GARDNER, Circuit Judge.
Appellant, a grain broker and an Illinois corporation, brought these five actions at law against appellees to recover moneys advanced by appellant to the appellees and earned broker’s commission on the purchase and sale of grain for future delivery. By stipulation of the parties, the five actions were consolidated and tried as one, trial by jury being waived. The trial of the consolidated cases resulted in a judgment against appellant and in favor of the appellees.
The parties will be referred to as they appeared in the lower court.
The petition of plaintiff in each of the eases was in conventional form, alleging that at all times therein mentioned plaintiff was engaged in the grain business, acting as a grain broker. That, on the various dates referred to, the defendants employed plaintiff to purchase and sell wheat and other grains for them on certain named markets, the de[526]*526fendants agreeing to pay plaintiff a commission on all such purchases and sales; that pursuant to such employment plaintiff purchased and sold grain for defendants, plaintiff sometimes advancing all or a part of the purchase price of such grain, for which services and advancements defendants agreed to pay plaintiff, and that during said time an account arose between plaintiff and the defendants of mutual credits and debits in the purchase and sale of grain, the account being attached and made a part of the petition in each case.
The defendants filed answer in each ease, denying generally that they were indebted to plaintiff on account of the allegations in the petition, or any item thereof, and affirmatively alleging that each and all of the transactions involved were fictitious. That the buying and selling of the grain, as alleged by plaintiff, was a mere form and pretense; that the various transactions in question were gambling transactions between plaintiff and defendants, were illegal, and in violation of the laws of the state of Missouri. That the defendants at the time of the transactions did not intend to accept delivery when they purchased grain, or make delivery when they sold it, and that their gains and losses were to be ascertained by the fluctuations in the market prices of the grain; that is to say, by taking the difference between the price at which it was pretended to be purchased, and the price at which it was sold, such difference to determine the amount of their gain, or the amount of their loss.
The reply of plaintiff put in issue the affirmative allegations of the answer.
The evidence discloses that plaintiff was engaged in the grain, grain elevator, and grain brokerage business, and was a member in good standing of the grain exchanges or boards of trade of Kansas City, Mo., Chicago, Ill., Minneapolis, Minn., and Winnipeg, Canada. Its business consisted in buying and selling cash grain for itself and for its customers, the operation of grain elevators, and acting as agent or broker for its customers in the purchase and sale of grain for future delivery. In the year 1924, when all the transactions here in question were had, plaintiff maintained a principal office at Chicago, Ill., and a branch office at Kansas City, Mo. It also maintained a local office at Carrollton, Mo., which was in charge of one E. S. McDonough.
The transactions here involved were initiated in the local office of plaintiff at Carrollton, by the giving of an order by one of the defendants to plaintiff’s agent or employee, for the purchase or sale of grain for future delivery, to be executed on the boards of trade or grain exchanges at Kansas City, Chicago, Minneapolis, or Winnipeg. Plaintiff maintained a private leased telegraph wire from its Carrollton office to its Kansas City office. Verbal orders of purchase or sale were given by defendants to plaintiff’s agent at Carrollton, which were by him; transmitted by telegraph to plaintiff’s Kansas City office for acceptance or rejection. Plaintiff’s agent at Carrollton had no authority to accept or reject any order for the purchase or sale of grain for future delivery, but transmitted such order to plaintiff’s Kansas City office for acceptance or rejection. If the order was accepted by plaintiff, its Kansas City office immediately telegraphed an order for execution to its Chicago office, except where the order was for the purchase or sale of Kansas City wheat. If the order was for the purchase or sale of Chicago wheat, it was executed on the trading floor of the Chicago board of trade; if for the purchase or sale of Minneapolis or Winnipeg wheat, it was executed on the trading floor of that respective board of trade or grain exchange. Immediately upon the execution of such an order, plaintiff made out and mailed from its Kansas City office to the customer a written confirmation of the order and of its execution. Such written confirmation recited the date of the contract, the quantity and kind of grain bought or sold, the contract price (per bushel) of the commodity, the delivery month, and the place where the contract of purchase or sale was executed, as required by the Federal Grain Futures Act (7 USCA §§ 1-17). Such written confirmation recited that: “All transactions made by us for your account contemplate the actual receipt and delivery of the property and payment therefor. We reserve the right to close these transactions when deposits are running out, without giving further notice. We also reserve the privilege of clearing all transactions through Clearing Associations, if there be any, from day to day in accordance with ’ the usage, rules or regulations of the Exchange where the trade is made, prevailing at the time. All purchases and sales made by us for you' are made in accordance with and subject to the rules, regulations and customs of the Chamber of Commerce or Board of Trade where the trades are made, and the rules, regulations and requirements of its Board of Directors, and all amendments that [527]*527may be made thereto. This contract is made under authority of the Act of Congress known as 'The Fixture Trading Act.’ ”
Bach contract of purchase or sale of grain for future delivery, here involved, was made and executed on the respective boards of trade or exchange in the name of the plaintiff as a clearing member of such board of trade or exchange, and was made with a grain broker who was also a clearing member of such board of trade or exchange, in the name of said broker acting either for himself or for an undisclosed principal; in fact, the rules of the respective exchanges, and also section 4 (b) of the Federal Grain Futures Act, 7 USCA § 6 (b) require that all contracts for the purchase and sale of grain for future delivery shall be made by or through a clearing member of the board of trade or exchange which has been designated as a "contact market.” Clearing members are the parties to these transactions on the exchange, and they look for settlements to one another. Plaintiff was a member in good standing of the federal department. The 'Chicago Board of Trade, the Minneapolis Board of Trade, and the Kansas City Board of Trade, were all officially designated as "contract markets” by the Secretary of Agriculture, in accordance with the provisions of the Federal Grain Futures Act. Every contract of purchase or sale executed by plaintiff for defendants obligated it to full performance by sale or purchase, and such performance was protected by the margin or deposit maintained by it with the clearing house, or exchange; or board on which the transaction was made.
On most of the transactions here involved, defendants put up a margin or deposit with plaintiff. Plaintiff's only remuneration or compensation was for acting as broker for defendants in these transactions. Every sale or purchase made by plaintiff for defendants had an offsetting purchase or sale, so that the net result was that no grain was delivered in any of these transactions. The testimony of the defendants was that they did not intend to make delivery in any case of the grain sold, or to accept delivery of any grain purchased, but that each sale or purchase was intended to be fulfilled by an offsetting sale or purchase of grain before the expiration of the time required for delivery.
The lower court found that all the purchases or sales were offset by sales or purchases executed in the same manner as the initiating purported purchase or sale, and that "every pretended purchase or sale was closed out by a purported offsetting transaction before the delivery time arrived and was purported to have been executed by plaintiff on the orders and at the instruction of defendants, save and except as to some of the last transactions, which were closed out by plaintiff without instruction from such defendant at a time when defendant had no cash margin to protect his transactions.” The court concluded that the transactions were gambling transactions and void under Revised Statutes of Missouri, 1029, §§ 4316 to 4326 inclusive.
On this appeal it is contended: (1) That there was no substantial evidence to support the finding of the court that the transactions were fictitious or gambling transactions; (2) that the Federal Grain Futures Act superseded all state laws relating to the subject of dealings in futures on contract markets, and that the contracts in question were valid under the Federal Grain Futures Act; (3) that, independently and apart from the federal statutes, plaintiff was entitled to recover; and (4) that, if the transactions as made were unlawful, it was because of the acts of plaintiff's agent at Carrollton, which were outside the scope of his authority.
There is little room for originality of thought or expression so far as the law covering this subject is concerned, because it has been well settled by controlling decisions of the Supreme Court of the United States and of this court. There was no evidence that plaintiff bet with its customers, as found by the lower court. If the defendants lost on transactions, the plaintiff did not thereby win, and, if they won by the transactions, the plaintiff did not thereby lose. There was no element of wager or bet in the transactions between plaintiff and defendants. The court, in its tenth finding, found that none of the contracts were actually executed between clearing members of the exchange, but the undisputed evidence shows that in every instance the plaintiff went into a contract market and bound itself to purchase or sell. These transactions were sufficiently real so that the defendants in some instances realized and accepted a profit therefrom. On some of them there was a loss, which to date plaintiff, in part at least, has suffered. The transactions were real enough so that in most instances defendants deposited with plaintiff, and plaintiff in turn deposited with the board of tradfe or exchange concerned, a margin to secure the performance of the contracts it made. So [528]*528far as plaintiff is concerned, it was bound by the contracts of purchase and sale which it entered into as the broker for the defendants, to receive or deliver the grain contracted for, and it was liable in damages for the failure so to do.
Speculation is not necessarily gambling, and, absent some constitutional or statutory provision to the contrary, a contract for the sale or purchase of a commodity to be delivered at a future day is very generally held to be valid, even though the seller has not the commodity and has no means of getting it, other than to go into the market and buy it before the day of delivery. The contracts here under consideration were presumed to be lawful, and, the defendants having pleaded that they were gambling contracts, the burden of proof was upon them to prove facts which voided them. Clews v. Jamieson, 182 U. S. 461, 21 S. Ct. 845, 45 L. Ed. 843; Cleage v. Laidley (C. C. A.) 149 F. 346; Browne v. Thorn (C. C. A.) 272 F. 950; Hoyt v. Wickham (C. C. A.) 26 F.(2d) 777.
Contracts for future delivery made with the intention of settling them by offset or by ringing off or ringing out and by the payment of differences, in accordance with the rules and practice of boards of trade, are not wagering contracts. It is not necessarily gambling that the buyer in a contract of sale providing for future delivery resells before the maturity of his contract; in fact, the contract is not tainted with the element of gambling by reason of the fact that at the time of the making of the contract a purchaser intends to resell before the time appointed for delivery. Chicago Board of Trade v. Christie Grain, etc., Co., 198 U. S. 236, 25 S. Ct. 637, 638, 49 L. Ed. 1031; Clews v. Jamieson, 182 U. S. 461, 21 S. Ct. 845, 45 L. Ed. 1183; Browne v. Thorn, 260 U. S. 137, 43 S. Ct. 36, 67 L. Ed. 171; Board of Trade of Chicago v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839; Gettys v. Newburger (C. C. A.) 272 F. 209, 218; Browne v. Thorn (C. C. A.) 272 F. 950; Mullinix v. Hubbard (C. C. A.) 6 F.(2d) 109, 114; Wilhite v. Houston (C. C. A.) 200 F. 390; Hoyt v. Wickham (C. C. A.) 25 F.(2d) 777; Solomon v. Newburger (C. C. A.) 35 F.(2d) 328; Lyons Milling Co. v. Goffe & Carkener (C. C. A.) 46 F.(2d) 241, 247; Grain Futures Act, 7 USCA §§ 1 to 17.
The Grain Futures Act, approved September 21, 1922 (7 USCA §§ 1-17) was enacted for the stated purpose of preventing and removing obstructions and burdens from interstate commerce in grain by regulating transactions in grain future exchanges. It limited the right to deal in futures and placed the practice under certain restrictions and regulations. Section 4 of that act (section 6, title 7, USCA) makes it unlawful for any person to transmit, through the mail or otherwise in interstate commerce, any offer to make or execute, or any confirmation of the execution of, or any quotations, or report of the price of any contract of sale of grain for future delivery on or subject to the rules of any board of trade in the United States, or for any person to make or execute such contract of sale, “which is or may be used for (a) hedging any transaction in interstate commerce in grain or the products or by-products thereof, or (b) determining the price basis of any such transaction in interstate commerce, or (e) delivering grain sold, shipped, or received in interstate commerce for the fulfillment thereof, except—
“(a) Where the seller is at the time of the making of such contract the owner of the actual physical property covered thereby, or is the grower thereof, or in ease either party to the contract is the owner or renter of land on which the same is to be grown, or is an association of such owners, or growers of grain, or of such owners or renters of land; or • .
“(b) Where such contract is made by'or through a member of a board of trade which has been designated by the Secretary of Agriculture as a ‘contract market,' as hereinafter provided in this chapter, and if such contract is evidenced by a record in writing which shows the date, the parties to such contract and their addresses, the property covered and its price, and the terms of delivery." (Italics ours.)
While the act placed a ban upon much of the practice of dealing in futures that had theretofore existed, it is to be observed that the transactions here involved seem clearly to come within exception (b), and the evidence shows that the requirements of that section were all complied with. It was manifestly the intention of Congress to legitimatize and make lawful transactions, dealings, and contracts in grain futures in which the provisions of this act were complied with. Having made it unlawful for any person to engage in such transactions unless within the exceptions specified, it seems necessarily to follow that, where the transaction comes within the exceptions specified, and has met and complied with all the requirements provided in the statute, such transactions are valid.
[529]*529Dealings in grain futures had been sustained by the courts before this act of Congress was passed. The act does not in térros at least provide that the validity of transactions -in grain futures shall depend upon whether the purchaser or seller intends to take or to make actual delivery of the grain. Congress left the law in this regard as it stood at the time of the adoption of the act. In Board of Trade of Chicago v. Christie Grain, etc., Co., supra, in an opinion by Mr. Justice Holmes, it is said:
“We must suppose that then as now, a settlement would be made by the payment of differences, after the analogy of a clearing house. This naturally would take place no less that the contracts were made in good faith, for actual delivery, since the result of actual delivery would be to leave the parties just where they were before. Set-off has all the effects of delivery. The ring settlement is simply a more complex ease of the same kind. * * *
“The fact that contracts are satisfied in this way by set-off and the payment of differences detracts in no degree from the good faith of the parties, and if the parties know when they make such contracts that they are very likely to have a chance to satisfy them in that way, and intend to make use of it, that fact is perfectly consistent with a serious business purpose, and an intent that the contract shall mean what it says. * * *
“In the view which we take, the proportion of the dealings in the' pit which are settled in this way throws no light on the question of the proportion of serious dealings for legitimate business purposes to those which fairly can be classed as wagers, or pretended contracts. No more does the fact that the contracts thus disposed of call for many times the total receipts of grain in Chicago. The fact that they can be and are set off sufficiently explains the possibility, which is no more wonderful than the enormous disproportion between the currency of the country and contracts for the payment of money, many of which'in like manner are set off in clearing houses without any one dreaming that they are not paid, and for the rest of which the same money suffices in succession, the less being needed the more rapid the circulation is.”
This court in Gettys v. Newburger, supra, in an opinion by the late Judge San-born, after defining gambling transactions, said: “On the other hand, there are lawful customary and generally prevailing methods of closing out such contracts, settling them and discharging the obligations of the parties thereunder which do not render such contracts wagering contracts or illegal, to wit: (1) By sales; (2) by direct set-offs; and (3) by ringing off before the times of delivery specified in the contracts arrive, so that when those times come no liability to deliver or to pay will exist, and if the parties, when they make such a contract intend not to deliver’ or to pay for the commodity at the time fixed in the contract therefor because they intend to close out the contract and to settle their obligations thereunder by the use of these lawful methods before the time fixed for the delivery arrives, that intention not to pay or deliver is consistent with the laws and the public policy regarding wagers and it does not make or tend to prove such a contract a wagering contract, illegal or void.”
In the instant case, the defendant Dickson, on direct examination, said: “There was no intention on my part at any time to accept delivery of wheat that I bought or make delivery of wheat that I sold. I have never been in any other business but the clothing business. I was never interested in any elevator. I am not a grower of wheat. I could not have made any preparations to accept delivery. I would not have been financially able to have bought the wheat and paid for it.”
On cross-examination, however, he testified as follows:
“Q. Did he (Mr. McDonough, plaintiff’s agent at Carrollton) tell you the deals would be handled by the Uhlmann Grain Company on those Boards of Trade? A. Yes, sir. * * *
“Q. So there were lot of those transactions that were handled either because you told him what to do, or acquiesced in what he did for you? A. I suppose so.
“Q. Every one of those transactions he handled for you in the way you have described, was done either because you told him beforehand to close it out, or because he closed it out and later you told him it was all right? A. Yes, sir. * * *
“Q. I am asking you if it isn’t a fact that is what you did before the delivery month arrived, you sold out your purchase and you bought out your sales? A. I suppose it was.
“Q. And that is what you intended to do all along in all of these dealings that you had? A. Sell out without delivery?
“Q. Yes, sir; and buy out without a purchase before the time came around, and that [530]*530is what you did whenever you exercised your own judgment, didn’t you? A. I suppose.”
Another one of the defendants testified:
“Q. Now, whenever any of those contracts were entered into between you and as you say, Mr. McDonough, that you made a purchase, for instance, did you later make a sale against that purchase before delivery time came? A. Yes, sir.
“Q. Did that in every instance? A. Always. ‘
“Q. Never did anything else? A. No, sir. * * *
“Q. That is to say, before the time of delivery arrived you were going to get rid of your contract, that is the way you intended to do when you first started to deal with Mc-Donough? A. That is the instructions I gave to him.
“Q. And he carried them out, didn’t he? A. Yes, sir.”
This testimony, which is typical of that submitted on behalf of all the defendants, and so stipulated, shows that it was the intention and understanding of the defendants that all of these transactions were to be consummated by plaintiff as their broker upon the contract markets named, and that the transactions were actually consummated by the plaintiff in accordance with their purpose, intention, and understanding.
The validity of these contracts seems to be conclusively established by Gettys v. New-burger, supra. This court has consistently so held in a long line of eases following Gettys v. Newburger. In Mullinix v. Hubbard, supra, where the validity of a similar contract was upheld, this court, speaking through Judge Lewis, said: “As already stated, there was no delivery on any of these contracts, but before delivery dates were due they were all closed out by the lawful, customary and generally prevailing methods permitted by the rules and regulations of the exchange and its clearing house, and Bryant’s intention when he made his contracts that they should be closed out in that way did not render them wagering contracts.”
In Lyons Milling Co. v. Goffe & Carkener, supra, in an opinion by Judge Phillips, it is said: “The fact that contracts for future delivery are closed out before delivery is due, by set-off or ringing off in accordance with the rules and regulations of the Board of Trade and its 'clearing house, and the fact that a purchaser so intended to close out a contract before delivery was due, does not make the contract a wager and invalid.”
The burden of proof was on the defendants to prove that the trades here involved were gambling transactions. This burden they have not sustained, and there was no substantial evidence to sustain the court’s finding which branded these contracts as gambling transactions.
It is urged, however', that the transactions were void under certain Missouri statutes. Section 4316 of the Revised 1929 Missouri Statutes makes the carrying on of a “bucket shop” a felony. Section 4317 attempts to define the term “bucket shop” and transactions within the ban of the statute. The test is whether in fact there was an actual purchase and sale, or sale and purchase, for or on account of the parties to the contract. We have here held that there was such a sale and purchase of grain for future delivery at a designated contract market in accordance with the provisions of the Grain Futures Act and the rules prescribed by such markets. Neither the Missouri Statutes, nor the decision of the Supreme Court of Missouri in State v. Christopher, 318 Mo. 225, 2 S.W.(2d) 621, 630, has any application to purchases of grain for future delivery made at duly designated markets. In that case the Supreme Court of Missouri said: “We accordingly hold, until federal authority declares otherwise, that the effect of the Grain Futures Act was to restrict the operation of state laws, like our section 3574, so as to make them inapplicable to transactions coming within the terms of the Grain Futures Act, conducted on a 'contract market’ according to the rules prescribed by that market.”
There is both reason and authority for holding that Congress, having entered the legislative field with respect to transactions in grain futures at designated contract markets, has superseded and displaced all state laws and legislation regarding such dealings. Stafford v. Wallace, 258 U. S. 495, 42 S. Ct. 597, 66 L. Ed. 735, 23 A. L. R. 229; Swift & Co. v. United States, 196 U. S. 375, 25 S. Ct. 276, 49 L. Ed. 518; Board of Trade of Chicago v. Olsen, 262 U. S. 1, 43 S. Ct. 470, 67 L. Ed. 839; Chamber of Commerce of Minneapolis v. Federal Trade Commission (C. C. A.) 13 F.(2d) 673; Hoyt v. Wickham (C. C. A.) 25 F.(2d) 777; State ex rel. Burnett v. Rosenbaum Grain Co., 115 Kan. 40, 222 P. 80; Goffe & Carkener v. Henneberger, 132 Kan. 211, 294 P. 672. However, it is not necessary to decide whether the Grain Futures Act supersedes the Missouri Statute, further than the Missouri court has itself held.
[531]*531The state statute could not affect transactions at a contract market. It appears in this ease that plaintiff merely extended the facilities of its Kansas City office into Carrollton, by making available there much the same service and information to be had at the contract market. Any one of the defendants could have gone into either of these contract markets, through a broker, and made these purchases and sales. This in effect was done at Carrollton, using the agency employed by plaintiff at that place to effectuate the transactions.
These transactions involved interstate commerce, and, if the Missouri Statute relied upon created a burden on- or interfered with interstate commerce, then it was immaterial whether that burden was substantial or incidental, because, when Congress has acted with reference to a matter confided to it by the Constitution, then its statutes displace and supersede all conflicting state legislation touching the matter. Gulf, etc., R. Co. v. Hefley, 158 U. S. 98, 15 S. Ct. 802, 39 L. Ed. 910; Missouri, etc., R. Co. v. Harris, 234 U. S. 412, 34 S. Ct. 790, 58 L. Ed. 1377, L. R. A. 1915E, 942; Asbell v. Kansas, 209 U. S. 251, 28 S. Ct. 485, 52 L. Ed. 778, 14 Ann. Cas. 1101; Lake Shore, etc., R. Co. v. Ohio, 173 U. S. 285, 19 S. Ct. 465, 43 L. Ed. 702; Smith v. Turner, 7 How. 396, 12 L. Ed. 702.
In the Grain Futures Act (section 3) it is recited that: "Transactions in grain involving the sale'thereof for future delivery as commonly conducted on boards of trade and known as ‘futures’ are affected with a national public interest; that such transactions are carried on in large volume by the public generally and by persons engaged in the business of buying and selling grain and the products and by-products thereof in interstate commerce; that the prices involved in such transactions are generally quoted and disseminated throughout the United States and in foreign countries as a basis for determining the prices to the producer and the consumer of grain and the products and byproducts thereof and to facilitate the movements thereof in interstate commerce.” (7 USCA § 5.)
The act was sustained by the United States Supreme Court in Board of Trade of Chicago v. Olsen, supra, as a regulation of interstate commerce.
When the lower court held that the plaintiff was engaged at Carrollton in purely intrastate commerce, it failed to give effect to the declarations of the Grain Futures Act, and failed to recognize that this'local agency was a part of the national and international market and agency for the handling and sale of grain or grain futures. Stafford V. Wallace, supra.
As the ease must be reversed for the errors already considered, it is not deemed necessary to diseuss other contentions of appellant.
The judgment appealed from is reversed, and the cause remanded for further proceedings not inconsistent herewith.