Munns v. Donovan Commission Co.

Ladd, O. J. — [519] 2 3 [517] Burehard opened what he was pleased to denominate a “board of trade” in the back room of an upper story in the town of Corning. The furniture consisted of a blackboard, chalk, and suitable seats for his customers, among whom were the plaintiff and G. W. Oruzen. His connection with the defendant was simply that of correspondent to whom it furnished the market reports of produce on the Chicago Board of írade, directly from Chicago, every 15 minutes during certain hours of the day.' These were immediately transferred to the blackboard, and when some one offered to buy or sell any commodity for future delivery during a named month, Burehard reported the proposition to defendant at St. Louis, by whom it was accepted or rejected; and, if accepted, a small margin — as, in case of wheat, one cent a bushel — was paid to Burehard, who deposited it to [518] defendant’s credit in the Corning Savings Bank. Thereupon the customer was given a card, showing a corresponding number, the commodity, quantity, price, and month of delivery. A purchaser, if the price fell, or a seller, if it raised, was required to advance additional margins, which were deposited in the same way. Upon failure to do so the trade was closed out as soon as the margins paid were exhausted by fall or rise of the market price. The defendant drew the money from the bank at will. Bur-chard was allowed three-fourths and the defendant took one-fourth of the commissions exacted. In event the market continued in favor of the customer till the end of the month, the margin paid, less commissions, together with profits, were remitted by defendant from St. Louis, as was also Burchard’s share of commissions. This avoided disclosing the exact state of account in the bank. Burchard had operated about three months, when, on the 17th of July, 1900, he was advised that the telegraph company would discontinue transmitting market reports, and on the following day this action was begun; Oruzen having assigned his claim to plaintiff. At that time the plaintiff had paid to Burchard, to be used in the purchase of commodities on the Chicago Board of Trade in September options, $1,853, and Oruzen $3,084. These payments were made on Burchard’s representation that defendant was a member of said board of trade, and would there purchase said options. But for such representations and their reliance thereon, the money would not have been paid. Purchases were not in fact made on the board of trade. The above statement of facts is undisputed. The defendant pleaded, and now insists, that the alleged purchases were gambling contracts. This may be conceded. Peoples Sav. Bank v. Gifford, 108 Iowa, 279; Gregory v. Wattowa, 58 Iowa, 713; Counselman v. Reichart, 103 Iowa, 430. But those contemplated by Munns and Cruzan were never carried out. They turned the money over to [519] Burchard for a specific purpose; i. e., to buy options on the Chicago Board of Trade. The latter had represented that defendant was a member of that body, and that it would make such purchases. Burchard did not pretend to bargain with plaintiff or defendant. He was a mere go-between, a medium through whom the parties communicated. As he was engaged in promoting a gambling enterprise, he cannot be said to have been merely the agent of either party, but was particeps criminis. Pearce v. Foote, 113 Ill. 228 (55 Am. Rep. 414); Fortenbury v. State, 47 Ark. 188 (1 S. W. Rep. 58); Nolan v. Clark, 91 Me. 38 (39 Atl. Rep. 344); Mexican Intr. Banking Co. v. Lichtenstein, 10 Utah, 338 (37 Pac. Rep. 574); Irwin v. Williar, 110 U. S. 499 (4 Sup. Ct. Rep. 160, 28 L. Ed. 225); 14 Am. & Eng. Enc. Law., 636. Was anything bought of defendant? If so, neither Cruzen nor plaintiff were apprised of the fact. The defendant did not claim to keep any of the commodities for sale. It made quotations of the Chicago Board of Trade prices, not its own, to be put upon the blackboard. It exacted a commission on every purchase or sale. If undertaking to buy or sell for itself, would it have been likely to have exacted a commission? It's very name indicated the character of business intended. These matters were well calculated to confirm the belief of the customers that they were dealing with the defendant as a broker, and not as a principal. There was nothing to inform them that they were merely betting with the Donovan Commission Company on the rise or fall in the price of produce, and allowing it to hold the stake put up on one side only'. If defendant was to make purchases on the board of trade of commodities with the intention that the difference between the contract and the market prices be settled in money, and that there should be no actual delivery of the property, the plaintiff and Crmzan had the right to repent of their wrong loing, and revoke the authority given, at any [520] time before the purchases were actually made. Having discovered the error of their ways, the law not only permitted them to withdraw from the transaction, but extended to them a helping hand by offering the inducement of giving back to them that with which they had parted. Wassermann v. Sloss, 117 Cal. 425 (49 Pac. Rep. 566, 59 Am. St. Rep. 209, 38 L. R. A. 176); Bernard v. Taylor, 23 Or. 416 (31 Pac. Rep. 968, 37 Am. St. Rep. 693, 18 L. R. A. 859); Tyler v. Carlisle, 79 Me. 210 (9 Atl. Rep. 356, 1 Am. St. Rep. 301.) See Shannon v. Baumer, 10 Iowa, 210; Adkins v. Flemming, 29 Iowa, 122. The principle on which recovery is allowed in such cases was lucidly stated in Clarke v. Brown, 77 Ga. 606 (4 Am. St. Rep. 98): "This is not a suit upon a wagering contract. It is a suit for money in the hands of agents by the principal, furnished them to buy and sell grain for him; and it is alleged that this money now sued for is the money so furnished. There is nothing illegal in the contract set up in the declaration. It is the defense that sets up the illegal contract. All that the plaintiff has to prove in order to recover is that these agents have his money that he furnished them, and refuse to turn over his own to him. Thereupon the agents say, ‘It is true we have your money, but you furnished us it to speculate in futures for you, and you cannot recover it back, because you furnished it for an illegal purpose.’ The agents cannot set up this illegal contract, because they made it, and got a consideration for using the money illegally, and are partieeps eriminis. Just as if it had been necessary for the plaintiff, the principal, to use the illegal contract to recover the- money, — which would have been necessary had he sued for the profits of the venture, — so it is illegal for the agents to use it to defend the suit for money they have belonging to the principal.” If, however, the money was turned over to defendant on the mistaken supposition that such purchases would be made, but defendant really intended to treat the [521] money as placed in its hands as a wager on the future price of commodities, then the minds of the parties never met, and upon the discovery of the mistake before defendant had done more than enter the transaction on its books the plaintiff might refuse to proceed further, and insist upon the return of his money. The evidence established conclusively the one situation or the other. And we need not determine whether a party to a wager may also act as stakeholder; but, if it be conceded that he may, there i no apparent reason why his liability for the return of the amount put up by his adversary before loss should be different than that of a third party acting as stakeholder. 5 II. The petition upon which the writ of attachment was sued out alleged an oral contract to pay the money. Thereafter an amendment was filed, stating somewhat in detail the transaction, and containing allegations of fraud. It was unverified, but prayed for an order that the money in the hands of the garnishee be applied on the judgment to be recovered. .This amendment, eliminating the allegations of fraud, which were not proven, stated a cause of action based on an implied promise to repay money had and received, and upon this recovery was had. It merely set up a cause of action in different form for the same indebtedness to secure which, however evidenced, the writ was sued out. Under these circumstances we think the order for the application of the money attached on the judgment rightly entered. Cawker City State Bank v. Jennings, 89 Iowa, 280. 6 III. Appellant suggests that all the money paid into the bank and attached by garnishment was not the identical money turned over by plaintiff and Oruzen, and for this reason the verdict directed was excessive. This could make no difference, as the defendant appeared in court, and joined issue on the averments of plaintiff’s petition as amended. The court therefore acquired jurisdiction of the parties as well as the subject522 matter, and might render judgment for the amount found due regardless of the extent of the levy. — Affirmed.