Court Opinion

ID: 6964123
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:50:45.937768+00
Date Added: 2024-06-11T16:08:32.541153
License: Public Domain

Mr. Justice Wilkin delivered the opinion of the Court: The sufficiency of the fifth and seventh counts depends entirely upon the construction to be placed upon the instrument therein declared on; the eighth, whether or not that instrument can be aided by averment and parol proof. The question upon which doubt is expressed in the opinion of the Appellate Court, viz., whether or not the paper set out in the several counts should be regarded as an agreement, or a mere proposition for a sale, is eliminated from the case as here presented, counsel for appellants admitting the correctness of the decision below in that regard, contending, however, that although a contract between the parties, of the date it bears, it is not an option contract, but a contract of purchase and sale of the shares of stock specified. It is said to be “an executory contract of sale, the time of its performance being of the essence thereof, the non-performance of which would authorize the vendor either to rescind the contract, or, standing upon it, sue for damages for the breach.” In support of this proposition many authorities are cited, and among them Andrews v. Pontue, 24 Wend. 289, Ives v. Hazard, 4 R. I. 27, Spalding v. Hallenbeck, 30 Barb. 299, Barton v. McLean, 5 Hill, 256, and Wain v. Walters, 5 East, 10, all of which are referred to in the opinion of the Appellate Court as holding the instrument in question, though executed by only one of the parties, t¡y.t delivered to and accepted by the other, a contract, and not a mere offer. A careful examination of these and other like cases cited will show, that while they sustain the position in support of which they were cited by the Appellate Court, they throw no light whatever upon the question as to whether that contract should be construed to be a contract for an option, or one of sale and purchase. Looking at the instrument itself, it seems impossible to give it the construction contended for by appellants, without violating plain and well settled rules of law applicable to all instruments in writing. It must first be determined that there is some uncertainty as to the meaning of the contract, otherwise there is no room for construction. But if construction can be resorted to, then all parts of the instrument must be construed 'in such a way as to give force and validity to all of them, and to all of the language used, where that is possible; also, to give to the words their common and generally accepted meaning. Here, however, the construction contended for ig-ñores the first clause of the instrument entirely, and gives to the word “if, ” in the last sentence, an entirely different meaning from that ordinarily attached to it, thus making the contract in effect read, “I hereby agree to sell to George Schneider, Walter L. Peek and Ferdinand W. Peek 1786 shares of the capital stock of the North Chicago City Bailway stock, at $600 per share, to be taken (or they to take the same) on or before the 15th of December, 1885.” So read, it would undoubtedly, under the authorities cited, be an absolute contract of sale of the shares of stock. But, reading the entire instrument, the question arises, if appellee in fact meant by the language, “I hereby agree to sell,” that he then and there did sell the shares of stock, and if appellants, by accepting the instrument, thereby meant that they had then and there bought the same, where was the necessity for saying, “in consideration of one dollar,” etc., “I hereby agree to sell?” Why not have said, “I have this day sold, ” or, as was said in the Hazard case, supra, “I agree to sell,” etc., “at * * * $15,000 ?” And if the parties did intend, by the last clause, to make time of the essence of the contract, why say, “if taken,” instead of using words showing a mutual agreement to take within a time limited ? The plain, unambiguous meaning of the contract (treating it as such) is, that appellants paid appellee a valuable consideration for the refusal or privilege to buy 1786 shares of stock of the North Chicago City Bailway Company, at $600 per share, at any time on or before the 15th of December, 1885, —a contract heretofore of frequent occurrence in commercial transactions, perfectly legal and enforceable at common law. In the absence of section 130, no one, it seems to us, would hesitate to pronounce this a contract to give to appellants the option to buy railroad stock at a future time. The argument in support of the eighth amended count admits that such is its effect, on its face; but it is insisted it is competent to vary its terms by allegation and proof that no consideration was in fact paid by appellants, or received by appellee, for the agreement to sell, and thus show the transaction a mere offer on the part of appellee, without consideration, which became an agreement only upon the acceptance and offer to perform on the part of appellants. The- general rule excluding parol evidence offered for the purpose of contradicting or varying the terms of a written instrument, is not questioned. The validity of this count is based exclusively on the provisions of section 9, chapter 98, of the Revised Statutes, entitled “Negotiable Instruments.” That section provides that a defendant may plead want or failure of consideration to a suit on a note or other contract, for the purpose of defeating a recovery in whole or in part, when the same was given without consideration, or when the consideration has failed. No authority is found in this section for permitting a plaintiff to prove a want of consideration, for the purpose of varying the terms of his contract. This proposition is too clear for argument. The parties must be held bound by the contract as they wrote it. 1 Greenleaf on Evidence, sec. 275. The right to vary or explain the consideration expressed in a written contract, or to prove that it was never paid, does not authorize the introduction of such testimony to affect the terms or validity of the contract. O’Brien v. Palmer, 49 Ill. 72; Morris v. Tillson, 81 id. 607. Still it is most earnestly insisted that notwithstanding the instrument sued on is, on its face, an option contract, and although it can not be changed into a mere offer by parol proof, yet it is not violative of section 130, by proper construction of that section. To maintain this position, it is insisted that by the prohibition of the statute, the legislature only intended to make unlawful such option contracts as contemplate a settlement by differences; that to come within the inhibition of section 130 the contract must be a gambling contract; that the option here meant is the option or right to elect whether to accept or deliver the stock or other commodity, or pay the difference between the contract price and the market price when the same should be accepted or delivered under the terms of the agreement. The language of the section, so far as applicable to this question, is as follows: “Whoever contracts to have or give to himself or another the option to sell or buy, at a future time, any grain or other commodity, stock of any railroad or other company, * * * shall be fined, * * * and all contracts made in violation of this section shall be considered gambling contracts, and shall be void.” The first question which suggests itself in considering the construction of this statute contended for by appellants is, if their construction is the true one, why was the statute enacted at all? Nothing is more clearly and firmly established by the common law, than that all gambling contracts are void. It is equally well settled, that all contracts for the purchase and sale of property with the understanding or agreement of the parties (whether that agreement is expressed on the face of the contract or exists by secret understanding) that the property is not to be delivered or accepted, but the contract satisfied by an adjustment of the difference between the contract and market prices, are mere wagers, or gambling contracts, and void. (3 Am. and Eng. Ency. of Law, p. 873, and cases cited in note 1; Cothran v. Ellis et al. 125 Ill. 496.) Long prior to the passage of this statute it had been repeatedly so decided by this court. Therefore the section, as construed by counsel for appellants, serves no purpose whatever. If their construction is correct, when the legislature declared that all contracts made in violation of section 130 should be considered gambling contracts, and void, it only condemned contracts which were already gambling contracts, and void. Certainly more than this was intended. It must be presumed that the object of the legislature was to declare that unlawful which theretofore had been lawful. Prior to this act it was lawful to contract to have or give an option to sell or buy, at a future time, grain or other commodity. Such contracts were neither void nor voidable at the 'common law. The statute makes them unlawful and void m Illinois. The case of Biglow v. Benedict, 70 N. Y. 202, cited by counsel for appellants, in which the contract sued on is admitted to be substantially the same as the one before us, well illustrates the effect of our statute upon option contracts of this character. In that case the language of the contract was as follows: “Know all men by these presents, that I, Charles B. Benedict, for and in consideration of the sum of $250, good and lawful money of the United States, to me in hand paid, the receipt of which is acknowledged, do agree to receive from W. C. Biglow, at any time within six months from date he may choose to deliver the same, $2500 in gold coin of the United States, for which I agree to pay to the said Biglow ninety-five per cent premium on the dollar, or at the rate of $195 in good current funds for each and every $100 of coin. The said Biglow does not contract to deliver the coin, but pays the $250 for the privilege of delivering or- not, at his option.” In the absence of statutory provision on the subject of option contracts, the New York Court of Appeals held the Biglow contract valid and binding on the parties. .We can perceive no good reason why it should not have done so. As we have before said, such contracts are valid at common law. But suppose the validity of that contract is tested by the foregoing section of our statute. Will it be seriously contended that a recovery could be had in this State ? If that contract is not in the teeth of section 130 of our Criminal Code, we are at a loss to perceive how one could be drafted that would be. But it is said this court is committed to the construction insisted upon, and in support of the statement, Wolcott et al. v. Heath, 78 Ill. 437, Pickering et al. v. Cease, 79 id. 330, Pearce v. Foote, 113 id. 228, and Tenney v. Foote, 95 id. 99, are cited. We have carefully re-examined each of these cases, and are unable to discover anything in them inconsistent with the view here expressed. The only ease in which it can be said that this court has given its approval to a definition of the word “option,” as used in the statute, is that of Tenney v. Foote, supra. In that case a written opinion, rendered by the late Judge McAllister on the trial in the circuit court of Cook county, was, on appeal to the Appellate Court for the First District, adopted as the opinion of the Appellate Court, and on a further appeal to this court, the same opinion was approved. In that opinion Judge McAllister quotes the definition of the word “option,” as used in the stock exchange, from Webster’s Dictionary, (ed. of 1872, p. 917,) as follows: “A stipulation; privilege to a party, in a time contract, of demanding its fulfillment on any day within the specified time.” And the Judge proceeds to say: “In practice, on the stock exchange it was often the intention of the parties that no stock should be delivered, hut the transaction settled upon differences. These became common, and the English statute was aimed at its repression, because it was, in effect, gambling. Our statute is directed against the same evil, and extends to transactions in grain and other commodities as well as stock, so that the word ‘option,’ as used in the statute here, taken with the context, means a mere choice, right or privilege of selling or buying, and it is the contract for such choice, right or privilege of selling or buying at a future time any commodity, the statute was intended to prohibit, as contradistinguished from an actual sale or purchase with the intention of delivering and accepting the commodity specified.” The logic of this opinion is certainly against the position sought to he maintained. White v. Barber, 123 U. S. 392, and Osgood v. Bauden, 75 Iowa, 550, are also authorities against the construction contended for. See, also, Webster v. Sturges, 7 Bradw. 560. We agree fully with counsel for appellants as to the object of the statute. It manifestly is to break down the pernicious practice of gambling on the market prices of grain and other commodities. How is this object sought to be accomplished ? There was and is' nothing illegal or even immoral in an option contract, within itself. The evil aimed at, nevertheless, grew out of such contracts. As said by Judge McAllister, in the opinion referred to in Tenney v. Foote, “in practice it was often the intention of the parties that no stock should be delivered, but the transaction settled upon differences;’,’ and by Judge Andrews, in the Biglow case, supra, “contracts of this kind may be mere disguises for gambling.” In this case the parties might have intended, if appellants called for the stock, to settle on differences. The contract could have been made the disguise for gambling on the future price of stock of the North Chicago City Railway. The question is not, did they so intend, but, did not the legislature regard such contracts as lying at the root of the evil aimed at, and strike at them. The treatment is heroic, but the evil was most malignant. We can neither read out of the contract language which the parties put in it, nor into the statute expressions which the legislature, for a manifest purpose, omitted. The contract, tested by the statute, is void, and therefore each count of the declaration obnoxious to the demurrer interposed. The judgment must be affirmed. Judgment affirmed.