Overholt v. Burbridge

• Decision Date: 06 February 1905
• Docket Number: 1586
• Citation: 79 P. 561,28 Utah 408
• Parties: B. F. OVERHOLT, Appellant, v. O. H. BURBRIDGE and A. W. COPPS, Copartners, Doing Business as BURBRIDGE, COPPS & COMPANY, Respondents
• Court: Utah Supreme Court

79 P. 561

28 Utah 408

B. F. OVERHOLT, Appellant, v. O. H. BURBRIDGE and A. W. COPPS, Copartners, Doing Business as BURBRIDGE, COPPS & COMPANY, Respondents

No. 1586

Supreme Court of Utah

February 6, 1905

Appeal from the Third District Court, Salt Lake County.--Hon. C. W Morse, Judge.

Action for money had and received. From a judgment in favor of the defendants, the plaintiff appealed.

REVERSED.

W. R Hutchinson, Esq., and A. R. Barnes, Esq., for appellant.

There is no attempt on the part of the plaintiff in this case to enforce the original transaction. That has been executed. The plaintiff does not ask the court to recognize that transaction or give aid to it. It is the defendants who are seeking to invoke the alleged illegal transaction as a defense. The plaintiff is simply seeking to recover a sum of money now in the hands of the defendants, and admitted by them to belong to the plaintiff.

The plaintiff having established his case without invoking to his aid the alleged illegal contract, and the defendants having admitted the alleged indebtedness, the defendants should not be allowed to avail themselves of any illegality there may have been in the original transaction. This has been the holding of the courts from the very beginning. It is the settled law in England, as shown by a long line of decisions and the same principle has been universally adopted by our courts. The principle here relied upon is clearly stated by Justice STRONG in the case of Planters Bank v. Union Bank, 16 Wallace, 483. Tennant v. Elliott, 1 B. & P. 3; Brooks v. Martin, 2 Wall. 70; McDonald v. Lund (Wash.), 43 P. 348; Peters v. Grim (Pa.), 24 A. 192; Munns v. Com. Co. (Iowa), 91 N.W. 789.

See also in support of the above proposition, the following cases: Farmer v. Russell, 1 B. & P. 296; Petrie v. Hannay, 3 Term 418-419; Sharp v. Taylor, 2 Ph. Ch. 801; Telephone Co. v. Railroad, 3 F. 423-427; Railroad v. Railroad, 66 New Ham. 132, 20 A. Rep. 386; Buchanan v. Bank, 55 F. 226; Hatch v. Hansen, 46 Mo.App. 334-335; De Leon v. Tervino, 49 Texas 89; Pfeuffer v. Mallby, 54 Texas 454; Floyd v. Patterson, 72 Texas 202; Gilliam v. Brown, 43 Miss. 641; Elder v. Tallcott, 43 Ill.App. 439; Repplier v. Jacobs, 149 Pa. 167; Clark v. Brown, 77 Ga. 606. McNaughton v. Holdeman, 160 Pa. 144.

Messrs. Ryckman & Sawyer for respondents.

No brief on file for reporter.

McCARTY, J., delivered the opinion of the court. BARTCH, C. J. and STRAUP, J., concur.

OPINION

McCARTY, J.

STATEMENT OF FACTS.

This is an action for money had and received. The complaint, in substance, alleges: (1) That defendant is a copartnership composed of O. H. Burbridge and A. W. Copps, doing business as Burbridge, Copps & Co., associated together for the purpose of conducting a brokerage business in Salt Lake City, Utah. (2) That on or about the 1st day of September, 1901, plaintiff placed in the hands of defendants the sum of $ 2,060, to be invested by them in stocks, and that said sum yielded after being so invested, less all commissions and expenses due defendants, the sum of $ 3,267.85; that no part of said sum has been paid except the sum of $ 1,740, which was paid by defendants and credited upon said account on the 6th day of February, 1902. (3) That said sum of $ 1527.85 is the money of the plaintiff, and is held by defendants in trust for plaintiff. The complaint further alleges that the defendants refuse to pay said sum to plaintiff, or any part thereof. Defendants, in their answer, admit the receipt of the $ 2,060 mentioned in the complaint from plaintiff, but allege that this amount was received as a margin in carrying on what they designate as a wagering or gambling transaction; that defendants were associated under the firm name and style of Burbridge, Copps & Co., for the exclusive purpose of conducting a bucket shop, a place kept for the exclusive purpose of wagering and gambling in the future price of the stock of corporations, and the future price of other commodities; that on the date mentioned in plaintiff's complaint, plaintiff and defendants entered into a gaming contract for the express purpose of speculating and wagering in the future price of the stock of the American Sugar Refining Company, a corporation duly organized and existing at that time, and having shares of stock; that defendants undertook, in form, to sell short for the plaintiff 100 shares of the stock of said American Refining Company, to be delivered at a future date; that plaintiff was not possessed of any of said stock, nor did he intend to go into the market to purchase the same for delivery, but it was the intention of the parties, both plaintiff and defendants, to neither receive nor deliver said 100 shares of said stock, but solely to wager on the market price thereof, and to pay or receive the difference between the price at the time the said wagering contract was first made and the market price at a future date; that on the 23d day of December, 1901, the plaintiff ordered the transaction closed, and it was ascertained and determined that, after deducting commission and an amount equal to the dividends paid in the meantime on the 100 shares of stock, plaintiff had won the sum of $ 1,011.75; that defendants returned and paid to plaintiff a portion of the $ 2,060, deposited with the defendants as a marginal protection as aforesaid, to wit, the sum of $ 1,740.

Upon the issues raised by the pleadings, evidence was introduced at the trial which showed that plaintiff delivered to defendants, which was accepted by them, the sum of $ 2,060, as a marginal protection in a certain trade or transaction, wherein the defendant, acting as agents for the plaintiff, undertook to sell short for him 100 shares of the stock of the American Sugar Refining Company to Wendt & Co., who, to quote the evidence of defendant Copps, "took the buying side, whence, if the market advanced, Wendt & Co., won, and Overholt [the plaintiff] lost, or vice versa." The $ 2,060 deposited with defendants by plaintiff was to protect Wendt & Co. in case the price of the stock advanced; that is, Wendt & Co. were to be paid a sum equal to all dividends declared on his amount of stock before the transaction closed, and while the deal remained on, and a sum equal to the amount of the advance in price, if any, on said amount of stock. Defendants were not possessed of the shares of stock of the American Sugar Refining Company, or was it understood that they should go into the market to purchase the same for delivery, but it was the intention of the parties to wager on the market price thereof, and to pay or receive the difference between the price at the time the contract was first made, and the market price at a future date. At the time of the transaction, September, 1901, the market price as quoted on the New York Exchange, was $ 133.75 per share. At the time plaintiff ordered the deal closed the market price of the stock was $ 115 per share, representing a gain for plaintiff of $ 18.75 per share, or a sum total of $ 1,875 paid by Wendt & Co., from which Burbridge, Copps & Co., defendants, deducted the dividends and their commission, amounting in all to $ 863.25, leaving a gain to plaintiff of $ 1,011.75, which, together with the $ 2,060 originally deposited by plaintiff with defendants, made $ 3,071.75 of plaintiff's money held by defendants, for which amount defendants gave plaintiff credit on their books, and later on remitted to plaintiff the sum of $ 1,740, leaving a balance due plaintiff of $ 1,340.35. It appears from the record that the principals to this transaction were plaintiff and Wendt & Co., and that defendants were merely the agents for the principal actors. A. W. Copps, one of the defendants, testified on this point as follows: "The trade, as taken by Burbridge, Copps. & Co., would signify that B. F. Overholt [plaintiff] had bet with Wendt & Co. that the said shares of the American Sugar Refining Company would decline in value, and hence had 'shorted' or 'sold' to them 100 shares of the American Sugar Refining Company at a given price, Wendt & Co. taking the buying side." It is admitted that there is a balance of $ 1,340.35 due plaintiff from defendants. The court, in the third finding of fact, found that "the plaintiff bet the defendants that the price of sugar stock would go down, and the defendants bet the plaintiff that the price of sugar stock would go up." The court further found as a conclusion of law: "(2) That the sum of $ 1,011.75, above referred to, represents the money won by plaintiff from the defendants upon the aforesaid illegal wager, and, as such, the same cannot be recovered. (3) That the $ 2,060 above referred to, which was deposited with the defendants by the plaintiff as a marginal protection, was so deposited for the sole purpose of furthering and carrying out the said illegal wager, and, as such, became the instrument of a wager, and, that the payment of said money was a part of the above illegal and void transaction, and cannot be recovered back."

Judgment was entered for defendants, and the action dismissed. Plaintiff appeals.

McCARTY, J., after the foregoing statement of the case, delivered the opinion of the court.

Appellant contends that the wagering on the rise and fall of stocks was not between plaintiff and defendants, as found by the court but that the undisputed evidence shows exclusively that the illegal transactions pleaded as a defense were between plaintiff and Wendt & Co. We think appellant is right in his contention, and that the court erred in its findings on this point. The record shows that defendants received $ 2,060 from plaintiff as a marginal protection to Wendt & Co., who "took the buying side of the deal," which deal was brought about, carried on, and...