62 P. 571 | Cal. | 1900
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *324
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *325 Action to recover four hundred and seventy dollars alleged to have been paid to defendants by plaintiff for the purchase of stocks of mining corporations on margin. The cause was tried by the court sitting with a jury, and plaintiff had the verdict. The appeal is from the judgment and from an order denying defendants' motion for a new trial.
The evidence was that the purchases were all made by plaintiff's sister acting, as is claimed by plaintiff, as his agent, and that he personally had no dealings whatever with defendants and defendants had no knowledge that Miss Parker was acting for plaintiff.
Defendants claim: 1. That the money paid by plaintiff's sister was in fact hers and not his, and if there can be any recovery it must be by her alone: and 2. That if the money could be considered plaintiff's, then he attempted to *326 delegate authority to his sister to engage in an illegal transaction, thus creating an agency which the law will not recognize.
Section 26, article IV, of the constitution provides as follows: "All contracts for the sale of shares of the capital stock of any corporation or association, on margin to be delivered at a future day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent jurisdiction."
1. Had the plaintiff personally paid the money he could have recovered it, and we see no reason why the remedy given him by the constitution should be taken away because he employed an agent to pay the money for him. The constitution treats the transactions in question as harmful in their tendency, and because harmful has sought to eradicate the evil not only by declaring the contract void, but also by giving a right of action to recover the money paid under it. Being in pari delicto, the purchaser of stocks would be left where the law finds him but for the remedy given by the constitution. It would be an exceedingly narrow and an altogether unwarranted construction of the constitution to hold literally to the words of that instrument — that the money may be recovered only "by the party paying it"; i.e., by the particular person who handed over the money to the seller or in whose name the business might happen to be conducted.
In Sheehy v. Shinn,
In Cashman v. Root,
Defendants are presumed to have known that they were receiving money which could be recovered by its owner if he chose to assert his right; it was immaterial, therefor, whether or not they knew who was the principal for whom Miss Parker was acting. Ordinarily, where an agent acts for an undisclosed principal, either the agent or the principal may sue; and while it is true that one cannot delegate authority to do an illegal act, the cause of action here does not depend on the validity of the agency created by plaintiff, but it rests on the provisions of the constitution which made the transaction void and gave a right to recover the money paid.
2. There is evidence tending to show that plaintiff's sister was acting as his agent in paying the money to defendants; he so testified directly. The cross-examination of Miss Parker gives some ground for doubt as to whether she was acting for herself or for her brother, and would perhaps have justified the jury in finding that the money paid by her to defendants had been given to her by plaintiff and became her own and was hers when paid on account of the stock purchases. But there was evidence supporting the view taken by the jury, and we are not permitted to interfere with its conclusion.
3. The unverified complaint alleges that "defendants heretofore, and within two years last past, contracted with plaintiff to buy and sell mining stocks, portions of the capital stock of certain mining corporations, for plaintiff on a margin to be furnished by said plaintiff," etc. The answer is a general denial and puts in issue the above averment.
There is no direct evidence that there existed a corporation or corporations and that the stocks mentioned in the complaint were shares of the capital stock of such corporation or corporations. This was urged as ground for defendants' motion for nonsuit, and the denial of the motion was assigned as error; and was also specified as one of the particulars in which the evidence is insufficient to support the verdict. The evidence was that the money paid to defendants was for the purchase of "stocks"; and witnesses speak of certificates of stock for a certain number of shares which were purchased in the Pacific Stock Exchange by defendants. A statement of defendants' transaction with Miss Parker *328 was furnished by defendants; in this statement some of the same stocks referred to by plaintiff's witnesses are enumerated, and in it appears the amount of money paid at certain dates, with a description of the stocks as follows: "200 Kentuck," "100 Potosi," "100 Yellow Jacket," "50 Challenge," and the like. In the written contracts between the parties defendants say: "We will act as agents and brokers in the purchase and sale . . . . of stocks and bonds for our principals," etc.
Webster gives the following definition of the word "stocks": "Property consisting of shares in joint stock companies." In Anderson's Law Dictionary the following definition is given: "The capital of an incorporated company in transferable shares of a specified amount." We think it reasonably clear that the stocks referred to by the witness and in the written contracts of the parties were stocks in the sense of the above definition and were shares of incorporated companies.
4. Defendants contend that our constitutional provision is in conflict with section 1 of the fourteenth amendment to the federal constitution, in abridging the privileges and immunities of citizens of the United States and depriving persons of liberty and property without due process of law, and denying persons making margin contracts the equal protection of the laws; that it interferes with the freedom of contract, and is beyond the police power of the state, inasmuch as it is not confined to mere gaming contracts or contracts for the payment of differences, but prohibits legitimate business transactions. This defense was specially pleaded in the answer and was urged on the motion for nonsuit, and was assigned as one of the particulars wherein the verdict is against law.
Chief Justice Shaw, in defining the police power of the state, said: "All property in this commonwealth is . . . . held subject to those general regulations which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient." (Commonwealth v. Tewksbury, 11 Met. 55.) *329
In Cashman v. Root, supra, reference was made to the causes which led to the adoption of the constitutional provision in question. It was pointed out that a large part of the community had been set wild by stock speculations, and that "the rapid fluctuations of stock afforded unusual inducement to stock gambling," and it was said: "By skillful manipulation of the markets a few fortunate ones had been able to take advantage of the existing mania and made large fortunes for themselves, at the cost of widespread financial ruin and distress. People of small means were enabled by brokers to speculate largely at that time through these very purchases on margin. Of these matters this court will take judicial notice, and, in doing so, cannot doubt that this inhibition was intended to strike down this practice." This class of speculative investments must be conceded to possess some of the elements of gaming or gambling contracts, and while it may be that but for the constitutional provision they would not be held void, or, if held void, that the law would furnish no relief to parties in pari delicto, still their actual as well as possible injurious effect upon the community and its welfare we think clearly brings them within the police power of the state to regulate or prohibit. For a discussion of the police power of the state, see Judge Sanderson's opinion in Ex parte Smith,
If the provision in question on its face fails to distinguish between bona fide contracts and gambling contracts as is urged, it is none the less a proper police regulation, for the question remains to be determined in each case whether the transaction is in contravention of the constitution. (Kullman v. Simmens,
5. It is claimed that the facts in this case do not bring it within the constitutional condemnation. Briefly, the transactions were as follows: Plaintiff paid to defendants certain money, accompanied by an order to purchase certain stocks; defendants went into the stock board, bought and paid for these stocks in full at the market rate; defendants then credited plaintiff with the money paid by him (which was always less than the amount paid for the stocks by defendants, or, in other words, was but a margin of the cost), and by agreement held the stocks as security for their commissions, advances, and for the accumulating interest thereon, with the power to sell the stocks to protect themselves against a decline in value; defendants did not keep the particular stocks purchased, but had others of like character, and could and would have delivered a like number of shares to plaintiff upon full payment of all balances due at any time upon demand; defendants acted only as agents of plaintiff and had no interest in the stocks beyond their commissions, advances, and the agreed interest. So far as we can perceive, the deal was similar to that in the cases heretofore passed upon by this court and held to be within the provisions of the constitution. (See Sheehy v. Shinn, supra, and cases there referred to; Kullman v. Simmens, supra.)
6. It is contended that the court invaded the province of the jury in remarking, as to an admission that defendants' witnesses would testify to certain facts, as follows: "The admission tends to support plaintiff's theory of the case rather than defendants'." It is urged that the remark was prejudicial, particularly in view of an instruction asked by defendants, and refused by the court, to the effect that whether the transactions in question are in contravention of the constitution is a question of fact to be determined by the jury from all the circumstances (citing Kullman v. Simmens, supra); whereas the court told the jury that it is a question of "mixed law and fact." The court instructed the jury that they were "to apply to that evidence these instructions [the instructions previously given] as to the law." The admission referred to presented the question as to whether the facts as admitted constituted a "margin" contract, and this was purely a question of law. The court in its remark assumed the facts to be as admitted, and so left them with the jury, but it intimated, *331 as it later on properly instructed the jury, that as matter of law the facts supported plaintiff; and in this we think the court did not err, and the remark could not have prejudiced defendants' case.
7. When Miss Parker was testifying for plaintiff counsel asked her: "Do you owe Otis Co. any money?" Defendants' objection was overruled and the witness answered: "Yes, on a margin proposition." Defendants moved to strike out the latter part of the answer as not responsive to the question and as being a conclusion. The court overruled an objection to the following question asked plaintiff: "Did you delegate authority to your sister to act as your agent and to purchase or deal in stocks on the market with any broker?" The motion in the one case should have been granted and the objection in the other should have been sustained. A witness should be confined to facts, leaving conclusions to be drawn from these facts to the jury or court. The defendants, however, were not injured, because the facts were fully stated during the examination of the witnesses, and the jury could and no doubt did draw its own conclusions from these facts under the instructions of the court as to what constituted margin contracts.
8. Error is claimed because the court, in its instructions, read to the jury the whole of section 26, article IV, of the constitution, the first part of which relates to lotteries and gift enterprises. It was not necessary to the case to read more than the latter part of the section, but reading all of it could not have been prejudicial to defendants. Error is claimed in refusing to give certain instructions asked by defendants, or in modifying them as given.
We have carefully examined these offered instructions and find that such of them as were essential to a proper presentation of the issues to the jury were given as asked or with such modifications as fairly placed the matters in controversy before the jury. Those which were refused were not such as could enlighten the jury or aid them in reaching a right conclusion. For example, it could not have injured defendants by refusing to tell the jury that plaintiff "is entitled to no sympathy from you" — the court, however, did tell them that "there are no equities between these parties, and their rights are to be determined by the strict rules of law," and this was *332 about equivalent to telling them that neither party was entitled to their sympathy. Again, defendants cannot complain because the court refused to tell the jury "that it is never to be presumed that parties deliberately enter into contract in violation of the constitution." The court very clearly pointed out to the jury that they must find for the defendants unless they should find from the preponderance of the evidence that the transactions in question were margin transactions within the meaning of the constitution as the court had declared that meaning. The instructions as given were a remarkably clear exposition of the law, and the jury were repeatedly cautioned as to its application to the facts and as to the rules which should govern them in judging of the facts. We see no prejudicial error in giving or refusing any instructions.
9. There remains but one question undisposed of. The court instructed the jury to allow interest from the commencement of the action, and this is urged as error. We think the question is settled by the decision in Baldwin v. Zadig,
It is advised that the judgment be modified by striking therefrom the amount allowed for interest, and thus modified that the judgment and order be affirmed.
Cooper, C., and Gray, C., concurred.
For the reasons given in the foregoing opinion the judgment is modified by striking therefrom the amount allowed for interest, and, thus modified, the judgment and order are affirmed. Van Dyke, J., Garoutte, J., Harrison J.
Addendum
On petition for rehearing, the court, in Bank, rendered the following additional opinion, which was dated November 26, 1900, and filed November 27, 1900:
A point overlooked in the commissioner's opinion is the defense of the statute of limitations. The claim is that subdivision 1, section
What is meant by a statutory penalty was defined in Los Angelesv. Ballerino
There is nothing penal in the constitutional provision; it is simply remedial. The action is for money had and received, and recovery cannot be had except after demand and refusal. (Baldwinv. Zadig,
Rehearing denied.