Murray, Nelson & Co. v. Ocheltree

• Decision Date: 04 October 1882
• Citation: 13 N.W. 411,59 Iowa 435
• Court: Iowa Supreme Court
• Parties: MURRAY, NELSON & CO. v. OCHELTREE AND OTHERS.

59 Iowa 435

13 N.W. 411

MURRAY, NELSON & CO.

v.OCHELTREE AND OTHERS.

Supreme Court of Iowa.

Filed October 4, 1882.

Appeal from Louisa district court.

Action upon a promissory note executed by defendants to plaintiffs. The cause was tried to the court without a jury, and judgment was rendered for defendants. Plaintiffs appeal.Gray & Tucker, for appellant.

Newman & Blake, for appellee.

BECK, J.

1. As a defense to the action, defendants plead “that plaintiffs were commission merchants in Chicago, Illinois, and doing business for defendants in the sale of grain; and that plaintiffs dealt and traded in what is known as options ‘on ‘change,’ in Chicago, in grain, by selling and buying in market ‘on ‘change’ certain grain for future delivery, when in fact no delivery was ever intended or demanded, and no grain was bought or sold, or intended to be; that the whole business was a venture and speculation on ‘margins,’ depending for profits or losses on the fluctuations of the markets, and purely a fictitious and gambling transaction; that in such trade no consideration was received for money lost and paid, and, when money was received, nothing was paid therefor; and defendants say said note was given for loss in so trading in options, which plaintiffs well knew, and was therefore without consideration, in violation of law, and contrary to public policy.'' This defense presents the sole issue in the case.

2. A transaction of the character alleged in the answers to be the consideration of the note in suit is illegal, and is not a sufficient consideration to support a contract. But to invalidate a contract on the ground of the illegality of the transaction, it must be shown by a preponderance of evidence that both parties bought or sold property with the knowledge and purpose that no actual delivery of the property which was the subject of sale should be made; or, in other words, both participated in the intention, which, if executed, renders the transaction illegal. If one of the parties acts in good faith, with the intention and expectation of delivering or receiving the property which is the subject of the sale, the transaction as to him will be valid, and will be a sufficient consideration for a contract in his hands based thereon. Pixley v. Boyenton, 79 Ill. 351.

3. The evidence in this case shows without contradiction that the transaction for which the note in suit was given was, on the part of plaintiffs, made in good faith, with the...