Democratic Northwest. [volume] (Napoleon, Ohio) 1869-1894, 1884-02-07
THE NORTHWEST.
lohginsll
OPTION CONTRACrs-ARE THEY
LEGAL?


stocks without the intention to deliver
or receive them, is q gaming contract
and void. And this was directly af-
frmed In Swartz's appeal, 8 Brewst, l3l.
In Pickering W. Cease, 70 Ill. S27, it
was held that contract for the sale and
future delivery OF grain, ny which the
seller has the privilege ofdelivering or
not delivering, and the buyer that of
calling or not calling for the grain, as
each may choose, and which on matur-
ity is to be filled by adjusting the diff
ferences in the market value, is an "op-
tional contract" and in the nature of
q gambling transaction and void even
at common law as well as under the
statutes of Illinois, similar to that of
Ohio.
Lyon VS.. Culbertson, So ILL.,, SS, is a
case where the plaintiff contracted in
writing with the defendant for the pur-
chase of 10000 bushels of wheat at
$l.573 per bushel deliverable at defend
ants option during August, 1872, sub
ject to the rules and regulations of the
Chicago Board of trade. These rules
provided that if "margins" were not
put up by q given time the contract
should be considered filled ut the mar
ket price of the article at the time OF
notice for margins. Margins were put
up by the plaintiff in conformity to
these rules, from time to time. On the
10th August the market opened at from
ST. q to $1.34, and fell rapidly during
business hours, and between II and
o'clock it was as low as Sl.lO-the de-
fendant became entitled, under the
rules, to further deposits and sent writ
ten notice to the Office of the defendants
for further margins. and the plaintiff
falling to respond, as by the rules re-
quired, within the next banking hour,
the defendant elected to consider the
contract filled and charged to account
Of the plaintiff the difference between
the par contract price and SILL }, and
notified plaintiff thereof. This differ
ence was the dispute between the par
ties. On trial in the court below, the
jury found for the plaintiff; a motion
for new trial was overruled, judge
ment rendered on the finding, and ap-
peal brought by defendant. Walker,
j., in delivering the opinion says:
"Were it not for the terms and condi-
Gons of the contracts as expressed in
the rules of the board of trade, the case
would be exceedingly simple and free
from all difficulty. We presume all
persons in the profession know that
when, in the face of the agreements,
the delivery of the wheat and the pay
ment of the money were concurrent
acts, to be performed by the parties to
the same ut one and the same time,
neither party could put the other in de-
fault without performing his part of
the agreement, or offering to perform
1t. And the time elapsed for perform
ance, all know that appellees would
have been compelled to tender the wheat
and appellants to have refused to
receive and pay for it before the
former could have sued and recovered.
Pals. OH Conts.vol. 2, p. 1S9; l entity Pl.
351. This is illustrated by every well
prepared precedent of declaration on
such contracts, whatever may be the
form of action. The fact
that no wheat was offered or demanded,
shows, we think, that neither party ex-
pected the delivery of any wheat, but
In case of default in keeping margins
good, or even at the time for delivery,
they only expected to settle the contract
on the basis of differences, without eth
er performing or offering to perform his
part of the agreement; and if this was
the agreement, it was only gambling on
the price of wheat, and if such gam
bling transactions shall be permitted, ii
must eventually, lead to what are called
Corners" which engulf hundreds in
utter ruin, derange and unsettle prices
and operate injuriously, on the fair and
legitimate trader in grain, as well as the
producer, and are pernicious and highly
demoralizing to the trade. A contract
to be thus settled, is no more than bel
on the price of grain during or at the
end of a limited period. Ifthe one par
ty is not to deliver or the other to re-
eeive the grain, it is, in all but name, 6
gambling on the price of the commodi
ty, and the change of name nevel
changes the quality or nature of things
1t has never been the policy of the law
to encourage, or even sanction, gaming
transaction, or such as are injurious tt
trade, or are immoral in their tendency
and the old maxim, that courts will al
ways suppress new and subtitle inven
tons in derogation of the common Law
(Branch's Principia, ny, would be ap
plicable to such contracts. This seem
TO be q subtitle invention to abrogat
well-established, fair and just principle
of the law of contracts; and not only so
but to the great injury of fair and legiti
mate trade"
In Rudolph vs. Winters, Neb. 126
the defendant deposited money in tn
banda of tha p1oiufifF IN ho ipyoctod 1,