. S. Lumbley, was in charge of and managed the Vicksburg office, and while so engaged, in violation of his agreement with appellant not to do so, and without the consent or knowledge of appellant, engaged in the name of another person, without the knowledge or consent of the latter, in various dealings in future contracts with the appellant's correspondents and upon appellant's credit. The result was a loss of three thousand five hundred dollars. After the loss had taken place, C. S. Lumbley notified appellant thereof. Appellant made the losses good with his correspondents, and to secure appellant for the amount so paid, C. S. Lumbley induced appellee, his aunt, to execute the notes and mortgage involved in this case.

Appellee argues that the consideration for the notes grew out of gambling transactions, namely, future contracts, there being no agreement or intention between the parties thereto to deliver the actual commodities bought and sold. And that is true beyond question, and it is also true that the business in which appellant was engaged furnished C. S. Lumbley the opportunity to engage in the illegal business which resulted in the loss. But does it follow that the indebtedness thus incurred by C. S. Lumbley, and which was paid by appellant for him at his request, became so affected with the illegal business out of which it grew that the appellant will not be permitted...