Ward v. Vosburgh

• Decision Date: 01 May 1887
• Citation: 31 F. 12
• Parties: WARD v. VOSBURGH.
• Court: U.S. District Court — Eastern District of Wisconsin

31 F. 12

WARD v. VOSBURGH.

United States Circuit Court, E.D. Wisconsin.

May, 1887

Joseph Wright and Shepard & Shepard, for plaintiff.

Quarles & Spence, for defendant.

DYER J.

This is undoubtedly a hard case for the defendant, and, if the court could see its way clear to relieve him from the liability which is sought to be enforced against him, it would be glad to do so. So many decisions have been rendered by various courts upon the particular question we have here to decide in which may be found the expression of conflicting views that it is not easy to arrive at a conclusion unattended with doubts. One proposition is well settled, namely, that where in fact no purchase or sale of property is intended but simply a wager on the rise or fall of prices, the transaction is a gambling one, and cannot be upheld. It is also equally true and well settled by authorities, so familiar that they need not here be cited, that where the gambling intent exists only on one side, and the other party intends an actual purchase or sale, then the transaction is valid. The difficulty always is in applying these principles of law to the facts as they are developed in the given case. It has been of late repeatedly decided, that, if the parties intend in fact to buy or sell property to be delivered at a future time agreed upon by them, it is not a gambling transaction, although they exercise the option of settling the difference in price, rather than make delivery of the property.

Upon a careful perusal of the opinion of the court in Barnard v. Backhaus, 52 Wis. 593, 6 N.W. 252, and 9 N.W. 595, and of the record and testimony in that case submitted by counsel for the defendant, I am strongly inclined to the opinion that if the case in judgment involved a Wisconsin transaction, arising under the Wisconsin statute, that opinion might be considered a controlling authority in favor of the defendant here. The rule laid down in that case was that, to uphold a contract for a sale and delivery of grain at a future date, for a price certain, it must affirmatively and satisfactorily appear that the contract was made with an actual view to the delivery and receipt of grain, not as an evasion of the statute against gaming, or as a cover for a gambling transaction. The meaning of this proposition would seem to be that the burden of proof to uphold such contract is upon the party who seeks to recover upon it.

It was held by Judge GRESHAM, then district, now circuit judge in this circuit, in Williar v. Irwin, 11 Biss. 60, that 'the burden of showing that the parties were carrying on a wagering business, and were not engaged in legitimate trade or speculation, rests upon the defendant. On their face, these transactions are legal, and the law does not, in the absence of proof, presume that parties are gambling. A person may make a contract for the sale of personal property for future delivery which he has not got. Merchants and traders often do this. A contract for the sale of personal property which the vendor does not own or possess, but expects to obtain by purchase or otherwise, is binding, if an actual transfer of property is contemplated. A transaction which on its face is legitimate cannot be held void, as a wagering contract, by showing that one party only so understood and meant it to be. The proof must go further, and show that this understanding was mutual; that both parties so understood the transaction. If, however, at the time of entering into a contract for the sale of personal property for future delivery, it be contemplated by both parties that, at the time fixed for delivery, the purchaser shall merely receive or pay the difference between the contract and the market price, the transaction is a wager, and nothing more.'

Other cases might be cited in which the same rule is applied to these contracts for the sale and purchase of grain on the board of trade as is applied to every other contract, namely, that presumptively they are legal and valid: and that the burden is not, in the first instance, upon the plaintiff to show that the contract was not an evasion of the statute, or a cover for a gambling transaction. The supreme court of the United States in Irwin v. Williar, 110 U.S. 507, 508, 4 S.Ct. 160, expressly approve the statement of the law on this point, as it has just been quoted from the opinion of Judge GRESHAM; and I must therefore hold that the burden here is not upon the plaintiff to make it satisfactorily and affirmatively appear that the contracts in question were legal, but that it is incumbent upon the defendant to show that the contracts were in fact gambling transactions; and this is not shown by merely proving his own intention in the transaction. As was well said in Clarke v. Foss, 7 Biss. 548:

'It is very easy for either party to swear to what his own understanding of the contract was, but that, standing alone, is manifestly immaterial. The secret intentions of one party, contrary to what appears on the face of the contract, and not communicated to the other party, cannot prevail to make a contract illegal which is otherwise valid. The real question is, what was the contract? and that implies an inquiry as to the mutual understanding and meeting of the minds of the parties. What was that? It is easy for a party to swear what his own understanding and intentions were; but, when he comes to swear to the intentions and understanding of the other party, the consideration due to his testimony stands on an entirely different footing. He may be presumed to know his own intentions, but the evidence of the intentions of the other party should not be of a merely subjective character, but should consist of tangible facts and circumstances, outside of his own consciousness, and a knowledge of which would be capable of satisfying other minds.'

In Bangs v. Hornick, 30 F. 97, Judge BREWER in his opinion says:

'Counsel for defendant say that it is the absolute duty of the court to denounce this transaction, unless it clearly appears that it was a valid and honest one. I think the duty of the court is precisely the reverse, and that it is the duty of the court to uphold it, unless it appears that it was an invalid and dishonest one.'

This is a terse and accurate statement of the rule of law applicable to the present case. The plaintiff was a broker or agent of the defendant in the transactions in question. He was the middle-man between the defendant and other parties, to whom sales and from whom purchases of commodities were made. Like the case of Bangs v. Hornick, just cited, as there observed by Judge BREWER, it is not a case where the defendant, as principal on the one side, was dealing with the plaintiff as principal on the other. There was no contract of purchase or sale, real or pretended, between them. He was merely a broker,--an agent to do the defendant's bidding in transactions real or pretended. 'There is no presumption that an agent does not obey the instructions given, or that he does not intend to obey them; and, it matters not what the intent or supposition of the principal may be, the law will presume that the agent obeyed the instructions that were given, and as they were given; and, if the contrary be alleged, it must be proved.'

Now although the defendant may not have intended any real purchase or sale of grain or other commodities, it is not satisfactorily proven that the parties with whom the plaintiff dealt for the defendant, did not contemplate the actual...