§ 95. Where Contracts for Future Delivery are Sustained. The statutory regulations in regard to contracts for the delivery of grain at a future day, with a fixed price, are not uniform, the difference relating essentially to the burden of proof. Where it appears that a contract for the future delivery of grain, at a fixed price, was a bona fide transaction, that is, that it was made with the express understanding that the grain was to be, in fact, delivered and received by the parties, and that the contract was not intended to be a protection of a gambling transaction, it will be sustained. In a case in Wisconsin, it was held that to uphold a contract in writing for the sale and delivery of grain at a future day, for a price certain, it must affirmatively and satisfactorily appear that it was made with an actual view to the delivery and receipt of the grain, and not as a cover for a gambling transaction. Where some of the transactions between the parties which enter into the consideration of a note and mortgage are mere gaming transactions, they render the whole security void.' The 1 Barnard v. Backhaus, 52 Wis. 593. See also Pope v. Hanke, 155 Ill. 617; Crawford v. Spencer, 92 Mo. 498; First Nat. Bank v. Oskaloosa Packing Co., 66 Iowa, 41; Schneider v. Turner, 130 Ill. 28; Cothran v. Ellis, 125 Ill. 496; Fortenbury v. State, 47 Ark. 188; Pixley v. Boynton, 79 Ill. 351; Miller v. Bensley, 20 Ill. App. 528; Clay v. Allen, 63 Miss. 426; Commiskey v. Williams, 20 Mo. App. 606; Kingsbury v. Kirwan, 77 N. Y. 612; Cooke v. Davis, 53 N. Y. 318; Yerkes v. Salomon, 11 Hun, 471; Seeligson v. Lewis, G5 Tex. 215; s. C., 57 Am. Rep. 593; Kirkpatrick v. Adams, 20 Fed. Rep. 287; Bartlett v. Smith, 13 Fed. Rep. 263; S. C., 4 McCrary, 388; Maxton v. Gheen, 75 Pa. St. 166; Appleman v. Fisher, 34 Md. 540; Smith v. Bouvier, 70 Pa. St. 325; Cassard v. Hinman, 1 Bosw. 207; Stanton v. Small, 3 Sandf. 230; McIlvaine v. Egerton, 2 Robt. (N. Y.) 422; Gregory v. Wattowa, 58 Iowa, 711; Cobb v. Prell, 15 Fed. Rep. 774. "A contract for the sale of property which the vendor does not possess, to be delivered in future, is not illegal, unless both parties understood it to be a mere speculation in the future price, with no intention of delivering or accepting, and the burden of proof is on the party alleging the illegality. Conner v. Robertson, 37 La. Ann. 814; s. C., 55 Am. Rep. 521. It is not unlawful to buy or sell commodities to be delivered at a future day, even if at the time of the purchase the seller has none to deliver, and no means of obtaining them, excep to go into the market and buy them, if the parties really intend and agree that the goods are to be delivered and the price paid. Such rule in Illinois is not in entire accord with that of Wisconsin, as above given. In a leading case before the Circuit Court of the United States for the Eastern District of Wisconsin, it was held that under the Illinois statute, a simple a proceeding is a wager, and as such void, only when the real intent of the parties is to speculate in the rise and fall of prices, and the goods are not to be delivered, but one party is to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract. The character of such an operation is derived from the intention of the parties, and such party must concur in the vicious intent to bring the transaction under the denunciations of the law against gambling. If either contracts in good faith and contemplates a sale to be followed by the constituents of delivery and payment, he is entitled to the benefit of the contract, no matter what may have been the secret intention or purpose of the other party. Benjamin on Sales (4th Ed.), §§ 82, 83, and 542, and authorities there cited; Irwin v. Williar, 110 U. S. 499; Rountree v. Smith, 108 U. S. 269; Gregory v. Wendell, 40 Mich. 432; Pixley v. Boynton, 79 Ill. 351." Clay v. Allen, 63 Miss. 426, 430. "The plaintiff claims that the transactions out of which T's pretended indebtedness arose were gambling transactions, in that they were not, as they purported to be upon their face, contracts for the sale and delivery of grain, but, virtually, bets in relation to the future market price of grain in Chicago. It is a matter of general information that many ostensible transactions in grain are of a purely gambling and criminal character. The widespread ruin produced shows them to be among the greatest of evils. Where their true character is discovered, courts should promptly condemn them, and hold them void. But they need to proceed with caution. In the movement of the grain of the country, contracts for future delivery are, to some extent, a necessity, and they are as legitimate as any other; and that, too, though the parties may contemplate the possibility of a settlement by a payment of differences. The real intention of the parties, of course, must determine the character of the transaction, and in arriving at the intention we must be governed by the evidence, and not by conjectures based upon our knowledge of other contracts." Tomblin v. Callen, 69 Iowa, 229, 230. "We utterly fail to discover any wrong on the part of the plaintiffs. Their business was a legitimate one, and, so far as appears, their connection with this transaction honest. Their profits were not to be affected by the result, their commissions were not to be increased or diminished by any contingency. It is true they were aware that the defendant, at the time, had no wheat. But the fact itself being immaterial, their knowledge of it is equally so. It is not only common, but perfectly legal, and sometimes necessary, to contract for the sale and future delivery of an article which, at the time, has no existence, but which is afterwards to be purchased, raised or manufactured. option, reserved by the seller to himself, as to time of delivery of property within certain time, and the settlement of differences upon such a contract, does not render the contract void as a gambling transaction. The burden of proof, in an action on such a contract by a broker for commissions and advances, for settlements made by the "ringing up' process, is, therefore, upon the defendant to show the gambling intent; and it does not follow, from the fact that he himself intended no delivery, that such was the intention of the broker and the other principal, or that deliveries were not made as a matter of fact.1 In the opinion in this case, the court said: "The weight of authority, therefore, in this circuit, is all one way as applied to Illinois transactions, namely, that a simple option reserved by the seller to himself as to time of delivery of property within certain limits, and the settlement of differences upon such a contract, does not make the contract void as a gambling transaction. The proof must go further, and affirmatively show that it was not the intention of either seller or buyer when the contract was made to deliver any property; and this is not proved by showing merely the intention of one party, even coupled with the intention of his agent representing him in the transaction." In a case before the Supreme Court of the United States, Mr. Justice Matthews, It does not appear that the defendant had any intention beyond what appears upon the face of the contract, or if he had, that the plaintiffs were cognizant of it. The mischief and illegality arises when the apparent contract is not the real one, when it is a mere cover for ulterior designs, and such as are not authorized by law. A contract for the sale and purchase of wheat, to be delivered in good faith at a future time, is one thing, and is not inconsistent with the law. But such a contract, entered into without an intention of having any wheat pass from one party to the other, but with an understanding said: "The generally accepted doctrine in this country is, as stated by Mr. Benjamin, that a contract for the sale of goods to be delivered at a future day is valid, even though the seller has not the goods, nor any other means of getting them than to go into market and buy them; but such a contract is only valid when the parties really intend and agree that the goods are to be delivered by the seller and the price to be paid by the buyer; and if, under the guise of such a contract, the real intent be merely to speculate in the rise and fall of prices, and the goods are not to be delivered, but one party is to pay to the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, then the whole transaction constitutes nothing more than a wager, and is null and void."'1 § 96. Rights and Liabilities of Third Parties.-A third party, who acquires an interest in a contract for cornering the market, as an agent or broker, or by advancing money under the contract, stands in the same legal position as the principal parties in interest. In a recent case in Illinois, it was held that a broker, who is privy to the unlawful design of the parties to an option contract, and brings them together for the purpose of making it, cannot recover for any services or losses incurred in the transaction. In the case of Samuels v. Oliver, the rule, relat 1 Irwin v. Williar, 110 U. S. 499, 508; s. C., 4 Sup. Ct. Rep. 160. Pope v. Hanke, 155 Ill. 617. See also Nat'l Bank of Augusta v. Cunningham, 75 Ga. 366; Cunningham v. Nat'l Bank, 71 Ga. 400; Thompson v. Cummings, 68 Ga. 124; McCormick v. Nickols, 19 Ill. App. 334; Stewart v. Schall, 65 Md. 299; s. c., 57 Am. Rep. 327; Fortenbury v. State, 47 Ark. 188; Irwin v. Williar, 110 U. S. 499; In re Green, 7 Biss. 338; Kirkpatrick v. Adams, 20 Fed. Rep. 287; Dickson v. Thomas, 97 Pa. St. 278; Beadles v. Owing, 16 Lea, 424; Barnard v. Backhaus, 52 Wis. 593; Pearce v. Foote, 113 Ill. 228; s. c., 55 Am. Rep. 414. "At the argument, the case of Third Nat'l Bank, 10 Fed. Rep. 243, was cited as favoring the position that the rule that money lent knowingly, and for the purpose of furthering an illegal act, cannot be recovered, applies to acts contrary to the statute law, and not to those contrary to the law founded on public policy. That case was upon promissory notes, the plaintiff claiming to be an innocent holder for value. The notes were given for balances ing to the standing of third parties, is stated, as follows: If a grain broker, in executing the instructions of his principal, is required to pay out money to adjust differences in respect of the purchase and sale of grain, and is guilty of no fraud on an illegal agreement, unenforceable between the original parties, but it was not within the gaming statute of Missouri, which destroys the negotiable character of a note given for a gaming consideration, within the term of that statute, for it pronounces a gaming contract absolutely void. And it was held that an innocent holder for value would recover. In the opinion it is said that the great weight of authority supports the rule that a broker or agent employed to buy or sell commodities for the purpose of speculating on the rise and fall of prices merely, and the agent buys in his own name, but on his principal's account, and after losses have occurred in such transactions, he advances money at his principal's request to pay such losses, or if he pays such losses, and afterwards his principal gives him a note therefor, may recover against principal the advances so made, or the note so executed, notwithstanding the illegal character of the original venture. Whether such be the rule in this State need not be considered. But it is further remarked: 'If a broker or factor supply his principal with funds for the express purpose of enabling him to engage in illegal transactions, and if he (the agent) conducts the illegal venture in his own name, it seems clear that he becomes a particeps criminis, and the law will not aid him to recover moneys advanced for such purposes, nor will it enforce securities taken there for.' And this makes near approach to the controlling principle and facts, as alleged in the case before us. Where a man lends money to another for the express purpose of enabling him to commit a specific unlawful act, and such act be afterwards committed by means of the aid so received, the lender is a particeps criminis." Waugh v. Beck, 114 Pa. St. 422, 429. "The customer employs the broker to buy certain railroad stocks for his account, and to pay for them, and to hold them subject to his order as to the time of the sale. The customer advances ten per cent. of their market value, and agrees to keep good such proportionate advance according to the fluctuations of the market. Waiving, for the moment, all disputed questions, I state the following as the result of this agreement: The broker undertakes and agrees: 1. At once to buy for the customer the stocks indicated. 2. To advance all the money required for the purchase, beyond the ten per cent. furnished by the customer. 3. To carry or hold such stocks for the benefit of the customer so long as the margin of ten per cent. is kept good, or until notice is given by either party that the transaction must be closed. An appreciation in the value of the stocks is the gain of the customer, and not of the broker. 4. At all times to have in his name or under his control, ready for delivery, the shares purchased, or an equal amount of other shares of the same stock. 5. |