State v. McGinnis

• Court: North Carolina Supreme Court
• Writing for the Court: CLARK, C.J.
• Citation: State v. McGinnis, 138 N. C. 724, 51 S. E. 50 (N.C. 1905)
• Decision Date: 23 May 1905
• Parties: STATE v. McGINNIS.

51 S.E. 50

138 N.C. 724

STATE v. McGINNIS.

Supreme Court of North Carolina

May 23, 1905

Appeal from Superior Court, Wake County; Neal, Judge.

E. C McGinnis was convicted of maintaining a bucket shop, in violation of Laws 1905, c. 538, to prevent dealing in futures, and he appeals. Affirmed.

Busbee & Busbee and Argo & Shaffer, for appellant.

The Attorney General, for the State.

CLARK C.J.

This is an indictment under chapter 538, p. 544, Laws 1905, "to prevent dealing in futures." By chapter 221, p. 233, Laws 1889, "to suppress and prevent certain kinds of vicious contracts," it was, in substance, enacted as follows: Section 1 made void all contracts for the sale of articles therein named for future delivery, wherein (notwithstanding any terms used) it is not intended that the articles agreed to be sold and delivered shall be actually delivered, but only the difference between the contract price and the market value at the time stipulated shall be paid. Section 2 enacted that when the defense provided by that act is set up in a verified answer the burden shall be upon the plaintiff to prove a lawful contract, but the answer shall not be used against the defendant on an indictment for the transaction. Section 3 made the parties to such contract and agents concerned therein indictable, and section 4 made persons while in this state consenting to become parties to such contract, made in another state, and all agents in this state aiding and furthering such contract made in another state, indictable. Chapter 538, Laws 1905, provides (section 1) that it shall be unlawful to open or establish an office in this state for dealing in futures, as forbidden by aforesaid act of 1889. Section 2 makes such act a misdemeanor. Section 3 provides that no person participating in such act shall be excused from testifying, but a party so testifying is pardoned for such offense. Section 4 specifies certain acts which shall be prima facie evidence of a violation of this statute. Section 5 specifies what shall be prima facie evidence of a contract forbidden by the act of 1889, and section 6 provides what shall be prima facie proof of the opening and establishing an office in violation of this act and of the act of 1889. So far the provisions of both acts clearly fall within the police power of the state, and it is not denied that, if nothing further appeared in the statute, the defendant is guilty upon the facts found in the special verdict, which are that the defendant opened and established an office in Raleigh for the purpose of carrying on the the business forbidden by the above-cited statutes, Laws 1889, p. 233, c 221, and Laws 1905, p. 538. The business forbidden by the act of 1905 is--to avoid a paraphrasis, and following the usual American method of describing an act by a word or a phrase--the business of running a "bucket shop," which is defined by the Century Dictionary as "an establishment, nominally for the transaction of a stock exchange business, or business of a similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in." In Board of Trade of Chicago v. Odell Commission Co. (C. C.) 115 F. 574, the president of the board of trade, in answer to a question, thus defined a "bucket shop": "It is a place where dealings are had upon the fluctuations in the market price, without any bona fide transactions." The definition of "bucket shop" in Webster's Dictionary is, "An office or place where facilities are given for betting small sums on current prices of stocks petroleum, etc." In Smith v. Tel. Co., 84 Ky. 664, 2 S.W. 483, the court describes the manner of dealing at a bucket shop in full detail, and defines its business, "while purporting to be actual transactions," as being "in fact merely wagers on the market price of some commodity at some specified time in the future," and in the absence there of any statute held that such business was "a species of gambling as well defined and reprehensible as that of keeping a faro bank or a dice machine, and it is therefore illegal, and contrary to public policy." A bucket shop is defined (Bryant v. Tel. Co. [ C. C.] 17 F. 825, and Fortenbury v. State, 47 Ark. 192, 1 S.W. 58) as "a place where wagers are made upon the fluctuations in the price of grain and other commodities," and in both cases the course of dealings at such establishment is fully described, as in Smith v. Tel. Co., supra; but in all these cases, of course, solely upon the information given the learned judges by the testimony of witnesses set out in the record. In Weare v. People, 209 Ill. 528, 70 N.E. 1076, is a recent, full, and able discussion of statutes against bucket shops, sustaining Soby v. People, 134 Ill. 66, 25 N.E. 109. Indeed, the word "bucket shop," as well as the business it transacts, is mentioned and denounced in many statutes and decisions, and both the name and the business have become matters of general knowledge. In Booth v. Illinois, 184 U.S. 425, 22 S.Ct. 425, 46 L.Ed. 623, it was held that the Illinois statute making all "dealings in futures" gambling contracts, and punishable, was within the police power of the state, and not prohibited by the fourteenth amendment; affirming s. c., 186 Ill. 43, 57 N.E. 798, 50 L. R. A. 762, 78 Am. St. Rep. 229. In Irwin v. Williar, 110 U.S. 499, 4 S.Ct. 160, 28 L.Ed. 225, the court said: "If under guise of the contract to deliver goods at a future day the real intent be to speculate in the rise or fall of prices, and the goods are not to be delivered, but one party is to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, the whole transaction is nothing more than a wager, and is null and void." Wagner v. Hildebrand, 187 Pa. 136, 41 A. 34; Jamieson v. Wallace, 167 Ill. 388, 47 N.E. 762, 59 Am. St. Rep. 302; Wheeler v. Stock Exchange, 72 N.H. 315, 56 A. 754; Clews v. Jamieson, 182 U.S. 461, 21 S.Ct. 845, 45 L.Ed. 1183; Pickering v. Cease, 79 Ill. 328; Bibb v. Allen, 149 U.S. 481, 13 S.Ct. 950, 37 L.Ed. 819; 1 Cook on Stock & Stockholders (3d Ed.) § 341. Freund on Police Power (1904) p. 186, says: "It is well established that, if there is no intention to buy or sell, but only to pay or receive differences in value, the transaction is simply betting on the rise or fall of market prices, and hence illegal and void." While the facts found bring the defendant within the words of the statute, it is contended that the addition of the seventh and last section made the whole act unconstitutional and void under the fourteenth amendment to the Constitution of the United States, which guaranties the equal protection of the laws. Said section 7 reads: "This act shall not be construed so as to apply to any person, firm, corporation or his or their agent, engaged in the business of manufacturing or wholesale merchandising in the purchase or sale of the necessary commodities required in the ordinary course of their business." This section is stated by counsel, and we believe was admitted on the argument, to have been added upon the passage of the bill in the second house. It was doubtless hastily drawn, for it is clearly not germane to the statute, which is for the prohibition of the establishment or opening an office for...