Case Name: Chas. Counselman & Company, Appellant, v. Emanuel Reichart
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1897-10-22
Citations: 103 Iowa 430
Docket Number: 
Parties: Chas. Counselman & Company, Appellant, v. Emanuel Reichart.
Judges: 
Reporter: Iowa Reports
Volume: 103
Pages: 430–435

Head Matter:
Chas. Counselman & Company, Appellant, v. Emanuel Reichart.
3 Gambling Contract.: evidence. Defendant telegraphed plaintiff: “Buy five thousand Sept, oats below thirty-one. Draw on me for margins,” and by a subsequent telegram directed plaintiff to “sell September, and buy May.” Defendant failed to put up margins and the May oats were sold at a loss. Plaintiff paid the loss, and' sued to recover the same, but failed to disclose from whom he purchased, or to produce any memorandum of the transactions; while defendant denied that the purchases were actually made, and testified that in ordering such purchases he did not intend any delivery of the grain to him. Held, that a verdict for defendant was warranted.
1 Same. To render a contract in grain futures void as a mere speculation on the chances of rise and fall of the market, with no intention to deliver the grain, both parties thereto must have contemplated that no delivery would be made; and the contract between commission merchants and a customer is not void on that ground, although the customer intended, only, to speculate on margins without a delivery of the grain, if the commission merchants intended an actual delivery.
i2 Same: Intent. A party to a contract in grain futures may attack it on the ground that it is a mere gambling contract and may testify as to his intention with reference to the delivery of the grain when he made the purchase. Citing Pope v. Hanhe, 155 111. Sup. 617 (40 N. E Rep. 839); Grandell v. White, 184 Mass. 54 (41 N. E. Rep 204).
4 íresumptions. . The jury are warranted in drawing an inference unfavorable to the existence of the intention on the part of a commission merchant in purchasing “futures” grain for a eustomer, that there should be an actual delivery, from his failure to produce the paper and documents showing a purchase by him on the market, in response to the demand of the other party.
Appeal from Cass District Court. — Hon. A. B. Thornell, Judge.
Friday, October 22, 1897.
The plaintiff firm is engaged in the commission business in Chicago, 111. The defendant, in 1894, was engaged in the grain business at- Neola, Iowa, and shipped grain to the plaintiff in Chicago. This action is brought to recover a balance of five hundred and five dollars and forty-three cents on account. June 14,1894, the defendant, by telegram, directed plaintiff to buy for him five thousand bushels of September oats. On the thirty-first of August, 1894, defendant directed plaintiff to sell the oats, and to buy for him five thousand bushels of May oats. Plaintiff reported to defendant a loss on the September oats of six dollars and twenty-five cents, and charged a commission of six dollars and twenty-five cents, making an aggregate charge against defendant on that transaction, of twelve dollars and fifty cents. The purchase of the May oats was reported as made, and, after a neglect or refusal to put up margins by defendant, the grain was closed out January 25, 1895, with a loss, including commission, of three hundred dollars. The losses on the two oats transactions, including commissions, and a balance on account of grain shipped to Chicago, make up the aggregate of plaintiff’s claim. As to the balance of one hundred and ninety-two dollars and ninety-three cents, on account of grain shipped, there is no question, and defendant offered to confess judgment for the sum of two hundred and twenty dollars, 'being for that amount with interest. -The contention is as to the claims based on the two transactions in the purchase of oats. The defendant denies the purchase, and avers that the transactions-were illegal, as being gambling contracts, in that they were mem speculations in margins, with no intention to make, actual purchases or sales of grain. The issues were tried to a jury that returned a verdict for plaintiff for two hundred and seventeen dollars and six cents, being less than the offer of judgment. There was a judgment on the verdict, and the plaintiff appealed. — ■
Affirmed.
Be Laño & Meredith for appellants.
Swan & Bruce for appellee.

Opinion:
Granger, J.
The court instructed the jury that, inasmuch as it appeared from the evidence that plaintiff, as agent for defendant, made the purchase of the May oats, and because of defendant's failure to put up the margins the oats were sold at a loss by plaintiff, and as it is not claimed that plaintiff, in so doing, exceeded its authority, and as plaintiff paid the loss, it is entitled to recover the amount of the lo.ss, with interest, "unless it further appears from the evidence that the purchase of said oats by plaintiff was, in contemplation of law, a gambling contract." There are some questions argued quite extensively, about which there is no dispute, and they may be set at rest without extended notice. Contracts for grain, where the intention is to merely speculate on the chances of a rise or fall of the market, and no delivery is intended, are gambling contracts, and void. It is not enough, to render a contract void, that the buyer intends it as a gambling contract, unless the seller participates in that intention; that is, if, in'the case at bar, the defendant, in ordering the purchase of the oats, only intended a speculation upon margins, without a delivery of grain, and the plaintiff purchased the grain for actual delivery, it would not be a gambling contract. To make the contract void as between these parties, the intention to make a gambling contract must have been mutual. McClain's Code, section 5349; Acts Twentieth General Assembly, chapter 93, section 1. The court sa instructed the jury. It also said in its instructions: "In deciding what the intention of said parties was in making said contracts, you have the right to consider, not only the direct evidence of the parties as to their intentions, but also, as far as shown by the evidence, how the contract or contracts were made, and their terms, who was the purchaser and seller, how the losses on said contracts were in fact settled, whether any grain was in fact handled or delivered in the settlement thereof, and every other fact and circumstance shown by the evidence, and throwing light thereon." The court permitted the defendant to testify as to his intentions in ordering the purchase of the oats, whether there was to' be a delivery; and it is thought the court erred in so' doing. We think not. It was a fact directly involved, and the question we are considering was ruled in National Bank v. Packing Co., 66 Iowa, 41. In that case, speaking of the intention oE the purchaser in such a transaction, it is said: "This essential element in the case the defendant was bound to establish, and there was no better evidence by which to show it than by proving the intention of the very party who made the contract in behalf of the defendant." In Pope v. Hanke, 155 Ill. Sup. 617 (40 N. E. Rep. 839), speaking of how the mutual intention may be established, it is said: "This intention may be established, not merely by the .assertion' of the parties, but by all the attending circumstances of the transactions." See, also, Crandell v. White, 164 Mass. 54 (41 N. E. Rep. 204). It is said that the uncommunieated motive or intention of the defendant should not 'have been admitted in evidence, because it did not enter into, nor become a part of, the contract between the plaintiff and the defendant. If both had that intention, it made a meeting of minds upon that fact, and that is what made the contract. It is not to be fairly said that such transactions are carried on without an understanding about so important a f actor of the transaction as whether the grain is to be delivered or not. Defendant's iiitention would not control, but it was essential to be known in connection with the intention's of the plaintiff. When both are known, they fix the fact of whether or not there was a mutual intention that the grain was not to be delivered. There was no purpose to make defendant's uncommunicated intentions a part of the contract, except in so far as they were understood, and, together with plaintiff's intentions, completed an understanding.
Much importance is attached to the fact by appellant that the only communications by the parties were by letter and telegrams, which are in evidence, and they make no disclosure of a purpose not to deliver the oats. The directions to buy were: "Buy five thousand Sept, oats below thirty-one. Draw on me for margins." "Sell September, and buy May." It was upon these telegrams that the purchases and sale were to be made. They are evidence on their face that the parties understood what was not expr essed. Neither telegram purports to express all that is intended to be understood. In several particulars they are incomplete as to details essential to a complete contract. In view of the generally known fact that business on the board of trade is conducted on a plan of non-delivery of produce, but as a speculation in margins or differences, it may well be said that the fact of whether there was to be a delivery of the grain in question was one of understanding between the parties, independent of the orders for purchases. This understanding, under the issues, was a matter to be established by proof. Each •party testified to the intention as to- delivery. Other evidence was submitted, and the jury may have found that no purchase was made by plaintiffs, or, if made, that it was with no intention of a delivery. Plaintiffs, if they made the purchases in good faith, knew of whom they made them, and the particulars; so that they could have disclosed the facts. They were asked to make exhibits of papers and documents showing the transactions, and they said the written memoranda of the purchases would be furnished by the bookkeepers. None was so furnished. A fair inference is that none could be furnished favorable to plaintiffs. In the face of a denial that such purchases were made, and a charge that the transactions were illegal, and with exclusive knowledge of the particular facts', and how they could be disclosed,-the plaintiffs failed to give light as to the facts, where it especially devolved on them to do so because of such exclusive.knowledge. We think the verdict lias support in the evidence, and the judgment will stand affirmed.