134 A. 29 | Md. | 1926
The chief question to be determined in this case is whether or not certain agreements involving the buying and selling of grain for one Thomas A. Conaway by the appellant were wagering transactions. The record shows that Conaway in 1922 owned a farm near Mt. Airy in Frederick County, that the farm was worth about $7000, and had two mortgages on it totalling $4800, and that Conaway's sole other possessions consisted of about $1300 worth of personal property. In March, 1922, Conaway, apparently at the suggestion of Mr. Kline, president of the appellant company, *45 began to trade in grain "futures," and continued doing so until January 29th, 1925. On October 23rd, 1924, he owed the appellant $1,441.11 for losses sustained by him in these transactions, and at the request of the appellant he gave a confessed judgment note for $2000, which note was applied to his then existing indebtedness, and the balance credited to his account and used as margin for subsequent transactions. These transactions resulting in further losses, a judgment was entered on the note on November 12th, 1924, and when Conaway stopped dealing in grain in January, 1925, he owed the appellant $558.89 over and above the amount of that judgment. On April 25th, 1925, Conaway's farm was sold under the first mortgage, and on the same day he was adjudicated an insolvent debtor in the Circuit Court for Frederick County, and D. Princeton Buckey and Reno S. Harp were appointed preliminary trustees, and later, on August 19th, 1925, Buckey was elected permanent trustee.
The actual amount paid for the farm by the purchaser at the mortgage sale was $7000, and after the payment of the costs and expenses, and the principal and interest due on the first and second mortgages, there remained in the hands of the assignee who made the sale the sum of $1539.60, which sum the appellant claimed as a payment on its judgment. The auditor stated an account, in which this $1539.60 was distributed to the appellant, and Conaway's preliminary trustees in insolvency thereupon excepted to the ratification of the audit on the ground, interalia, that the note on which the judgment was based was given for a debt growing out of a wagering transaction, and so was without consideration, and the judgment obtained on it invalid. The learned court below, after a full hearing in open court, sustained this exception, and from this ruling and the order passed in pursuance of it, the appellant has appealed.
There has been a great deal of litigation in this country dealing with the question of what is and what is not a *46 gambling or wagering contract, and the respective rights of the parties to such contracts, and the decisions are not all harmonious. But here in Maryland the following principles have been established and must now be considered the settled law of the state.
In Emerson v. Townsend,
In Stewart v. Schall,
In Burt v. Myer,
These principles have also been applied and affirmed inBillingslea v. Smith,
While the foregoing principles are well established, considerable difficulty is sometimes experienced in applying them. There is no law against speculating. A man can buy an article or commodity today and sell it tomorrow, or next year, without in any way violating the laws against gambling, nor does the fact that he gains or loses in the transaction render it illegal. Practically every commercial transaction involves the element of gain or loss, and the task of distinguishing wagering contracts from admittedly valid speculations is often not an easy one. The test seems to be that if, at the inception of the contract, the parties did not intend to deliver the articles dealt in but merely expected to settle in money the difference between the purchase and sale prices, the transaction is illegal. The application of this test requires the ascertainment of the intention of the parties, and where there is a conflict between them as to what their intentions were, the courts admit evidence of the surrounding facts and circumstances, so that the real intention of the parties can, if possible, be determined. 27C.J. 1058 to 1060, and cases cited, supra.
In the present case Conaway testified that he never intended to accept delivery of the grain he purchased, but that his sole intention was to always sell it before the time of delivery and accept the profit or loss which resulted from such sales. On the other hand the two officers of the appellant with whom he dealt testified that all of Conaway's orders to buy grain were transmitted to a grain broker in Baltimore, and this broker testified that his firm purchased the grain through its representative in Chicago, and that the grain could have been delivered if called for. It is *48 conceded, however, that neither the Baltimore nor Chicago grain brokers knew Conaway in these transactions. They bought and sold for the appellant only, and hence, under the authorities, these brokers need not be considered at all in this case, and their intentions are immaterial. They could not have had any intention regarding Conaway's dealings in grain, because they did not know anything about him or his transactions. 27 C.J. 1092.
We are accordingly only concerned with the question of whether the appellant was, in the language of Stewart v. Schall, supra, "privy" to the wagering contract which Conaway undoubtedly intended to enter into, and to determine this we will have to briefly examine the "surrounding facts and circumstances" as they are disclosed by the evidence.
Conaway's farm was in the vicinity of the appellant's mill, he was a customer of the mill, and the appellant's officers knew him and knew something about his financial condition. Conaway's net worth at the time he began these transactions was $3,500, and, as we saw above, when he finished a little less than three years later he was insolvent. His first purchase in March, 1922, was of 5,000 bushels of wheat, and between that time and January, 1925, in more than fifty transactions he bought and sold more than half a million bushels of grain, worth about $620,000. None of this grain was ever delivered to him or to the appellant, he never actually paid for any of it, nor could he have paid for it. The smallest transaction he had involved the purchase of 5,000 bushels at a price in excess of $5,000, and on one occasion he bought 45,000 bushels at a cost of almost $50,000. The appellant's officers testified that when these transactions started Conaway had a balance of about $150 due him for grain of his own which he had sold the appellant, and thereafter they tried to have him keep sufficient balance to represent a five cent margin per bushel on what he bought. When his balance got below the necessary five cent margin, or became a debit, as it frequently did, he was called upon for more money, and finally when the debit became more than $1,400 in October, 1924, Conaway gave the appellant the *49 $2,000 confessed judgment note which is involved in this case. There is no evidence that the appellant was betting against Conaway in these transactions, the only apparent interest which it had in them being the commission of one-half cent per bushel which it received in each one, and which it in turn divided with the Baltimore broker. The record contains extracts from the appellant's books showing its transactions and accounts with Conaway, and an examination of these shows that each purchase and sale of grain was entered as a complete transaction, and the resulting gain or loss was then carried to Conaway's general account. For example, on a billhead of the appellant, marked "Sold to T.A. Conaway," we find, under date of March 15th, 1922, the following:
"Sold 5000 bushels May wheat 1.31 7/8 .................. 6593.75
Commission ............................. 25.00
War Tax ................................ 1.32
Bought 5000 bushels May wheat at 1.30 ........ 6500.00 6526.32
_______
Net Gain ...................... 67.43"
And a similar separate account of each purchase and sale of grain was made out by the appellant. In addition to these separate accounts, however, the appellant also kept a general account with Conaway, showing his credit or debit with it at any given time, but this general account does not charge Conaway with the full value of the grain he purchased, but simply credits or debits him with the gain or loss on each grain transaction, the entries, under the appropriate dates, being simply "Gain on May," "Loss on Dec.," and so on.
Under the foregoing facts and circumstances the learned court below concluded that it was the intention of the parties not to actually buy and sell grain, but to settle the differences between the purchase and sale prices in money, and that they were accordingly gambling transactions. It is difficult to escape reaching the same conclusion. The financial ability of the purchaser to pay for what he buys, the absence of any deliveries, the dealing on margin, the method of keeping the *50
accounts, etc., all have some bearing on the intention of the parties, and while none of these things standing alone would be conclusive, taken all together they are certainly very persuasive of the correctness of the finding of the lower court. It should also be remembered that this finding was one of fact, and it has long been established that where the testimony is taken in open court, as it was here, the fact findings of the chancellor will not be disturbed unless they are clearly erroneous. Bortner v.Leib,
The appellant relied largely on the case of Richter v. Poe,
The only remaining question to be considered is that raised by the claim of the attorney for the purchasers at the mortgage sale to an appearance fee. Conaway's farm was advertised as containing so many acres of land, and was sold at so much per acre, the total amounting to $7144. It subsequently appeared that the farm contained three or four acres less than the number advertised, and, upon a petition being filed by the purchasers setting out this fact, the court abated the purchase price to $7000. The attorney who represented the purchasers in this matter claimed that he was entitled to an appearance fee to be paid out of the proceeds of the sale, and upon the auditor declining to make such an allowance he excepted to the audit. The lower court overruled this exception, and as no appeal was taken from its action in this regard the question is not before us. However, as some mention of it was made at the argument, and as the profession may have some interest in the question, we deem it proper to say that we concur with the conclusion of the learned chancellor on this point for the reasons set out in the opinion which he filed in the case.
Finding no error in the order appealed from, it will be affirmed.
Order affirmed, the costs to be paid by the appellant. *52