Buckingham v. Fitch

Opinion by Hall, J. The only point for our determination is whether the matter contained in the answer constituted a defence to this action. Thus two questions are presented: first, was the contract of purchase of wheat, alleged in the answer to have been made by the plaintiffs, void; and, second, if such contract was void, was the contract between plaintiffs and defendant, in pursuance of which the former paid for the latter the amount of the loss incurred by the purchase of the wheat, so tainted by the invalidity of the former contract as to be also void % 1. It may be, as contended by plaintiffs, that in the answer there is no express averment that the defendant knew or intended that the contract of purchase to be made for him by them should be a gambling contract, but, while this may be true, strictly speaking, the evident meaning of the answer is to the contrary. However this may be, the answer does aver, in the language of Thompson, j., Kent v. Miltenberger (13 Mo. App. Rep. 508), defining a gambling contract of the kind in issue, that the contract actually made by plaintiffs with the unknown vendor for wheat “was immoral, illegal and void, for that it was mutually agreed and tender stood by and between the parties to said contract that no grain should be delivered, and that the only subject matter of said pretended purchase and sale contracted for, was that the parties thereto should, at the time agreed upon for the delivery of said grain, settle the difference in price agreed to be paid and the market price at the time mentioned in said contract for the delivery of said grain.” And the answer also shows that, after the making of — 99 — said contract by plaintiffs, the defendant ratified the same as made by plaintiffs by giving them the note sued on in settlement of the amount of loss incurred on account of the contract, which had been previously paid by plaintiffs. So that the answer squarely presents to this action this defence, that plaintiffs at defendant’s request and as his brokers engaged to and did enter into the contract above set out in their names, but for him, and that the only consideration for the note sued on is a loss arising out of such contract paid by plaintiffs ; that such contract was a gambling contract, illegal and void, and against public policy, and the said consideration is insufficient to support the note. That the contract was on its face valid is not conclusive, and it was competent to show “by extrinsic evidence,” that it was intended “by the contracting parties, not as a commercial transaction, but as amere wager on the future of the market.” Kent v. Miltenberger, 13 Mo. App. Rep. 507. The burden of proving the illegal intent would be on the party attacking the validity of the contract. Ibid. The contract alleged in the answer to have been made by plaintiffs with the unknown vendor for the purchase of wheat, was clearly a gambling contract and, therefore, void. Ibid. Williams v. Friedman, 6 Mo. App. Rep. 269; Waterman v. Buckland, 1 Mo. App. Rep. 45. 2. As to the second question the law is clearly, “that where the contract grows immediately out of, and is connected with, an illegal or immoral act, a court of justice will not lend its aid to enforce it. And if the ■contract in fact, be only connected with the illegal (“or immoral ”) transaction, and growing immediately out of it, though it be in fact a new contract, it is equally tainted by it.” Armstrong v. Toler, 11 Wheaton 279. The contract of purchase of the- wheat in this case was not an illegal act, but it was contrary to public policy and was an immoral act as already in effect stated by us. So far as this second question is concerned, we perceive no difference between the effect of an illegal and an immoral act. The same rule applies to both acts. — 100 — The only difficulty in this case is in the application of the well-known rule of law, laid down in the 11th Wheaton, to the facts. In our opinion, the contract between plaintiffs and defendant, as appears from the answer, was not merely, that plaintiffs should pay the loss already incurred by defendant in the consequence of the gambling wheat “ deal,” but it was that the plaintiffs in their names, but really for the defendant, should conduct the gambling enterprise, manage the gambling transaction, collect the-profit, if any, arising therefrom, and account to the defendant therefor, and pay the loss incurred therein, if loss there should be, which the defendant should refund to them. There is no pretense that plaintiffs by their contract were to, or did pay, any other loss of defendant than the loss resulting from the contract made by the-plaintiffs. It seems clear to us that, unless the plaintiffs had conducted the gambling enterprise and managed the gambling transaction, they would not, under their contract with defendant, as set out in the answer, have been authorized to settle any loss of defendant. The right of plaintiffs to have refunded the amount of the loss paid by them does not depend upon the payment thereof alone, but depends upon the payment of the loss arising from a " deal ’ ’ made by them for defendant. This right of plaintiffs, then, is not only tainted with, but actually depends, upon the immoral “ deal ” of plaintiffs. The plaintiffs are not in the position of one, who has paid for another a loss incurred by the other at a gambling table ; but they are in the position of one, who has undertaken to furnish the necessary money to risk at a gambling table, to perform the act of gambling himself, and who has completed the undertaking, who has met with loss in so doing, and who has paid the - loss. . How, in the case at bar, can the payment of the loss be separated from the act of gambling done by the plaintiffs themselves under their agreement, in consequence of which the loss resulted? Had the “deal” resulted in a gain instead of a loss, who will contend that defendant could have maintained an action for the amount of the — 101 — .gain, upon the plaintiffs’ refusal to account for it ? The plaintiffs can have no better right to recover the loss paid by them, than the defendant would have to collect the .gain received by them. The purpose for which the defendant employed the plaintiffs was an immoral purpose; it necessarily follows that the contract of employment was immoral and invalid. In Kent v. Miltenberger, supra, in speaking of Barnard v. Backhans (52 Wis. 593), it is said, “the court deemed it clearly and satisfactorily proven, that, in respect of some of the transactions, none of the parties intended an actual sale and purchase of wheat, but that the whole thing was to be settled by payment of differrences. The court held just as we should have held upon similar proof that such transactions were gambling transactions and that part of the consideration of the. note, given to the broker, being tainted and void.” In Barnard v. Backhans, supra, it is also said, “now, what Bartlett & Mohr were employed to do — what the evidence shows they did do — was to enter into these gaming contracts for Baekhans. They were engaged equally with him in the transaction of illegal business; .and the fact that they were executing the orders of their principal does not render their conduct any the less blameworthy. All were engaged in the furtherance of Illegal objects — making contracts which were unlawful; consequently a note given for money which they paid in the settlement of their contracts is tainted with illegality.” In the case at bar the contract was not illegal, but it was immoral and against public policy, and we can see no reason why the principle of the case of Barnard v. Backhans does not apply with full force. In Kent v. Miltenberger, supra, it is also said, “the same may be- said of Teeney v. Foot (4 Bradw. 594). Whatever may have been said in the decision of that case ■* * * the indisputable fact was, that the agreement between the principal and broker was. that the dealings ■of the latter for the former ‘ should only be in options, and that no produce should be delivered or received on ■Ms account, but that the transactions should be settled — 102 — upon the differences.’” “This contract,” added the learned judge, “ was fully proved and without any conflict of evidence to it. Now, as there was a statute in Illinois prohibiting the dealing in ‘options,’ it was very clear that a note, springing out of such a consideration, was void. Upon such a state of facts, we should hold the same way without the aid of sueh a statute * * While it is true that the court, in the case last quoted from, refers to and disapproves the case of Farreira v. Gabell (89 Pa. St. 89), it disapproves that case, in so far only, as it defines a gambling contract. That portion of the Pennsylvania case holding, “ that one who should undertake to make a bet or wager for another, and advance the money staked would have no right of action against his principal in the event of loss,’’’ is not disapproved. But, on the contrary, Thompson, J., in Kent v. Miltenberger, supra, as clearly appears from the quotations herein from the opinion in that case, lays down the same principle. As said by the trial court in Farreira v. Gabell, siopra, and approved by the supreme court of Pennsylvania, we “can see no difference between such a case ......as the present case......and that of any agent who’renders services and expends money in conducting any other gambling operation.” It is true that the views herein expressed are in conflict with the English authorities cited in the plaintiffs’ brief. In those authorities a distinction is clearly made between contracts which are illegal and contracts which are void. And under those authorities plaintiffs would be entitled to recover despite the matter contained in the answer. But, with the views entertained by us, we cannot make any distinction between a contract such as-the contract in this case, immoral in its nature and tendency, and void as against public policy, and a contract illegal and prohibited by law. We are firmly of the opinion that the contract between plaintiffs and defendant,'as pleaded in the answer, by which plaintiffs undertook to act as defendant’s brokers in making gambling option deals, was an immoral contract, and was void as against public policy; and that the parties — 103 — thereto 'must remain exactly where they have placed themselves by that contract; and that the defence set np in the answer is a sufficient defence to this action, and should not have been stricken out. See 1st Nat'l Bank v. Oskaloosa P. Co., Sup. Ct. Iowa, vol. 23, p. 255, N. W. Reporter. The judgment of the circuit court will be reversed and the cause remanded. Ellison, J., concurs; Philips, P. J., concurs in result.