Murman v. Rose

• Decision Date: 04 June 1908
• Citation: 132 Mo. App. 73,111 S.W. 527
• Parties: MURMAN v. ROSE.
• Court: Missouri Court of Appeals

111 S.W. 527

132 Mo. App. 73

MURMAN v. ROSE.

St. Louis Court of Appeals. Missouri.

June 4, 1908.

GAMING — PROHIBITED TRANSACTIONS — STATUTES.

Where a customer employed a broker to purchase stock, intending to make a bona fide purchase, and the broker purchased stock, which the customer could have obtained by asking for it and paying the full price, the transaction was not within Rev. St. 1899, §§ 2337, 2338 (Ann. St. 1906, pp. 1444, 1445), prohibiting option dealing, though the broker handled "bucket-shop" deals in which no delivery was intended, and the customer was entitled, on a sale of the stock by the broker, to recover the difference between the amount paid to the broker on the purchase of the stock and the amount received by the broker on the resale.

Appeal from St. Louis Circuit Court; Robt. M. Foster, Judge.

Action by Henry Murman against Hugh C. Rose. From a judgment for plaintiff, defendant appeals. Affirmed.

E. C. Slevin, for appellant. Lee Merriwether, for respondent.

GOODE, J.

The purpose of this action is to recover the sum of $4,800 alleged to be due plaintiff from defendant as part of the purchase price of 200 shares of the second preferred stock of the St. Louis & San Francisco Railroad Company. The defense stated in the answer is that it was understood and agreed between plaintiff and defendant the shares of stock should not be purchased by defendant, who was acting as plaintiff's agent in the transaction, and defendant did not purchase them; that it was agreed the purchase should merely be a pretense, with no intention on the part of plaintiff to pay for the shares and on the part of defendant to deliver the same, but that the contract should be a wager on the rise and fall of the market price of the stock. Defendant pleaded he learned on November 28th his dealings with plaintiff were illegal, and so notified plaintiff, and that defendant would withdraw from them. He swore he knew all along they were illegal. The facts out of which the case grew are these:

Defendant was a stockbroker in the city of St. Louis. He testified he conducted a bucket shop, but made actual sales and purchases, accompanied by deliveries of the shares, when his customers preferred that mode of dealing. Charles F. Kelly, a friend of plaintiff, had purchased 400 shares of the stock aforesaid through the agency of defendant. The certificates for these shares had been delivered to defendant for Kelly, but were retained in defendant's possession as security for part of the price he had advanced for Kelly. Certain dividends had been collected by defendant and paid to Kelly on this stock while it was in the former's possession. On July 7, 1904, Kelly directed plaintiff to go to Rose's office and have him dispose of the 400 shares at the market price on said date. Plaintiff concluded to buy 200 of the shares himself, and it was agreed that number (one-half of them) should be transferred from Kelly's name to plaintiff's. When plaintiff told defendant of this arrangement, the latter said he had already sold all Kelly's shares and could not transfer them to plaintiff. Thereupon plaintiff ordered defendant to buy 200 shares in the market. Plaintiff made two visits to defendant's office. He gave the order to purchase 200 shares for his account during the first visit. On the next visit defendant said he had purchased the shares for plaintiff and had them in his possession, whereupon plaintiff paid $600 on the price. This money was paid by defendant retaining $600 of the sum he owed Kelly for the 400 shares sold for the latter's account; the arrangement being satisfactory to Kelly. On the occasion of the second visit, and as evidence of the purchase of the shares for plaintiff, defendant gave him this writing on a card: "We solicit and will receive no business except with the understanding that the actual delivery of property bought and sold upon orders is in all cases contemplated and understood, and we reserve the right to close all transactions without further notice when margin is about exhausted. Memorandum No. ____. St. Louis, July 5, 1905. Bought from Central Stock & Grain Exchange, of Chicago, for account of Henry Murman, 200 `S. S. F.,' at 46; commissions, 316; $600; margin open; interest 3 per cent. [Signed] Hugh C. Rose, Broker. Errors and omissions excepted." On November 28th the price of the stock was much higher, and plaintiff ordered his shares sold. Defendant afterwards told him he had sold the stock at the market price then current, at which the total price would amount to $13,600. Plaintiff...