Murphey v. Springs & Co.

• Decision Date: 12 November 1912
• Docket Number: 2,321.
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: MURPHEY v. SPRINGS & CO.

200 F. 372

MURPHEY v. SPRINGS & CO.

No. 2,321.

United States Court of Appeals, Fifth Circuit.

November 12, 1912

But the case here depends on the ruling of the court in reference to issues tendered on the third count, and attention must be specially given to the answer to that count.

The answer to the third count, describing the dealings between the parties on which the alleged stated account is based alleges that it was agreed that there would be no contract made calling for the sale or delivery of the actual cotton and that he (Murphey) would never be asked to take a bale of cotton, and that if he (Murphey) allowed him (Gardner) to conduct the operations, Murphey simply furnishing such money as he desired and naming the amount of cotton, all would be well; that he would make money and be treated fair; that he (Gardner) represented Springs & Co., plaintiffs, and Murphey could safely rely upon these assurances, to wit, that the transaction was purely speculation on margin, to be adjusted by the differences in the market between him (Murphey) on one side, and Gardner and Springs & Co. on the other; that the agreement between the plaintiffs and the defendant to transact a cotton future business, as stated, was made in Georgia, and was to be settled in Georgia, according to the differences in value of cotton futures as reported by telegraph from New York; that plaintiffs bought no actual cotton nor contracts calling therefor in the name of this defendant, and none were tendered to him, but the transactions authorized to be entered into for the account of the defendant were speculations in cotton futures upon margins, to be settled according to the differences in the market, and what was done was a cotton future speculation.

The defendant having tendered the issue, in brief, that the account stated described in the third count was based on an illegal or gambling or wagering consideration, the following proceedings occurred:

The Court: 'I am very clear in my own mind that the defense which is sought to be set up in this case cannot be interposed to a common-law action, to which the defendant has answered and admitted that he promised to pay the amount sued for if he was given time. If he had relied originally upon the ground that it was a speculative and wagering contract and that therefore the amount was neither just nor due, why I think we could have gone on at common law, and heard all of the facts, and determined whether or not it was such a wagering contract as would justify him in making this defense. Nobody else has the right to make this defense but himself. It is true a wagering contract is against public policy; but a man who deals in cotton futures can pay the balance ascertained to be true upon a comparison of accounts between himself and a member of the Cotton Exchange with whom he dealt. There was such a comparison of accounts. There is no question about that. He admitted it to be correct, and stated in his answer that he promised to pay if he was given time. Well, he was given 40 days, and did not pay it, and the suit was brought. Now, the contention that these New York people beguiled him, that the man he thought was acting for him was acting for them, that they were guilty of all kinds of covin and deceit in bringing about this disastrous result to his venture, are matters, in my judgment, of equitable defense, which cannot be heard in reply to an action at law in a court of the United States. It may be possible that the court is in error on this; but it is better for the court to express its convictions and decide the case, and, if error is committed, allow it to be corrected in one way or another as soon as that possibly can be done. I am very clear in my own mind about this. * * * So I shall have to disallow his plea of set-off, and, taking the whole case together, I am obliged, under the agreement of submission, to grant a judgment for the plaintiffs for the amount sued for.'

Mr Miller: 'Do I understand your honor strikes the plea of gambling consideration, and will not hear any evidence on that point?'

The Court: 'Yes.'

Mr. Miller: 'I understand, therefore, that your honor strikes and refuses the plea of set-off as now of file?'

The Court: 'Yes.'

Mr. Miller: 'And also strikes our defense of a gambling contract?'

The Court: 'I hold that your defense as you have set it up is illegal, or an equitable defense to an action at law.'

Exceptions were duly taken to these rulings of the court, and they are here assigned as error.

The court,...