Pearce v. Foote

Mr. Justice Scott

delivered the opinion of the Court:

This case is one of more than usual importance, on account of the sum involved, which is quite considerable, and on account of-the principles involved in the decision. There can be no controversy in this court concerning the facts. They must be regarded as having been settled by the finding and judgment of the trial and Appellate courts. This much is frankly conceded by counsel, and the position is taken, if the case shall now be considered as on a demurrer to evidence,— that is, conceding the truth of all the evidence tends to establish in favor of plaintiff,—the facts do not establish, in law, a right to recover. ■ The defendant does not claim he is an assignee of the note for value. It came to him from Hooker & Co., to whom it had been assigned by plaintiff, among the assets of that firm that were assigned to him for the benefit of their creditors. It is plain the defendant stands in the shoes of his assignors, and in the further consideration of the case it will be most convenient to treat it as though the action had been brought against Hooker & Co. The ease naturally falls into two parts: First, is the contract which has been found by the trial court to exist between plaintiff and Hooker & Co. a “gambling contract,” as those terms are used in the statute, and hence void; and second, if the contract shall be held to be obnoxious to the statute, since plaintiff has delivered the note under that contract, can he, under the statute, recover its value from Hooker & Co., or, what is the same thing, from their assignee ? At the outset this court disclaims any right to review controverted questions of fact. The issues having been found for plaintiff by the lower court, it will be understood that all the facts the evidence tends to establish in his favor will, as upon a demurrer to evidence, be held to have been so found for him.

Looking into the evidence to ascertain that which it' tends to prove, it is seen what the contract is or was between plaintiff and-Hooker & Co., out of which the present litigation ultimately sprang. As respects the original contract between plaintiff and Hooker & Co., Mr. S. G. Hooker, a member of the firm, testified that plaintiff said to him: “I don’t want to pay for any property. I want to trade in options exclusively. I don’t want to pay for any cash grain.” To which witness replied: “You shall not. I will trade with you in differences. ” And again, that plaintiff further said to him: “I don’t ever want to pay for any more property. I don’t want to carry any more property on the board of trade. I want to trade exclusively in differences in options,—betting on the market. ” To which witness answered: “I agreed to do just exactly that thing for him.” On being asked, “What thing,” the witness said, “To trade in differences and in options, and to settle upon profit and loss upon the fluctua- . tions of the market,—guessing or betting on it.” Plaintiff states the contract substantially in the same way. He says : “I told him (Hooker) I didn’t want to buy any grain, no lard, no pork, or any thing of the kind. He said he could make money in speculation,—for instance, buy for this month for delivery next month, then settle on differences. If there was a loss, I had to pay it; and if there was a gain, he would pay it to me.” The plaintiff further says neither Mr. Hooker nor Mr. Lincoln had any authority from him to deal in any other way except to settle on differences. Hooker says the contract he made with plaintiff was made on behalf of his firm, of which he was the head, and within five or six days after the making of it he informed Mr. Lincoln, his partner, of the arrangement he had made with plaintiff. It is due, however, to Mr. Lincoln, to say that he denies all knowledge on his part that the firm had contracted to deal in options with plaintiff, but it is freely and fully admitted by Hooker the contract was made with the firm, and the trial court must have found such was the contract, and that finding is, of course, conclusive on this court.

It is plain that under the contract between plaintiff and the firm of Hooker & Co., it was not in the contemplation of the parties any actual purchases or sales of grain or other commodities should be made for plaintiff, or on his behalf. Indeed, it was expressly agreed none should be made. All the speculating that was to be done was to be in differences in options,—or, as the parties termed it, “betting on the market.” Of course it was expected by the parties that such purchases and sales of grdin or other commodities that should be made, were to be made on the board of trade. As was said by this court in Pixley v. Boynton, 79 Ill. 351, the true idea of an option is what are called, in the peculiar language of the dealers, “puts” and “calls.” A “put” is defined to be the “privilege of delivering or not delivering” the thing sold, and a “call” is defined to be the “privilege of calling for or not-calling for” the thing bought. “Optional contracts,” in this sense, are usually settled by adjusting market values, as the party having the “option” may elect. It is simply a mode adopted for speculating in differences in market values of grain or other commodities. It must have been in this sense the term “option” is used in the statute. Such a contract-is obviously fictitious, having none of the elements of good-.faith, as in a contract where both parties are bound, and is defined by statute as a “gambling contract. ” Fictitious purchases or sales, such as were in the contemplation of the parties, were as nothing, and it is a matter of no consequence where it is pretended they were made,—whether on the board of trade or elsewhere. It would have been quite as well, and would have conformed as nearly to the contract of Hooker & Co., had they simply entered upon their books they had made such purchases or sales on behalf of plaintiff, without going upon the board of trade, and claiming they had made such purchases and sales, and on returning made such entries. “Betting on the market” could be done just as well in that way as in any other. It needs no illustration to make it apparent the contract between plaintiff and Hooker & Co., as the trial court must have found it from the evidence, comes exactly within the meaning of section 130 of the Criminal Code, that declares: “Whoever contracts to have or to give to himself or another the option to sell or buy at a future time any grain • or other commodity,” shall be subject to a fine or imprisonment, and “all contracts made in violation of this section shall be considered gambling contracts, and shall be void.” It is seen this statute forbids any one to contract to have, or to give to himself, or to contract to give to another, the privilege to deal in options. That is precisely what Hooker & Co. did. They contracted to give to plaintiff the privilege to deal in options and settle with them upon differences, as indicated or determined by the fluctuations of the market. That is one of the offences against which the statute is leveled. Of course the party who contracts to have the option is equally guilty with the party who contracts to give it. It is wholly immaterial whether plaintiff knew “optional contracts, ” such as his agreement with Hooker & Co. contemplated, were defined by statute to be “gambling contracts. ” His ignorance of the statute in that respect did not change the character of the contract. Undoubtedly, under the contract between the parties, Hooker & Co. may have made fictitious contracts with persons, unknown to plaintiff, on the board of trade, nominally, at least, on behalf of plaintiff, for the purchase or sale of grain, and may be other commodities, which were settled by differences in market values, in which transactions the losses greatly exceeded the profits. Finally, Hooker & Co. rendered plaintiff an account of such transactions, which included losses and commissions claimed to be due to them, growing out of these purchases and sales, amounting to a large sum,— perhaps over $22,000. It appears that plaintiff, by his attorney in fact, in settling this large demand made against him, paid Hooker & Co. $2000 in cash, and assigned to them, with his guaranty of payment written on the back, four notes of $5000 each, made by the trustees of the Couch estate to plaintiff. One of these notes passed to defendant, under the assignment made by Hooker & Co. for the benefit of their creditors, and is the note in controversy. It is admitted that before this suit was brought, plaintiff demanded the note of defendant, and on his refusal to deliver it this action was brought in the circuit court, and the recovery was for its face value and accumulated interest. It is obvious that under section 131 of the Criminal Code, which declares void all promissory notes, bids, or other securities made, or given, or executed, where any part of the consideration thereof is money or any valuable thing won by wager upon any unknown or contingent event whatever, or made, or given, or executed, for reimbursing any money knowingly lent or advanced, at the time and place of such bet, to any person so betting, the assignment and guaranty of the note in controversy .to Hooker & Co., under the circumstances proven, was void, and passed no title whatever to them or to their assignee, the defendant. It was so declared by this court in Tenney v. Foote, 95 Ill. 99.

Assuming, then, as must be done, the facts were correctly found by the trial court, the contract between plaintiff and Hooker & Co. was, in law, a “gambling contract, ” and hence void, the question arises on the other branch of the case, whether plaintiff, either at common law or under the statute of this State, can recover that which he paid to Hooker & Co. as money or property lost in a gambling transaction, from defendant, in whose hands the specific property is found. As the solution of this question depends solely upon the construction that is to be given to the statute of this State on this subject, no investigation will be made as to what the common law was in such cases. So much of section 132 of the Criminal Code as has any application to the point being considered, is as follows: “Any person who shall, * * * by any wager or bet upon any * * * contingent event, lose to any person so * * * betting, any sum of money or other valuable thing, (amounting in the whole to the sum of $10,) and shall pay or deliver the same, or any part thereof, the person so losing and paying or delivering the same shall be at liberty to sue for and recover the goods, money or other valuable thing so lost and paid or delivered, or any part thereof, or the full value of the same, by an action of * * * trover, * * * from the tuinner thereof, with costs, in any court of competent jurisdiction.” It is said, if it shall be conceded the contract between plaintiff and Hooker & Co. were a “gambling contract,” within the contemplation of the statute, this provision of section 132 does not apply to nor does it authorize an action against Hooker & Co., for the simple reason they had not won any money or valuable thing from plaintiff upon any gambling transaction,—or, more tersely stated, the argument is, the note in controversy “was not paid upon á bet or gambling transaction to the tvinner of such bet.” The position taken can hardly be maintained. The agreement, as the trial court was authorized to find it, is, that ^looker & Co. contracted to give plaintiff the privilege to deal in options with or through them, and “if there was a loss, ” plaintiff was to pay it to them, and “if there was a gain, ” Hooker & Co. were to pay it to plaintiff, and for their services they were to he paid a commission. The suggestion that Hooker & Co. merely acted as the agents for plaintiff in these unlawful transactions, may he rejected at once as having nothing in its support. There is and can be no such thing as agency in the perpetration of crimes or misdemeanors, or, indeed, in the doing of any unlawful act. All persons actively participating are principals. Treating all the parties engaged as principals, it is immaterial to which one the money or property lost was in .fact paid or delivered,—whether to Hooker & Co., or to any of the parties on the board of trade with whom they may have made fictitious contracts, and lost,—and paying to either principal is, in law, paying to the “winner.” But aside from this view, the contract in express terms provides the losses, if any, should be paid to Hooker & Co., and not to the person ■with whom they might have had “gambling contracts ” on the board of trade, or elsewhere, and the money and note wrere so paid and delivered to Hooker & Co., as the contract provided should be done. Plaintiff could not know with whom they may have had such transactions. It was a matter about which he had no concern, for the reason he was obligating to pay the losses to Hooker & Co., and to no one else. So far as he was concerned they were the “winners” of his money and property. Plaintiff did not, and could not, know any one else in the transactions. It was from Hooker & Co., and nobody else, that plaintiff obtained the contract to deal in options, and despite all subtle reasoning on this branch of the case, it is apparent Hooker & Co. are the actual “winners ” of plaintiff’s money and property, and he neither knew nor cared to whom they may have paid any portion or all of that which they obtained from him.

But there is another view that may be taken that leads to the same conclusion,—that is, under the most favorable construction that can be given to the evidence the contract between the parties was, that plaintiff w'ould reimburse Hooker & Co. for any losses they might sustain in optional or gambling contracts made on the board of trade, in consideration that if any gains, should be made in such dealing, Hooker & Co. would pay the same to plaintiff, and that plaintiff would pay them a commission for their services. Such a contract is obviously unlawful, as being inhibited by statute. (Crim. Code, sec. 132.) The wager in this case was upon market values within a given time,' or on a given day. What is a wager ? It is a contract by which two or more parties agree that a certain sum of money or other valuable thing shall be paid or delivered to one of them on the happening of a certain event. That is precisely what was done in this case. The betting was as to market values within stated periods, and was evidently done by Hooker & Co. with others whom they may have met on the board of trade. It is not probable the parties that won in such transactions from Hooker & Co. had any knowledge of plaintiff. ■ They looked alone to Hooker & Co. for payment of their winnings, and it is said they were paid by Hooker & Co. Plaintiff’s contract—if he made any— to reimburse Hooker & Co. for any such losses paid by them, is not only contrary to the statute, but is forbidden by a sound public policy, and is therefore void.

Although the statutes being considered are highly penal, there is no warrant for construing them with any unreasonable strictness. They ought rather to have a just, if not liberal, construction, to the end the legislative intention may be accomplished,—to prohibit all dealings in options in grains or other commodities. Nothing is productive of more mischievous results. Considerable fortunes secured by a life of honest industry have been lost in a single venture in “options.” The evil is all the more dangerous from the fact it seemingly has the sanction of honorable commercial usage in its support. It is a vice that has in recent years grown to enormous proportions. Legitimate transactions on the board of trade are of the utmost importance in commerce. Such contracts, whether for immediate or future delivery, are valid in law, and receive its sanction and all the support that can be given to them. It is only against unlawful “gambling contracts ” the penalties of the law are denounced, and no subtle finesse of construction ought to be adopted to defeat the end it is to be hoped may be ultimately accomplished.

The point is made the declaration is not framed under the statute, and is not sufficient in law to support a judgment on the evidence contained in the record. The defect insisted upon is, it does not contain the words, “whereby an action hath accrued to the plaintiff according to the form of this act.” The declaration is in the usual form in trover, and was evidently drawn from approved precedents. It is sufficient in law to support a judgment in trover. But if it were insufficient, under the evidence given, that objection ought to have been pointed out on the trial, as should have been done by special demurrer had the facts been stated in the declaration, when an amendment would have been allowable instanter. After verdict the declaration is clearly sufficient, under the statute of “Amendments and Jeofails,” (sec. 6, div. 9,) which declares no judgment shall be arrested or stayed after verdict for the want of any allegation or averment on account of which omission a special demurrer could have been maintained. It is now too late to insist upon the objection made, even if it might have been sustained at the trial had it been made specifically.

It is also made an objection to the present judgment it is rendered against the defendant individually, whereas he was sued as assignee of Hooker & Co., and if any judgment in this action was justifiable, it should have been rendered against defendant in his representative capacity, and not otherwise. A sufficient answer to the position taken is, the supposed fact on which the error is assigned has really no existence. Defendant was not sued in his representative character, but as an individual, for his alleged personal tort. Besides that, if he is guilty of a conversion of plaintiff’s property, it is his own wrongful act, and not that of his assignors. It is a matter of no consequence the descriptive appellation of assignee is affixed to defendant’s name. It does not indicate he was sued otherwise than for his personal wrongful act. The suit was properly brought, and if it- can be sustained it must be done against defendant as an individual, and not against him as the representative of his assignors.

As to the fifth error assigned, viz, the Appellate Court erred in not holding the circuit court erred in denying the motion for a new trial, based upon the affidavits filed and sworn to in the cause, there is clearly nothing in it. The granting of a new trial, under the circumstances disclosed by such affidavits, was a matter resting in the sound discretion of the circuit court, and it is only when this court is able to say there has been an abuse of such discretion, it will interpose. After the fullest and most careful examination, nothing is discovered that would warrant such interference in the present case.

The judgment of the Appellate Court must be affirmed, which is done.

Judgment affirmed.