Seeligson v. Williams

• Decision Date: 08 December 1885
• Docket Number: Case No. 1811
• Court: Texas Supreme Court
• Parties: H. G. SEELIGSON v. LEWIS & WILLIAMS.

65 Tex. 215

H. G. SEELIGSON

v.LEWIS & WILLIAMS.

Case No. 1811

Supreme Court of Texas.

Dec. 8, 1885.

APPEAL from Harris. Tried below before the Hon. James Masterson.

The case will be understood from the opinion.

Jones & Garnett, for appellant, on sufficiency of the plea attacking the legality of the notes, and on question of liability for money advanced and services rendered in furtherance of unlawful transactions, cited: Read v. Smith, 60 Tex., 379; Marx v. Ellsworth, Tex. Law Jour., 561; Monroe v. Smalley, 25 Tex., 587;Connor v. Mackey, 20 Tex., 747;Norvell v. Oury, 13 Tex., 31; Gregory v. Wendell, 8 Cent. Law Jour., 115; arts. in Cent. Law Jour., 221, 242, and authorities there cited; Marshall v. Thurston, 10 Cent. Law Jour., 242; Everingham v. Meigham, 15 Cent. Law Jour., 332; Cobb v. Prell, 22 Am. Law Reg., N. S., 609, and note to the decisions where authorities are collected.

On the proposition that if any part of the consideration for a contract is illegal, the whole contract is void, they cited: Parsons on Cont., vol. 1, pp. 456, 457; 7 Am. Law Reg., N. S., 572; Cobb v. Cowdery, and Clements v. Marston, 12 Am. Law Reg., N. S., 530.

Baker, Botts & Baker, for appellees, that when one person, by request, pays the debt of another, although the debt may have arisen out of an illegal contract and he was aware of that fact at the time, the party who pays is entitled to recover it back from him at whose request it was paid, cited: Boggess v. Lilly, 18 Tex., 200;Mills v. Johnson, 23 Tex., 308;Lehman Bros. v. Strassberger, 2 Woods, 560;Armstrong v. Toler, 11 Wheat., 274;Brooks v. Martin, 2 Wall., 78;Roundtree v. Smith, 108 U. S., 269; Petree v. Hannay, 3 Tenn., 418; Thacker v. Hardy, 4 Queen's B., 685; Owen v. Davis, 1 Bailey, 315;Durant v. Burt, 98 Mass., 167; Clark v. Foss, 7 Biss., 338; Sawyer v. Taggart, 18 Am. Law Reg., 231.

That a note given in settlement of a debt arising out of an illegal transaction, is not tainted with the vice of the illegal enterprise, they cited: DeLeon v. Trivino, 49 Tex., 88;Mills v. Johnson, 23 Tex., 308;Pfeuffer v. Maltby, 54 Tex., 460;Read v. Smith, 60 Tex., 379;Planters' Bank v. Union Bank, 16 Wall., 500;Brooks v. Martin, 2 Wall., 78; Cook et al., ex'rs v. Sherman, 20 Fed. Rep., 167.

STAYTON, ASSOCIATE JUSTICE.

This action was instituted by the appellees to recover the amount of three promissory notes executed to them by the appellant.

The appellant answered by a general denial and by a sworn plea, which was as follows:

“And for further answer to plaintiffs' original and first supplemental petitions in the cause filed, this defendant says, that the three notes sued on herein by plaintiffs were not, nor was either of them, executed by the defendant for any consideration, good, valuable or sufficient in law. This defendant avers, that for some time prior to the giving of the notes, the plaintiffs were engaged in the business of brokers, in the city of New Orleans, and as such, among other things, bought and sold what is generally and commonly known as cotton futures, or futures in cotton, with the understanding between all the parties concerned that no cotton was actually to be received or delivered, but that the sale or purchase was to be completed and finished by the paying or receiving of the difference in the price at which the cotton was sold or purchased, and the price that cotton bore on the date fixed for delivery; that this defendant employed plaintiffs to buy and sell such cotton futures for him, with the distinct understanding and agreement between them that no cotton was to be received or delivered in pursuance of any such sale or purchase, but that the difference between the price at which the purchase or sale was made, and the price of cotton on the date fixed for delivery, was to be paid by the buyer or seller, as the rise or fall in the price of cotton might require; and plaintiffs did make purchases and sales of cotton futures for defendant under and in accordance with the employment, understanding and agreement; that the purchases and sales were mere gambling transactions, with no intention, understanding or expectation, on the part of either plaintiffs or defendant, or any other party to them, at the time they were made, or at any other time, that a real sale, purchase or delivery of the cotton was made or to be made.

That after these transactions between plaintiffs and defendant had been going on for some time, plaintiffs claimed that defendant owed them a balance for advances made by them under the employment in making the sales and purchases, and in paying margins, and plaintiffs' commissions thereon, and for this balance so claimed by plaintiffs, and for no other consideration whatever, defendant executed three notes, and probably one or two other notes not sued on herein. This defendant never received any money, or other good or valuable consideration for the notes, or either of them, and there was no consideration for said notes, or either of them, except as above stated; and plaintiffs, as well as defendant, all the time well knew that the sales and purchases were gambling transactions, and that no cotton was to be received or delivered under them.

Wherefore defendant says the notes and each of them are illegal and void, and entitle plaintiffs to no recovery against defendant, and he prays hence to be dismissed with all his costs.”

To this answer impeaching the consideration of the notes, the plaintiffs filed a demurrer, which was sustained by the court, and judgment then went against the defendant for the sum shown by them to be due. The action of the court in sustaining the demurrer, which was general in form, but went only to the answer set out, is assigned as error, and this presents the only question in the case. If the matters set up in the answers are true, there can be no doubt that the transactions which form the consideration for the notes sued upon transpired in the furtherance of wager contracts, in which the appellees actively participated. We have no statute in this state prohibiting such transactions as that set out in the answer, and the matter rests with us as at common law. That at common law actions might be sustained on wager contracts was not universally true, and distinguished judges have regretted that courts ever felt authorized to enforce them in any case.

In Monroe v. Smalley, 25 Tex., 587, it is said: “It is true that by the common law an action could be maintained on a wager, although the parties had no previous interest in the question on which it was laid. But this proposition was always subject to qualifications. These qualifications were that an action could not be maintained on a wager if it was contrary to public policy, or immoral, or in any other respect tended to the detriment of the public, or if it affects the interests, feelings or character of a third person.”

After reviewing cases at some length, which illustrate the tendency of later decisions, the opinion proceeds to declare the result and rule which we believe to be sustained by authority, and in harmony with the present time, in the following language: “The uniform tendency of the later decisions is to treat all gaming contracts and all wagers as utterly void. We feel ourselves authorized to conform our decisions to the public policy and to the sense of morality which the modern decisions and the modern legislation on the subject of gaming and wagers so clearly indicates. We find that the ancient rule of the common law was subject to certain exceptions, and in proportion, as the courts have considered these questions, these exceptions to the ancient rule have been adjudged to be more and more comprehensive in their embrace, until, as has been said, the exceptions to the rule have taken the place of the rule itself. We think that in the true spirit and meaning of the exceptions to the old rule, all idle wagers and all gaming contracts may be properly held to be void.” To the same effect is Conner v. Mackey, 20 Tex., 748.

The transactions stated in the answer were essentially gambling transactions with no facts to give them semblance of legitimate business, and all such dealings but tend to unsettle fair and legitimate trade and to make market values to depend, not on the supply and demand, but on the fictitious elevation or depression in prices, which in extent, in any given case, will depend on the amount of capital invested in the one direction or the other.

As was well said in Melchert v. Telegraph Co., 11 Fed. Rep., 195--“such a dealing amounts to a mere speculation upon the rise and fall of prices. It requires no capital except the small sum to put up margins and pay differences. It promotes no legitimate trade. Any impecunious gambler can engage in it with infinite detriment to the bona fide dealer It enables mere adventurers, at small risk, to agitate the markets, stimulate and depress prices and bring down financial ruin upon the heads of the unwary. It enables the unscrupulous speculator, with little or no capital, to oppress and ruin the honest and legitimate trader. Corners and black Fridays and sudden fluctuations in values are its legitimate progeny.”

In the absence of any statute prohibiting such transactions, we believe the rule thus stated by the supreme court of the United States to be that generally approved: “The generally approved doctrine in this country is, as stated by Mr. Benjamin, that a contract for the sale of goods to be delivered at a future day is valid, even though the seller has not the goods, nor any other means of getting them than to go into the market and buy them; but such a contract is only valid when the parties really intend and agree that the goods are to be delivered by the seller and the price to be paid by the buyer; and if, under guise of such a contract, the real intent be merely to speculate in the rise or fall of prices, and the goods are not to be delivered, but one party is to pay the...