The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1902-03-19
Future Contracts---Spurious And
Bona Eide.

Some of the most interesting con-
tributions to the body of the law
relating to the validity of contracts
for futures have been made by the
Supreme Court of the United States,
and the decision rendered by that
court on Monday, in the case OF Booth
VS.. the people of the State of Hi
nois, is not the least interesting OF
these. In this case the court passes
on the question of the extent OF the
prohibitory power which may be
exercised by the legislatures of the
states in relation to such contracts.
The particular legislation involved
was section 80 of the Criminal Code OF
Illinois, which provides that whoever
contracts to have or to give to himself
or another the option to sell or buy
at future time any grain or other
commodity, or forestalls the market
by spreading false rumors to influence
the price of commodities, or corners
the market, shall be fined not less
than $40 nor more than $1,000 or con-
fined in the county Jail not exceeding
one year or both. The plaintiff in
error was convicted on the charge Of
violating this statute, SO far as it
related to options to buy grain or
other commodities at a future time,
and the afhrmance of his conviction
by the Supreme Court of Illinois has
been sustained by the Supreme Court
of the United States.
In its opinion the court said that it
was unable to declare from any facts
judicially known, or from evidence in
the case, that the prohibition OF
options to sell grain ia future time
had in itself no possible relation to
the suppression of gambling in grain
contracts where the parties contem-
plated only settlement on the basis
of differences in prices. It might be
that the legislature thought that deal
ings in options to sell or buy at
future time, though not always or nee
essarily gambling, might have the
effect to keep out of the market, while
the options lasted, the property which
was the subject of the options, and
thus assist purchasers to establish for
a time what are known as corners,
whereby the ordinary and regular
sales or exchanges of such property,
based upon existing prices, might be
interfered with, and persons who had
no grain and did not care to handle
any were enabled practically to control
rices. Or, again, the legislature may
have thought that options to sell or
buy at a future time were IN their
essence mere speculations in prices
and tended to foster a spirit OF
gambling. In all this it was admitted
that the legislature might be mis-
taken, but if so the mistake was not
such as to justify the conclusion that
the statute was mere cover to de-
stroy particular kind of business not
distinctly harmful or immoral. 1t
must be assumed that the legislature
was one of the opinion that an efec-
tual mode to suppress gambling gain
contracts was to declare illegal all
options to sell or buy at future time.
The court declared itself unable to
say that the means employed were not
appropriate to the end sought to be at
tained and which it was competent for
the state to accomplish, or to adjudge
that the state of Illinois transcended
the limits of constitutional authority
when enacting the statute in question.
That legislation prohibiting con-
tracts for the mere collection OF
differences is within the power OF the
states is no new doctrine to the read
ers of this journal. Those are cases
where there is no intention on either
side to deliver or to receive commod-
tiles. This class of cases must, how
ever, he clearly Disseminated from
the cases where there is no such mu-
tual understanding, but where an
actual delivery is contemplated. The
latter class of future contracts are per-
fecatly legal and valid; indeed, as the
Supreme Court itself ruled in the case
of Clews VS.. Jamison, decided last
year, the fact that at the time Of max
ing contract for future delivery the
party binding himself to sell has not
the goods in his possession and has no
means of obtaining them for delivery
or otherwise than by purchasing them
after the contract is made does not
invalidate it. The decision just rem
dered, in word, leaves bona-fde fu-
ture contracts still within the protec-
ton of the law.