Pearce v. Foote

• Citation: 113 Ill. 228,55 Am.Rep. 414
• Court: Supreme Court of Illinois
• Decision Date: 07 February 1885
• Parties: J. IRVING PEARCEv.IRA FOOTE.

113 Ill. 228

55 Am.Rep. 414

J. IRVING PEARCE

v.IRA FOOTE.

Supreme Court of Illinois.

Filed at Ottawa Feb. 7, 1885.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District;--heard in that court on appeal from the Circuit Court of Cook county; the Hon. THOMAS A. MORAN, Judge, presiding.

This suit was brought in trover by Ira Foote, in the circuit court of Cook county, against J. Irving Pearce, to recover the value of a promissory note for the sum of $5000, made by the trustees of the estate of Ira Couch, deceased, and payable to the order of Ira Foote, which note was assigned by the payee to S. G. Hooker & Co., and by indorsement thereon the payee guaranteed the payment of the note at maturity. To the declaration, which is in the usual form in trover, defendant pleaded not guilty, and on the trial before the court, without a jury, the court found the issues for plaintiff, and assessed his damages at $7265, being the full amount of the principal of the note, and interest to the date of the judgment, and entered judgment accordingly. Defendant excepted to the finding and judgment of the court. At the same term of court defendant entered, among other motions, one to vacate the judgment entered, and grant him a new trial, which motion was supported by affidavit as to newly discovered evidence, but the motion was overruled, and to that ruling of the court defendant also excepted. The judgment so entered against defendant was afterwards, on his appeal, affirmed in the Appellate Court for the First District, and he brings the case to this court on his further appeal.

Messrs. DENT & BLACK, and Messrs. LYMAN & JACKSON, for the appellant:

The parties having been in pari delicto, at common law there can be no recovery. Broom's Legal Maxims, *692; Dixon v. Olmstead, 9 Vt. 310; McBlair v. Gibbs, 17 How. 232; Worcester v. Eaton, 11 Mass. 368; McCullum v. Gourley, 8 Johns. 147; Foote v. Emerson, 10 Vt. 338; Lubboch v. Potts, 7 East, 449; 2 Parsons on Contracts, 747; Best v. Strong, 2 Wend. 325; Tennant v. Elliott, 1 B. & P. 2; Howson v. Hancock, 8 T. R. 575; Pepper v. Haight, 2 Barb. 429; Brothers v. Potter, 46 Vt. 402; Evans v. City of Trenton, 24 N. J. 764; Yates v. Foote, 12 Johns. 1; Buckman v. Bryan, 3 Denio, 340; Peck v. Briggs, Id. 107.

Section 132 of the Criminal Code has not changed the rule in this case. It authorizes a recovery only from the winner. Hooker & Co. were not winners, if this should be held a gambling transaction.

As to the rulings on options, reference is made to Pixley v. Boynton, 79 Ill. 351; Wolcott v. Heath, 78 Id. 433; Logan v. Musick, 81 Id. 414; Sawyer v. Taggart, 14 Bush, 727; Lehman Bros. v. Strassberger, 2 Woods' C. C. 554; Hibblewhite v. McMorine, 5 M. & W. 462; Clarke v. Foss, 7 Biss. 540. See, also, upon this subject, Rumsey v. Berry, 65 Maine, 570; Smith v. Bouvier,70 Pa. St. 375; Petrie v. Hannay, 3 T. R. 418; Owen v. Davis, 1 Bailey, 315; Porter v. Veits, 1 Biss. 177; Knight v. Fitch, 80 E. C. L. 566; Rosewarne v. Billing, 109 Id. 316; Gilbert v. Gaugar, 10 C. C. In. 340; Black v. Ferdiman, 11 C. L. N. 99.

Mr. EMERY A. STORRS, for the appellee.

Mr. JUSTICE SCOTT delivered the opinion of the Court:

This case is one of more than usual importance, on account of the sum involved, which is quite considerable, and on account of the principles involved in the decision. There can be no controversy in this court concerning the facts. They must be regarded as having been settled by the finding and judgment of the trial and Appellate courts. This much is frankly conceded by counsel, and the position is taken, if the case shall now be considered as on a demurrer to evidence,--that is, conceding the truth of all the evidence tends to establish in favor of plaintiff,--the facts do not establish, in law, a right to recover. The defendant does not claim he is an assignee of the note for value. It came to him from Hooker & Co., to whom it had been assigned by plaintiff, among the assets of that firm that were assigned to him for the benefit of their creditors. It is plain the defendant stands in the shoes of his assignors, and in the further consideration of the case it will be most convenient to treat it as though the action had been brought against Hooker & Co. The case naturally falls into two parts: First, is the contract which has been found by the trial court to exist between plaintiff and Hooker & Co. a “gambling contract,” as those terms are used in the statute, and hence void; and second, if the contract shall be held to be obnoxious to the statute, since plaintiff has delivered the note under that contract, can he, under the statute, recover its value from Hooker & Co., or, what is the same thing, from their assignee? At the outset this court disclaims any right to review controverted questions of fact. The issues having been found for plaintiff by the lower court, it will be understood that all the facts the evidence tends to establish in his favor will, as upon a demurrer to evidence, be held to have been so found for him.

Looking into the evidence to ascertain that which it tends to prove, it is seen what the contract is or was between plaintiff and Hooker & Co., out of which the present litigation ultimately sprang. As respects the original contract between plaintiff and Hooker & Co., Mr. S. G. Hooker, a member of the firm, testified that plaintiff said to him: “I don't want to pay for any property. I want to trade in options exclusively. I don't want to pay for any cash grain.” To which witness replied: “You shall not. I will trade with you in differences.” And again, that plaintiff further said to him: “I don't ever want to pay for any more property. I don't want to carry any more property on the board of trade. I want to trade exclusively in differences in options,--betting on the market.” To which witness answered: “I agreed to do just exactly that thing for him.” On being asked, “What thing,” the witness said, “To trade in differences and in options, and to settle upon profit and loss upon the fluctuations of the market,--guessing or betting on it.” Plaintiff states the contract substantially in the same way. He says: “I told him (Hooker) I didn't want to buy any grain, no lard, no pork, or any thing of the kind. He said he could make money in speculation,--for instance, buy for this month for delivery next month, then settle on differences. If there was a loss, I had to pay it; and if there was a gain, he would pay it to me.” The plaintiff further says neither Mr. Hooker nor Mr. Lincoln had any authority from him to deal in any other way except to settle on differences. Hooker says the contract he made with plaintiff was made on behalf of his firm, of which he was the head, and within five or six days after the making of it he informed Mr. Lincoln, his partner, of the arrangement he had made with plaintiff. It is due, however, to Mr. Lincoln, to say that he denies all knowledge on his part that the firm had contracted to deal in options with plaintiff, but it is freely and fully admitted by Hooker the contract was made with the firm, and the trial court must have found such was the contract, and that finding is, of course, conclusive on this court.

It is plain that under the contract between plaintiff and the firm of Hooker & Co., it was not in the contemplation of the parties any actual purchases or sales of grain or other commodities should be made for plaintiff, or on his behalf. Indeed, it was expressly agreed none should be made. All the speculating that was to be done was to be in differences in options,--or, as the parties termed it, “betting on the market.” Of course it was expected by the parties that such purchases and sales of grain or other commodities that should be made, were to be made on the board of trade. As was said by this court in Pixley v. Boynton, 79 Ill. 351, the true idea of an option is what are called, in the peculiar language of the dealers, “puts” and “calls.” A “““put” is defined to be the “privilege of delivering or not delivering” the thing sold, and a “call” is defined to be the “privilege of calling for or not calling for” the thing bought. “Optional contracts,” in this sense, are usually settled by adjusting market values, as the party having the “option” may elect. It is simply a mode adopted for speculating in differences in market values of grain or other commodities. It must have been in this sense the term “option” is used in the statute. Such a contract is obviously fictitious, having none of the elements of good faith, as in a contract where both parties are bound, and is defined by statute as a “gambling contract.” Fictitious purchases or sales, such as were in the contemplation of the parties, were as nothing, and it is a matter of no consequence where it is pretended they were made,-- whether on the board of trade or elsewhere. It would have been quite as well, and would have conformed as nearly to the contract of Hooker & Co., had they simply entered upon their books they had made such purchases or sales on behalf of plaintiff, without going upon the board of trade, and claiming they had made such purchases and sales, and on returning made such entries. “Betting on the market” could be done just as well in that way as in any other. It needs no illustration to make it apparent the contract between plaintiff and Hooker & Co., as the trial court must have found it from the evidence, comes exactly within the meaning of section 130 of the Criminal Code, that declares: ““Whoever contracts to have or to give to himself or another the option to sell or buy at a future time any grain or other commodity,” shall be subject to a fine or imprisonment, and “all contracts made in violation of this section shall be considered gambling contracts, and shall be void.” It is seen this statute forbids any one to contract to have, or to give to himself, or to contract to give to another, the privilege to deal in options. That is...