Higginbotham v. McGready

81 S.W. 883, 183 Mo. 96, 1904 Mo. LEXIS 210

• Court: Supreme Court of Missouri
• Decided: June 20, 1904
• Status: Published

Opinion

ROBINSON, J.

This is an action by the plaintiff,, endorsee of a promissory note for $500, against defendant, the maker thereof. By answer, the defendant interposed the following as his defense to plaintiff’s action:

“That the sole and only consideration moving to the execution of the note in plaintiff’s petition described, was money lost by this defendant at a game of chance, commonly called poker, played by means of a gambling device, to-wit, a pack of cards, which said game was played on the day and on the day before the execution of said note, to-wit, January 22, 1900, at the city of DeSoto, Jefferson county, Missouri. Defendant further avers that at the said game of poker1 at which defendant lost the money for which said note was executed, he (defendant) and D. Ballard, the payee of said note, together with others, played at said game of chance, and that said money was won by the said D. Ballard and the other parties who played at said game of chance; that for the said money so won by the said D. Ballard and the other parties who played at said game of chance, defendant executed to the said Ballard the note sued on herein.

“Further answering plaintiff’s petition, defendant denies each and every allegation therein contained, not in this answer expressly admitted.

“Wherefore, the premises considered, the defendant avers that the said note is void and of no' effect in law. ’ ’

To this answer the plaintiff filed the following reply:

“Now comes the plaintiff in the above-entitled cause and for replication to the answer of the defendant in the above-entitled cause denies each and every allegation of new matter in said answer contained.

“Further replying to said answer, plaintiff says that the note sued on in this case was assigned, transferred and delivered to this plaintiff for value before the maturity of said note as averred in plaintiff’s petition and that plaintiff was the holder of said note, for value without any notice as to the consideration of said note. And plaintiff avers that, if it were true (which plaintiff denies) that said note was given for a gambling transaction, as averred in. defendant’s answer, the plaintiff, being a holder for value of said note before the maturity thereof, is entitled to recover the value thereof, and the plaintiff avers that section 3427 of the Revised Statutes of 1899, in so far as said statute authorizes such defense of want of consideration as against this plaintiff, is a violation of section 15 of article 2 of the Constitution of the State of Missouri in that the same impairs the obligation of the contract between the payee of said note and this plaintiff, and further that said section of the statute is violative of section 1 of .article 14 of amendments to Constitution of the United States, and of section 10, article 1 of the Constitution of the United States.

“And having- fully replied, plaintiff prays judgment as in his petition heretofore prayed.”

At the conclusion of the testimony, the plaintiff asked the court to give to the jury the following instructions :

“1. The court instructs the jury that if you find from the evidence that defendant executed the note sued on and delivered the same to D. Ballard for money loaned defendant by said D. Ballard, and that said D. Ballard for value transferred said note to plaintiff before the note became due, and that the note has not been paid, then you will find the issues for the plaintiff for the amount due on the note, although you may further find that defendant borrowed said money and used it after-wards for gambling purposes.

“2. The court instructs the jury that if you find from the evidence that plaintiff purchased the note sued on and paid value for it before its maturity and that he so purchased it without any knowledge that it was given to Ballard for money lost at a poker game, then you will find the issues for the plaintiff, although you may further find the note was given - for a gambling debt, as section 3427 of the Revised Statutes of Missouri 1899, is unconstitutional and void in such cases. ’ ’

These instructions the court refused, and at the instance of defendant, instructed the jury that under the pleadings and evidence plaintiff was not entitled to recover, and directed a verdict for defendant. In due •time the plaintiff filed his motion for a new trial, the overruling of which led to the prosecution of his appeal, and the case was sent to this court on account of the constitutional question raised.

As the case was disposed of by peremptory instruction of the trial court directing the jury to return a verdict for the defendant, it will become necessary only to briefly outline the testimony given by plaintiff and one of his witnesses, which was to the effect that plaintiff was an innocent purchaser for the value of the note in suit from the payee thereof before its maturity; that plaintiff had no information or knowledge whatever before or at the time he purchased the note that it had been given on account of a gambling debt, or that it was made as the result of money won or lost at any game or gambling device. By way of rebuttal the plaintiff called as a witness the original payee of the note, Dave Ballard, and since upon his testimony the result of this appeal will be determined, we have thought best to present that testimony in the precise language of the witness, as follows:

“Q. Your name is Dave Ballard? A. Yes, sir.

“Q. You live in DeSoto? A. Yes, sir.

“Q. I show you a note, Mr. Ballard, made payable to you, signed by F. E. MeG-ready, dated January 22, 1900, for five hundred dollars, payable to you or bearer and by you endorsed to Judge Higginbotham, the plaintiff, and ask you if that note was delivered to you by Mr. McGready? A. Yes, sir.

“Q. That was for money you had given Mr. Mc-Gready for his checks? A. Yes, sir.

“Q. How much? A. Six hundred dollars.

“Q. What was it furnished in? A. Cash.

“Q. You loaned him six hundred dollars? A. Yes, sir.

“Q. This note was given for six hundred dollars? A. No, sir.

“Q. Did you say you loaned him any money? A. Yes, sir, I loaned him six hundred dollars.

“Q. Did you loan it all at one time? A. No, sir.

“Q. How much at a time ? A. I loaned Mm fifty dollars and lie gave me a check signed by P. E. Me-Gready & Son, and then be took that np. He gave me five hundred dollars worth of them that night.

“Q. Ton say yon took np five one hundred dollar checks? A. Well, some of them might have been for fifty dollars; but he took np checks to the amount of five hundred dollars and one I got cashed at the bank for one hundred dollars.

‘ ‘ Q. Ton mean to say you loaned him six hundred dollars? A. Yes, sir.

“Q. He gave you a check signed P. E. McGready & Son? A. Tes.

“Q. Is that a firm doing business ? A. Tes, sir.

‘ ‘ Q. These checks that he gave you, you furnished him money for? A. Tes, sir.

“Q. Cash? A. Tes, sir.”

Cross Examination by Judge Dinning.

“Q. Ton say, Mr. Ballard, you loaned Mr. Mc-Gready that night six hundred dollars? A. Yes, sir,

“Q. What did he do with it? A. Bought poker chips with it.

“Q. What did you loan him that money for? A. Because he wanted it.

“Q. Ton expected to get it back as soon as you could? A. Of course, if I could win it.

“Q. Ton say you loaned Mm money at the poker table? A. Yes, sir.

“Q. Ton counted him out the money and he would buy chips from Huskey? A. Tes, sir.

“Q. Didn’t you loan him the money for the purpose of buying poker chips? A. He could do as he pleased.

“Q. Ton regard his note as good? A. Yes, sir,

“Q. Why did you trade if off at such a discount when it was drawing eight per cent interest? A. Because I needed the money.

“Q. Why did you sign.it this way? A. So that Mr. Higginbotham couldn’t hold me for it. And he was willing to take it that way.

“Q. They knew it was a gambling note! A. I don’t know anything about that; I loaned him the money and he gaye me the note for it.

“Q. Yon loaned him the money and then won it back? A. There was other people in that game; there was Hnskey and Brit.

“Q. Brit stayed there until he got his eyes open and quit? A. He quit the game winner.

“Q. Now Mr. Ballard, why did you have ‘or. bearer’ put in there? A. To make it negotiable.

“Q. Isn’t it a fact that as well known as Mr. Mc-Gready is, his paper can be cashed any day in DeSoto. A. I don’t know.

“Q. Don’t you know that his note is regarded as absolutely good? A. I don’t know whether it is or not. I went to the German American Bank and they said they didn’t want any of his paper.

“ Q. Who told you that Judge Higginbotham would buy it? A. You told me, you thought he would buy it. The Peoples’ Bank.said they didn’t want it.

“Q. Can you prove that? A. Yes, sir.

“Q. Why haven’t you got the people here? A. They can be got here. They told me they didn’t want it.

“Q. Didn’t they tell you they didn’t want this paper? A. Didn’t make any reference to that paper; said they didn’t want any of his paper.

“Q. When did you put this stamp on there? A. When it was written.

“Q. Who did it? A. I put it on there.

“Q. Did this Mr. Graham tell the truth about everything he told here ? . A. I think he did.

“Q. Those cheeks, what became of them? A. He tore them up.

“Q. You loaned him the money? A. Yes, sir. It was just this way: after the game was all over Mr. Mc-Gready says to me, ‘I have overplayed myself, Mr. Ballard, in this game,’ and he said, ‘I can fix this inside of a year, and if you don’t care I would like for you to carry me for a year. You can give me those checks and I will give you my note for five hundred dollars.’ He wanted me to take his note for five hundred dollars, and I told him I would if he would make me a negotiable note, and Mr. McGready wrote this note and I put the stamp on it.

“Q. You let him have five hundred dollars? A. I got his check before I let him have the money.

“Q. What did he write them with? A. He wrote these checks with a lead pencil.

“Q. Signed them F. E. McGready &¡ Son? A. Yes, sir.

“Q. What bank? A. Peoples’ Bank.

“Q. Did he take up these checks before he left • the room and give you this note? A. No, sir. It was written down stairs.

“Q. You gave him the checks back down stairs after he gave you the note? A. Yes, sir.

“Q. Those checks were never presented for payment? A. No, sir.”

This case was tried and disposed of by the circuit court as if its facts, as presented by the plaintiff, brought it within the operations of sections 3426 and 3427, Revised Statutes 1899, which provide:

“Sec. 3426: All judgments by confession, conveyances, bonds, bills, notes and securities, when the consideration is money or property won at any game or gambling device, shall be void, and may be set aside and vacated by any court of competent jurisdiction, upon suit being brought for that purpose by the person so confessing, giving, entering into or executing the same, or by his executors or administrators, or by any creditor, heir, devisee, purchaser, or other person interested therein.

‘ ‘ Sec. 3427: The assignment of any bond, hill, note, judgment, conveyance or other security shall not affect the defense of the person executing or confessing the same.”

That plaintiff was a purchaser of the note in suit for value before its maturity, and that he took it in absolute ignorance of the consideration that resulted in its execution, are facts about which there is no dispute or conflict in the testimony. And for the sake of this discussion, it must also be conceded that the note in suit was given as the result of money borrowed by the defendant from the witness Ballard, during a game of poker played by said defendant with said Ballard and others, to enable defendant to purchase chips or checks (which are but a convenient representation of money' used as the stake put up or deposited in lieu of money upon the table before the players engaged in gambling).

Under this state of the facts then, was the note in suit of the character condemned by section 3426, above, as void, and subject to be vacated by any court of competent jurisdiction upon suit brought for that purpose, by the person executing the same or by his executor, administrator, creditor, etc., and was it of such a character as to carry its infirmity into the hand of an innocent holder by assignment, as provided in section 3427, supra?

That the note in question would not have been en-forcible, as a binding obligation in the hands of the payee against the maker may be quite true, but from this, it by no means follows as a necessary corollary, that it is also non-enforcible against the maker, in the hands of an innocent holder for value. Between notes and other negotiable instruments made void ab origine by some positive statute, and those that may be found to have been made contrary to the rules of good morals simply, when they (the latter) have reached the hands of an innocent holder for value, the courts Rave ever made a distinction. In the first instance, the note or contract being void hy a positive declaration of law to that effect, can never thereafter he vitalized, purged of its illegality, or given new life by the hand into which it may thereafter fall, however innocent that hand may he of the- corrupting and contaminating cause that led to its creation, but in the latter instance, the instrument is voidable only, and will he non-enforcihle or enforc-ib-le as the court will withdraw its aid to one of the guilty participants to its making, or will give its aid to him or her into whose hands the instrument has come through the regular channels of business or trade in ignorance of its tainted inception.

Viewing the transaction that led up to- and resulting in the making of the note in question, as its history is given hy the witness Ballard, we are unable to see why this note in the hands of an innocent indorsee for value should fall under the ban of a statute levelled at notes' and similar instruments given in settlement for money or property won at gambling.

While feeling that as little assistance as possible should he given hy courts to compel the enforcement of gambling transactions, or of contracts in any way .tainted hy immorality as between the guilty participants thereto-, yet we have no disposition or authority to go one step in advance of the legislative fiat, denying protection to the innocent holder for value of commercial paper put upon the market by gamblers. If the gambler will insist on closing up his unsuccessful transactions at the gambling table, by issuing his negotiable promissory note to his more successful brother gambler, thereby enabling him to fleece some innocent third party through a further wrongdoing, he ought not to expect from the hands of the court, as against an innocent sufferer from his act, other than the most rigid construction of the statute he invokes, not intended for the special benefit of him and his class, as he seems to think, but adopted as an extreme expedient solely in an effort to put a check upon and to prevent as far as possible the practice of his crime (gambling). What then is the meaning of this statute, and is the note in suit, which defendant now seeks to defend against, within its letter or spirit?

Though the statute in question is not as clearly worded as it might have been made, it is quite evident that the Legislature did not mean by it to declare that all notes thereafter issued in consideration of money borrowed or received that may have at some time been won at some game or gambling device should be void, or that money or property won at gambling should thereby become so corrupted that it ever afterward would be incapable of constituting a valid consideration for a note given for its use and enjoyment. This statute was directed not at money or property that had been won at a game of chance or gambling device, but against notes and the other contracts enumerated, that may be made or given in settlement of bets or wagers of money or property lost at some game of chance or gambling device. The Legislature did not aim its blow at the inanimate dollar that might perchance be taken to and loaned or exchanged in the gambling room by gamblers, but against the evil of gambling, and the most ruinous result that follows the practice of permitting drafts upon one’s future resources and energies to be made, to satisfy the losses of a present vicious craving, as is done when one is permitted to gamble and to satisfy his losses when they occur by the issuance of his future payable obligations or contracts.

Here the note in suit, according to the testimony of the witness Ballard, was not given in settlement of a bet or wager between himself and defendant, at a game of chance, wherein Ballard was successful and the defendant was unsuccessful; nor was it given in-consideration of money or property won at any game of clianee or by or through any gambling device, but it was given to Ballard by defendant in exchange for five cheeks which the defendant had drawn the previous afternoon and night upon his local banker in the city of De Soto and given to said Ballard on account of money at that time borrowed from said Ballard during the progress of a game of poker then being played by said Ballard, the defendant and others. (The money was borrowed by defendant of Ballard to enable him to- buy poker chips or checks, as they are commonly called, in order that he might continue in a game of poker then in progress, by betting said chips or checks upon the result of the game as it would progress from one deal of the cards to another.)

As said above, while this note in the hands of Ballard may have been defeated because the court would refuse its aid to assist one wrongdoer to enforce a contract made with another in the furtherance of an unlawful act, yet quite different is the situation of this plaintiff who is an innocent purchaser of the note for value before its maturity, with the rules of the law merchant, and the provisions of our statute declaratory thereof to be applied in his favor. In our opinion, this note was not made under circumstances condemned by the statute in, question, and for this reason it must follow that the trial court committed error against the right of plaintiff in directing the jury to return their verdict for the defendant.

To appellant’s further contention, that section 3427 of the act in question should be declared unconstitutional in so far as it may be intended to- discriminate against the holders of negotiable notes like the one in suit, who have -taken them in the ordinary course of business, without notice of their infirmity, it need only be said, that this section of the statute does not undertake to discriminate against the holder of any character of notes, obligations or contracts put under the ban of the law by the preceding section. All notes, obligations, contracts, etc., that are made, issued or created under the conditions mentioned in section 3426, supra, are declared void, and the following section, 3427, merely declares that the assignment shall not affect the defense of the person executing the same.

While it may be conceded, as appellant asserts, that among the inalienable rights of the citizen is that of the liberty of contract, and further that the courts should ever guard with zealous care legislative encroachments thereon, we are unable to find that by the statutes in question any right of private contract guaranteed to plaintiff by the Constitution is denied, taken away, or in any manner abridged. There is no vested right in the plaintiff or any other citizen of the State to buy, purchase or receive, any kind or character of obligation, contract or agreement made between others regarding the payment of money or property freed from the right of the maker thereof to interpose any defense he may have against its enforcement or collection. No curtailment of the right of the plaintiff to buy or purchase any kind of a paper obligation, or to malm whatever contract he may think proper with the holder and owner thereof, is sought or attempted by this statute. He may purchase and contract as freely now regarding notes and obligations of the character enumerated in the statute as he could prior to its enactment, but in aid of a declared policy of the State, the Legislature has simply enacted, as it had the manifest right to'do, that notes and other obligations enumerated, and made under circumstances therein set out (whatever be their form) should be void, and, that the fact that made them so, might be interposed by the maker as against anyone into whose hands said obligations may fall.

If the Legislature thought wise or expedient, there could be no doubt of its power to destroy the negotiability of notes and obligations of every kind and character, and that too without regard: to whether they had beeen made under conditions and circumstances that would in any way affect their validity.

Appellant’s contention that the statute in question is unconstitutional is without merit, hut for the reason given above .it follows that the judgment of the circuit court must be reversed ánd the cause remanded for a new trial, and it is so ordered.

All concur.