Opinion
No. 32340.
December 14, 1936. Suggestion of Error Overruled January 25, 1937.
1. GAMING.
In brokers' suit for money paid client under belief margin of client was greater than needed, wherein client contended that dealings constituted a gambling contract, brokers could not make out a prima facie case without going into entire transaction, and hence were required to offer their books in evidence, where money was paid before account of client was closed.
2. GAMING.
In brokers' suit to recover money paid client under mistaken belief that margin of client was greater than needed, evidence as to whether contract between client and broker was gambling contract held for jury, even though contract had appearance of legality, and stated that actual delivery of commodities bought or sold was contemplated (Code 1932, secs. 1828-1830).
APPEAL from circuit court of Hinds county. HON. J.P. ALEXANDER, Judge.
Creekmore, Creekmore Capers, of Jackson, for appellant.
Plaintiff to make out case had to rely on illegal contract and claim cannot be enforced.
The defense pleaded by the defendant in this case was a violation of sections 1828 and 1830 of the Code of 1930, which is the statute providing that certain contracts of sale for future delivery of cotton and other commodities shall be null and void and unenforceable in any court of this state.
In the case of Alamaris v. John F. Clark Company, 145 So. 893, 166 Miss. 122, the court held that contracts for future delivery of commodities are valid only where the parties intend actual delivery of the goods and payment of the price therefor, and that where there is evidence that will support an inference that the parties did not intend actual delivery under the contract for future delivery the question was for the jury. In the case at bar, the jury were not permitted to pass upon this question but the circuit judge instructed the jury to find for the plaintiffs, presumably upon the theory that the claim sued for was not a part of the illegal contract and could, therefore, be enforced. We submit that the learned circuit judge misconstrued the Mississippi decisions and completely overlooked the fact that it was necessary to prove the illegal contract and transaction in order to offer any testimony to substantiate the claim of three hundred fifty dollars claimed to have been paid by error.
Adler v. C.J. Searles Co., 86 Miss. 406, 38 So. 209.
It is apparent to anyone that the plaintiffs, in order to prove their case, had to go into the whole contract, the rules and regulations of the cotton exchange, etc., in order to show the alleged mistake in the payment. The only way that a prima facie case could be made out on behalf of the plaintiffs would be by proving that Knox was paid three hundred fifty dollars, that the payment was made by mistake and Knox refused to refund the money. Now this could not be done except by introducing the ledger records of the plaintiff and the record when introduced showed a balance of about two thousand nine hundred dollars in Knox's favor. Then it became necessary for the whole contract and the method of dealing between the parties to be testified about and when that was done the illegal contract became the basis of the suit to recover the money.
13 C.J. 502, sec. 445.
Apparently there is no conflict in the authorities upon the proposition that if the complaining party must prove the illegal transaction no recovery can be had.
Mitchell v. Campbell, 111 Miss. 806, 72 So. 231; Lowenburg v. Klein, 125 Miss. 284, 87 So. 653; Woodson v. Hopkins, 85 Miss. 171; Dixie Rubber Co. v. Catoe, 145 Miss. 342, 110 So. 670; Green v. Brown, 159 Miss. 893, 133 So. 153; Grapico Bottling Co. v. Ennis, 140 Miss. 502, 106 So. 97.
Loving Loving, of Columbus, for appellees.
The plaintiffs, in the court below, appellees here, made out a prima facie case by showing the payment or remittance of three hundred fifty dollars on July 8, 1930, to the appellant, and by charging to the account of Ross M. Knox of Mobile, and that no knowledge of this error was known until October 14, 1930. It is true that the appellees first brought out in the trial of this case the fact that the appellant was dealing with the appellees in cotton. But this was not brought out for the purpose of making out a case against the appellant, but to meet the allegations in the special plea, in which the appellant plead the gambling act. It possibly would have been better form to have shown the error, the payment of the money as it was paid, and rested the case, than to have brought out this dealing between the parties in rebuttal, but such was not the case, and the facts in reference to the cotton dealings were brought forward at the time that it was, for the purpose of meeting the matters set forth in the special plea. This special plea is an affirmative plea and a plea in which the burden of proof rests on the appellant, for the reason that the determination of the defense is not necessary for the establishment of a prima facie case by the appellees, the appellees could, and did make out a prima facie case, without the determination of the facts set forth in this plea.
Archer v. Helm, 70 Miss. 874, 12 So. 703; Bessler Movable Stairway Co. v. Bank of Leakesville, 140 Miss. 536, 106 So. 445; Georgetown Mercantile Co. v. Steen, 155 Miss. 719, 125 So. 120.
In reviewing the evidence on this special plea, it clearly appears that the appellant did not meet the burden of proof that rested upon him, in fact, that he wholly failed to do so.
The evidence of the plaintiff in the court below, appellees here, shows that there was some cotton dealings between the parties hereto, and that it was conducted in a legal way and met the requirements of the statute that delivery was contemplated, and that the appellant signed an instrument to this effect.
It is true in appellant's testimony, he states he never contemplated any delivery of cotton, under the dealings he had with the appellees, yet he admits signing the contract providing for actual delivery. Nowhere in the evidence does he disclose the fact that he informed the appellees that he did not contemplate delivery and repudiate the instrument he had signed where actual delivery is provided for. The fact, his furnishing the appellees, under his own signature, the statement that actual delivery was contemplated must prevail and control in this suit over his oral testimony as to what his intention in the matter was, without his informing the appellees of what his actual intention in the matter was.
We submit that the defense put up by the appellant was not material to overcome or to be disproven to prevent the appellees from making out a prima facie case and with all the evidence on this special plea the appellees made out a prima facie case and the appellees are entitled to recover under the common counts; that the evidence clearly shows that the appellant received three hundred fifty dollars from the appellees to which he is not entitled, and in equity and good conscience, it is not his money, and under the common counts to the declaration, the appellees are entitled to recover.
Pascagoula Hardwood Co. v. Chisholm, 164 Miss. 242, 144 So. 710.
The appellant cites many cases in reference to illegal contracts, especially recovery on illegal contracts, but recovery is not sought in this action on an illegal contract, but on money paid through mistake, and we must insist that the evidence clearly shows that the money was paid through error.
Adler v. C.J. Searles Co., 86 Miss. 406, 38 So. 209.
It has been held by this Honorable Court that even where an illegal business has been carried on between the parties and they make a settlement of this illegal business and a payment is made in error, it can be recovered, but in this instance there is no effort whatever to enforce any contract, but merely to recover money that has been paid through error, and that the error has been fully established without any resort whatever to the contract, and the only reference to the contract on the part of the appellees is a refutation of the matters and things set forth in the special plea.
Moritz v. Lumbley, 141 Miss. 453, 106 So. 642.
John F. Clark, Jr., and others, a partnership composing the firm of John F. Clark Co., brought an action at law against Rush H. Knox, the appellant, to recover three hundred and fifty dollars, an alleged overpayment by check drawn by Clark Co. in favor of Knox.
By an amended declaration, the transaction was set forth in detail.
To the declaration, Rush H. Knox pleaded the general issue, and filed a special plea setting up that the transaction arose out of contracts of sales and purchases for future delivery of cotton, to be settled upon the basis of the public market quotations, and alleged that said contracts were executed and dealt in without any actual or bona fide execution thereof, and without any intent to make delivery of the cotton covered by such contracts, but with the intent of settling same by the rise and fall of the price on the cotton exchange.
On the request of the appellees, the court below granted them a peremptory instruction for the debt and interest, and judgment was rendered thereon accordingly.
Two witnesses were introduced. For the appellees, Waldo, the office manager in New Orleans, of Clarke Co., testified that they received the following letter, on his letter head, from Rush H. Knox.
"Jackson, Miss. July 3, 1930.
"John F. Clark Co., "New Orleans, Louisiana.
"Gentlemen:
"Please let me have check for my excessive margin, and charge the same to my account.
"Yours very truly,
"R.H. Knox."
In the office of the appellees, the following notation was made on the above quoted letter: "Mail check for $350.00, chg. S.B. acct. stox. O.K. Mott."
Appellees' check was made for the sum of three hundred and fifty dollars, payable to Rush H. Knox, received and cashed by him, and the check was offered in evidence.
Waldo testified that, from the books, they had on that date, the account of "Ross M. Knox" of Mobile, Ala., was charged with this three hundred and fifty dollars, and that Rush H. Knox was not charged therewith. The original ledger sheets were introduced in evidence, over the objection of Rush H. Knox, showing this charge of three hundred and fifty dollars to Ross M. Knox, and Waldo testified that it was a mistake to have so charged it, and that the initials "S.B." referred to a Mobile account, and that this mistake was not discovered until October 14, 1930, when the three hundred and fifty dollar item was charged to Rush H. Knox. So far, Waldo had established that, by mistake, a sum of money sent to Rush H. Knox had been charged to Ross M. Knox, but he had not established prima facie that Rush H. Knox was not entitled thereto under the terms of the letter by which the check was mailed to him. The ledger account showed that, on that date, Rush H. Knox had to his credit the sum of two thousand nine hundred seventeen dollars and four cents; that from that account and another, Rush H. Knox had one hundred fifty bales of cotton against which, under their rules, there should be charged, and the account reduced in the sum of two thousand two hundred thirty-two dollars and fifty cents. Waldo further testified that the margin clerk had charged Rush H. Knox with five dollars per bale on his cotton, or seven hundred fifty dollars margin, and, with that added, Rush H. Knox lacked sixty-five dollars and forty-six cents of having enough margin. He testified that his firm had transactions with Rush H. Knox from November, 1929, to September, 1930, when they finally closed his account and sent him a check for about fifty-two dollars in full settlement; that this business was being conducted legitimately on the Cotton Exchange of New Orleans; that Rush H. Knox was a cotton planter, and that his firm and Rush H. Knox had twenty-seven deals and executed contracts in which no commodity had ever been tendered or delivered by either party.
Rush H. Knox testified that he kept no books, and that, on July 3, 1930, he had the appellees' office here, by telegraph, to request, from the New Orleans office, the amount of his balance, and that, from the figures then given him, he had an ample margin to take some money therefrom which he needed, and that he never learned that a mistake had been claimed until long after his account had been closed. That he had no cotton to sell, and that "there was to be no delivery of cotton," that it was just purely a market deal to be settled by the rise and fall of the market, and that, as to the three hundred and fifty dollars received by him, Clark Co. owed him more than that at the time. Rush H. Knox admitted that, on March 4, 1930, he signed, without reading it, what he termed a signature card which, among other things, contained this language: "Stop orders, as well as open orders, are effective until canceled by me/us. Any transaction made for my/our account is subject, in all respects, to the constitution, rules, by-laws and customs of the Exchange on which executed, and of its clearing house, or clearing association. Actual delivery of all commodities bought or sold for my/our account is contemplated, and I/we so understand and agree."
The appellant, Rush H. Knox, contends that the court below erred in granting the peremptory instruction, because the appellees did not make out a prima facie case against him without the introduction of their books showing the entire transaction. He further contends that all the evidence, together with that of Waldo, made an issue of fact to be settled by a jury, as to whether the dealings constituted a gambling contract within the purview of sections 1828, 1830, Code of 1930, as construed by this court in the case of Alamaris v. John F. Clark Co., 166 Miss. 122, 145 So. 893, 895, notwithstanding the contractual part of the signature card above quoted.
We think it is quite manifest that the appellees did not, and could not, make out a prima facie case against appellant without going into the entire transaction. To do this, it was essential that appellees offer their books in evidence.
Both the appellant and the appellees rely upon the case of Adler v. Searles, 86 Miss. 406, 38 So. 209, in which this court said that, "if the plaintiff had to resort to a contract, executed or executory, growing out of an illegal business, to make out his case, then the defendant could successfully have resisted the claim. But the illegal business had been settled, and a new and independent element supervened — the payment by mere mistake of the one thousand dollars — and the defendant admits that it was paid by mistake. He does not deny this. No resort was necessary to the bookkeeping to show it."
In the case at bar, the illegal business had not been settled when the check was paid, and the account of Rush H. Knox was not closed until nearly two months later, and if gambling it was, it continued during that time, and if mistake it was, on the part of the appellees, it was an integral part of the transactions then being carried on between the parties. Suppose Rush H. Knox had paid to Clark Co. five hundred dollars excessive margins on that date, could it be doubted that he could not recover this sum from Clark Co. for the reason that it was a part of that contract, whether legal or illegal?
The books of the appellees were absolutely essential to make out a prima facie case. The dealings of the parties were in fieri, and long afterward completed.
As to whether the contract in the case at bar is illegal, we think, in view of all the evidence, is a question for the jury.
In Alamaris v. John F. Clark Company, supra, this court held that, "if, however, at the time of entering into a contract for a sale of personal property for future delivery it be contemplated by both parties that at the time fixed for delivery the purchaser shall merely receive or pay the difference between the contract (price) and the market price, the transaction is a wager, and nothing more. It makes no difference that a bet or wager is made to assume the form of a contract. Gambling is none the less such because it is carried on in the form or guise of legitimate trade."
Reversed and remanded.