Case ID: mich_51/html/0232-01.html
Source: Caselaw Access Project
Author: {"author": "Cooley, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Henry Stanley v. Harvey D. Nye.
    
      Action on agreement to lend — Option dealings.
    
    Assumpsit ior tlie amount of a promised loan will not lie after the expiration of the time within which it was to have been paid hack. The only right of action, if any, is for damages for not making the loan as agreed.
    The parties to an arrangement for speculating in options have the right as between themselves to settle their mutual dealings as they please; and a loan from one to the other, agreed upon by them in making such settlement, would not be affected by the nature of their previous operations.
    Error to Genesee. (Newton, J.)
    June 22.
    July 2.
    AssuMpstt. Defendant brings error.
    [Reversed.
    
      Geo. II. c&. Gluts. A. Durand and Isaac Marston for appellant.
    Promissory notes are valid though made to raise money to carry on illegal business: Bottomley v. Goldsmith 36 Mich. 28 ; Webber v. Donnelly 33 Mich. 471; Smith v. Barstow 2 Doug. (Mich.) 156. •
    
      Howa/rd ds Thayer for appellee.
    Parties'to an illegal transaction cannot hold each other liable for moneys ad•vanced or paid tberefor: Baymond v. Lea/oitt 46 Mich. 447 ; ■Gh'egory v. Wendell 39 Mich. 337: 40 Mich. 432; Arnot v. Pittston <& Elmira^ Goal Go. 68 N. Y. 558; Sanvpson v. Shorn 101 Mass. 145; Doolin v. Wa/rd 6 Johns. 194 ; Story v. Salomon 71 N. Y. 420; an agreement of partnership an object of which is the contemplated illegal sale of lottery -tickets is void: Williams v. Woodman 8 Pick. 78; money lent to enable a person to gamble cannot be recovered: White ■v. Buss 3 Cnsh. 448; Staples v. Gould 5 Seld. 520; an agent cannot recover compensation from his principal for services in making a contract which is illegal, nor can he recover for money paid on account of his principal in execution of it: Stebbins v. Leowolf 3 Cnsh. 137; where a contract ds illegal, either under a statute or at common law, the illegality will extend to all antecedent contracts made in aid of ■or to effectuate the illegal purpose: Mosher v. Griffin 51 Ill. 184; Golldnsv. Merrell 2 Mete. (Ky.) 163 ; Tatum v. Kelley .25 Ark. 209; Watson v. Fleteher 7 Gratt. 1; a note given for .•option deals is a gambling contract, and without consideration ; but may be good if it has passed into the hands of a 'bona fide holder: Shaw v. Glarlt 49 Mich. 384; where a debt is extinguished by the deed, or the money paid is not advanced ■by way of loan, or where it is optional with the grantor to •refund or to keep the money, the transaction is a conditional sale and not a mortgage: Swetland v. Swetland 3 Mich. 482; Bobmson v. Gropsey 2 Edw. Oh. 138 : 6 Paige 480 ■; 1 Hil-liard on Mortgages (2d ed.) 86 ; Holmes v. Grant 8 Paige .250; Glover v. Pa/yn 19 Wend. 520; Goodmanv. Grierson 2 B. &. B. 274; Brown v. Dewey 2 Barb. 28; Balter v. Thrasher 4 Hen. 493.
   Cooley, J.

Assumpsit to recover the sum of two thousand dollars, which is claimed as part of the purchase price -of a city lot in Flint.

The plaintiff’s case is that in December, 1879, the parties entered into an arrangement for joint speculations in pork . and grain in Chicago, and that in pursuance of such arrange,-ment they bought options until in April, 1880, when they ■were found to have lost several thousand dollars. The parties tben bad a meeting to adjust matters between themselves,, the result of which was that plaintiff deeded to defendant the-city lot in question, which was worth four thousand dollars, and defendant was to apply two thousand dollars in full settlement of the dealings between them, and pay plaintiff the further sum of two thousand dollars within a few days. It is this latter sum that plaintiff claims to recover in this suit. The transaction would thus appear to be a sale of the lot for four thousand dollars, with short credit for half the purchase price.

The defendant sought by the cross-examination of the plaintiff to show that he did not buy the lot, but received a deed of it by way of security of an agreed balance due - him on their settlement. This balance the plaintiff stated was four thousand dollars; and he also said that at the ■ time of the adjustment he was willing to pay defendant all that was due him, and had no desire to cheat him out of any thing. He also admitted that, when the deed was delivered, defendant gave him back a writing agreeing to reconvey the property in one year or two years.

The following questions and answers then appear in the • record:

“ Q. This property, now — this conveyance was really given with that object in view- — -to secure him — -was it not; in part at least ?
A. Tes sir; two thousand dollars of it.
Q. The object was security, and upon your being able to-repay him you should have it back again %
A. Yes sir.
Q. That was the object of the transaction ?
A. Yes sir.
Q. That was the object of putting the agreement in writing, that he should convey back and discharge the .obligation on your paying the amount ?
A. Yes sir.”

The plaintiff did not put the agreement in evidence, but he called as a witness the notary who drew the deed and agreement, and he gave evidence on cross-examination that the arrangement between the parties was that the lot - was to be reconveyed to the plaintiff on his paying within either one year or two years — the witness was not certain-wbicb — tbe sum of'four thousand dollars with ten per cen-tum interest. No evidence was given on tbe part of the-plaintiff wbicb .tended to make out any different case.

On tbe testimony of tbe notary it is very clear tbe plaintiff could not recover. He was bringing suit for two thousand dollars wbicb was to be loaned to him for repayment within one or two years. IVIore than two years bad' elapsed before tbe suit was instituted, and therefore, if he-were to recover tbe money, defendant would be entitled to sue and recover it back again immediately. It is idle to-contend that this may be done. If tbe plaintiff has a right of action, it can only be for damages for not making tbe loan as agreed.

Tbe plaintiff admits that defendant bolds tbe land as security, but be claims that the sum secured is only two thousand dollars. There are some difficulties in understanding this, but tbe most favorable view for him that can be taken of bis evidence is this : that by the arrangement be allowed defendant two thousand dollars in settlement of their deals, and was to have a loan of two thousand dollars for two years upon a pledge of the lot. It would not do to say that tbe arrangement was one of sale of the lot, w’itb tbe privilege of repurchase on payment of two thousand dollars when the-plaintiff'himself says it was worth twice that sum. But if tbe transaction was one of loan, it is immaterial for tbe purposes of this suit whether tbe sum to be repaid was two thousand dollars or four thousand, for in neither case is any sum owing to tbe plaintiff.

Argument was made in tbe case respecting tbe legality of tbe Chicago transactions; but whether they were legal or illegal seems to be of no moment. If they were illegal, the-parties bad a right to settle them up as they pleased, and they bad full legal authority at tbe same time to agree upon a loan one to tbe other if they pleased. Tbe previous transactions would not affect this agreement, even though they may have furnished the occasion for entering into it.

The judge should have instructed the jury that there was-no evidence entitling the plaintiff to recover.

The cause will be remanded for a new trial and the defendant will recover the costs of this court.

The other Justices concurred.