Williams v. Tiedemann

• Decision Date: 03 December 1878
• Citation: 6 Mo.App. 269
• Parties: FRANCIS W. WILLIAMS ET AL., Respondents, v. FREDERICK TIEDEMANN, Appellant.
• Court: Missouri Court of Appeals

6 Mo.App. 269

FRANCIS W. WILLIAMS ET AL., Respondents,

v.FREDERICK TIEDEMANN, Appellant.

St. Louis Court of Appeals, Missouri.

Dec. 3, 1878.

1. A contract for the sale of goods for future delivery is not rendered a wager by reason of the fact that the vendor has not the goods on hand to fill the contract, but expects to go into the market for them.

2. Where it is agreed that the goods sold are not to be delivered, but a settlement of differences made according to market fluctuations, the contract is a wager, and will not be enforced.

3. Where either party to the contract intends a bonâ fide sale or purchase, the contract is not a wager, whatever may have been the secret intent of the other party, and courts will enforce it at the suit of the innocent party.

4. An executory contract may be obligatory upon one of the parties to it, and optional as to the other.

5. There is no presumption of law against the validity of a contract the subject-matter of which is proper, but the burden is on him who attacks its validity.

APPEAL from St. Louis Circuit Court.

Affirmed.

CONDE & BATEMAN, for appellant: Contracts such as that in issue are mere wagers, and will not be enforced. And where it appears that the parties intentionally adopted a legitimate form to cover a mere gambling or wagering transaction, or to overreach the law and evade the decisions of courts of justice, the mere parade of honest forms will not avail.-- Waterman v. Buckland, 1 Mo. App. 45; Brua's Appeal, 55 Pa. 296; Sanderson v. Shaw, 101 Mass. 145; Cassard v. Hinman, 1 Bosw. 201; Kirkpatrick v. Bonsall, 72 Pa. St. 155; Amory v. Gilman, 2 Mass. 6; Grazewood v. Blain, 73 Eng. Com. Law, 525; Ex parte Young, 6 Biss. 53; Lyon v. Culbertson, 5 Cent. L. J. 401.

SILAS B. JONES, for respondents: A contract may be optional with one of the parties, in part or in whole, and obligatory on the other.-- Giles v. Bradley, 2 Johns. Cas. 253; Disborough v. Neilson, 3 Johns. Cas. 81; Tyler v. Barrows, 6 Robt. 104; Kirkpatrick v. Bonsall, 72 Pa. St. 155; Mason v. Payne, 47 Mo. 517. In a contract of sale of goods to be delivered in future, the fact that the vendor has not the goods does not make the contract a wager.-- Hibblewhite v. McMorine, 5 Mee. & W. 462; Mortimer v. McCallan, 6 Mee. & W. 58; Stanton v. Small, 3 Sandf. 230; Frost v. Clarkson, 7 Cow. 24; McIlvane v. Egerton, 4 Robt. 422; Tyler v. Burrows, 6 Robt. 104; Kingsbury v. Kirwan, 6 Cent. L. J. 228; Smith v. Bouvier, 70 Pa. St. 325; Brown v. Speyers, 20 Gratt. 296; Rumsey v. Berry, 5 Me. 570; Walcott v. Heath, 78 Ill. 433. If either party intends a bonâ fide purchase or sale, the contract will, at his suit, be enforced.-- Pixley v. Boynton, 79 Ill. 351; Logan v. Musick, 81 Ill. 415; Corbitt v. Underwood, Ch. Leg. N., February 17, 1877.

LEWIS, P. J., delivered the opinion of the court.

Plaintiffs sue on two drafts drawn in their favor by William L. Black, on defendant, and by him accepted, in March, 1877, one being for $1,000 and the other for $1,500. The defendant pleads by way of defence that the acceptances were without consideration, and were given on account of certain gaming or wagering contracts concerning the rise or fall of cotton in market price. Issue was joined on this defence, and the verdict of a jury was in favor of the plaintiffs.

The material question in the cause is whether the transactions between the parties were within that forbidden class of wagers thinly disguised with a semblance of mercantile trading, which have always been denounced by the courts as contra bonos mores and not entitled to judicial protection. The instructions given by the Circuit Court were clearly appropriate to the facts in proof, and if they correctly set forth the law, it will be difficult to find a reasonable ground for disturbing the verdict of the jury. For the plaintiffs, the court instructed as follows:--

“1. The court instructs the jury that a mere intent or purpose of the defendant not to receive or deliver any cotton in the transactions mentioned in the evidence, but to settle differences only, does not make the transactions bets or wagers on the price of cotton; but to make said transactions bets or wagers on the price of cotton, there must have been a mutual understanding between both the seller and buyer in said transactions that no cotton was to be delivered or received in said transactions, and that there was to be a settlement of differences only.

2. The court instructs the jury that a party may contract to sell cotton at a price agreed upon, though he may own none at the time of the contract, to be delivered to the purchaser during a future month agreed upon at the time of the contract to sell, upon any day of said month that the seller may choose, if the buyer and seller so agree, and that such a transaction is not objectionable on the grounds of betting, gaming, or wagering, unless it is understood by both the buyer and seller, at the time of making said contract, that no cotton is to be delivered, but that there is to be a mere settlement of differences between the parties according to the market price of cotton at the time stipulated for delivery.”

An instruction was given for defendant, as follows:--

“1. If the jury believe from the evidence that the transaction between the plaintiffs and the defendant was one in which no actual sale and delivery of cotton was contemplated, but merely the payment of differences according to the rise or fall of the cotton-market, the contract was a gaming contract, and void in law, and any notes or accept ances given in consideration thereof are also void in law; and if the jury further believe from the evidence that the drafts sued upon were accepted by defendant in pursuance of one or more of such wagering or gaming contracts, then the jury must find for the defendant.”

Counsel have favored us with very carefully prepared briefs, whose thoroughness of research has lent us an exceptional aid in this investigation. The subject of wagering-contracts has undergone much discussion in the courts, on both sides of the Atlantic, so that the controlling tests by which their presence is to be determined are now clearly defined and universally agreed upon. It may suffice to summarize the general conclusions wherein there seems to be no conflict among modern authorities.

The simplest and purest form of mercantile transaction is where A. purchases a commodity for a certain price, takes it into actual possession, and afterwards sells and delivers it to B., who pays to A. a price agreed upon. The price in each operation is supposed to represent the real or market value of the article. Actual delivery consummates the transaction, whereby the buyer has in his possession a tangible equivalent for the money he has paid. If there be a rise or a fall in the market price, or if the purchase be in one market and the sale in another, these circumstances may determine the question of profit or loss; but, in any event, there is a fair exchange of money for goods, with absolute dominion over the acquisition on either side. Every step in the process is legitimate, implying no tendency in derogation of commercial or social propriety.

A second form of mercantile transaction is where the seller does not at once deliver the article sold, but binds himself in a contract to deliver it at a future time. He may or may not have the commodity in his possession at the time of the contract. But the query whether he has it or not can be of no possible concern to the purchaser, provided it be forthcoming at the time agreed upon. If the seller has it not, he must purchase or acquire it in due time, so that the dominion may be transferred in return for the money which the purchaser is to pay or has already paid. Here again there is a fair exchange of equivalents, in which no pernicious tendency can be discerned. It was said by Lord Tenterden, in Bryan v. Lewis, Ry. & M. 386, that if a party enters into a contract for the sale of goods to be delivered at a future day, and neither has the goods at the time, nor has entered into any prior contract to buy them, nor has any reasonable expectation of receiving them by consignment, but...