130 Tenn. 700 | 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 cer-tiorari. 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 depends, and they were tried in the same manner here. The evidence was taken originally in the Goles Case, but was also used in the Morgan Case.
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
As the evidence was taken in the Goles Case we shall state the substance of it from the standpoint of that case.
At the time the money was paid to them defendants held themselves out as brokers and bankers doing business at No. 205 Third Ave., 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 chairs 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 actual transactions were placed on the blackboard for the information of defendants’ customers, to guide them in their fictitious deals in the various commodities named on the board, that is, as materials on which to base their judgment as to the probable course of the market, in order that they might act in the light of such course of the market, mirrored in its momentary fluctuations
“XIV. 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,
“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 already stated, as their orders, and for their benefit, and the confirmations came back to them in the same way, showing in each instance that the sale, or purchase, had been made to or by the person named in the confirmation as seller or buyer, as the case might be. The confirmations usually contained several trans
“Logan & Bryan,
Commission Merchants,
No. 2 Board of Trade.
Chicago, 12/21 — 1911.
E. C. & H. 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.
Quantity Delivery Artiele Price Of Whom Bought
10 May W 98f King, Farnum & Co.
McCarthy
10 ” ” 9'8f Finley, Barrell & Co.
King, Farnum & Co.
10 ” ” 98|- Copenhagen
5 ” ” 98¿ King, Farnum & Co.
Fay
10 July ” 93f Squire
The following show some transactions wherein sales were confirmed:
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.
Quantity Delivery Article Priee To Whom Sold
10 May W 98f- Wing-
Bar tlett
10 ’’ ”99 Scott”
But it is to be observed that these transactions were all negotiated by Logan & Bryan, as brokers for E. C. & H. E. Morrow, and the contracts when made were between the persons named in the confirmations as sellers or buyers, and the said E. C. & H. E. Morrow. The customers of E. C. & H. E. Morrow were not known on the Board of Trade, and could not be under Rule XIV. Nor were they known to Logan & Bryan. This was admitted in substance in Mr. Dillon’s testimony, wherein he said, referring to a deal or deals embracing 10,000 bushels of May wheat at ninety-eight and three-fourths: “Logan & Bryan, they don’t know whom we are trading for; it is all done in our name,
It is apparent therefore that no contracts were negotiated on the Board of Trade ,for the benefit of E. C. & EL E. Morrow’s customers. The contracting parties were E. C. & H.'E. Morrow, and the persons named as buyers, or sellers, in the confirmation slips. It was not within the power of 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 XIV, 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 benefit of Coles, or any other person not a member of the hoard would not have been recognized by the Board of Trade, and could not have been under Rule XIV. 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 transactions when dealing with their customers. Al
"E. C. & H. E. Morrow, Brokers
205 Third Avenue North Members
New York Cotton Exchange
Chicago Board of Trade
New York Stock Exchange.
Chicago Board of Trade.
New York Cotton Exchange.
New York Coffee Exchange.
St. Louis Merchants Exchange.
Nashville,-Tenn., Dec. 21, 1911.
I. Gr. 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 he made thereto.
Quantity Delivery Article Price Of Whom Bought
5M May Wht 98§
“E. C. & H. E. Morrow, Brokers
205 Third Avenue, North, Members
New York Cotton Exchange
Chicago Board of Trade
New York Stock Exchange.
Chicago Board of Trade.
New York Cotton Exchange.
New York Coffee Exchange.
St. Louis Merchants Exchange.
Nashville, Tenn., Dec. 27, 1911.
I. G. 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.
Quantity Delivery Article Price To Whom Sold
5M 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 Rule XIV, the whole scheme of the organization would be disarranged, and such confusion would be introduced that in no long time its purposes would be wholly frustrated. We might, in order to show this more fully, go into an analysis of
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 $150.00 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. & H. 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 with the difference between the price at which the supposed purchase was made and the subsequent sale at market price. A similar proceeding was had in case the deal were in the form of a sale, and the dif
In this manner, Coles speculated in the rise and fall of the market, settling always by differences. He testifies 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 alreády 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, of warehouse receipts, etc. Coles was no member, and he could have neither made nor accepted a delivery, and as stated, he never contemplated such a thing. It is equally certain that C. E. & H. E. Morrow never themselves contemplated either making or receiving
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 ch. 251, Acts of 1883, is repealed by ch. 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 credit by an item of $2,194 taken over from Thomas Plater & Co. This, however, represented a deal or deals Plater & Co. had made for Morgan, and out of these deals only $831.51 in cash was received by defendants. The item of $2,194 should therefore be re-
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 days, 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 Morgan Case, after modification, as above indicated, must also be affirmed, with interest from the date of the chancellor’s decree.