Mr. Justice Smith
delivered the opinion of the
court.
Many errors are relied upon in appellant’s brief and argument for a reversal of the decree of the Superior Court. It will not be necessary, in our opinion, to discuss all of them specifically in disposing of the case. The main object and purpose of the bill is to free the 222 shares of the capital stock of Borden’s Condensed Milk Company, of which appellant Johnson is the owner as between him and Probst, from the claim of lien of Milmine, Bodman & Company and prevent the transfer of said stock to them, or the sale of the stocks to satisfy the claims of Milmine, Bodman & Company against Probst. The bill and the case made under the bill present the following grounds of relief: First, the transactions between Probst and Milmine, Bodman & Company were gambling transactions and were therefore void under the statute; second, that Milmine, Bodman & Company had actual or constructive notice of the rights of complainant Johnson as owner of the stock; and third, that Milmine, Bodman & Company wrongfully closed out the deals of Probst, and they have no standing to assert and foreclose the lien on the stock under their cross-bill.
The other questions presented and discussed by the able and exhaustive briefs and arguments of counsel on both sides of the case are subsidiary to the questions above stated, and so far as it may be deemed necessary or possible to discuss them within the reasonable limits of this opinion it will be done while considering the questions above stated.
It may be conceded at the outset that if the evidence sustains any one of the grounds above enumerated, the decree is erroneous and must be reversed.
Some leading principles have been established, we think, by the decisions of our Supreme Court and the courts of last resort in other jurisdictions in cases involving similar transactions which have been presented for determination, under similar statutes. Without stopping to quote the statutes which are familiar to the profession we shall state such of those principles as we deem applicable to the transactions now before us.
In the first place, we think it is clear that the statute does not prohibit a bona fide contract of sale and purchase of grain for delivery within a future month, where the day of delivery is made at the option of the vendor by the terms of the contract.
Second. A contract of this character will be held void if it appears that at the time the same was made it was the intention of both parties that no delivery of the commodity should take place, but that the transaction should be settled by adjusting the differences between the contract and market prices.
Third. If either party acted in good faith in making such contract, intending at the time of the making of the contract that there should be delivery thereunder and the commodity specified should be received and paid for, the contract will be valid and binding-under the law. This is perhaps a corollary of the last proposition.
In Wolcott v. Heath, 78 Ill. 433, the court said:
‘ ‘ Time contracts made in good faith for the future delivery of grain or any other commodity are not prohibited by the common law, nor any statute of this state, nor by any policy beneficial to the public welfare. Such a restraint would limit commercial transactions to such a degree as could not but be prejudicial to the best interests of trade.”
In Barnett v. Baxter, 64 Ill. App. 544, it was said:
“Transactions of purchase and sale of grain for future delivery are valid, and the fact that the seller has the option to deliver any time during the month for which the sale is made does not render them illegal.”
In Pixley v. Boynton, 79 Ill. 351, the court held:
‘ ‘ The intent of the parties gives character to the transaction and if either party contracted in good faith he is entitled to the benefit of his contract, no matter what may have been the secret purpose or intent of the other party.”
In order to invalidate a contract for the delivery and sale of stocks, grain or other property in the future, it must appear that neither party had the intention to deliver the property, and that both had the intention of settling on differences only. Pratt v. Ashmore, 224 Ill. 587. Both parties must be shown, (1) not to have had the intention to deliver, and (2) to have had the intention of settling the differences only. Proof of such mutual intention is necessary. Pope v. Hanks, 155 Ill. 617; Ward v. Vosburgh, 31 Fed. Rep. 12.
And in Logan v. Musick, 81 Ill. 415, the court held:
“The statute does not prohibit a party from selling or buying grain for future delivery; such was not the purpose of the statute; nor can it make any difference as to the legality of the contract whether the party who sells for future delivery at the time the sale is made has on hand the grain.
“A party may sell today a certain quantity of grain for delivery in a week or a month hence and then go upon the market and buy grain to fill the contract. It is true the defendant had the option under the contract to select a day within a limited time on which he would receive the grain, but such an option does not fall within the statute for the reason that it does not render the sale optional. ’ ’
Examining the evidence in the record with these principles in mind we find that the main reliance of the complainant for establishing the illegal character of the transactions between Probst and Milmine, Bod-man & Company is that Probst was a practicing lawyer in Chicago, and not a man engaged primarily in dealing in grain; that this fact was known to Mil-mine, Bodman & Company, and that the transactions conducted by them on Probst’s orders were greater in extent and volume than could reasonably be undertaken by a man of his financial ability. It also appears from the record that although there were upwards of two hundred and forty-eight accounts of purchases and sales rendered by Milmine, Bodman & Company to Probst from the time he commenced dealing through them as brokers in September, 1901, to February 26, 1906, covering millions of bushels of grain and large quantities of cotton and coffee, there were few actual deliveries made, and most of the contracts were closed out or changed to other deliveries before the times of delivery arrived. Probst testified directly and positively that the intention on the part of himself and Milmine, Bodman & Company was that there should be no' deliveries of the commodities purchased and sold. These and other similar facts are pressed upon our attention as presenting a strong preponderance of proof in favor of the complainant on the gambling character of the transactions between the parties.
Upon a careful consideration, however, of all the evidence on this issue, we are of the opinion that the weight of the evidence is against the complainant, and that the transactions shown in the record were the ordinary transactions on the Chicago Board of Trade and the stock exchanges. "We find it difficult to believe the testimony of Probst when he testifies that Milmine, Bodman & Company had the intention, in common with himself, that there should be no deliveries under the contracts made by them on Probst’s orders and for his account. They deny such intention squarely and specifically. As stated above, their transactions were made on the Board of Trade and the Stock Exchanges of Chicago and New York, and subject to the rules, regulations and contracts of those bodies. These contracts contemplated delivery and receipt of the commodities bought and sold as between Milmine, Bodman & Company and the parties with whom they executed Probst’s orders. It is unbelievable, on the evidence in the record, that Milmine, Bodman & Company would have consented to enter into contracts with other members of the exchanges which required deliveries and receipts of the commodities dealt in, and at the same time agreed with Probst that as between him and them he should not be required to receive the commodities which they purchased for him on his orders, or to deliver what they sold for him—in other words, that Mil-mine, Bodman & Company agreed for the regular commissions which they were to receive, to stand in the breach between Probst and the parties with whom they made transactions, taking their commissions if the market was in favor of Probst and standing the loss if the market was against him, with no claims which they could legally enforce against him. We cannot understand how a concern like Milmine, Bodman & Company, whom Probst characterized as “strictly business from the time they open until they close at night,” could consent to stand in the breach between Probst and the parties with whom they made contracts, from a purely financial point of view, to say nothing of the deliberate purpose involved to violate the criminal code of the state. This theory of the transactions is inherently improbable.
In this connection the evidence of Probst must be considered. All through his evidence he speaks of conversations with Mr. Mitchell and Mr. Stolz, who were connected with Milmine, Bodman & Company, in regard to deliveries which would be made when certain options matured. And in order to avoid the deliveries contemplated by the transactions which were maturing, new transactions were made in order to change over from one option to another. Probst says: 1 ‘ The object of this was to prevent my being called upon to deliver the wheat if I was short.” He further says: “I would have these talks with Mr. Mitchell and Mr. Stolz four times a year or of tener. ’ ’ He refers in this testimony specifically to the regular May, July, September and December deliveries under contracts for those deliveries. Probst thus shows by his own testimony that it was clearly understood and recognized between him and Milmine, Bodman & Company not only that the purchases and sales which they were making in pursuance of his orders contemplated deliveries of the commodities between his brokers Mil-mine, Bodman & Company, and the parties with whom they dealt, but also as between Milmine, Bodman & Company and himself.
The burden of proof in this case to show that the contracts in question were in fact gambling transactions is upon the complainant who asserts the fact, and in a case like this the complainant should be required to make this proof by a clear preponderance of the evidence. Pixley v. Boynton, supra; Ward v. Vosburgh, supra. As said in Curtis v. Wright, 40 Ill. App. 491: “Unless we are prepared to hold that all such transactions on the Board are in violation of law and gambling transactions, we cannot hold that the fact that there are no deliveries of grain sold, is conclusive evidence that when the parties made the sale they did not intend to deliver.”
The record in this case explains how it came about that there were comparatively few deliveries. The evidence shows that the deals were changed over from one option to another, and thus the actual deliveries were postponed. This was done with Probst’s consent and on his orders, and for the purpose of preventing deliveries on the maturing options. The fact therefore that few deliveries were made becomes of little significance on the question as to whether the transactions in question were gambling transactions and void. Clews v. Jamieson, 182 U. S. 461, 492, 494. In this connection the remarks of Mr. Justice Holmes considering a similar question in Chicago Board of Trade v. Christie, etc., 198 U. S. 236, are pertinent.
In Cleage v. Laidley, 79 C. C. A. 284, the court considered a case where a party dealt in 14,000,000 bushels of grain and the contracts for more than ninety-eight per cent, of this property were settled by set-off, and by the payment of differences, and held that this fact did not show an illegal intention or purpose.
The rules and laws of the Chicago Board of Trade, the Chicago Stock Exchange and the New York Stock Exchange, in which markets all the transactions here involved were made, provided for, contemplated and intended the delivery of the property dealt in. That Probst knew this, and gave his orders with this understanding, is fully shown by his testimony and by what he did during the four years or more covered by the transactions. In the first notice of confirmation of sales received by him from Milmine, Bodman & Company on September 3, 1901, he was notified in writing that all purchases and sales made for him were made in accordance with and subject to the rules and regulations of the different markets where the transactions were made for him. Every confirmation of sales received by him subsequently contained the same notice. The record fully justifies us in the conviction that Probst fully understood that all the transactions made for him were of the character contemplated by the rules and laws of these exchanges, and required deliveries to be made. Our conclusion from the evidence is that they were so made; and that there was no understanding between Probst and his brokers or intention on the part of Milmine, Bodman & Company not to deliver but to settle by the payment of differences between the contract price and the market price.
The next question for consideration is whether Mil-mine, Bodman & Company had actual or constructive notice of the rights of complainant Johnson as owner of the shares of stock in question.
The position taken by complainant in his original bill is that Probst and Milmine, Bodman & Company entered into a combination and conspiracy to cheat and defraud complainant Johnson out of the 222 shares of the Borden’s Company stock. No evidence was introduced to sustain these allegations of the bill, and solicitors for complainant in their argument do not claim or contend that there was such a combination or conspiracy by which Milmine, Bodman & Company came into possession of the certificates. This contention in the bill may therefore be dismissed from further consideration.
In his answer to the Milmine cross-bill Johnson bases his claim to the stock upon the ground that Probst, at the time he delivered the stock to Milmine, Bodman & Company, informed them that the stock belonged to Johnson, and that he, Probst, had no right to pledge or transfer and convey the stock.
The only evidence offered in support of this averment of notice of Johnson’s interest in the stock was that of Probst, who testified that along in the summer of 1905, he had a conversation with Mr. Mitchell of Milmine, Bodman & Company, who told him they were not satisfied with the certificates being in the name of Dr. Johnson, while he was drawing the dividends as the ostensible owner; that Mitchell further said they would feel much safer if the stock was transferred to themselves, or if not to themselves to him, Probst; and thereupon he—Probst—told Mitchell that Dr. Johnson had an interest in the stock, and that he was certain Dr. Johnson would not consent to the transfer of the stock to anyone, and that he would not care to ask him to make the transfer. Probst further says the matter was then dropped, but was taken up again on three or four occasions, the last time along in the early part of November, when Mitchell said: “We can’t carry your account on stock margins with this Borden’s stock unless it is transferred from Johnson’s name to us or to you.” Probst says that he replied that he would not transfer it, or ask to have it transferred, as Dr. Johnson had an interest in the stock; that they—meaning Milmine, Bodman & Company— would either take his business with the stock in its then condition or he would transfer his account elsewhere, and the result was that Mitchell dropped the matter and decided to continue carrying his account on the Borden’s stock margins. After this talle he says he redeposited the little certificate in the middle of November. Then in the latter part of November, 1905, he deposited the larger certificate for 100 shares, and in the early part of the following December another certificate, and in January, 1906, another share certificate which gave them control and possession of all four certificates. Mitchell expressly and specifically denies that Probst ever told him at any of the times when the stock was put up by him that Johnson had an interest in it; he testified that the first conversation he had with Probst as to Johnson’s interest in the stock was on February 26, 1906, when Mitchell informed Mr. Bodman that Johnson had served the notice on the Borden Company that the 222 shares had been stolen from him, Johnson; that hé did not request Probst to have the certificates of the Borden’s Company stock transferred to himself or to Milmine, Bodman & Company; that he did not tell Probst that Milmine, Bod-man & Company were dissatisfied with the certificates being in the name of Dr. Johnson and that Dr. Johnson was drawing the dividends; that he did not say to Probst that they were carrying the stock as margins or mention it to him; that nothing was ever said about taking it as margins. Mitchell had a conversation with Probst in Milmine, Bodman & Company’s office, when he deposited the stock, October 31, 1904. He said he would leave the stock as collateral, that it was perfectly good, and Milmine, Bodman & Company could get a quotation from New York on it, and they obtained such quotation.
Mitchell testified that in the conversation on February 26,1906, in regard to the notice served by Johnson, Probst said that it was nonsense about the stock being stolen from Johnson; and several days later after Probst deals had been closed out Probst told him, Mitchell, that he had papers which showed that he had a perfect right to use the stock, and that Johnson had a half interest in his transactions with Milmine, Bod-man & Company and had received half of all the checks which that firm had paid Probst. Here again, on this question of notice to Milmine, Bodman & Company of Johnson’s interest in the stock in question, we find it difficult to believe Probst’s testimony. It is inherently improbable. Probst is personally interested in the issue of this litigation. A decree in favor of complainant Johnson would be greatly to the advantage and benefit of Probst. The great discrepancy between his pleadings and his testimony, and between his direct and his cross-examination, and between his testimony and his own letters and telegrams and the documentary evidence in the case, all lead us to accept the testimony of Mitchell rather than that of Probst. We cannot believe that when he offered this stock as collateral security for margins, or as margins as he puts it, that he would give notice that he was not the sole owner of it, for he knew as a lawyer that Milmine, Bodman & Company could obtain no lien upon or rights in the stock as against Johnson, if they had notice of Johnson’s ownership of, or interest in, the stock, and that such notice would in all probability defeat his purpose in attempting to pledge the stock. Johnson had endorsed the stock and delivered it to Probst, thus giving him evidence that it was his, Probst’s, stock (McCarthy v. Crawford, 238 Ill. 38). Why should he, by giving notice of Johnson’s interest, start an inquiry which in all probability would defeat his immediate object, and make the stock useless in his hands 1 Such a notice would have been evidence to Milmine, Bod-man & Company that Probst was dishonest toward Johnson, or dishonest with them, for, according to his own version of the facts, he had deceived them by suppressing the truth in regard to the ownership of the stock when he first pledged it to them as security for margins, or as security for a loan of money. If he intended to put up as security for his own transactions another man’s property, naturally and ordinarily he would have said nothing about it.
Considering the situation, the relations of the parties, the probability or improbability of the truth of the conflicting testimony of Probst and Mitchell and the interest of Probst in the outcome of the case, we think the weight of the evidence is decidedly against the claim of the complainant Johnson that Milmine, Bodman & Company had notice of Johnson’s rights in the stock at the time it was delivered to them as security.
We are further of the opinion that on the principles announced in McCarthy v. Crawford, supra, and the authorities there cited, the blank transfers on the backs of the certificates of stock signed by complainant Johnson, as shown by the evidence, were good assignments to Probst when delivered to him, and that complainant Johnson can set up no equities in the stock as against Milmine, Bodman & Company, who took them for value in the ordinary course of business, in good faith and without notice of the rights or equities of complainant Johnson, even though it appears that Probst had diverted the stock from the purposes for which it was delivered to him.
Where the owner of title to property confers upon another an apparent title to, or power of disposition over it, he is estopped from asserting his title as against an innocent third party who has dealt with the apparent owner in reference thereto, without knowledge of the claims of the true owner. The rights of the third party do not depend upon the actual title or authority of the one with whom he dealt, but upon the act of the owner, which precludes him from disputing the title or authority he has apparently conferred. Pomeroy Eq. Jurs. (3d Ed.), pp. 1242 to 1248. Williams v. Fletcher, 129 Ill. 356; Otis v. Gardner, 105 Ill. 436, 442; Coffey v. Coffey, 179 Ill. 283.
We think the evidence in the record brings the case fully within the authorities and principles above stated and that complainant Johnson, having by his endorsement and delivery to Probst of the certificates of shares placed them in such condition that they could be readily sold or hypothecated by him, can get no relief in equity against that which he authorized to be done, where, as in this case, such, relief would affect injuriously an innocent purchaser or pledgee for value.
It is contended on behalf of complainant that Mil-mine, Bodman & Company held the certificates of stock as margins, not as collateral security for the payment of margins. The evidence, in our opinion, does not sustain this contention. Milmine, Bodman & Company from time to time made loans of money to Probst as well as being his brokers. On April 27, 1905, he borrowed of them $1,000, and as security for the payment of it he deposited with them three railroad bonds. In the following August he borrowed $3,000 and deposited the same bonds with them as collateral security, the former loan having been paid and the bonds returned to him. On October 27, 1905, he borrowed of appellees $3,500 and deposited with them fifty shares of the Borden stock as collateral security for the loan. On November 20, 1905, he borrowed $7,500 of appellees, and as collateral security he deposited with them 120 shares of the Borden stock. He received checks for all these loans. The amounts of these loans were charged to him in his account and memoranda were made on the ledger of Milmine, Bodman & Company of the collateral deposits and were copied into the monthly statements mailed to him. Some of these loans remained unpaid at the time Probst trades were closed out. As to these deposits of bonds and stocks there is no reasonable question on the evidence that they were made as collateral to secure the loans.
As to the deposits of the Borden stock as margins, or as security for margins as contended by Milmine, Bodman & Company, the evidence is substantially confined to the testimony of Probst, Mitchell and Bodman, and certain receipts, letters and telegrams which passed between Probst and appellees. Upon a careful consideration of the evidence we have reached the conclusion that the stocks in question were deposited with Milmine, Bodman & Company as collateral security for the payment of the margins, and not as margins.
The contention is also made on behalf of complainant that, by sending the stock to New York for transfer on the books of the Borden Company and by refusing to deliver the stock to Probst on his demand made on February 26, 1906, Milmine, Bodman & Company converted the stock, and that the conversion at that time resulted in Milmine, Bodman & Company having-in their hands $40,000 in money which was amply sufficient to margin Probst’s deals.
This contention is based upon the testimony of Probst that Milmine, Bodman & Company agreed to carry Ms trades on the stock as margins without having it transferred to their name, and that he notified them at the time he deposited the stock that it belonged to Johnson. These matters we have discussed above and will not be further considered here. The evidence shows that Milmine, Bodman & Company had made repeated demands upon Probst not only for additional security for margins, but that he should take up the stock and deposit money for his margins before the stock was sent to New York, and these demands had resulted in nothing but promises. The letter which accompanied the stock to New York does not evidence any desire or intention on the part of' appellees to wrongfully convert the stock to their own use. The letter says: “We are holding this as collateral for a customer who has considerable loss in open trades in grain and as it may be necessary for us to sell this security, we would like to have it transferred into the name of Milmine, Bodman & Company. * * * We would prefer to hold the stock if possible. We accepted it temporarily only until he could raise funds from another source which he promised to do and has not yet done.”
Mr. Mitchell testified that the stock was sent to New York for registration and to facilitate delivery.
We do not think Milmine, Bodman & Company wrongfully converted the stock to their own use, in violation of the terms and conditions under wMch they held it.
The next question is, were the trades of Probst illegally closed out by Milmine, Bodman & Company? The evidence shows that from January 30, 1906, to February 26, 1906, Milmine, Bodman & Company, by letters and telegrams and finally by personal interviews, were in constant communication with Probst on the subject of the market and his account which on February 26, 1906, showed a loss of substantially $25,000; and further that appellees were entitled to receive from Probst an additional sum of substantially $15,000 to protect and carry Ms open trades. The subject of the claims being made in New York that Probst did not have good title to the stock in question was discussed between appellees and Probst, the latter claiming that “it was all nonsense about the stock being stolen and that he would fix the matter up.” About eleven o ’clock on February 26, 1906, Probst was notified by appellees that the market in his trades was declining, and that his trades would be closed out unless he took care of them at once. Probst took no steps to take care of his transactions, did not deposit any sum whatever with appellees, although he had promised to deposit $40,000, and after one o’clock on that day his trades were regularly closed out after notice and in conformity with the rules of the Board of Trade of Chicago and the exchanges in New York under which it was distinctly and clearly understood by the parties the transactions were made. In our opinion the trades were legally and properly closed out after due notice.
It is urged that the decree in favor of Milmine, Bod-man & Company on their cross-bill is excessive. The amount of the decree appears to have been arrived at by taking the balance due on February 26, 1906, $28,-320.89, and adding interest on that amount at six per centum, the rate regularly charged in all the monthly statements to Probst without objection, to the date of the decree, making the total amount $31,266.52. Probst was credited on April 26, 1906, with $2,762.50, and interest on that amount at the same rate from date of payment, making a total credit of $3,022.16. This taken from $31,266.52 leaves the amount of the decree. We know of no reason why interest should not be allowed, and at the rate agreed upon by the parties.
The decree is in conformity with the legal and equitable rights of the parties and must be affirmed.
Affirmed.
Mr. Justice Mack took no part in the consideration of this case.