Plank v. Jackson

• Decision Date: 30 January 1891
• Docket Number: 14,686
• Citation: 26 N.E. 568,128 Ind. 424
• Parties: Plank v. Jackson
• Court: Indiana Supreme Court

26 N.E. 568

128 Ind. 424

Plank v. Jackson

No. 14,686

Supreme Court of Indiana

January 30, 1891

Reported at: 128 Ind. 424 at 430.

From the Elkhart Circuit Court.

Judgment reversed, at costs of appellee.

J. D Osborne and A. S. Zook, for appellant.

J. H Baker and F. E. Baker, for appellee.

OPINION

Olds, C. J.

This is an action by the appellant against the appellee on several promissory notes executed by the appellee to the appellant.

The complaint is in several paragraphs, each counting on a promissory note. The appellee answered in three paragraphs. The first, payment, the second, want of consideration, and the third that the notes were given for money borrowed to be used by the appellant and appellee, jointly and individually, in gambling contracts, investing in margins on grain, and to make good and pay losses sustained by them jointly and individually, stating fully that the notes were given for money to be used, and which was used, by them, jointly and severally, by investing in gambling and unlawful contracts, and in paying losses sustained on account of such contracts.

This third paragraph of answer was demurred to by appellant, the demurrer was overruled, exceptions were reserved, and the ruling assigned as error.

It is contended by counsel for appellant that this ruling was erroneous for the reason that the answer only shows that the money was borrowed with the knowledge of the appellant that the money was to be used, or intended to be used, in gaming contracts, by investing in options on grain, in which contracts appellant had no interest, and that a mere knowledge on the part of the appellant that such was the purpose of the appellee was not sufficient to defeat the collection of the note.

If the answer justified the construction the appellant places upon it, then it would be defective, for, as held in the case of Jackson v. City Nat'l Bank, 125 Ind. 347, 25 N.E. 430, mere knowledge on the part of the lender that the borrower intended to use it by investing in such contracts, is not sufficient to defeat a recovery on the note, though the borrower did intend, at the time of receiving the money, to use it in such unlawful purpose; he was at liberty to change his mind, and the lender has no control over the money after he parts with it and receives the note for its payment. But in this case the answer will not bear such a construction. It charges directly, and repeats the charge in various forms, that the appellant was interested in the gambling contracts.

It is further contended by counsel that options or futures on grain are not a wager, as the word is used in common acceptance, and that as the deals were to be made outside of this State, in the city of Chicago, to make a good answer it must allege and set up a statute of the State of Illinois making such deals unlawful.

We are cited by counsel to the case of Sondheim v. Gilbert, 117 Ind. 71, 18 N.E. 687, but in that case there is the following statement of the law in relation to contracts of this character:

"While contracts for the sale of property to be delivered in the future are valid, where the parties, or either one of them, actually contemplate a delivery of the subject-matter of the contract, yet if, under the guise of a contract which has the appearance of validity upon its face, the real intention is merely to speculate on the rise or fall of the market, without any purpose that any property shall be delivered or received, but with the understanding that at the appointed time the account is to be adjusted by paying or receiving the difference between the contract and the current price, then the whole transaction is illegal, as against public policy, and falls under the condemnation of the law."

In the case of Whitesides v. Hunt, 97 Ind. 191, the court says: "In the case of Rumsey v. Berry, 65 Me. 570, the court very clearly defines the line which separates the two classes of contracts, the legal from the illegal. In that case, it was said: 'A contract for the sale and purchase of wheat to be delivered in good faith at a future time is one thing, and is not inconsistent with the law. But such a contract entered into without an intention of having any wheat pass from one party to the other, but with an understanding that at the appointed time the purchaser is merely to receive or pay the difference between the contract and the market-price, is another thing, and such as the law will not sustain. This is what is called a settling of the differences, and as such is clearly and only a betting upon the price of wheat, against public policy, and not only void, but deserving of the severest censure.'"

These decisions of our own court are in harmony with and but state the law as held by the Supreme Court of the United States in the case of Irwin v. Williar, 110 U.S. 499 28 L.Ed. 225, 4 S.Ct. 160. We think the words "dealing in options, futures or margins" are well understood to mean a mere speculative contract, in which the parties speculate in the rise or fall of prices, and imply a contract in relation to the prices of the article, and not the article itself. And when the person loans money, and, as a part of the arrangement, it is to be used...