Succession of Condon

1 McGl. 351

• Court: Louisiana Court of Appeal
• Decided: July 1, 1881
• Docket: No. 162
• Status: Published

Opinions

McGloin, J.

The matter at issue iu this case is the validity of a certain promissory note for $700, executed by Patrick Condon, now deceased, in favor of A. E. Bignon. The defence is that said note represented a balance against Condon upon speculations in cotton futures, which constituted contracts aleatory in their nature, and not enforceable. It appears by the proof that Condon dealt for some time with Bignon, the latter representing, or now claiming that he did represent, the New York firm of B. R. Smith & Co. Said dealings were in the nature of purchases and sales of what-are known as cotton futures. The note sued upon is the one figuring upon the following account:

Mn. P. CONDON in account with A. E. BIGNON.

1879. --debit.-

Oct. 1Ü — To lull, due me as per acc’t rend, tliis day.....$1055 21

Dec. 4 — To am’t loss on 100 July delivery............... 369 75 '

“ — “ “ “ “ ' “ ............... 153 88

-- $1578 84

1879. -credit.-- -

Oct. 13 — By am’t casliroc’d from you...................$ 355 21

Nov. 29 — By ain’t his note............................ 700 00

Dec. 3 — By cash rec’d from you........................ 250 00

“9— “ “ “ “ ........................ 273 63

--r- $1578 81

1879. --

Deo. 9 — To your note due........................................$ 700 00

e. & o. E.

Pew Orleans, December 9th, 1879. A. E. Bighton.

Articles 2982 and 2983, La. Civil Code, declare all contracts, aleatory in their nature, to be of no legal effect. If such be, in fact, the nature of the conventions now being considered, we must deny to the note that has sprung from them all judicial enforcement. What are usually termed gaming or wagering contracts are generally reprobated by the laws of civilized nations j and it can make no difference in what particular shape such agreements present themselves, so far, at least, as their reprehensibility is concerned. The force of such legislation should be the same, whether the gamesters style themselves merchants, and place their stakes upon the future con-tin gency of a rise or fall in the market price of any commodity, or, on the other hand, place their ventures upon the turn of a card or the cast of a die. Indeed, if it be wrong or against public policy to rest one’s hopes for fortune, or to venture what one already has, upon matters of mere chance, that species of gaming which intrudes itself into the places of commerce, and mingles itself with the flow of the legitimate business of a country, must be by far the most dangerous of all wagering-. It is so, because it scorns the secrecy of mere card-playing, and holds its glittering temptations perpetually in the eyes of men; because it escapes the odium usually belonging to common gambling, and claims to rank as a branch of legitimate commerce ; because it deals in millions, where other gaming handles only its thousands or hundreds; and because its effects bear not simply upon the player himself, with his own immediate family, but upon the entire community as well, inásmuch as it perpetually menaces the harmonious working of the law of supply and demand in the matter of regulating prices.

Courts which would direct their efforts at the enforcement of legislation of the character under consideration, against the mere card-player alone, or the ordinary better of any kind, and shrink from extending a similar treatment to his more dangerous and powerful brother, the commercial gambler, would merit the contempt of honorable men.

When, however, the judicial tribunals are called upon to-scrutinize particular contracts between merchants, or between persons styling themselves such, with a view to ascertaining whether such contracts be aleatory or not, the task is often, one of great difficulty. The element of chance must enter largely into all commerce, and men, for legitimate- purposes, may enter into conventions that are unimpeachable, but which, yet must of necessity be affected, as to the pecuniary interests of those concerned,.by the future conditions of the markets.. Thus, the merchant, laying in his customary -stock, may profit or lose by fluctuations in prices, before his wares are entirely disposed of. The same merchant, unwilling to charge himself with, the expense or trouble of caring for a great accumulation of merchandise, may stipulate for future deliveries, in lots •and at times to suit his trade. In this last event the profit or loss of purchaser and vendor must depend largely upon subsequent variations in prices.

The legitimate trader, however, in these cases, differs from the commercial gambler in this, that, while he assumes, possibly against his will, the risk of future fluctuations, his expectations of profit do not rest alone upon the chance of a rise. He acquires at one figure, which, by reason of the largeness of his dealings, or for other reasons, is less than that at which the generality of men can acquire, and he sells at an advance to those who seek him. The commercial gambler, on the other hand, contemplates no such legitimate course, or methods of securing his profits, but founds his hope of fortune alone upon the chance of a fluctuation in prices favorable to himself.

There is, likewise, a character of speculation which, while it rests its expectations upon the chance of future variations in prices, is, nevertheless, not to be designated as commercial gambling. A man may believe that rising markets are ahead, and invest his money in purchasing with a view to taking advantage of the rise he foresees. In such a case, however, he executes a real contract of sale, acquires and takes property; and the one from whom he purchases has no remaining interest in the transaction, except to receive the stipulated price; and between the two there are no conflicting hopes to balance in the scales of chance. So, the mere speculator may be unwilling to charge himself with the custody of the property while he awaits the coming advance, and therefore he may stipulate for a future delivery. Even yet, however, he differs from the commercial gambler. The speculator in the case last supposed makes a true contract of sale, and the price is absolutely fixed and paid, or to be paid, no matter what may be the course of the market. So is the property itself to be similarly and certainly delivered. The agreement itself, whatever may be the «eventual profit or loss to either party, has in it nothing of the element of chance. The commercial gambler, however, really makes no sale, and contemplates no delivery or receipt, and no payment of a price. He merely selects an opponent at play, and pits his own judgment against that of the latter, just as one who bets at cards or upon a horse-race might do, only the matter upon which the stakes are laid in his case is the state of the market, as to some'particular commodity, at some special date in the future. With him, payment either way depends solely upon chance, as does also the amount, if any, which is to be paid.

Thus it will be seen that as to the contracts themselves there is no confusion, and that, in fact, the lines of distinction are clearly drawn. The difficulty lies generally in ascertaining the intent of the parties, as a question of fact, for upon such intention all cases of this nature must turn.

In striving, however, to solve this issue, it must not be forgotten that these matters are not beyond the pale of inference. The mutual intention of gaining is not, and need not always be expressed, but it may be implied from circumstances. In other words, in striving to find out what was the actual intent in such cases, the courts may have recourse to circumstantial evidence, with as much profit and propriety as they could do so in any other investigation after the facts. Indeed, in an inquiry such as this, where the scrutiny is not held in the interest of parties, but'in that alone of public policy, the tribunals are in no manner bound by the expressions that may be in the particular contracts that are being judged. It is not only possible, but very usual for parties to attempt to clothe their vicious contracts with the forms and appearances of legality; and in such cases the courts are not precluded from searching* rigorously into such deceptions, in order to prevent the defilement of their dockets by suits which are really illegitimate, although wearing the garb of legitimacy. To hold otherwise would be to make wrong-doing invincible the moment it enters into an alliance with cunning. It would also reduce the laws under consideration, and others of a similar character, to the condition of mere dead letters; for men are ever shrewd in the matter of disguising whatever they have done that is of an evil nature.

The case that is now before us discloses many facts that come properly within the domain of circumstantial evidence. The parties had had together prior dealings of the same kind as those under investigation, and which were carried forward to final completion or determination. As such anterior transactions were, it may be presumed, that the ones being considered were intended to be. In all such antecedent contracts, there was simply a settlement for differences in prices, and no delivery of goods or payment of purchase money. See Bur as’ Appeal, 55 Penn. 298.

The very note sued on is the result of similar adjustments, representing a balance against Condon, after partial payments, upon settlements of differences in prices, all without deliveries of payment of considerations. While it is true that parties who have made a legitimate contract for future delivery, may subsequently agree to settle it by simply paying differences, and while it may be fairly claimed that'the rights of parties in such cases are to be determined according to the intention as it originally existed, yet it cannot be denied that, as result discloses cause, so the manner in which persons eventually execute their contracts may be fairly inferred to be the one in which it was originally intended that they should be executed.

The parties in this case, at the time of their transactions, had no cotton on hand to meet the obligations assumed, nor did they at any time subsequently acquire any with a view to meeting their contracts. Condon was not a regular operator in actual or spot cottons, aud he was without the means to handle the same in any considerable quantity. The dealings between him and Bignon were all upon the market in New York — a place wherein Condon, a resident of New Orleans, had no facilities for receiving or holding cotton. Incidents such as these, while any one of them alone might not be sufficient to determine the cause, are certainly corroborative of each other, and of other circumstances which may exist with them.

A strong inference, in our judgment, arises from the fact that' these particular contracts form part of a line of dealing that has grown to be immense,, and to which alone the term “cotton futures ” does, or can apply. They form, as it were, drops in a mighty tide of business that flows through the cotton exchanges of this city and of New York. Their nature may, therefore, be fairly judged by the general character of the class or kind of dealings with which they are thus assimilated. The court may legitimately examine into the general characteristics of this business as a whole, and impute, in default of sufficient contradiction, such general characteristics to each particular agreement that goes to make up the aggregate. It is shown affirmatively in this case that actual delivery and payment of price is a matter of rare occurrence in the history of these transactions. It is also shown that it would not be possible to bind this business down to actual delivery, because the total of its operations exceeds many times the aggregate of all the cotton to be found in the country. This, it will be borne in mind, is in addition to the commerce in spot cottons, which must at least be commensurate to the amount of the staple actually grown.

How can it be reasonably contended that a system of dealing in futures, which, in its proportions, is so infinitely beyond the capacity of the nation for the production of the article it claims to handle, can be one which, as a system, does not contemplate or iuvolve a mere wagering upon prices

All of these facts we consider as establishing, by sufficient, presumption, the accountant’s contention, and as making good his defence, iu default of contrary proof from the holder of this note. In* other words, we consider that they have shifted the burden of proof, and chat, being uncontradicted, they justified the judge a quo in his finding.

The rules of the New Orleans Cotton Exchange have been submitted to us and argued upon by both parties. As the contracts, however, were made before the coming into force ot these rules, and upon the markets of New York, we do not see the connection they can have with this case. Even if, however, they be substantially similar to those- in operation in the exchange at New Tort, and the contracts between Condon and JBignon were governed by the latter, this would not affect our opinion.

The reference to any such a set of rules can have no further effect than to incorporate them, by reference, into the agreements themselves. They certainly can have no greater force than similar express declarations, if actually embodied in the conventions. We have seen, however, that the declarations of such contracts cannot debar the courts from searching after the real intention of the parties, and determining the controversy accordingly. The betters in these cases might purposely draw their written contracts so as to cover delivery as well as a settlement of differences, and to regulate the former with all the elaboration that is found in these rules, and yet all the while the intention might be in fact to gamble.

If this mode of dealing be essentially in the nature of wagering, and if, as such, it be reprobated by law, it is hardly to be imagined that persons forming public rules for the government of the business would incorporate among their regulations a formal confession of the very illegality by which it was threatened. On the contrary, some attempt to hide away its illegitimacy should naturally be expected. To accomplish this latter purpose, the most convenient plan would be to frame such rules, and the contracts thereunder, so that the latter would possess at least «the seeming of legality. The framers would naturally incorporate into their rules and forms, stipulations for delivery and payment of price, and others of a similar nature, which usually mark conventions that are of validity. Parties that merely contemplated gambling could, as they are doing every day, put up their bets upon the exchange; and consequently, under these «rules, and certainly, these regulations, could not alter the real nature of their dealings, any more than they could control absolutely the minds and wills of such contractants. The mere fact that the holder of. such a simulated contract may subsequently determine to stand upon the letter of his convention, and demand or tender delivery, does not exclude the idea that, at the inception of the matter, both parties intended a simple settlement for differences without such delivery and without payment of price. The courts, upon-the presentation of this issue of illegality, will not stop their investigations, any more for being in face of such rules, than if confronted by a written convention, which similarly reserves a right of which it is asserted both parties intended not to avail themselves. So, the circumstances would be appealed to for light, and those that we have already considered would be as potent against these rules as they could be against such a contract that was express and complete without reference. As the burden of proof can be shifted by circumstantial evidence in one case, so, likewise, may it be shifted in the other.

These formal rules do not reduce a particle the great volume of the future business, or add one bale to the actual crop. They do not do away with the fact that, despite their clauses, this vast business is conducted almost entirely upon settlements of differences, and with so few deliveries. They could not' wipe away the history of the past transactions between Condon and Bignon in this case, or strike out one feature from the peculiarity of their relations towards each other and towards the contracts themselves.

It is contended, in this case, that Bignon was simply a broker, or agent, of Condon, and that, as such, he is entitled, under any circumstances, to reimbursement for what he has paid out for account of his principal. The laws of this State are express and emphatic in their condemnation of gaming. The constitution of 1879, art. 172, declares gambling to be a vice, and commands the legislature to pass laws for its suppression. We are not prepared, under any circumstances, to hold thatvany one who is fully cognizant of the nature of transactions of this nature, and hence knowingly brings them about, can escape being viewed as a participant in transactions which the law condemns, and appeal to the courts for the • (enforcement of his rights or interests in, or growing out of, '■such obnoxious dealings. However, we do not consider, from, '¡.the evidence, that Bignon was the mere agent of Condon, taking disbursements as such. He had a standing connection with the New York house, covering many dealings, and for many persons. He kept a general and running account of losses and gains with that house, and made stated settlements with them. That house had accounts with no one but Bignon, in connection with such matters; rendered accounts to him, drew upon him, and were drawn upon by him, according as the balancé of their accounts varied one way or the other. On the •other hand, Condon and Bignon, likewise, dealt with each ■other exclusively. From Bignon, and in the name of Bignon alone, Condon received all accounts, and between them it was that losses or gains were adjusted and paid, or settled by note, as the case might be.

Whilst it was, of course, necessary for Bignon to have some one in New York to act for him, who that representative was does not seem to have concerned Condon, who sought for, and dealt alone with Bignon. Under such circumstances, we cannot view the latter in any other light' than as a contracting-principal, at least so far as Condon was concerned, who was making use of B. R. Smith & Co., to transact business for him in New York, as a bank here, receiving foreign bills to collect, might send such bills to a foreign bank for presentation, etc.; nr as a commission merchant here might consign his principal's cotton to Liverpool for sale, on that market, by his own correspondent.

The judge deciding this case below seems to have disposed of this case in accordance with the principles herein propounded, and his judgment is affirmed, with costs.