Wall v. Schneider

• Decision Date: 29 January 1884
• Citation: 18 N.W. 443,59 Wis. 352
• Parties: WALL AND ANOTHER v. SCHNEIDER.
• Court: Wisconsin Supreme Court

59 Wis. 352

18 N.W. 443

WALL AND ANOTHER

v.SCHNEIDER.

Supreme Court of Wisconsin.

Filed January 29, 1884.

Appeal from circuit court, Milwaukee county.

This action is to recover damages for the breach of the following agreement, in writing, to-wit:

“MILWAUKEE, January 24, 1882.

Fourteen thousand bushels No. 2 barley, April, at $0.96. In consideration of one dollar, hand paid, Wall & Bigelow hereby sell and agree to deliver, and J. C. Schneider buy and agree to receive and pay for on delivery, fourteen thousand bushels of No. 2 spring barley, at ninety-six cents per bushel, to be delivered in current warehouse receipts of Milwaukee elevators, at such time in the month of April, 1882, as the seller may elect. It is mutually agreed that this contract is subject to the rules and regulutions of the chamber of commerce of Milwaukee, and the same are hereby made part of this contract.

J. C. SCHNEIDER.”

A duplicate of this contract was signed by the plaintiffs at the same time, and delivered to the defendant. The plaintiffs were at the time commission merchants, and members of the chamber of commerce, and did business there. The defendant also did business there, and had an office in the chamber of commerce building, but in fact lived at Hudson. The rules and regulations of the chamber of commerce of Milwaukee, the warehouse receipts, the checks in payment of the barley, the memoranda of sales, book accounts, etc., are all in evidence. At the close of the trial the court directed a verdict for the plaintiffs for the amount of the difference between the contract price and the amount received by the plaintiffs on the contract, and from the judgment entered thereon this appeal is brought.

ORTON, J., dissents.Finches, Lynde & Miller, for respondents, Edward C. Wall and another.

Frisby & Turner and Wellington Vannatta, for appellant, J. C. Schneider.

CASSODAY, J.

The statute provides for the punishment of any person who shall lose or win any money, property, or thing in action by gambling in any manner, or by any means, or by betting upon any future contingent or unknown result or occurrence in respect to anything whatever. Section 4535, Rev. St. So the statute makes all promises or other contracts (except insurance) void where the whole or any part of the consideration is for money or other valuable thing won or lost, laid or staked, or betted at or upon any game of any kind, or under any name whatsoever, or by any means, or upon any wager, or for the repayment of money or other thing of value lent or advanced at the time and for the purpose of any game, play, bet, or wager, etc. Section 4538, Rev. St. In the case of Barnard v. Backhaus, 52 Wis. 597, [S. C. 9 N. W. REP. 595,] it appears, not only from the opinion of the court by the present chief justice, but from the note left by the late chief justice who participated in that decision and was to write the opinion, that “contracts in writing for the sale and delivery of grain at a future day, for a price certain, made with a bona fide intention to deliver the grain and pay the price, are valid in law; but when such contracts are made as a cover for gambling, without intention to deliver and receive the grain, but merely to pay and receive the difference between the price agreed upon and the market price at such future day, they come within the statute of gaming, and are void in law.” The ground for holding the note void in that case is stated by the present chief justice, in his opinion, in these words: “It is sufficient to say that the court deems it clearly and satisfactorily proven that in respect to some of the transactions none of the parties intended an actual sale and purchase of wheat, but that the whole thing was to be settled by the payment of differences.” Page 603. The writer was not a member of the court when that case was decided, but such being the facts, he apprehends that no one could, under the statute, come to any different conclusion. That case was followed in Everingham v. Meighan, 55 Wis. 354, [[S. C. 13 N. W. REP. 269,] where the judgment was reversed and a new trial ordered because the trial court improperly took the case from the jury and directed a verdict for the plaintiff, when there was some evidence tending to prove that neither party had any bona fide intention to deliver and receive the grain at a future day on payment of the price, but merely to pay and receive the difference between the price agreed upon and the market price at such future day. For the same reason the late case of Lowry v. Dillman, ante, 4, was reversed and a new trial ordered, and the doctrine reiterated “that contracts for the sale and purchase of commodities, where neither party intends to deliver or accept the property sold, but where they are merely to pay the difference in price according to the rise and fall in the market, are gambling contracts, and that any security founded on such transaction is void.” That doctrine, as there said, will be rigidly enforced in all cases fairly coming within its scope and meaning.

Do the facts here presented bring the case within the scope and meaning of the doctrine thus stated? True, the contract was for No. 2 spring barley, to be delivered in current warehouse receipts of Milwaukee elevators. The issuance of such warehouse receipts without having the property, as therein represented, is severely punishable by statute. Section 4424, Rev. St. When such receipts are issued, as therein provided, they are by statute made transferable by delivery thereof, without indorsement or assignment, and any person to whom they are so transferred is deemed and taken to be the owner of the property therein specified, so far as to give validity to any pledge, lien, or transfer made or created by such person. Section 4425, Rev. St. These ware house receipts must be understood as applying to private warehouses as well as custom houses or bonded warehouses. Price v. Wisconsin Marine, etc., Co. 43 Wis. 267. And they are negotiable, with like effect as to title as negotiable paper for the payment of money. Id. 281. These warehouse receipts are in evidence, and there is nothing to impeach their integrity or genuineness. They must, therefore, each and all, be treated as representing, and held to represent, the amount and quality of barley stated in them respectively.

It is urged that the written contract with the rules and regulations of the chamber of commerce, which are made a part of it, is upon its face a gambling contract, and hence void. In order to so hold we must find, as a matter of fact, that at the time of making the contract the plaintiff had no intention of selling and delivering the warehouse receipts as therein stated, and also that the defendant had no intention of buying or receiving such receipts. Can we so find upon the evidence in this case? True, the contract provided, in effect, that the plaintiff should be secured by a margin of 10 per cent. on the contract price, and for an additional margin in case such barley should go down on the market; and also provided a summary way for closing out the transaction in case the defendant failed to pay the money and take the warehouse receipts at the time designated. But this does not seem to be enough, especially when taken with the other evidence in the case, to authorize a finding that neither party intended to perform the contract. Under one of the rules of the chamber of commerce, made a part of the contract, a failure on the part of the plaintiffs to deliver the warehouse receipts, as agreed in the contract on the receipt of the price, would have subjected them to suspension and expulsion from the chamber of commerce. By another rule the defendant, by making default in the payment of the money and receiving the warehouse receipts for the space of one month, thereby subjected him to being barred from any right to representation upon the floor of the chamber of commerce for any business, object, or purpose whatever. Thus the rules and regulations contemplated the enforcement of the contract, as well as the putting up of the margins and the settlement of differences. True, the rules provide, in effect, that in case of the default of either party, such party shall be liable to the other for the difference between the contract price and the price at which the property has been sold or bought, (as the case may be;) but that is only so as a consequence of a breach, and in order, in that event, to constitute and fix the rule and measure of damage against the party so in default. But such could only be the result in case of default. In the absence of such default and in case of performance by both parties no such consequence could occur.

Of course, the power to make contracts implies the power to break contracts. A necessary incident of breaking a contract is liability to the other party for the breach. The amount of damage must necessarily depend upon the nature of the contract and the extent of the breach. In an executory sale of a commodity having a fluctuating market value, the amount of the damage must necessarily depend upon the state of the market at the time of the breach. Is the contract in question to be condemned as illegal, merely because it provided, in effect, that in case it should be broken by either party, the measure of damages should be the difference between the contract price and the price on the chamber of commerce at the time of the breach? Assuming that such price on the chamber of commerce at the time of such breach would be the true market value, then it is manifest that the amount of damages thus stipulated for was precisely the measure of damages which the law would have given for such breach, without any stipulation. Hill v. Chipman, ante, 160. True, the rules prohibit members of the association from gathering within or adjacent to the chamber of commerce, before or after regular business hours, and forming a market for the purpose of making...