47 Minn. 228 | Minn. | 1891
The plaintiffs sue defendan^^; jponey paid and expended for his use in the purchase and sale of. grain. The answer sets up that the purchases and sales referred to were not actual or veritable purchases and sales of grain, but were merely colorable, and “were gambling transactions, whereby the plaintiffs in form un
Contracts for the purchase or sale of grain or other commodities to> be delivered at a future time are not per se unlawful, if the parties intend in good faith to perform them by the actual delivery of the property according to their terms. Nor are bona fide contracts for the future delivery of goods invalid because at the time of the sale the vendor has not the actual or potential possession of the goods which he has agreed to sell. He may afterwards go into the market and procure the goods which he has agreed to furnish his vendee.. Business may be successfully and lawfully conducted in that way;, and, where such contracts are intended in good faith to represent, actual transactions, they are not unlawful. The law places no unreasonable limitations upon commercial dealings; and it is no legal ground of objection that bona fide contracts for future delivery are-entered into for the purpose of making a speculation through an, anticipated rise in the price of commodities. But contracts in form for the future delivery of goods not intended to represent actual transactions, — that is, the actual-delivery and receipt of the goods,— but merely to pay and receive the difference between the agreed price and the market price at a future day, and upon the risk of the-rise or fall in prices, are generally held to be in the nature of wagers on the future price of the commodity, and void by statute or as against public policy. The party dealing in futures in substance bets that the price of a commodity at a future day will be a certain sum more or less than the market prices, which involve elements of risk and uncertainty; and the “stake” is the amount of the “margin” required to cover differences in values, and according to the price of the commodity on a future day the parties to the contract must respectively gain or lose. 22 Am. Law Beg. 613, note.
In Rumsey v. Berry, 65 Me. 570, the accepted doctrine is stated as follows: “A contract for the sale and purchase of wheat to be-delivered in good faith at a future time is one thing, and is not in
“The bargain represents, not a transfer of property, but a mere stake or wager upon its future price. The difference requires the ownership of only a few hundreds or thousands of dollars, while the capital to complete an actual purchase or sale may be hundreds of thousands of dollars. Hence ventures upon prices invite men of small means to enter into transactions far beyond their capital, which they do not intend to fulfil, and thus the apparent business in the particular trade is inflated and unreal, and, like a bubble, needs only to be pricked to disappear, often carrying down the bona fide dealer in its collapse.' * * * Such transactions are destructive of good morals and fair dealing, and of the best interests of the community.” Kirkpatrick v. Bonsall, 72 Pa. St. 155.
It becomes material, therefore, to inquire into the intention of the parties in entering into contracts purporting to be for the future delivery of commodities, and the plaintiffs must be shown to be in pari delicto to defeat a recovery in this action'. ''The language or form of the contract is not conclusive. The real nature of the transaction and the understanding and purpose of the parties may be shown, notwithstanding the contract is fair on its face. Indeed, in view of the extent to which stock and grain gambling is carried on at the exchanges in the commercial centres of the country, — a fact of which the courts are bound to take notice, — time contracts of the character under consideration will be very carefully scrutinized by the courts, and they will go behind and outside the language of the contract, and look into the facts and circumstances surrounding and connected with it, in order to determine its real character, as in the case of contracts claimed to be void for usury or fraud. In Barnard v. Backhaus, 52 Wis. 593, 600, (6 N. W. Rep. 252,
/ The testimony of the defendant, which is undisputed, shows or tends to show that he did not intend to make actual bona fide purchases and sales of grain, but intended to “deal in futures” solely, and the manner in which the business was conducted and the several “deals” closed and adjusted by the plaintiffs is consistent with this theory, and tends to support it; and, while this circumstance might not alone be sufficient to establish the fact that plaintiffs, or the third parties with whom they dealt in executing the orders of the defendant, had notice that defendant's object was not to buy and sell grain, but to speculate in the price of grain merely, yet the manner in which the business involving these transactions was conducted was certainly an element to be considered with other circumstances in determining the question of their good faith. Hill v. Johnson, 38 Mo. App. 383; Crawford v. Spencer, 92 Mo. 498, (4 S. W. Rep. 713.) It is not necessary to prove that plaintiffs had express notice of defendant’s purpose. The understanding between the parties may be gathered from the facts and attending circumstances. This is well settled, and upon this point evidence of the defendant’s occupation, residence, financial ability; that he never
The statutes of Wisconsin, where the business was done, were not introduced in evidence. The rights of the parties will therefore be determined by the rules of the common law, as generally accepted and applied in this country. Harvey v. Merrill, 150 Mass. 1, (22 N. E. Rep. 49.) And it is generally held as the common-law doctrine that all wagering contracts are illegal and void as against public policy. Irwin v. Williar, 110 U. S. 499, 510, (4 Sup. Ct. Rep. 166;) Harvey v. Merrill, supra. No cause of action arises in favor of a party to an illegal transaction; nor will the law lend its aid to enforce any contract which is in conflict with the terms of a statute, or sound public policy or good morals. In re Green, 7 Biss. 338; Armstrong v. Toler, 11 Wheat. 258; Ruckman v. Bryan, 3 Denio, 340. And there is no reason why a broker or commission merchant should be favored or exempted from consequences resulting to other parties who aid or assist in unlawful transactions. Barnard v. Backhaus, supra. It was through the agency of the plaintiffs that the defendant was attempting to carrying on an unlawful business. They executed his orders, advanced money for margins, and settled the differences. The contracts were all made in their names, and he was not known in the transactions with third parties, and they were person
The plaintiffs’ counsel, however, concedes in his brief in this court that if, by the arrangement between the parties to this suit, they were to undertake gambling transactions, then the intent of third parties was not material. But the defendant’s counsel insists that the charge of the court on this subject, including the instructions asked by plaintiffs, would warrant the jury to infer that it was necessary for the defendant to make it appear that the parties with whom plaintiffs dealt were also in pari clelicto. Upon this point the charge, taken as a whole, is perhaps not entirely clear, but we think if there was any ambiguity or uncertainty in the charge on the question the defendant should have asked more specific instructions.
It is also assigned as error that the court erred in refusing defendant’s second request to charge, which -was in substance' that, in order to prove notice or knowledge on the part of the plaintiffs of the designs and intentions of the defendant, it is not necessary that defendant should have written or said to any of the plaintiffs that such was his design; but the jury were to determine the understanding of the parties from all the circumstances connected with the transactions betw’een them, and that upon this question they were “entitled to consider the fact that at the time the plaintiffs sold the barley for
We think evidence of the general character of transactions in the ■chamber between other dealers was properly rejected; but for the error above referred to there should be a new trial.
Order reversed.