
    Henry C. Peck, Resp’t, v. The Doran and Wright Company (Limited), App’lt.
    
      (Supreme Court, General Term, Third Department,
    
    
      Filed November, 1887.)
    
    Contract—Wager contract—What is.
    The contract in this action stated, among other things, that the parties agreed to deal and traffic upon the market value of wheat, and that they did so traffic and deal between certain dates. It further stated that the plaintiff gave his orders to defendant for wheat and paid defendant’s commissions for doing the business, and also paid a margin to secure defendant against a decline in the market value; that if the market value should advance it was agreed that plaintiff should be entitled to the advance. Held, that the contract stated was a wager contract. Landon, J., dissenting, held that the transactions related being consistent with an agreement to deal in the wheat itself, and not the market value, the contract was not forbidden by law.
    
      Henry T. Sanford, for app’lt; William H. Shephard, for resp’t.
   Learned, P. J.

—It seems to me that the second count states a wagering contract.

It alleges that the parties agreed to deal and traffic upon the market value of wheat, and that they did so traffic and deal between certain dates. Here is a distinct allegation that the subject of their dealing and agreement was the market value of wheat in distinction from the wheat itself. Then it proceeds to state the mode, viz., that plaintiff gave his orders to defendant for wheat and paid defendant’s commissions “for doing the business,” not necessarily for making purchases; and also paid a margin to secure defendant against a decline in the market value; that if the market value should advance it was agreed that plaintiff should be entitled to the advance. Now if these orders given by plaintiff were to be actually fulfilled by defendant and the wheat actually purchased, there would be no need of an agreement the plaintiff should be entitled to the advance in the market value. For in that case the wheat would belong to the plaintiff and he would have the benefit of the advance without any agreement. The fact then that it was necessary to make an agreement to this effect indicates that though orders were given they were not to be executed.

The complaint goes on to say that the transactions were based on the rate, condition and fluctuations of the market value and that defendant had closed the transactions (not sold the wheat), on the basis of the market and had retained the margin of $2,535. If there had been an actual purchase of wheat by defendant for plaintiff and a subsequent sale of the same at such a decline as to cause a loss .of $2,535, then the defendant would not have kept and retained that sum, but it would have been lost by the decline in prices.

Here, however, the demurrer admits that defendant had kept and retained that money for the reason that by the decline in market value the margin had been exhausted.

1 think that sufficient was stated to show a wagering contract. Bigelow v Benedict, 70 N Y., 202 at 206.

How the fact may appear in the trial we cannot tell.

I think the interlocutory judgment should be affirmed, with costs.

Williams, J., concurs.

Appeal from an interlocutory judgment directed by the Albany special term overruling a demurrer to the second cause of action alleged in the complaint.

The complaint states the second cause of action, substantiaEy as foEows:

That at different times between December 1, 1885, and Séptember 15, 1886, plaintiff had business transactions with defendant, by which defendant (in consideration of commissions paid and to be paid by the plaintiff), undertook, promised and agreed to and with plaintiff to deal and traffic upon the market value of wheat.

That the plaintiff and defendant did deal, traffic and trade on the market value of wheat in form and manner as foEows:

Plaintiff gave his several orders to the defendant for wheat, amounting to 46,000 bushels, and paid defendant’s commissions, $115; and, also, the sum of $2,535, as margins on the several purchases, to secure the defendant against any dechne of the market value of wheat between the dates of the orders and a date named for the closing of the transactions; and as a margin and forfeit to defendant, in case the market value should dechne so as to exhaust the margin, the plaintiff had the right to advance and pay defendant a further margin, as in the first instance. That it was a part of said contracts between the plaintiff and defendant that if the market value advanced after plaintiff gave his several orders to defendant as to all the wheat ordered, the plaintiff should be entitled to the advance, and also to receive back from defendant his marginal advances thereon.

That aE of the adjustments and settlements of the said transactions were to be made and were made, and said transactions were based on the state, condition and fluctuation of the market value of wheat.

That when the time arrived for the closing of the several orders, the defendant told the plaintiff that the market value had declined, and that all of the margins had been exhausted; that the defendant had closed all of the tranactions on the basis of the market value, and had retained and kept the said sums and has refused to pay the same to plaintiff after demand.

That all said transactions, agreements and contracts were and are illegal and void and in violation of the statutes, against betting and gaming.

, The cause of action attempted to be alleged is one for violations of the statute against betting and gaming. 1 R. S., part 1, chap. 20, title 8, art. 3, §§ 8 and 9.

The defendant demurred on the ground that the complaint did not state facts sufficient to constitute a cause of action.

Landon, J.

(dissenting)—If the contract set forth in the complaint is one for ‘1 traffic and trade upon the market value of wheat,” and not for the purchase of wheat or for the traffic and trade in wheat, then it is a wagering contract. Bigelow v. Benedict, 70 N. Y., 202; Story v. Salomon, 71 id., 420; Harris v. Tunbridge, 83 id., 92; Yerkes v. Salomon, 31 Hun, 471.

The complaint alleges that the parties agreed to traffic and trade upon the market value of wheat, and in addition to their bargain to do it, did traffic and trade upon the market value of wheat as follows: The plaintiff gave to the defendant orders for 40,000 bushels of wheat, paid him $115 commissions and $2,535 for margins against the decline in the market price of wheat between the date of the orders and the date of closing the transaction, and had the privilege to advance further margins; the plaintiff was to have the benefit of any advance in the market price of wheat, and receive such advance, together with his margins. If the price fell, the plaintiff would lose.

Now, under plaintiff’s orders for wheat, defendant was at ■liberty to buy the wheat ordered and hold it to await the fluctuations in its market value. If defendant did this, then, whether the price rose or fell, the defendant would make nothing except his commissions. If the price rose, plaintiff would win nothing from the defendant; he would make the profit, less commissions and interest, which the transaction realized. If the price fell, the plaintiff would lose the shrinkage in addition to the commissions and interest. The plaintiff would be simply a speculator and the defendant his agent or broker. ,

But if the understanding was that defendant was not to buy the wheat ordered, but if the price advanced defendant was to lose to the plaintiff the advance, and if it fell plaintiff was to lose out of his margin the amount of the decline, and the defendant was to keep it, then the transaction was a gambling one.

We think that the allegation of the complaint, that the parties agreed to traffic and deal upon the market price of wheat, must be construed in connection with the subsequent allegation that they did traffic and deal upon the market price “as follows;” that is to say, they agreed to traffic and deal in the manner in which they actually did traffic and deal as set forth in the complaint. And as the manner in which they did traffic and deal was as consistent with an agreement to deal in the wheat itself as upon the market price of it, the authorities require us to hold that that contract was made which was not forbidden by law rather than the one which was. Bigelow v. Benedict; Story v. Salomon; Harris v. Tunbridge, supra.

It follows that the interlocutory judgment must be reversed, and an interlocutory judgment directed for the defendant allowing the demurrer with costs of appeal and in the court below, with usual leave to amend complaint upon payment of costs._  