The times., 1901-06-03
A QUESTION OF INTENTION.
Validity of transactions ia stocks
FOR FIXTURE Delivery.

Cor FIXTURE Delivery.
Justice Peckham, IN delivering the opin-
ion OF the Supreme Court last Monday IN
the decision affirming the validity OK
transactions in stocks for future delivery
lays down well defined rules as TO what
constitutes bona fide TRANSACTIONS The
case was that of Henry Clews & Co.. OK
New Terk against Jameson q Co., Chi
cago stock brokers' to recover the diner
ence between the price at which the lat
ter agreed to purchaye 700 shares OF Dia-
mond Match stock and the price
brought when sold at auction after jamie
son & c., had declined to receive IL
The suit was dismissed by the United
States Circuit Court for want of any
privity OF contract. which action was af-
firmed by the Circuit Court OF Appeals.
which also held that under the Illinois
statute the contract was a gaming one,
and therefore void as contract for the
option to sell or buy at a future time"
This. says Justice Peckham. IS very
far-reaching decision, and il followed
would fnvalidate most transactions OF
every stock exchange in the country for
| the account" Quoting from a previous
| decision of the Supreme Court that a
contract for future delivery is only valid
J when the parties really intend and agree
| that the goods are to be delivered by the
seller and the price paid by the buyer, the
| opinion says:
AS a sale for future delivery is not on
! its face void. but is a perfectly legal
and valid contract. 1t must be shown by
| him who attacks 1t that 1t was not in
| tended to deliver the articles sold. and
that nothing but the difference between
| the contract and the market price was to
I - . fhp
And the fact that at the time Of making
a contract for future delivery the party
binding himself to sell has not the goods
| in his possession. and has no means for
obtaining them for delivery otherwise
than by purchasing them after the con-
| tract is made does not invahGate the
contract In order to invaIdate contract
as wagering one. both parties must in
tend that instead of the delivery of the
article there shall De a mere payment OF
the difference between contract and the
| market price The proof must show
| that there was a mutual understanding
! that the transaction was to be a mere
settlement Of differences; in other words,
| a mere wagering contract"
/ Taking up the contracts in the ass, the
| court finds there was nothing in them or
/ the evidence from which it could be in
/
! of Illinois, on the subject of gambling
Ali the parties TO the suit-admitted the
| transaction was according TO the rules Of
the Chicago Stock Exchange. which pro-
hibIted. under penalty of suspension, sales
for mere collection of differences. They
| also provided that every sale must be one
| in good faith for the delivery, either pres
ent or future. of the article sold and that
| sales for the account should be made
| upon the basis OF an intended actual de-
4 livery of the stock at the time when due
! AS TO the rules to be pursued when
| member of the exchange fails TO Iuiiii
/ contracts Justice Peekhdm says that 10
say they afford strong ground 10 infer an
\ understanding between the parties DONG
7 business subject TO them-that their con-
| tract was not one OF actual sale, Dut
/ merely 10 speculate upon Ol1erences
/ was in the opinion OF the court. to pre-
! sumo an Illegal contract against Its pam
/ terms, and without any sound basis tor
/ the presumption. The rules mace Tor VI,
| OlatiOn of contract did not provide. ana
1 were not intended to provide. means Ior
| its fuIfiIIment but merely Afforded an ex-
pedi:ious means Oh assersaihlhs M a., n,f unf
| say these rules actually prevented gam
! bling on the exchange II was possible.
| not probable that gambling might De anu
| was in fact carried on there, Dus IL must
be in violation Of, and not pursuant TO the
| rules.
| Taking up seven cases w1ere cohNlctloils
/ had been obtained under the Illinois stat
| ute. Justice Peckham points out tnat IN
each case thcy concerned what was COM
| rnonly known as puts and eals, Where
7 there was no obligation on the part OF
! the person to sell or buy That class OF
| contracts was covered by the statute
! For the reasons given above this class was
| not. -
as the contracts had been made with rei-
! erence to the rules of the exchange, the
/ partfes must in pursuing remedy, De
| confined to that which the rules provide,
to the exclusion of the jurisdiction OF or
binary courts of justice. the opinion says
| the court does not regard il is wen taken
The sales were made subject TO the rules
| referred to- but so far as regards q rem
edy for their violation. those rules proVld-
ed a means by which parties might seek
and obtain relief in accordance with their
/ terms They did not assume TO eXclude
| the Jurisdiction Of the courts, or, in other
| words, they did not assume TO provide
an exclusive remedy which the parties
! must necessarily follow. and which they
had no right to refuse to follow without
| violating such rules and thereby violat-
( ing their contract Any rule which would
exclude the jurisdiction OF the courts over
| contracts or transactions such as were
| here shown would not be enforced in a
! legal tribunal.
! The court holds that the course pur-
| sued by- Clews & Co in selling the stock
| after tender had been refused, was a
| proper and appropriate one. and the de-
| cree of the courts below dlSgnlSSlnS the