Morris v. Western Union Telegraph Co. , 94 Me. 423 ( 1900 )

Powers, J.

On April 15th, 1899, the plaintiff directed one Hayden, a correspondent at Machias, Maine, of F. A. Rogers & Co. of Boston, to buy for him of said Rogers & Co. twenty shares of Metropolitan Street Railway stock at $250and a quarter added for commission, making $250%:, and at the same time deposited with him $60.00 and received from him the following memorandum:

“Duplicate.

Trade No. 2. Margin Three Protect.

We solicit and receive no business except with the understanding that the actual delivery of property bought or sold upon orders is in all cases contemplated and understood.

To Mr. Chas. E. Morris;

In obedience to your orders, as your agent, in my own name, I have this day contracted with F. A. Rogers & Co. of Boston to buy twenty shares of Metro, at 250%:.

Date. Called. Limit. Deposit.

Apr. 15 250%: 47%: 60.00”

This transaction is termed by plaintiff’s witnesses a deal. According to the custom of F. A. Rogers & Co. all deals could be closed and stock treated as sold at any time before ten o’clock the next morning at the closing price of the day before on the New York Stock Exchange, and the difference between the buying and selling price adjusted on that basis. On April 17th the closing price of the stock above named was $255, and before nine o’clock the next morning plaintiff delivered to the agent of the defendant at its office, in Machias, a telegram addressed to said Rogers & Co. Boston, directing them to “Close Metro., fifty five.” At the opening of the Stock Exchange on the 18th this stock fell to 247 ^ and according to the,method of doing business and the understanding between the parties, the plaintiff’s “deal was exhausted”, his rights under the contract terminated, and his margin of $60 lost. Plaintiff brings this action for the non-delivery of the telegram, and claims to recover as damages the $60 margin, and $85, the difference between the purchasing price, $250 ^ and $255, the price at which he ordered his deal closed.

If the case stopped here, it might not be difficult to determine the true nature of the dealings between the plaintiff and F. A. Kogers & Co. It is admitted, however, that “in such a transaction or deal, the method of business in the plaintiff’s deal is as follows: Such trades are made on quotations only, no actual stock being in fact sold; but settlement of differences are fully made when the deals are closed as to profits or losses.” This admission is fatal to the plaintiff’s case. It strips the transaction of the semblance of legitimate business with, which the memorandum endeavored to clothe it, and leaves it a naked bet or wager upon the rise and fall of the price of the stock, which the law terms a gambling contract, and pronounces immoral and void. The particular disguise, or subterfuge to which the parties have resorted to prevent their real intention from appearing in the terms of the agreement, cannot control. The form is immaterial. To seek to evade the law by using the forms of law is a well known device. In such cases the court will not hesitate to determine and declare the true nature of the transaction. The intention is the crucial test. If the parties at the inception of the contract actually intend that the goods shall be delivered and the purchase price paid then the contract is lawful, but if they intend to settle differences only, then it is unlawful. Rumsey v. Berry, 65 Maine, 570; O’Brien v. Luques, 81 Maine, 46; Dillaway v. Alden, 88 Maine, 230; Nolan v. Clark, 91 Maine, 33; Irving v. Miller, 110 U. S. 409; Embrey v. Jemison, 131 U. S. 336.

In the case at bar, notwithstanding the written memorandum, the parties could not have “ contemplated and understood the actual delivery of property bought and sold” when it is admitted that by their method of doing business no actual stock was in fact sold, but trades were made on quotations only and settlements made of differences only. It would require stronger evidence than this case discloses to satisfy a court that parties engaged in a certain business actually intend in the prosecution of that business to do “ in all cases” that which according to their method of conducting the business they never do in any case. The plaintiff had no stock to to sell and the parties never intended the sale of any. His contract with Rogers & Co. was a gambling contract, and no loss growing out of it could in legal contemplation have been suffered by the plaintiff from the defendants failure to deliver the message. “Neither he nor the receiver can invoke the illegal contract, or the gain or loss resulting from it to measure the damage sustained by him in consequence of an erroneous transmission ” or non-delivery of the message. 25 Am. & Eng. Encyl. of Law, (1st Ed.) p. 814.

Neither in this case can he recover any price for transmission and delivery, for each count in the declaration alleges that the toll for transmitting, carrying and delivering the message was to be collected from Rogers & Co., and there is neither allegation nor proof that it has ever been paid by any one.

Judgment for defendant.