White v. Barber/Opinion of the Court

The only question involved in the suit at law is as to the correctness of the charge to the jury in the particulars specially excepted to. The proper construction of the statute of Illinois, (section 130 of chapter 38 of the Revised Statutes,) was determined by the supreme court of Illinois in Wolcott v. Heath, 78 Ill. 433, in the passage from the opinion in that case quoted by the circuit court in its charge to the jury. According to that construction, the contracts for the sale of No. 2 spring wheat, deliverable in July, 1882, made by Barber, were not void as gambling contracts, if they were bona fide contracts for the actual sale of grain, and if the only option the seller had was as to the time of delivery, the obligation assumed by Barber being to deliver the grain at all events, with the option only to deliver it at any time before the close of business on the last day of July, 1882. That the contracts made by Barber were of that character, and were not such gambling contracts as the statute denounces, must be held to have been found by the jury under the portions of the charge specially excepted to, and under other portions of the charge contained in the record. The plaintiff did not pray for any instructions to be given to the jury, nor did he present to the court any propositions of law which he maintained the court should lay before the jury as guides to a proper solution of the questions in controversy. The general exception to the whole of the charge cannot be regarded, as it is a violation of rule 4 of this court.

In its charge to the jury, the circuit court explained fully to them the theory of White,-that the dealings on account of which Barber paid out the moneys in question were, as between White and Barber, gambling or wager contracts, and, therefore, illegal. It presented fairly to them a statement of the testimony on both sides of that question, as set forth in the bill of exceptions. It also submitted to them the question whether, in view of the testimony, the contracts in question were contracts to buy or sell at a future day, or whether they were absolute sales, in which the seller had the entire month of July, 1882, in which to perform his contracts; and it instructed them that if they should find that the dealings by the defendant for the plaintiff were options to buy or sell at a future day, their verdict should be for the plaintiff; but that if, on the contrary, they should find that such dealings were contracts by which the grain was to be absolutely delivered during the month of July, 1882, the only option being the time when, during the month, the delivery should be made, their verdict should be for the defendant. This charge was very favorable to the plaintiff, for it necessarily involved an affirmation of the propositions that the plaintiff had a right to revoke his action in advising the tender of the No. 2 red winter wheat in fulfillment of the contracts, and had a right to revoke his express or implied assent to the appointment of the committee, under the rules of the board of trade, to determine what was a fair settling price for the wheat on the thirty-first of July, 1882, and had a right to recall his connection with the chancery suit brought by Barber against the board of trade, in which the validity of the contracts was recognized, and had a right to ignore the fact that he had placed Barber in the position in which, at the time of the giving of the notice of April 2, 1883, by White to Barber, Barber was not at liberty to refuse payment of the damages arising out of the non-fulfillment of the contracts, but was in danger of being expelled from the board of trade, if he persisted in such refusal.

The jury must have found, on the testimony, that the contracts made by Barber for the plaintiff at the board of trade were valid contracts, and that Barber was liable on them to either deliver the grain or pay the damages in case he failed to deliver, because the court charged the jury that, if the proof satisfied them that, by the contracts, Barber was liable to either deliver the grain or pay the damages, then the contracts were not gambling contracts, and they should find for the defendant. We find no error in the record in the suit at law, and the judgment is affirmed.

In the suit in equity, the contention on the part of White is that the contracts and transactions between Barber and himself were wagering contracts, and, therefore, void, and that the $6,700 was subject to the demand of White, if such contracts were void. It is urged on the part of White that the wheat was sold by Barber for him without any intention on the part of either of them that there should be any delivery thereof, but with the intention that the transactions should be settled by the payment of the differences between the prices at which the wheat was sold and its prices at the times stipulated for its delivery. White testifies that such was his understanding, communicated to Barber before Barber made the contracts of sale. Barber testifies that he has no recollection of anything of the kind. The evidence as to what White did in connection with the transactions is inconsistent with White's version, and it clearly appears that Barber had no such understanding.

The defense set up in the answer of Barber is proved to every substantial intent, and the facts therein set forth constitute a valid bar to the suit of White. The evidence shows that White, in advance, required that Barber should trade with parties whom he knew to be responsible; that in each case he gave special directions to Barber to buy or to sell, as the case might be, and left it to Barber to put the contract in form, these directions being generally given by telegrams from White at Fort Wayne to Barber at Chicago; that it was understood between them that Barber should buy or sell at the Chicago board of trade; that Barber, in all cases, obeyed the orders of White; that White controlled the trades which Barber made, that, unless the margin was exhausted, Barber was not to close out White's trades until White directed him to do so; that it was understood that Barber was to observe the rules of the board of trade; that White knew that Barber, as a member of such board, making such contracts on the board for White, would be obliged to observe those rules; that White directed Barber when to cover and when to close trades, and that Barber observed his orders; that White acted on his own judgment in making the sales of wheat for delivery in July, 1882; that, when the contracts for those sales had matured, White approved of the tender being made of No. 2 red winter wheat; that subsequently, on August 5 1882, White telegraphed to Barber from Fort Wayne, directing him not to cancel the July trades, and saying that White's attorneys at Fort Wayne believed that such tender was good, and could be enforced; and that, on the fifteenth of August, 1882, White, in a letter to Barber, stated that his attorney at Fort Wayne had examined the subject of the July deals in connection with the rules of the board of trade, and had concluded that the delivery which Barber had tendered was good, and was 'binding on the buyer, and that we can collect the difference in court.' It also appears that Barber was unwilling to default on the contracts lest it should injure his reputation on the board of trade, and that he defaulted on them because White insisted that he should do so. White knew of the rule of the board of trade under which a committee could be appointed to determine what was a fair price for property to be delivered, and was willing to leave it to such committee. After the committee had fixed the price at $1.35 per bushel, White was advised of this action, and determined that legal proceedings should be taken to set aside the award of the committee. It was in pursuance of the wish of White that the chancery suit was brought by Barber against the board of trade, to enjoin all action under such award. In that suit, an injunction was obtained to testrain such action, which injunction remained in force until the determination by the supreme court of Illinois of a suit brought by one Wright against the board of trade, (15 Chi. Leg. N. 239,) it having been stipulated that the suit of Barber against the board of trade should abide the final result of the Wright suit. The latter suit was decided in favor of the board of trade. After all this had occurred, White determined to repudiate his obligations to Barber, and, on the second of April, 1883, he served on Barber the written notice, claiming that the contracts for the sale of the wheat were illegal and void, and forbidding Barber to pay over any part of the $11,412.50 to any one but White, and demanding the immediate payment of it to him. On the twentieth of April, 1883, Barber, having been notified of complaints made against him before the board of trade, under its rules, which provided for the hearing of complaints and for suspension or expulsion in case of noncompliance with contracts, notified White in writing of these facts, and asked White if he could protect him (Barber) in any way. Not receiving such protection, Barber, on the twenty-fourth of April, 1883, paid out the moneys necessary to satisfy the damages on the contracts, and thereby relieved himself from being suspended from membership in the board of trade. He had no alternative but to pay the money or lose his business, and also lose a sum of money, in the value of his membership in the board of trade, equal to, if not greater than, the amount in controversy in this suit. He had acted strictly according to the instructions he had received from White. White had left the money in his hands for the express purpose of paying such damages as the committee of the board of trade should find to be due. Barber retained the money in order to allow White to obtain some benefit, if he could, from the suit in chancery brought by Barber. By that suit, and by the suit of Wright, all legal means were exhausted, leaving the rights of the purchasers under the contracts of sale to be enforced according to the rules of the board of trade under which they were made. The payment of the money by Barber in satisfaction of those damages was, under the circumstances, demanded by every principle of law and of equity, and no right was left in White to claim the $6,700.

White had no right to forbid the payment of the money by Barber, or to recall it from its destination. The money is to be regarded as having been, for all practical purposes, irrevocably set apart by both White and Barber for the payment of such damages, prior to the giving of the notice by White to Barber on the second of April, 1883. White had caused Barber to make the contracts, and to become bound for their performance, and had made it necessary that Barber should put up the margins and security, and had thus placed it out of the power of Barber to control the margins and security in any other way than according to the rules of the board of trade, in subordination to which White as well as Barber had acted throughout. It was obedience to the orders of White which had made Barber subject to suspension or expulsion by the board of trade. The $6,700 had been put up by Barber as margins, under the rules of the board of trade, prior to the giving of the notice of April 2, 1883, and thus had been before that time devoted by White as well as Barber to the purpose of paying the damages under the rules of the board of trade. For the reasons thus stated, we are of opinion that the claim of White sought to be enforced in this suit in equity cannot be allowed.

A claim is made on the part of White that he can recover this money under the provisions of section 132 of chapter 38 of the Revised Statutes of Illinois, (Hurd, Rev. St. Ed. 1883, p. 394; Ed. 1885, p. 405.) That section provides that 'any person who shall at anytime, * *  * by any wager or bet upon any *  *  * unknown or contingent event whatever, lose to any person so *  *  * betting any sum of money, *  *  * amounting in the whole to the sum of $10, and shall pay *  *  * the same or any part thereof, the person so losing and paying *  *  * the same shall be at liberty to sue for and recover the money *  *  * so lost and paid, *  *  * or any part thereof, *  *  * by action of debt, *  *  * from the winner thereof, with costs, in any court of competent jurisdiction.' It is a sufficient answer to this claim to say that Barber was not the 'winner' of any money from White.

There is a further view applicable to this case, arising out of the decision of this court in Higgins v. McCrea, 116 U.S. 671, 6 Sup. Ct. Rep. 557. In that case, Higgins, the broker of McCrea, sued him to recover moneys which Higgins had paid for the purchase, at the Chicago board of trade, of pork and lard, on the instruction of McCrea, in May, 1883, deliverable in August, 1883, on such day as the seller might elect. In his answer, McCrea set up that he had engaged with the plaintiff in gambling transactions, and that the contracts which the plaintiff had made were not contracts for the actual delivery of any merchandise, but were pretended purchases and mere options, and that it was the understanding of all the parties to the transactions that no merchandise should be delivered on the contracts, but that the same should be settled upon the differences between the contract prices and the market prices. On this basis, McCrea claimed, by way of counter-claim, to recover judgment against the plaintiff for the sum of nearly $20,000, which he alleged he had paid to the plaintiff to carry on such gambling transactions and to purchase option contracts. The plaintiff denied the version thus given by the defendant of the transactions. The circuit court had instructed the jury that the defendant was entitled to recover upon his counter-claim, and he had a judgment accordingly. This court held that the case of the defendant, as stated by himself in his answer and counter-claim, was that the money was advanced by him to carry on a gambling transaction; that with his concurrence the money so advanced was used in such gambling transaction; and that, by the statute of Illinois, where the contracts were made, they were treated as gambling contracts, and were void; that the counter-claim thus stated was supported by the testimony of the defendant given on the trial; that there was no statute of Illinois to authorize the recovery of money paid on such contracts; and that no recovery could be had by the defendant. This court said in its opinion: 'We do not see on what ground a party who says in his pleading that the money which he seeks to recover was paid out for the accomplishment of a purpose made an offense by the law, and who testifies and insists to the end of his suit that the contract on which he advanced his money was illegal, criminal, and void, can recover it back in a court whose duty it is to give effect to the law which the party admits he intended to violate.'

The decree of the circuit court is affirmed.