Court Opinion

ID: 6967360
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:56:16.583572+00
Date Added: 2024-06-11T16:08:40.265789
License: Public Domain

Mr. Chief Justice Magruder delivered the opinion of the court: According to the contention of the appellants in this case, they purchased for appellee, on December 5, 1892, one hundred shares of the Chicago Gas Company’s stock at §94.00 per share, making, with commissions, §9412.50, and, on January 17, 1893, purchased for her one hundred shares of the Chicago, Milwaukee and St. Paul Railway Company’s stock at the cost, including commissions, of §8087.50, making-the total amount of the purchases of the two hundred shares of stock §17,500.00. On July 27, 1893, appellants claim that, through a firm in New York City, they sold for appellee the one hundred shares of railway stock for §4850.00 and the one hundred shares of gas company’s stock at §4800.00, making a total of §9650.00. The total amount of the loss, as represented by the difference between the purchases and the sales, is §7850.00. The latter amount is claimed by appellants to be due from appellee, and, to reimburse themselves, they claim the right to retain the securities delivered by her to them as margins. The main question presented by the record is, whether or not the agreement between appellants and appellee with reference to the purchase of said two hundred shares of stock was a gambling contract. The master, to whom the cause was referred by the circuit court, and the circuit court and the Appellate Court have found the transaction to be a gambling transaction. It is well settled, that, where a contract for the delivery and sale of stocks or other property in the future is not made with the intention that such stocks or property shall be received or delivered but with the understanding, either express or implied, that the transaction shall be settled by the payment of the difference between the contract price and the market price at the time fixed, or at some future time, such a contract is a mere wager or gambling contract, and is void. (Schneider v. Turner, 130 Ill. 28; Pope v. Hanke, 155 id. 617, and cases there cited). “All contracts made between parties, who have no intention of receiving and delivering the property, but intend merely to settle accounts by the payment of the differences, are void and will not be enforced.” (8 Am. & Eng. Ency. of Law, 1005-1010). In order to invalidate the contract, it must appear that neither party has the intention to deliver the property, and that both parties have the intention of settling the differences only. But the intention of the parties in this regard may be established, not merely by their assertions, but by all the attending circumstances of the transaction. The question of intention is a question for the jury or for the court, to be determined by a consideration of all the evidence. (Pope v. Hanke, supra). The intention of the parties in such cases may be determined from the nature of the transaction, and from the manner and method of carrying on the business. (Irwin v. Milliar, 110 U. S. 507; Gregory v. Wendel, 39 Mich. 327; 8 Am. & Eng. Ency. of Law, 1010; North v. Phillips, 89 Pa. St. 250; Ruchizky v. DeHaven, 97 id. 202; Beveridge v. Hewitt, 8 Ill. App. 467; Griswold, v. Gregg, 24 id. 384; Carroll v. Holmes, id. 453; Kennedy v. Stout, 26 id. 133; Miles v. Andrews, 40 id. 155; Pearce v. Foote, 113 Ill. 228; Brand v. Henderson, 107 id. 141; Tenney v. Foote, 95 id. 99; Cothran v. Ellis, 125 id. 496). An examination of the authorities above referred to will show, that the intention of the parties may be determined from a variety of circumstances. Among these circumstances, besides the mode of dealing between the parties, is the pecuniary ability of the party purchasing. If the purchases of a party, as ordered through a broker, are larger in amount than he is able to pay for, it is a strong circumstance indicating that there was no intention of receiving the property, but rather an intention to settle the difference between the market price and the contract price. Such intention may be also inferred where the party, making the purchase, never calls upon the party, ordering the purchase, for the purchase money, but only for margins. It makes no difference, whether the real intention is formally expressed in words or not, if the facts and circumstances in proof show, that it was the real understanding, that there should be no actual purchase and no delivery or acceptance of the property involved in the contract, but merely an adjustment of damages upon differences. After a careful examination of the evidence in this record, we are of the opinion that the finding of the lower courts was justified by the testimony. The appellee was a woman who had little or no experience in business. She had known the appellants for many years. One of the appellants had lived in her family, and both of them had been friends of herself and her family. She was a woman of very limited means. When she first began to operate through the appellants, she had only about $3600.00 inherited from her husband. Shortly thereafter she inherited a further sum of about $4000.00 from her father’s estate, but at no time did her total capital exceed about $7500.00. From her relations to the appellants and from all the circumstances disclosed by the proof, it is impossible to believe that they were not well acquainted with the limited extent of her means. A woman, who was not in active business and had only $7500.00 in money, could not have been expected to take and pay for stocks amounting in value to $17,500.00. Appellants never made any inquiry of her as to her financial ability. They never tendered to her at any time the stocks, which they claim to have purchased for her, nor asked her for any money to pay the purchase price of such stocks. She swears that she did not understand that the stocks proposed to be purchased were to be paid for by her; that appellants said nothing to her about delivering the stocks to -her, and never offered to deliver them to her, and never told her how long the stocks would be carried. Before the purchase of the two hundred shares of stock here in controversy, appellee had had four other transactions with appellants. In January, 1892, they had purchased for her one hundred shares of the West Chicago Street Railroad Company’s stock of the value of $13,243.75, and shortly thereafter had sold the same, receiving a profit of $201.01, which they paid to her. In July, 1892, they had a second transaction with her in the same kind of stock, on which she received as profit from them about $371.84. In August, 1892, she had a third like transaction with the appellants in the same kind of stock, on which she received as a profit from them $571.12. In September, 1892, she had a fourth like transaction with them in the same kind of stock, on which she received as a profit from them $39.74. In all of these transactions the shares were bought in each case at a higher price than $13,000.00, and in the last transaction the shares were bought at $205.00 a share, making with commissions $20,535.00. In making purchases for amounts so far beyond the pecuniary means of appellee, it .is impossible that appellants should not have known her inability to pay for the stocks so purchased for her, and therefore must have intended merely to settle the accounts by the payment of the differences, they to pay the profits, if there were any, to her, and she to pay the losses, if there were any, to them. She swears, that she never intended to receive the stock so purchased by her, and that she was told by one of the defendants that he could make some money for her by speculating in such stocks, or by “scalping,” as he expressed it. The appellants deny, that they made use of any such word as “scalping,” but they evidently did not expect that there would be an actual delivery of- the stocks by them to appellee. It is claimed by appellants, that they made actual purchases of the stocks. They were represented in New York by brokers by the name of Fowler & Co. They telegraphed to New York to Fowler & Co. to purchase the stocks. The stocks were never delivered to appellants, who lived in Chicago. If the stocks were actually purchased, they remained in New York. Fowler & Co. did not make the purchases for the account of the appellee, nor did they know anything about appellee in the transaction. It is not entirely clear, that there was an actual delivery of the stock to Fowler & Co. The witness, who testifies to buying it, says: “It was understood to be paid for in full on delivery.” If the stock was in the possession of Fowler & Co., it would appear that it was pledged by them with some bank for the purpose of raising money, either to pay for such stock, or otherwise; at any rate, it is not clear that the stock could have at any time been obtained from New York by appellants, if they had desired to tender it to appellee. But whatever may be the fact as to the nature of the transaction between the appellants and those representing them in New York, so far as the transactions now involved are concerned appellants and appellee were principals. The contract between the appellee and the appellants is the only contract, which can be regarded in the decision of this case. It matters not, whether Jamieson & Co. actually bought the stock in question or not. As was said in Pearce v. Foote, 113 Ill. 228: “There is and can be no such thing as agency in the perpetration of crime or misdemeanor, or, indeed, doing an unlawful act. All persons actively participating are principals.” Therefore, the suggestion that appellants merely acted as the agents for appellee in these unlawful transactions, may be rejected at once as having nothing in its support. (Pearce v. Foote, supra). The question here in issue is with reference to the dealing and understanding between the appellants and appellee, and not in regard to the knowledge and understanding of parties in New York. If the understanding between appellants and appellee was that the deal as between themselves should be settled upon differences, and that there should be no delivery of the stocks, then the contracts as between them were gambling contracts, and within the statute. “The doctrine of agency has no application to the matter, so far as the question of the violation of this penal statute is concerned.” (Carroll v. Holmes, supra). The further question-arises as to the jurisdiction of a court of chancery to entertain the present bill. Section 132 of the Criminal Code provides, that: “Any person who shall, at any time, * * * by any wager or bet upon any * * * unknown or contingent event whatever, lose to any person so * * * betting, any sum of money or other valuable thing, amounting in the whole to the sum of §10.00, and shall pay or deliver the same or any part thereof, the person so losing and paying or delivering the same, shall be at liberty to sue for and recover the money, goods, or other valuable thing, so lost and paid or delivered, or any part thereof, or the full value of the same, by action of debt, replevin, assumpsit or trover, or proceeding in chancery, from the winner thereof, with costs, in any court of competent jurisdiction.” In Kennedy v. Stout, supra, in commenting upon said section 132, it was said: “If a person enter into a contract with his broker or commission man, which is a mere gambling contract, and pass to him money or property to cover losses sustained thereby, then such broker or commission man is a ‘winner,’ within the meaning of section 132 of the Criminal Code; and such person is given a remedy by such section of the statute against such broker or commission man for the recovery of such money or property. What the nature of the contract is that the broker may have entered into with some third party on the board of trade or elsewhere, is wholly immaterial or merely a circumstance of corroboration.” The same doctrine was announced by this court in Pearce v. Foote, supra. (See, also, Carroll v. Holmes, 24 Ill. App. 453, and Griswold v. Gregg, id. 384). In Petillon v. Hittle, 90 Ill. 420, it was held, that a bet on the result of an election, and the agreement growing out of the same for the stakeholder to pay the money deposited with him to the winner, were illegal and void, and that courts of chancery will assume jurisdiction to restrain the enforcement of unexecuted contracts founded on wagers or bets prohibited by law. In that case it was said, that the section of the statute, which provides that chancery may take jurisdiction when the loser sues to recover back money or property lost and paid to the winner, relates to money, property, etc., lost and paid on gaming, and not to prevent unexecuted contracts from being enforced. Here, as appellants must be regarded as the winners of appellee’s securities deposited with them, section 132 is applicable so far as it provides a remedy in chancery. The property, here sought to be recovered, has already been lost and paid on a gambling transaction. (See, also, Chapin v. Dake, 57 Ill. 295; Davidson v. Gibbons, 5 Bibb. 200). We are of opinion that equity has jurisdiction to entertain the present bill. The judgment of the Appellate Court and the decree of the circuit court are affirmed. Judgment affirmed.