128 Tenn. 550 | Tenn. | 1913
delivered the opinion of the Court.
Both of these cases were brought originally in the. chancery court' of Davidson county, and judgments were rendered in each against the defendants thereto; but the amount involved in the first case having fallen below the sum required to justify an appeal to this court, the appeal was prosecuted to the court of civil appeals, and the judgment was there affirmed. The case was then brought here by the writ of certiorari. The second case was appealed directly to this court from the chancery court. Both cases were tried in the chancery court on the ■ same evidence, so far as concerned the .vital points on which the controversy de-
Each case was brought to recover money alleged to have been paid the defendants in the prosecution of gambling transactions. There is no controversy about the sums expended, except as to one item in the Morgan Case. Upon this point we shall, further on, state our conclusions, and also' upon still another- point in that case, which we shall not now more specifically mention. The only real controversy is whether the transactions complained of were gambling transactions.
At the time the money was paid to them defendants held themselves out as brokers and .bankers doing business at No. 205 Third Avenue North, in the city of Nashville. Their place of business consisted of a room twenty-five by sixty feet. At one end was a blackboard, and in front of this board were twelve chair's for their customers. The defendants were the heads of the business, but they had in their employ one Frank W. Dillion, who was general manager, and also operator of'a private wire into the business place of the Board of Trade of the .City of Chicago. Defendants were members of this organization. As transactions were had on the floor of that Exchange, sales of wheat, corn, or other products dealt in there, the prices at which the sales were made, were reproduced on the blackboard, within a few seconds after the transactions occurred in Chicago. The prices on such
“IV. A. Members may act as brokers between other members only, except in making contracts between members of this association and authorized agents of transportation companies, vessel owners, railroad, insurance or banking companies in connection with the ordinary legitimate business of the latter, but in all cases the agent or broker of such person, firm or corporation, shall be held liable both for the acceptance of contracts by alleged principles and for the faithful execution of the same, under the rules of the association, by such principal. Provided that on C. I. F. contracts for grain for shipment to points outside Chicago, the broker so contracting may, if desired, give up to members for whose account such contracts have been made, the name of his principal, even though such principal be not a member of this association. Provided, however, that in such cases brokers shall be held liable both for the acceptance of such contracts and for their faithful performance under the rules of this association.
“B. Brokers shall be held personally liable on any transaction made by them until they have given the name of a principal acceptable to the other party to the transaction.
“C. A commission or brokerage must be paid on every transaction as prescribed in this rule.”
Pursuing this rule, the orders to Logan & Bryan referred to went forward in the name of defendants, as
Logan & Bryan,
Commission Merchants,
No. 2 Board of Trade.
Chicago, 12-21-1911.
E. C. & Ii. E. Morrow,
We have this day bought for your account:
All purchases and sales made by us for you are made in accordance with and subject to the rules, regulations and customs of the Board of Trade of the City of Chicago and the rules, regulations and requirements of its board of directors, and all amendments that may be made thereto.
Quan- Deliv- Ar-Price. tity. ery. tide. Of Whom Bought. King, Farnum & Co.
10 May W 98f McCarthey
10 98f Finley, Barrell & Co.
10 98§ King, Farnum & Co. Copenhagen
5 “ “ 98-1-King, Farnum & Co.
10 July W 93f Fay Squire
Logan & Bryan
Commission Merchants
No. 2 Board of Trade
Chicago, 12-27-1911.
E. C. & H. E. Morrow,
We have this day sold for your account:
All purchases and sales made by us for you are made in accordance with and subject to the rules, regulations and customs of the Board of Trade of the City of Chicago and the rules, regulations and requirements of its board of directors, and all amendments that may be made thereto.
Quan- Deliv- Ár- To Whom Sold, tity. ery. tide. Price.
Wing 10 May W 98f Bartlett
10 “ “ 99 Scott
But it is to be observed that these transactions were all' negotiated by Logan & Bryan, as brokers for E. C. & PI. E. Morrow, and the contracts when made were between the persons named in the confirmations as sellers or buyers, and the said E. C. & IP. -E. Morrow. The customers of E. C. & PI. E. Morrow were not known on the Board of Trade, and could not be under rule XLY. Nor were they known to Logan & Bryan. This was admitted in substance in Mr. Dillion’s testimony, wherein he said, referring to a deal or deals em
It is apparent, therefore, that no contracts were negotiated on the Board of Trade for the benefit of E.'C. & H. E. Morrow’s customers. The contracting parties were E. C. & H. E. Morrow to confer any legal or equitable right in these contracts on any person not a member of the Board of Trade, with certain exceptions mentioned in rule IV, which.do not apply to this case. An open attempt on their part to effect contracts on the floor of the Board of Trade for the benefits of Coles, or any other person not a member of the board would not have been recognized by the Board of Trade, and could not have been under rule XIY. An indirect attempt, by taking the contracts in their own names, could not be more successful.
The contracts, therefore, when taken, were not, in law, for the benefit of their customers, but their own contracts, and the testimony of E. C. & H. E. Morrow that their customers through them as agents bought or sold grain on the Chicago Board of Trade for future delivery, or otherwise, must go for naught.
It is true they attempted to put that face on their transaction when dealing with their customers. Although all of the deals as stated were made in their
New York Stock Exchange.
Chicago Board of Trade.
New York Cotton Exchange.
- New York Coffee Exchange.
St. Louis Merchants Exchange.
E. C. & H. E. Morrow, Brokers,
205 Third Avenue North, Members
New York Cotton Exchange, Chicago Board of Trade.
Nashville, Tenn., Dec. 21, 1911.
I. G-. Coles,
Nash.
We have this day bought for your account:
All purchases and sales made by us for you are made in accordance with and subject to the rules, regulations and customs of the Board of Trade of the City of Chicago and the rules, regulations and requirements of its Board of Directors, and all amendments that may be made thereto.
Quan- Deliv- Ar- Of Whom Bought, tity. ery. tide. Price.
5 M May Wht 98f
The following in case of a sale:
Chicago Board of Trade.
New York Cotton Exchange.
New York Coffee Exchange.
St. Louis Merchants Exchange.
E. C. & H. E. Morrow, Brokers,
205 Third Avenue North, Members
New York Cotton Exchange, Chicago Board of Trade.
Nashville, Tenn., Dec. 27, 1911.
I. Gr. Coles,
Nash.
We have this day sold for your account:
All purchases and sales made by us for you are made in accordance with and subject to the rules, regulations and customs of the Board of Trade of the City of Chicago and the rules, regulations and requirements of its board of directors, and all amendments that may be made thereto.
Quan- Deliv-- Ar- To Whom Sold. tity. ery. tide. Price.
5 M May Wheat 98|
They could not, however, as we have just said, by these papers or otherwise, give their customers any interest in the contracts, any rights in contracts limited by their express terms to members.of the Board of Trade. If such right could be transferred, and enforced in violation of the rule XIV, the whole scheme
The contracts then were at all times the property of E. C. & H. E. Morrow. We shall now state how they dealt with their customers in respect* of these contracts.
Take the case of Coles. When he gave the so-called order to Dillion, say for the purchase of 5,000 bushels of wheat, no matter what price, he was required to pay to E. C. & H. E. Morrow three cents on each bushel, say $150 as a “margin.” This was in the nature of a security against the decline of the wheat below the price at which E. C. & H. E. Morrow were to buy it on the floor of the Exchange. If the price went off so as to consume the margin, Coles was called upon to put up an additional amount. So, in case the deal were in the-form of a sale of wheat, and the market advanced to such an extent as to consume the' margin, he was called upon to margin the deal again. In case he failed to do so, when the deal was in the form of a purchase of grain, defendants, E. C. & PI. E. Morrow, had this specific deal closed out on the Board of Trade, by causing to be sold an equal number of bushels of grain at the then market price, and charged Coles
In this manner Coles speculated in the rise and fall of the market, settling always by differences. He testified that he had no thought or purpose, in any case of either making or accepting delivery of the grain represented by the contracts. We may add that he had no power under the rules of the Board of Trade to do either, because he was not known there, and, as we have already pointed out, had no interest in the contracts. We may further state that the rules of the board contain most elaborate provisions on the subject of delivery, and all of them contemplate delivery by one member of the board to another member, on the floor of the Exchange, in a specified symbolic form,
• Defendants say they had no interest in the deals except the commissions they expected to realize out of them, one half of $7.50 on each 5,000 bushels of grain involved, the other half going to Logan & Bryan. Concede it as true that all they expected to realize on the deals was the commissions, and that this was all they did realize. Still the deals were all their own. They were conducting a gambling business, and they must, under the law, repay the money received by them in the conduct of such illegal business; and it is immaterial whether they kept the money themselves, or turned it over to some other.
In this view it is unnecessary that we discuss the question whether chapter 251, Acts of 1883, is repealed by chapter 277, Acts of 1909.
We are of the opinion that the chancellor charged defendants in the. Morgan Case with $1,362.49 in excess of the true amount. It is true that when Morgan entered upon the series of transactions which he subsequently conducted with defendants they gave him
The action in the Morgan Case was brought by his children, under Shannon’s Code, section 3162, which reads as follows:
“Any other person may, after the expiration of the ninety clays, and within twelve months thereafter, recover the amount of such money, thing, or its value, by action for the use of the wife; or, if no wife, the child, or children; and if no child or children, the next of kin of the loser.”
It is shown the children were not minors, and it is therefore insisted that the suit could not be brought by them. There is no such restriction in the statute, and we cannot insert it. This objection must therefore be overruled.. -
It results that the decree of the court of civil appeals in the Coles Case must be affirmed; and the decree of the chancellor in the Morgcm Case, after modification, as above indicated, must also be affirmed, with interest from the date of the chancellor’s decree.