Court Opinion

ID: 7002483
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:44:33.289621+00
Date Added: 2024-06-11T16:09:57.858173
License: Public Domain

Hr. Justice Adams delivered the opinion of the court. The sole defense set up in the answers is, that appellee is engaged in conducting a bucket-shop; in other words, that the appellee’s business is such as is prohibited by “ An act to suppress bucket-shops and gambling in stocks, bonds, petroleum, cotton, grain, provisions and other produce,” in force July 1, 1887. 1 S. & C. Eev. Stat. 1896, p. 1304 (laws 1887, 96). Section 1 of the act provides : “ That it shall be unlawful for any corporation, association, copartnership or person, to keep or cause to bé kept within this State any bucket-shop, office, store or other place wherein is conducted or permitted the pretended buying or selling of the shares of stocks or bonds of any corporation, or petroleum, cotton, grain, provisions or other produce, either on margins or otherwise, without any intention of receiving and paying for the property so bought, or of delivering the property so sold; or wherein is conducted or permitted the pretended buying or selling of such property or margins; or when the party buying any of such property, or offering to buy the same, does not intend actually to receive the same if purchased, or to deliver the same if sold; and the keeping of all such places is hereby prohibited,” etc. Section 2 of the act is as follows : “ It shall not be necessary, in order to commit the offense defined in section 1 of this act, that both the buyer and the seller shall agree to do any of the acts therein prohibited, but the said person thus pretending or offering to sell, or thus pretending or offering to buy, whether the offer to sell or buy is accepted or not, and any corporation, association, copartnership or person who shall communicate, receive, exhibit or display, in any manner, any such offer to so buy or sell, or any statements or quotations of the prices of any such property, with a view to any such transaction as aforesaid, shall be deemed an accessory, and, upon conviction thereof, shall be fined and punished the same as the principal and as provided in section 1 of this act.” The Supreme Court, in Soby v. The People, 134 Ill. 66, has, in a very careful opinion, stated the object of the act, and what would be violation of it. The.court say: “ It is manifest that the object of the statute was to suppress and prevent gambling in grain and other commodities.” Ib. 71. Also: “ A consideration of the act will, as before indicated, show that it is directed against the keeping of any office or place, etc., first, wherein is conducted or permitted the pretended buying or selling of grain or other produce, on margins or otherwise, without any intention of receiving the property bought or delivering it if sold. Under this clause of the first section, the offense consists in keeping the place, etc., where such buying or selling is conducted or permitted. That plaintiff in error kept the office or place is conceded, and that buying and selling upon margins, without any intention on the part of the customer to receive the thing bought or to deliver the thing sold, was permitted in such office or place so kept by the plaintiff in error is also substantially conceded, and if it were not, is abundantly proved. Under this provision of the act, the keeper of such office or place, etc., can not shield himself from criminal responsibility behind the fact that he made no inquiry of his customers. The statute is preventive in its character, and is aimed at the keeping of places where gambling in grain is permitted. The keeper must know that the transaction is not gambling, or, in good faith, have just reason to believe that the buying or selling is not within the intended prohibition of the statute. But if this were not so, there is abundant evidence in this record to show that the plaintiff in error knew that his customers did not contemplate an actual delivery of the commodity bought or sold. Again, the second clause makes it an offense to keep a place, etc., wherein is conducted or permitted the pretended buying or selling of such produce on margins. It is scarcely contended that the customer did not, in fact, intend only to purchase options, and to make money in the rise and fall of the market, without any expectation of receiving or delivering grain. In other words, it is too plain for argument,. that the buying and selling of grain was a mere pretense, at least so far as the customer was concerned. Again, the third clause creates the offense where the party buying such produce, or offering to buy the same, does not intend actually to receive the same if purchased, or to deliver the' same if sold. Here the proof establishes, beyond question, that purchases were made without any intention of receiving the commodity purchased. The onH object was to make money on the fluctuations of the market by the pretended purchase of the grain on margins.” The evidence in the case is very voluminous. The evidence for the appellants, on whom the court held the burden of proof rested, was mainly directed to proving that the appellee kept a bucket-shop within the meaning of the statute; that the dealing at appellee’s place of business was solely on the market quotations of the Chicago Board of Trade, and that it knowingly permitted the pretended buying and selling by its customers of grain, with reference to such market quotations, and without any intention of receiving the grain ostensibly bought, or delivering that ostensibly sold, their only intention being to make money by the rise or fall of the market, as the case might be.’ Appellee’s evidence was mainly directed to proving that a large part of the business of the Board of Trade of the city of Chicago was similar to that of appellee, namely, that grain was bought and sold on the exchange of the board on margins or stop-orders, without any intention to deliver the grain; and, incidentally, that there were some deliveries by and to appellee. Appellee does a very large business. It is the lessee of the following telegraph wires, which it uses in its business: From Chicago to Davenport, Iowa; Chicago to Galesburg; Chicago to Louisville, Ky.; Chicago to Milwaukee; Chicago to St. Louis, and another wire from Aurora to Geneva, Ill., and from Canton to Quincy; from Decatur to Sycamore: from Freeport to Gainesville; from Galesburg to Burlington, Iowa; from Green Bay, Wis., to Menominee, Mich.; from Indianapolis, Ind., to Cincinnati, Ohio; from Lafayette, Ind., to Crawfordsville; from Louisville to ¡Nashville, Tenn.; from Milwaukee, Wis., to Oshkosh; from Oshkosh to Green Bay; from Peoria, Ill., to Canton, Ill.; from Pontiac, Ill., to Fairbury, Ill.; from Rockford to Freeport, Ill.; from Springfield, Ill., to Decatur, Ill.; from Sycamore to Rockford, Ill. The wires that do not run to Chicago are part of the same system as the wires running to Chicago, and are connected with appellee’s place of business in Chicago. Appellee has correspondents in places outside of Chicago, who act as brokers, for commission in buying and selling grain, and who send their orders to appellee in Chicago; and the-evidence shows that appellee, although purporting to act as principal in the deals, shares in the commission of its correspondents. Elmer Southard, a clerk of appellee, who had, at the time of testifying, been in its employ two years, and whose business it was to keep books in which were recorded the trades made with appellee, testified that he took from the telegram conveying an order received from a correspondent, the number of the trade, the name of the customer, the quantity, the kind of commodity dealt in, and the price, which, when the telegram reached the witness, was marked on it in blue pencil, and he entered in his book the number of the trade, the price, and the price to which the margin would carry it, which was practically all. Illustrating, the witness testified : u When, for instance, a telegram came opening a trade, if it is bought at seventy-five, we will know it is margined to seventy-four and one-eighth; that is the marginal price; it is generally one cent to all our customers.” The evidence shows that the deal is closed in such case as that stated, at seventy-four and one-eighth instead of seventy-four, because one-eighth is reserved from the margin 'as the commission of the correspondent or broker who sends the order. This witness also testified, that if an order was to buy 1,000 wheat at seventy-five, with a stop at seventy-four, if the market should close one day at seventy-four and three-fourths and open the next day at seventy-three, the trade would be closed at seventy-four. Frank C. Williams, a clerk of appellee, whose duties were the same as those of the witness Southard, testified substantially the same as that witness. W. E. Fildes testified that he had been a correspondent of appellee, at different places, for five years, the last place' being Bloomington, Illinois, where he had been fourteen months, ending in May next, before his testimony was given. He testified substantially as follows: “ At my office in Bloomington there was a telegraph instrument, a blackboard and chairs and a desk or two. That office was upon one of the private wires running to the office of the complainant at Chicago, under an arrangement between myself and the complainant. Between the hours of nine in the morning and two in the afternoon the market quotations of the Chicago Board of Trade and the Hew York Stock Exchange came over that wire and were posted on the blackboard when they came in. There were persons sitting on the chairs where they could see the blackboard. These people would give orders to buy and sell grain or stocks, as the case might be; in stocks from ten shares upward and in grain from 1,000 bushels upward. These customers in placing orders made deposits of money —nothing less than one cent and upward on grain and stocks ■ — one cent a bushel — that was usually the first amount of money that was paid as margins, which would be $10 on 1,000 bushels of grain and $10 on ten shares of stock. I would then send the order to the complainant over this wire and the money would follow later by what is called a bank wire. All orders would be telegraphed in over this wire. The orders would read, buy or sell the number of thousand bushels and the price, if stipulated, and otherwise it would be supposed to be the market price, and margin 1, or some of them would read margin 2. This would mean that that was all the money that was margined on the transactions, or supposed to be lost. On 1,000 bushels of grain M. 1, would mean $10, and M. 2 would mean' $20, and on ten shares of stocks M. 1 would be $10. When this order was sent in to buy or sell, they would repeat back the message, whether it was margin 1 or margin 2. That would indicate that that was all the money supposed to be lost or deposited on that transaction. If the telegram read, ‘ buy 1,000 bushels, seventy-five, margin 1,’ it would indicate that it was supposed to be closed or exhausted at seventy-four and one-eighth. The commission of one-eighth added to the purchase price would make seventy-five and one-eighth net, and margined one cent per bushel would reduce the price down to seventy-four and one-eighth. That is also true of stocks. The complainants got their proportion of the commission of one-eighth and I got mine. Their portion in grain is twenty-five cents on a thousand; m37 portion would be $1. The commission on stocks would be one-quarter, or $2.25 for ten shares, of which the-complainant would retain sixty-two and one-half cents. In the course of business between me and the complainant, if an order of that kind had been sent saying, ‘ buy 1,000 bushels of wheat, 75, margin 1,’ and if the market declined to seventy-four and one-eighth, the man would lose $10. The loss on the transaction would be $10, and there would be no further telegrams between me and the complainant, because it was generally supposed when a man put up $10 and margined at one cent, he was watching the black-board, and could see when the market declined one cent a bushel, and take it for granted, so far as I know, that he was out of the market, and I make no further report to my customer about it, nor the complainant to me by wire. I would receive a statement bv mail. This would show the price at which' this transaction had gone out of the market or exhausted, whatever 37ou -wish to term it. The entire margin of $10 would be sent in by draft, or by telegraphic communication through the bank, and I would settle the difference with my customer, if there was anything coming to him; that was the end of it. After I gave an order to buy 1,000 at a given price, and mention margin 1 in the telegram, and the market went down below seventy-four and one-'eighth, I would give no further order in the matter. That is the regular course of the business.” The witness further testified that in case a stop-order was put in at seventy-four, and the market closed at seventy-four and one-fourth one day. and opened the next at seventy-three and one-half, the trade would be stopped at the price mentioned in the stop-order, though the market never was at that price; also, that he, Avitness, never received nor delivered a 113' grain nor handled any Avarehouse receipts, nor suav any, in any of his transactions with appellee. On cross-examination this witness testified that he placed trades only with appellee, five or ten per day; that he might just as well have taken the trades himself so far as delivery was concerned; that he could not make delivery, not having the necessary capital to do so, and that his customers knew that both he and appellee ran bucket-shops; that such was the general opinion. Other witnesses testified to having dealt in futures with appellee, or margins, and with reference to the market quotations, without any intention of receiving or delivering the grain bought or sold, and with the intention of settling on the differences in the market quotations. The evidence shows clearly that the main part of appellee’s business was dealing in futures on margins, without any intention of delivering the grain sold or receiving that purchased by it, and that it kept a bucket-shop, within the meaning of the statute, and used the market quotations in its bucket-shop business. Appellee’s counsel, in their argument, admit that “ actual deliveries and receipts of commodities were not a large percentage of the business transacted,” and this admission is fully sustained by the evidence. It appears that there were some deliveries of grain, but such were exceptional and insignificant in comparison with the bulk of appellee’s business. It also appears from the evidence that appellee sent out delivery notices, and, in some cases, required persons to sign a contract to receive, but when the person receiving such notice, or signing such contract, objected to delivery, he had no difficulty in settling his trade with appellee by paying or receiving, as the case might be, the difference between the price at which, the grain was bought or sold, and the price at which the trade was closed by stop-order or exhaust of margin. The requiring a party who purchased or sold to sign a contract to accept or make delivery is an unusual circumstance, and not at all necessary in a T>ona fide transaction, the law in such case being that the party selling is bound to deliver and the party purchasing is bound to accept delivery. Therefore, the purpose of such a contract must have been something other than the securing of a legal right. Stockton, witness for defendant, testified that McHie, appellee’s president, told him that the trades must be based on actual delivery, and that he, witness, would have to sign an agreement .to that effect, which he did; but that after he made the agreement^ although he sometimes made trades with appellee of 50,000 or 100,000 bushels of grain in a day, he never received from or delivered to appellee one bushel of grain, and never saw a warehouse receipt in any transaction he had with appellee. It also appears from the evidence that one of appellee’s rules was, that if one of jts correspondents sent an order by telegraph, the telegram should not contain a stop-order, but if a stop-order were intended, it must be sent by a second telegram. This, we think, was evidently for the purpose of preventing the original order from apparently showing that the proposed deal was purely speculative. In Soby v. The People, supra, the court say : “ We are of opinion that it is no longer possible in this State, under any shift or device, however specious, to keep an office or other place where parties may, under the pretense of buying or selling grain or other produce, engage in speculation in futures, and gamble upon the rise and fall of the market,” etc. The court ruled appellee to produce telegram received in its business since July 1,1901-, which it declined to do on the claim of constitutional privilege, which claim was allowed. The witness Sanderson, clerk of appellee, testifies that he had, as such clerk, recorded on certain sheets trades made with appellee, and appellants moved for a rule on appellee to produce the sheets, which motion appellee resisted on the same claim of privilege, and the claim was allowed.. A number of the witnesses, some of them officers of appellee, refused to answer questions relevant to the issues, on the like claim of privilege. When a party refuses to answer relevant questions, or to produce evidence in his possession, or subject to his control, the presumption is that, the testimony, if given, or the evidence, if produced, would be unfavorable to him. 1 Jones on Evidence, Section 17. Although such refusal, if based on the ground that the evidence might tend to criminate the party, could not be used against him in a criminal prosecution, we are inclined to the view that in a civil case the general rule, as above stated, is applicable. Evidence produced by appellee tending to prove that a large part of the transactions between members of the Board of Trade is on futures and purely speculative, and not different in kind from that done by appellee, is irrelevant. Appellee is seeking relief, not the Board of Trade nor any member of the board. It is certified by the learned judge who tried the cause, that “ it was not necessary to a final disposition of said cause, to determine whether or not the complainant kept a bucket-shop,” and that such was his view is evidenced by the decree, and also by his opinion, a copy of which is filed in the cause here. We are committed to the opposite view. Christie-Street Commission Co. v. Board of Trade et al., 94 Ill. App. 229. That was a case similar to the present, in which the appellant, complainant in the lower court, prayed an injunction to restrain the defendants from refusing to furnish the complainant with the market quotations, and the defense in that case, as in this, was that the complainant was keeping a bucket-shop, and wanted the market quotations for use in that business. In that case we said: “ But aside from any question of pleading, we are of opinion that when it appeared to the chancellor that the aid of. the court was sought to enable the complainant, appellant, to carry on an enterprise which was prohibited by the law, the chancellor could not do otherwise than deny the prayer. If it is not within the scope of chancery jurisdiction to punish or prevent crimes at the instance of private suitors, it is surely quite as far removed from the scope of equity to assist the law-breaker in his violation of the statute.” The injunction in. the present case not only enjoins the appellant from refusing to furnish to appellee the market quotations, but it enjoins the Board of Trade from enforcing the rule, Section 8, copied in the statement preceding this opinion. The temporary injunction enjoined the appellants from “prohibiting any person, firm or corporation, being a member of the Board of Trade, from doing business with the complainant, the same as they do with other persons.” The temporary injunction is made perpetual by the final decree. We are of opinion that the rule, enforcement of which is enjoined by the decree, does not infringe public policy or any rule of law, and that it is not unreasonable. Such being the case, it was error to enjoin its enforcement. In Board of Trade v. Riordan, 94 Ill. App. 298, we reversed a decree enjoining the Board of Trade from trying a member of the board charged with a violation of the rule in question, citing numerous decisions. The decree will be reversed.