Ruchizky v. De Haven

• Decision Date: 28 February 1881
• Citation: 97 Pa. 202
• Parties: Ruchizky <I>versus</I> De Haven.
• Court: Pennsylvania Supreme Court

97 Pa. 202

Ruchizky versus De Haven.

Supreme Court of Pennsylvania.

February 11, 1881.

February 28, 1881.

February 11th 1881.

Before SHARSWOOD, C. J., MERCUR, GORDON, PAXSON, TRUNKEY, STERRETT and GREEN, JJ.

Error to the Court of Common Pleas, No. 2, of Philadelphia county: Of July Term 1879, No. 23.

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Rudolph M. Shick and Benjamin Harris Brewster, for plaintiff in error.—As regards the contracts on margin the defendants were dealing with the plaintiff as principals and not as agents. The collateral deposited with them was intended for their own indemnity and not for a transfer to others. In any event a court of equity would have decreed return of collaterals so held and refuse a decree authorizing their sale, the pledgor being a minor: Smith v. Eisonlord, 2 Phila. 353; Edwards on Bailments (2d ed.) sect. 189. The defendants could not therefore by selling the collaterals better their position and make their contract with the minor other than executory: Vent v. Osgood, 19 Pick. 572. Even if this contract be held to be executed, the minor is at liberty to rescind it and recover his property. In the present case the minor received nothing which he could tender to defendants. And the great weight of authority is to the effect that even where a minor has received consideration, in pursuance of an executed contract, he is at liberty to disaffirm the contract and recover his property without tender of the consideration received: Shaw v. Boyd, 5 S. & R. 309; Stoolfoos v. Jenkins, 12 Id. 399; Corpe v. Overton, 10 Bing. 252; Price v. Furman, 27 Vt. 268; Ewell's L. C. Infancy 126; 1 Am. L. C. 320; Urban v. Grimes, 2 Grant 96; Williams et al. v. Baker, 21 P. F. Smith 476; Lenhart v. Ream, 24 Id. 59; Schrader v. Decker, 9 Barr 14; Abell v. Warren, 4 Vt. 149; Gibson v. Soper, 6 Gray 279; Chandler v. Simmons, 97 Mass. 508; Walsh v. Young, 110 Id. 396; Mustard v. Wohlford's Heirs, 15 Gratt. 329. It is eminently proper, in view of the fact that this transaction was a mere gambling contract, and, as such, wholly opposed to public policy, to declare it entirely void, in which event the minor would uudoubtedly be entitled to recover.

Samuel Dickson, for defendants in error.—The defendants below were stock brokers, and were employed by the plaintiff to buy and sell stocks for his account. As such contracts are made by brokers in their own names for an undisclosed principal they become liable, both according to the general commercial law and the special rules of the board of brokers, to the parties with whom they contract. It is to secure them against loss upon contracts which they thus make in behalf of their customer that a margin is placed in their hands by way of collateral security; but if the collateral security is made use of, as was the case here, it is in order to make good the contract with the other parties thereto. The brokers do not retain the cash themselves, they pay it over to the other principal or his broker. It was in this way that all of the cash and shares received from the plaintiff were used by the defendants.

Defendants' position as agents is also established by the express terms of the case stated. They "acted as his (plaintiff's) brokers." The purchases and sales in question "were made by them (defendants) for him (plaintiff)." The stock was "purchased by defendants on his (plaintiff's) order." They were mere stakeholders paying over to others wagers in the shape of margins on plaintiff's order. The contract being executed, the minor could not elect to disaffirm it to the prejudice of defendants: Ex parte Taylor, 8 De G., M. & G. 254; 2 Kent's Com. 240; Reeves on Domestic Rel. 244; 1 Pars. on Con. 320, 322; Bartholomew v. Fennemore, 17 Barb. 428; Gray v. Lessington, 2 Bosw. 257; Strain v. Wright, 7 Ga. 568; Locke v. Smith, 41 N. H. 346; Bailey v. Barnberger, 11 B. Mon. 113; Cummings v. Powell, 8 Texas 80; Smith v. Evans, 5 Humphrey 70; Weed v. Beebe, 21 Vt. 495; Williams v. Norris, 2 Littell 157; Hill v. Anderson, 5 Sm. & M. 216; Edgerton v. Wolf, 6 Grey 453.

The case stated nowhere avers that the contract was a mere gambling one. It appears therefrom that shares were actually bought and sold for and on account of Ruchizky. True, he may not have intended actually to receive and deliver them, but non constat that this was the case. In the absence of any statement to the effect that he did not, the court has no right to draw from the case stated any such inference: Thayer v. Society of United Brethren, 8 Harris 60; Pittsburgh, Fort Wayne & Chicago Railroad Co. v. Evans, 3 P. F. Smith 250; Loew v. Stocker, 11 Id. 347; Winchester v. Bennett, 4 Id. 510; Wilde v. Trainor, 9 Id. 439; Ferguson v. Wright, 11 Id. 258; Philadelphia & Reading Railroad Co. v. Waterman, 4 Id. 337; Berks County v. Pile, 6 Harris 493; Diehl v. Ihrie, 3 Whart. 143. A jury alone can say whether a stock transaction amounts to a gambling contract or not: Kirkpatrick v. Bonsall, 22 P. F. Smith 155; Grizewood v. Blane, 11 C. B. 526.

Mr. Justice GORDON delivered the opinion of the court, February 28th 1881.

When, under the case stated, the court below assumed the defendants must be regarded as the agents of Ruchizky in the buying and selling of stocks, in other words, as the mere hand or medium through which he acted in transactions with other parties, it committed an error. An assumption of this kind is in the very face of the statement before us; the parties were dealing, not in stocks, but margins, and Ruchizky knew no principals but De Haven & Townsend. It was with them and no one else he was dealing, and with them alone he had to account. If any shares were bought, they were bought without the remotest intention of passing them to Ruchizky. The idleness of a supposition such as this is made manifest by the fact that the pretended stock purchases amounted to the sum of $472,419.55, on an advancement of $7024.96; nor could the credit of the decedent in this transaction have amounted to anything; for to start with, he was an infant, and therefore had no credit which could be made available in the money market; then again, he was but a clerk on a salary of $500 a year, and had no property of any kind, except that which, in the shape of money or stocks, went into the coffers of the defendants. But the case stated itself settles this matter, for by it we are informed that the several advancements made by the decedent were to be "held and used by the defendants...