Wagner v. Hildebrand

Opinion by Mr. Justice Fell, The law relating to stock-gambling transactions has been considered in a line of cases extending from Brua’s Appeal, 55 Pa. 294, to Anthony v. Unangst, 174 Pa. 10, and it has been firmly settled. A purchase of stock on margin for speculation is not necessarily a gambling transaction. If it is the intention of the parties that a real purchase shall be made by the broker, [142] although the delivery may be postponed or made to depend upon future conditions, the transaction is legal; if it is the intention that there is not to be a delivery to complete the purchase, but that the account is to be settled on the basis of a rise or fall in prices, it is a mere wager, and the contract cannot be enforced by either party: Peters v. Grim, 149 Pa. 163. The distinction made in the cases between transactions where there are actual purchases or sales and deliveries made or contemplated, and transactions which by the mutual understanding of the parties are to be settled by the payment of differences, is very accurately and clearly defined in the charge in this case. Some of the detached sentences of the charge which have been assigned as error may be open to criticism when considered alone. But they are not to be so considered. In connection with the context they are free from error, and we find no possible ground for objection to the charge when it is taken, as it should be, as a whole. The extent of the transactions and the conduct of the parties in relation to them tend to sustain the averment that no real purchase or sale was ever contemplated, but merely a wager on the fluctuation of the market. The accounts cover a period of fifteen months, and involve purchases amounting to over $300,000. During this time not a bond or share of stock was delivered or tendered, except a purchase of stock amounting to $100, which was made for a special purpose. The calls on the defendant were not to take up his stocks and bonds, but to deposit more margin. When the brokers wrere carrying stocks and bonds to the amount of $150,000, they wrote the defendant that in ordinary times a margin of five per cent would be required, and that while they did not ask that he should put up that much they desired that he should better protect his holdings, and added: '■ We will gladly allow you to withdraw money again as soon as the market improves.” In addition to this the defendant testified that there was an understanding and agreement that he would not be called on to pay for the stocks and bonds, but that the account would be settled by the payment of the difference in prices, and there was other testimony that his liability was limited by agreement to the amount he deposited as margin. The judgment is affirmed.