Virden v. Murphy
| Decision Date | 12 November 1900 |
| Citation | 78 Miss. 515,28 So. 851 |
| Court | Mississippi Supreme Court |
| Parties | GEORGE S. VIRDEN ET AL v. BRADFORD MURPHY |
October 1900
FROM the chancery court, first district, of Hinds county HON HENRY C. CONN, Chancellor.
Murphy the appellee, was complainant and Virden and wife appellants, were defendants in the court below.
The object of the suit was to vacate as fraudulent a conveyance of property, real and personal, executed by appellant, George S. Virden, to his wife, Ellen. The appellee, Murphy, claimed that he was a creditor of the grantor in the deed at its date, and he based his suit upon the individual promissory note of said grantor, George S. Virden. It appeared that the debt for which the note in suit was given was originally evidenced by a written receipt or contract, in these words:
The defense made to the debt was that George S. Virden and his wife, the husband managing, were, at the date of the receipt, engaged in a "bucket shop, " or gambling in futures, business at Philadelphia, and constituted the firm of Virden & Co.; that the money for which the receipt was given was borrowed, as Murphy well knew, to be used in said business. The controverted questions in the case were as to the character of the business of Virden & Co. and Murphy's knowledge thereof. It appeared that after the business had been abandoned, George S. Virden gave his individual note to Murphy for said borrowed money, Murphy accepting the same without releasing Mrs. Virden from liability. The court below resolved the controverted facts in favor of complainant, held his debt valid, and decreed the conveyance from Virden and his wife to have been fraudulent. Virden and wife appealed to the supreme court.
Bill dismissed.
Harper & Potter, for appellants.
Murphy admits that the note of George S. Virden had no new consideration, but was founded upon the old obligation of Virden & Company, as disclosed by the receipt. It is clear that by the terms of the agreement, as evidenced by the accepted receipt, the six hundred dollars ($ 600) was only to be returned, if at all, out of the net profits, and there is nowhere any allegation in the pleading that there were any profits at all, nor does the proof show that there were ever any profits. On the contrary, the evidence is that there were no profits. Again, this agreement on its face constitutes a partnership, and made Bradford Murphy a partner in a hazardous enterprise, and not a mere lender of money or an extortionate usurer. This identical question has been settled in this state in the case of Duval v. Neal, 70 Miss 288-290.
It is universally held that when advances are to be repaid only out of the net receipts, and not in any event, the agreement constitutes a partnership in a hazardous venture, and is not a loan.
The court below held that while no recovery can be had on the original obligation of Virden & Company, since it constitutes a partnership and Murphy was only to be paid out of the net profits, of which there was none, that he was still entitled to recover against George S. Virden on the new obligation as evidenced by the promissory note annexed to the original bill.
It will be observed that complainant in his amended bill places himself squarely upon the original obligation of Virden & Company, as shown by the receipt, and denies specifically that such obligation was ever released or extinguished by the new obligation of George S. Virden, and seeks to hold Mrs. Virden on the old obligation. Now, the note given by George S. Virden had and could have had no other consideration than the old obligation of Virden & Company. For the old, to constitute a good and valid consideration for the new obligation, there must have been a legal novation and substitution, since the parties and the terms both were changed. But it is learning of the most elementary character that in order that such novation and substitution may be valid and binding, all the parties to it must expressly consent thereto, and the old obligation must be extinguished and abrogated before the new can be effective. Or, in the language of the books, "In every novation there are four essential requisites; first, a previous valid obligation; second, the agreement of all the parties to the new contract; third, the extinguishment of the old contract; and, fourth, the validity of the new one." Clark v. Billings, 59 Indiana, 508.
Our own supreme court lays down the very elementary principles applicable to this case so fully and so plainly that it seems superfluous to look further for authority. Adams v. Power, 48 Miss. 450.
The court below has grievously erred in its conclusions of fact from the evidence offered by complainant himself. Certainly Virden & Company were engaged in keeping a "bucket shop, " or a place where dealings in futures and options were carried on, and Virden & Company did deal in futures. Indeed, there is no serious denial of this fact in the several depositions, the contention being that such transactions did not constitute their entire business; which contention, in the legal aspect of this case, does not in the least change or alter the results herein, since the entire business, as actually done by Virden & Company, was confessedly of an illegal character, because the evidence shows that no deliveries were ever made of any commodity sold or bought by or through Virden & Company. The entire business was the sale of commodities for future delivery upon margins, in none of which was delivery actually made. So there is no occasion for a separation of the legal from the illegal parts.
Murphy had knowledge of the nature or character of the business as carried on by Virden & Company. Upon this we invite the most careful attention of this court, for, if the conclusions of the court below, from the evidence of Murphy himself, be correct, then the statutory provisions against dealing in futures are practically and effectively wiped out.
Brame & Brame, for appellee.
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