(concurring).
In view of the importance of the question at issue, affecting, as it does, a very necessary unit in our industrial life, I desire to add my reasons for concurrence in the able main opinion in this case.
The Uhlmann Grain Company is a member in good standing of the boards of trade of Kansas City, Mo., Chicago; Ill., and Minneapolis, Minn., and through a representative operates upon the board of trade or grain exchange of Winnipeg, Canada. In Missouri, at the time under consideration, it had a branch office in Carrollton, in charge of one McDonough. Through this office the manager communicated for final confirmation and disposition of all grain trades with the parent house or houses. It is conceded, and is so stated by the court in its findings of fact, that all the requirements of the Grain Futures Act (7 USCA §§ 1-17) were met in the procedure adopted in the transaction here under consideration. The finding of the court is merely that such transactions were fictitious and the regularity of the procedure merely a sham and cover for such. With this concession it is necessary only to apply the law applicable to such situations.
To begin with, then, where contracts for the purchase and sale of grain on exchanges are fair on their face and presumptively lawful, regardless of the undisclosed intention of the defendant purchaser, the burden is on such defendant to prove that the transactions were mere wagers on the fluctuations of the market. Wilhite v. Houston (C. C. A. 8) 200 F. 390; Clews v. Jamieson, 182 U. S. 461, 21 S. Ct. 845, 45 L. Ed. 1183; Lyons Milling Co. v. Goffe & Carkener (C. C. A. 10) 46 F.(2d) 241.
In this case defendants rely upon their statement to the broker that they did not intend at any time to take any grain as purchasers nor to fulfill any orders as sellers. *532That this was communicated to the broker’s representative, who assured defendants that they could be protected against such a situation by hedging or sales prior to the date of maturity. There is no contention that the other parties to the contract, towit, the dealers upon the foreign boards of trade, expressed any such intention or were cognizant of such expressed intention. That such was the understanding is explicitly denied by Mr. McDonough, and all the contracts and documents entered into were in approved form for legitimate dealing upon the boards of trade in question. Of these contracts, and their import, the defendants are conclusively proved to have had knowledge.' Their testimony concedes that they knew these orders were being placed for them by the broker upon the foreign boards of trade. These transactions were in the nature of spreads or hedging operations and consisted largely of sales upon the Winnipeg board and corresponding purchases upon the Chicago Board of Trade or the converse. Thus in advance it was known that one trade was intended to offset the other, and any such trade was subject to being closed out before the future date of maturity of the contract. Such an operation has been repeatedly and authoritatively held to be valid, and this is true independently of the Grain Futures Act, or whether Congress has entered and appropriated this field, where the operation is otherwise a legitimate and legal one in the jurisdiction where it is consummated. Board of Trade v. Christie Grain & Stock Co., 198 U. S. 236, 25 S. Ct. 637, 49 L. Ed. 1031; Clews v. Jamieson, 182 U. S. 461, 21 S. Ct. 845, 45 L. Ed. 1183; Cleage v. Laidley (C. C. A. 8) 149 F. 346; Gettys v. Newburger et al. (C. C. A. 8) 272 F. 209; Mullinix v. Hubbard (C. C. A. 8) 6 F.(2d) 109; Hoyt v. Wickham (C. C. A. 8) 25 F.(2d) 777; Lyons Mining Co. v. Goffe & Carkener (C. C. A. 10) 46 F.(2d) 241.
And, where a defendant employs brokers to purchase and sell grain for him on commission at various exchanges, the brokers having no interest in the purchases and sales other than as defendant’s brokers, their relation is not affected by the fact that in executing defendant’s orders the brokers assume the position of principals toward those with whom they deal. Wilhite v. Houston (C. C. A. 8) 200 F. 390. There is nothing in this evidence to indicate that the dealings were between plaintiff and defendants as such principals. On the contrary, the entire testimony shows that the transactions were between defendants and principals upon the several boards of trade, whose identity could have been disclosed at any time upon application. There is no testimony which indicates that there was any irregular procedure upon those grain exchanges. Defendants, having lost in their grain speculations, seek to charge the principals upon those exchanges with their asserted knowledge of the representative of appellant'in charge of the Carrollton office. The record both from the standpoint of actuality or legal presumption totally fails to establish this contention.
The trial court evidently based its conclusion upon the case of State v. Christopher, 318 Mo. 225, 2 S.W.(2d) 621. In the first place the Missouri law is out of the picture, because it is conceded that none of the sales involved took place or were consummated upon the Kansas City Board of Trade; but it is somewhat instructive to consider further the basis of the Christopher decision. Its holding necessarily was that trades initiated through the Sedalia branch of the Kansas City Board of Trade were not conducted upon a contract market, but that such operations were confined to the Sedalia house, which was, in and of itself, not a contract market. It assumed, therefore, that the dealings were between the customer and the Sedalia house, which was thus conceived to be a bucket shop.
The trial court applied this same situation to the branch at Carrollton. This contention obviously cannot be sustained. So long as the ultimate consummation of the transactions was upon the contract market either at Kansas City, Chicago, or Minneapolis, it matters not that they were initiated for convenience, in the branch houses of such markets. It is essential that such outlying houses should be disconnected in substance and in fact from parent grain exchanges to justify the conclusion of the Missouri Supreme Court and of the court below. With this proposition established, the conclusion of both such courts falls, but it is further to be observed that the Supreme Court of Missouri was.not dealing with the statute of that state which forbids dealing in grain futures except with the intention to take or deliver the grain dealt in, but with section 3574 Rev. St. Mo. 1919, which makes it a misdemeanor for any person to keep a place wherein is permitted pretended buying and selling of stocks, grain, and other products without any intention of receiving and paying for the property bought, or delivering the property Sold; and the opinion concedes *533that the Grain Futures Act of Congress does regulate, forbid, or make lawful any contract for the future delivery of grain where made in a contract market, designated as such, by the. Secretary of Agriculture. In so holding the Supreme Court of Missouri is in harmony with the weight of authority and with the purpose and intendment of the Grain Futures Act. See State ex rel. v. Rosenbaum Grain Company et al., 115 Kan. 40, 223 P. 80; Lyons Milling Company v. Goffe & Carkener (C. C. A. 10) 46 F.(2d) 241. See, also, the decision of the same District Court, from which this appeal is taken, in Board of Trade of Kansas City v. Gentry,1 in which the trial judge in this ease sat as one of the three judges. But the effect of the Grain Futures Act is sufficiently disclosed by the decisions of the Supreme Court in construing .that act.
In Stafford v. Wallace, 258 U. S. 495, 528, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229, it is pointed out that the various stockyards of the country are great national public utilities to promote the flow of commerce from the ranges and farms of the West to the consumers in the East. They conduct a business affected by a public use of a national character and subject to national regulation.
In Board of Trade of City of Chicago v. Olsen, 262 U. S. 1, 43, 43 S. Ct. 470, 477, 67 L. Ed. 839, this same principle is held to apply to the grain business upon boards of trade. It has been held, and is universally •recognized, that such boards of trade or contract markets are essential to transactions in grain and kindred products, not only from the standpoint of those who sell upon such boards, but from that of the quotations upon which producers depend for their information. Such was the view of Congress in establishing these grain markets and entering .this field of regulation, and such is the construction placed upon this legislation by the Supreme Court of the United States.
It must inevitably happen that there will be irregularities and abuses, but so long as transactions are conducted in accordance with the rules and regulations of such contract markets, disgruntled speculators cannot be heard to complain and to repudiate their legal obligations upon such ground. It is true that, if a house is established to be a mere bucket shop, apart from and disconnected with any contract market, then the provisions of law against gambling in futures, or otherwise, apply. That Congress has entered and appropriated this field, as I have said, is evident from the decision in the Olsen Case in addition to the rulings already cited. This is the necessary import of the following language in that ease: “In the act we are considering, Congress has expressly declared that transactions and prices of grain in dealing in futures are susceptible to speculation, manipulation, and control which are detrimental to the producer and consumer and persons handling grain in interstate commerce and render regulation imperative for the protection of such commerce and the national public interest therein. * * * Sales of an article which affect the countrywide price of the article directly affect the country-wide commerce in it. By reason and authority, therefore, in determining the validity of this act, we are prevented from questioning the conclusion of Congress that manipulation of the market for futures on the Chicago Board of Trade may, and from time to time does, directly burden and obstruct commerce between the states in grain, and that it recurs and is a constantly possible-danger. For this reason, Congress has the power to provide the appropriate means adopted in this act by which this abuse may be restrained and avoided. * * * The Board of Trade conducts a business which is affected with a public interest and is, therefore, subject to reasonable regulation in the public interest.”'
The mere fact that no grain' was actually delivered or received pursuant to purchases and sales, but that the sales and purchases were set off against others according to the custom of exchanges, does not show that the transactions were illegal. Wilhite v. Houston (C. C. A. 8) 200 F. 390. All the more is this true where the very nature of the transaction was in its inception a spread or set-off dealing, which has been expressly held to be lawful. It is in evidence that some of these defendants would have been able to respond to their obligations under the contract entered into, but this is not essential. Contracts in every day affairs are entered into, and pecuniary liabilities thereby established irrespective of the financial ability of a party to respond thereto; nor can it be expected that brokers and parties upon contract markets must be put to investigation of a customer’s financial rating before permitting transactions upon such markets.
The situation is conclusively disposed of by Mr. Justice Holmes in his opinion in *534Board of Trade of Chicago v. Christie Grain & Stock Company, 198 U. S. 259, 25 S. Ct. 637, 49 L. Ed. 1031, as shown in Judge Gardner’s opinion.
No opinion filed.