The San Francisco call., 1903-01-22
BROKERS LOSE
IMPORTANT SUIT
Judge Sloss Pronounces
Certain Speculations
a Gamble.
Refuses to Recognize Deals
Where No Delivery
Is Made.

In an opinion rendered yesterday in the
suit of E W. Beals against Jacob Stem
Gel 10 recover $4,000 due on a note given
10y Stencil 10 the brokerage firm Of Bol-
Ton. De Ruyter & Co. Judge Sloss rem
6ered judgment against the plaintin- The
court decides that Beals who is the as
s.gnee OF Bolton. De Ruyter & Co, can
not collect on the note because the trans
actions which caused its issuanee1she
purchase OF options on puts and cars
on grain and stocks Of cOrpOrations-were
In the nature Of q gamble, and were there
fore fllegaL
This Is the first time the point al issue
has ever been decided in this STATE. The
decision is an important one in thar It
brands as gambler that class OF specu-
Iator which buys and sells a commodity,
cffecting both purchase and sale without
handing in any manner the goods he
acquires and dispOses Of In other words,
he Is a gambler who sends an order 70
q broker 10 purchase a certain article
and who disp0ses Of the article AZ gain
or loss by simply notifying the broker
10 sell. in neither instance receiving or
delivering the commodity-
The court holds that such a transaction
is a gamble on the market price o. the
article purchased and sold and is there
fore Illegal
Judge sloss' opinion. in part. is, as fol-
lows:
DEAL IN MARGINS.
-'-Stencel. g man of no means and hav-
ing no facilities for the receipt, storage
or disposition Of grain. made within less
than one year eighty-one purchases Of
wheat and eighty-Oue sales Of the same
amounts. These purchases and sales were
offset against each other, so that in no
rity Of contract OF purchase. receive.
nor did he. at the maturity Of any con-
tract OF sale, deliver a single bushel Of
wheat The amounts Involved an these
contracts were very great. the purchase
al The wheat amounting, according 10 tie
defendants testimony. 10 over one mil
lion dollars. The only pawn ent made by
the defendant TO the brokers on order
ing purchase Of wheat was margin Of
] per cent Of the purchase price. II was.
understood that the brokers had the right.
u sufficient payments were not made 10
keep the DEFENDANTS margins up 10 tie
required point 10 sell out the grain car
ried fer the defendant without notice CT
demand Of The purchase price The time
elapsing between purchase OF wheat
and the sale Of the same rarely exceeded
q few DAYS The accounts kept by Boil
tOn- De Ruyuer & Co. merely showed the
difference between the purchase and the
sale price.
GAMBLING PRACTICES.
These are precisely the conditions that
would result where a man engages in the
practice Of gambling on the market price
Of a commodity without any intent on
The part Of any one concerned that there
shall be a delivery Of that commodity in
any event They would not be likely TO
exist where a man engages in the legiti-
mate purchase or sale Of commodities for
future delivery. whether by way Of spec
Ulation or otherwise.
1T IS no doubt true that the mere fact
that a nan who has bought wheat, for
future delivery sells the same amount be-
fore the tine Of delivery does not show
an intent on his part 10 gamble on the
future state Of the market, much less
Goes It show that such intent. if il ex-
listed. was shared by those with whom
he dealt Nor is such intent necessarily
n be deduced from the fact that in one
or more transactions no wheat was ac-
tually delivered. or that many purchases
and sales were made within a short time
II may even be said that all OF these
circumstances, taken together. GO not az
matter Of law require the conclusion
rnat any Illegal dealing was contemplated
by the parties But. as a question Of
fact. ] think the proper inference 10 be
drawn from ali the testimony IS that
stencil intended al the outset 10 merely
gamble OF bet on the market prices Of
grain. and that plaintiffs assignors Che
brokers' knew Of this intent and particle
hated IL II