Warren & Co. v. Scanlan

Mb. Justice Cabtwbight delivebed the opinion of the Court. Appellants brought this suit against appellee to recover moneys advanced by them for him at his request to pay losses in dealings conducted on his behalf on the Board of Trade in Chicago. The special defense made was that the transactions in which the moneys were advanced were of a gambling nature. The case was tried before the court without a jury, and there was a finding and judgment for appellee. There was no substantial controversy at the trial concerning the facts, and they were proved to be as follows: Plaint iffs were a firm engaged in the grain and commission busi ness in Peoria, Illinois. They were not members of the Board of Trade, but did business there by placing orders for their customers with West, Andress & Co. and L. Everingham & Co., who were members, and entitled to transact business as such. Defendant was a wealthy man who had been a tradesman and farmer. He had retired from the farm to Peoria, but during the period of these transactions returned to his farm near Monica, Illinois. In 1891 and the early part of 1892, defendant at various times gave orders to plaintiff to buy specified lots of oats, corn and wheat for him on the . Board of Trade, and they complied with his orders. He was in their office almost daily while he lived in Peoria, and he advanced money to secure their agents in the purchases. He would order grain sold whenever he saw fit and plaintiffs obeyed his orders. They did not keep any account on their books of the purchases and sales, but credited him with all moneys received and charged him with the moneys paid out for him. The accounts of the purchases and sales were received by them and in every instance were delivered or mailed to him. On March 26, 1892, L. Everingham & Co. had bought on orders so given by defendant 10,000 bushels of corn and 30,000 bushels of wheat, to be delivered to them in the ensuing month of May. Prices were declining, an d there was already considerable loss on that wheat. On that day one of the plaintiffs went to see defendant at his farm and consulted with him about the market prospects and what he wanted done, and what arrangement he would make about the money already due. Defendant thought that there would be an advance, and wanted plaintiffs to hold the wheat until he could get out without loss, to handle it as if it were their own, and to use their best judgment in the matter. It was then agreed that they should hold the wheat as long as they could to save him from loss. The corn was afterward sold, and without loss, and the moneys sued for were advanced for losses on the wheat. It had been contracted for in lots of 5,000 bushels, and the sellers had a right to deliver any day in May. The wheat was all delivered to L. Everingham & Go. on different days in that month. If the wheat should be kept awaiting a better price it would be necessary to pay storage charges of one-third of a cent a bushel for each ten days, together with insurance and interest, but if it were sold for cash and a contract made for the same amount at the same price, to be delivered in the future, the only expense would be a commission of one-fifth of a cent a bushel. Such contracts could be sold out at any time and they afforded the only economical method of carrying out defendant’s orders. That method was for that reason adopted, and the lots were sold out the day following their delivery, and the same amounts were contracted for to be delivered in July, and storage, insurance and interest was only paid for the brief time that the wheat was held in elevators. Statements of these transactions and of each subsequent transaction were furnished to defendant. Afterward plaintiffs asked defendant to give his note for losses accrued, but he did not want to give a note, and it was not insisted upon. Plaintiffs kept the wheat in that form and renewed the purchases either by the method adopted in May or by selling out and buying anew before the time for delivery arrived, until June 30, 1893, when it was sold out during a financial panic because money could not be obtained to carry it any longer, and defendant had been asked several times for money for margins, but never furnished any. The loss was $11,291.86, exclusive of interest, and was paid by plaintiffs. Wheat had steadily declined in price. From these facts it will be manifest that plaintiffs exhibited a valid claim against defendant unless it was tainted with illegality, and that the contention here that there was a failure to prove that the money was advanced at defendant’s request and in pursuance of its terms is without foundation. In order to decide whether the defense of illegality in the contract was made out it was necessary for the court to ascertain from the evidence whether grain was purchased with a view to realizing a profit, or whether it was understood by the parties that the grain was never to be delivered or received, but that one or the other would win money from his adversary in a settlement according to the condition of the market on the last day for delivery. If defendant directed purchases of wheat to be delivered in the future at a fixed price in the hope that it could be sold at that time for more than the purchase price, the transaction would be just as legal as to contract for land or any other thing of value with the same object in view. The fact that it was to be delivered at a future day, would not make the contract a gambling one. Sanborn v. Benedict, 78 Ill. 309; Pickering v. Cease, 79 Ill. 328; Pixley v. Boynton, 79 Ill. 351; Logan v. Musick, 81 Ill. 415; Cole v. Milmine, 88 Ill. 349. On the other hand, if the parties were merely betting on the market the transaction would be unlawful. The form of the contracts did not indicate any illegality, and the evidence for plaintiffs was emphatic that they were carried out according to their terms without other or different agreement or understanding. The claim that the contracts were in fact different from what they appeared to be seems to rest almost exclusively on testimony of the defendant that he had no intention of receiving or paying for any of the grain, and this was admitted against the objection of plaintiffs. There was no claim that such intention was ever expressed or made known in any way to plaintiffs, but if defendant had such an intention it was a secret one. It was necessary to go further than to merely show such secret intention and prove that there was a mutual understanding of that kind. Unless there was such an understanding it was immatei'ial what defendant’s secret intention may have been. Pixley v. Boynton, supra. If either party contracts in good faith he is entitled to the benefit of his contract, and evidence of the secret intention of defendant to not comply with the terms of the contract did not tend to establish such mutual understanding. In the absence of any evidence that plaintiffs knew anything of his intention, the testimony should not have been admitted. Miller v. Bensley, 20 Ill App. 528. It has been deservedly regarded as a circumstance of great weight in some cases that the supposed purchaser was not in such circumstances as to be able to take and pay for the commodity, and the party dealing with him knew it and must have understood that he would not do so from such inability, but in this case, defendant was amply able to carry out his contract. There was no substantial evidence that the transactions were different from what they were in form, and it seems to us that the judgment can not be sustained. It will therefore be reversed and the cause remanded.