The morning call., 1891-06-02
STOCK GAMBLING.
Agents Held to Be as Culpablf
as Principals.
The Supreme Court Renders Decision Of
Particular Interest to Brokers and Their
Clients Who Deal in Margins.

The Supreme Court has rendered a de-
eisi0u that will set the thinking apparatus
Of every stockbroker in motion, and will be
read with deep interest by all who seek to
acquire wealth by dealing in margins.
The decision that will set the brokers
a-thinking was given in the case of William
P. eastman against George 3. Root and
others, an action by eastman to compel
Root to reconyey to him real estate valued
at $1,000, which was conveyed to the de-
PENDANT in trust to secure the payment of
any Indebtedness which might exist within
six months after July "a. 1885
The action was brought against Root as
the assignee Of an insolyent named Hooker,
who was engaged in buying and selling
mining stocks on margin or otherwise. The
plaintiff had been regular customer and
had lost heavily. Being short of money, he
conveyed in trust the property sued for to
defendant Root-who was in H0okeTs en-
ploy-tO cover margins, and to enable Cash
man to continue his speculatiOns in stocks.
Hooker valued the property at S3000 and to
that extent eastman could buy on margin
without putting up money.
THE ACCOUNT NOT DISPUTED.
They continued to deal together until
Hooker became insOlYent, in 1886, at which
time be held certain stocks for eastman,
and according to HOOker'S books eastman
owed him S2347. eastman did not dispute
the correctness of The account, according to
the course Of dealing between the parties or
their understanding at the time, but claimed
that the debt was Illegal and the contract
void because the State Constitution provides
that All contracts for the sale of shares of
the capital stock of any corporation or as
ISOLATION, on margin or to be delivered al a
future day, shall be void and any money
paid on such contracts may be recovered by
the party paying it by suit in any court Of
competent jurisdiction
Root conlended that Hooker was acting
merely as broker or agent and that the prop
erty held by him as security constituted the
relation Of pledgeT and PLEDGE, which IS not
prohibited by the constitution. Tins view
was adopted by the trial court, which found
that the stock was purchased by Hooker as
agent and belonged TO eastman, and that
Hooker never sold stock t. or bought from
plaintiff. No part of the Indebtedness,
therefore, arose from The sale OF stock on
margin or otherwise.
WHAT END WAS ACCOMPLISHED.
at is not easy to characterize by a name
the relation between the broker and his Gus
toner" says the appellate court in reversing
the decision of the trial court. For all OTdi-
nary purposes 1t may be admitted that the
broker purchases as the agent of his Gus
toner and then holds the stock to secure a
debt; but If by the transaction the customer
is enabled to Go that which is prohibited, to
wit: purchase stock on margin. it must be
held TO be within the prohibition, and if
Hooker did not sell himself t. plaintiff, but
was only the instrument through whom the
Illegal end was accomplished, he being pTivy
to the design, the same result would follow.
In the accomplishment Of the unlawful
purpose, he took the place of the vendor and
carried the stock, as the vendor might have
done, and the end was thus reached per in
teTpUSitam pers0nam. The end attained,
aud not the form OF the transaction, must
determine the question"
Fer this reason the Judgment of the lower
court was reversed and a new trial was or
deTed