63 N.J. Eq. 596 | New York Court of Chancery | 1902
This is a suit brought to set aside a fraudulent conveyance "made by John Stalker to his wife. On July 26th, 1894, the complainants recovered judgment against the defendant John Stalker for $2,071.64. The judgment is based upon two promissory notes, for $1,000 each, made by Stalker to complainants, dated November 1st, 1893. On November 3d of that year Stalker conveyed certain real estate in New Brunswick to Charles B. Herbert, and on November 4th, 1893, Herbert conveyed it to' Margaret I. Stalker, wife of John Stalker. In each deed the consideration is stated to be $1. Without discussing the evidence, I may say that I think it shows that the conveyances were fraudulent as against the complainants, and that complainants could avoid them if they held a judgment enforceable as against Mrs. Stalker. In the words of the court of appeals, in Minzesheimer v. Doolittle, 15 Dick. Ch. Rep. 397, although the judg
It appears from the correspondence that, on July 2d, 1888, an account, for purposes of speculation, was opened by Stalker with the firm of W. H. Calhoun & Company, who were stock brokers in New York City, and that $1,000 were deposited with them as a margin. This firm, of which the complainant Sharp was a member, dealt with Stalker until July, 1891, when it. was succeeded by the present firm of Sharp & Bryan. The account with the latter was continued until the close of the year 1893 or the early part of 1894. During all this time stocks were bought and sold for the account of Stalker. The purchases were at times very large—far beyond the ability of Stalker to pay. In September, 1891 (the month in which the purchases were the largest), they amounted to over $600,000. The money to buy was, in every case, supplied by the brokers. During the five years of their dealings nothing was ever called for but a margin. The contention of counsel for complainants is that, inasmuch as the evidence does not show affirmatively that there were to be no deliveries as between broker and customer, the transaction was not proved to be a dealing in differences, and therefore a gambling transaction.
In order to test the soundness of this contention, I will state the legal effect of the transaction as I understand it. It is beyond question that, as between the brokers and those of whom they bought or to whom the3r sold, the purchases and sales were real purchases and sales. When the transaction was a “long” transaction, the stocks were bought and paid for by the brokers out of their own moneys and there was an actual delivery of
In this exposition of the matter, I may seem, in the words of Disraeli, “to be illustrating the obvious and explaining the evident.” What I have been saying has, however, a direct bearing upon the case at bar. No written agreement was made, no explicit verbal agreement is shown. The beginning of the transaction is to be found in the letter of July 2d, 1888, in which Calhoun & Company write to Stalker, as follows:
*600 “Dear Sir.—In accordance with your understanding with Mr. Sharp we have this day transferred your account to his firm, Messrs. W. H. Calhoun & Co., giving them $1,000 received from you.”
The understanding referred to was that Stalker had $1,000; that he came to speculate with it, and that Sharp would receive his account; that “the margin had to be kept up,” and that, failing that, the stocks would be put upon the market and sold. The agreement of the parties, bej’ond this general understanding, can only be inferred from their acts, from the accounts rendered and from the correspondence; and these all indicate a' dealing in differences. Indeed Mr. Sharp himself so testifies. This is his evidence:
“Q. Did you ever have any stocks registered in Mr. Stalker’s name?
“A. They were never paid for outright, so that they were never registered in his name.
“Q. So that all his dealings with you were limited to a settlement of differences arising out of the fluctuation in the prices of the stock dealt in?
“A. Well it might or might not have been at all times. He may have had money enough to pay for some outright, and, on second thoughts, 1 think he did.
“Q. But what I have just stated is the general character of the transactions?
“A. Tes, sir; I suppose so.
“Q. (By the Court.)—He didn’t invest his money in stock?
“A. No sir.”
Mr. Stalker says that he never, except on one occasion, paid for any stock, and that, with this exception, no certificates were ever delivered to him. There is attempt to contradict this statement. Counsel argues that because in this one instance it is shown that Mr. Stalker took the stock, the court ought to infer that it was the agreement that all the stock should be taken, and if it was not taken at other times, it is to be inferred that it was not, not because he was not under a legal obligation to take it, but because, by mutual consent, it was left with Mr. Sharp. This one instances proves, he says, that it was not the agreement that there should be no deliveries. But, he contends, if it be not shown affirmatively that there were to be no deliveries, then it is not proved that the agreement is illegal. To sustain this view he relies upon Pratt v. Boody, 10 Dick. Ch. Rep. 175;
The distinction between that case and this is obvious. If the customer orders the broker to buy two stocks and gives him enough money to pay for one, and the broker buys both, no reasonable inference can be made that the entire transaction, or any part of it, is a dealing in differences. It might just as reasonably, or more reasonably, be inferred that the broker had made a bona ficle advance of money to his principal. The character of the transaction being in doubt, the law would not assume it to be unlawful; for the presumption is always in favor of its legality, when capable of a construction that would make it lawful. And if, in the course of a great number of purchases by the broker for the account of his customer, it appears that the customer sometimes pays for and takes the stock and sometimes leaves it in the broker’s hands, until the broker sells it, the transaction is still capable of a twofold construction, and the presumption of law in its favor still obtains. This I understand to be the rationale of the decision of Pratt v. Boody. But the inference to be made in this class of eases is not an artificial one. It is such an inference as a reasonable man would make from all the facts. If the purchases and sales are very numerous, and they have occurred through a long period of time, and all, with a single exception, point in one direction, it seems to me that the only reasonable inference that can be made is that the parties have been dealing in differences; and that they intended to deal in differences, except in the one case in which they, for some special reason, agreed otherwise. If this be so, the case in hand comes within the decision in Minzesheimer v. Doolittle, and not within the decision in Pratt v. Boody. I think there should be a decree for the defendants.