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The National Bank of Augusta vs. Cunningham

Supreme Court of Georgia1886-01-12
75 Ga. 366

Summary

Holding. The judgment was affirmed. The note was properly found to be void because its consideration derived from an illegal cotton futures contract, and the broker defendants who orchestrated the transaction cannot enforce obligations arising from their illegal conduct.

The National Bank of Augusta sued to enforce a promissory note given by Cunningham to Warren, Wallace & Company. The court examined whether the note's consideration—funds to be used by Warren, Wallace & Company to purchase cotton futures on Cunningham's behalf—rendered the note void as an illegal gaming contract. The court reaffirmed prior precedent establishing that cotton futures contracts are immoral, illegal, and contrary to public policy, making all resulting obligations unenforceable even in the hands of good-faith purchasers.

The court found that Warren, Wallace & Company, as brokers who initiated and executed the illegal transaction, were not innocent intermediaries but rather "particeps criminis" (partners in crime), and therefore could not enforce a contract arising from their wrongdoing. Additionally, the court upheld the admission of a deed as evidence to contradict testimony about the actual consideration supporting the note, which corroborated that the stated consideration was false and tied to the illegal futures scheme.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether contracts for cotton futures are illegal gaming contracts void as against public policy
  • Whether a broker involved in creating an illegal wagering contract can enforce obligations arising from it
  • Whether evidence of a deed may be admitted to contradict testimony regarding consideration for a promissory note

Procedural posture

The bank appealed a lower-court decision regarding enforcement of a promissory note, with the court previously having addressed the illegality of cotton futures contracts at an earlier term.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Blandford, Justice.

1, 2. When this case was before this court at September term, 1883, as found reported in 71 Ga., 400, it was then held that contracts for the purchase and sale of cotton futures are gaming contracts. They are immoral, illegal and contrary to public policy; and all evidences of debt executed on such consideration are void in the hands of any person, even though it be a bona fide purchaser before due and without notice. What was then held and decided we now adhere to.

The note in this case was given to Warren, Wallace & Company, who are the payees. The evidence shows that the consideration was for money which was to be expended by them in purchasing cotton futures for and on account of Cunningham. No money ever went into his hands, but Warren, Wallace & Company inaugurated, set on foot and consummated this nefarious transaction. In this respect this case differs from the case in 45 Ga., 501.

The Supreme Court of the United States, in Irwin vs. Williar and another, 110 U. S. R., 499, held, “ When a broker is privy to such a wagering contract, and brings the parties together for the very purpose of entering the illegal agreement, he is particeps criminis, and cannot recover for services rendered, or losses incurred by himself in forwarding the transtction.”

We recognize the principle here laid down as good law, founded upon high principles of morality and sound public policy. The agency of Warren, Wallace & Company, being connected as they were in bringing about this transaction, and carrying the same through, rendered them particeps criminis, so that the contract with Cunningham, growing out of the illegal transaction, is void. Anything that may have been decided in 45 Ga., 501, which is in conflict with what is here decided, may be considered as overruled; indeed, we much doubt the correctness of that decision.

3. Was the deed from Cunningham’s sisters to him, of their interest in the Millview place, properly admitted in evidence to contradict or impeach Wallace, who had testified that he had advanced to Cunningham one thousand dollars to pay his sisters for their interest in the Millview property, the deed reciting five hundred dollars as the consideration? We are of the opinion that the deed was properly admitted in evidence, taken in connection with the testimony of Colonel Black, who testified that he wrote the deed; that he was the attorney of Warren, Wallace & Co.; that when he examined the title to the Mill-view place, he found that Cunningham’s sisters still owned an interest in the property, and it was necessary to put the title in Cunningham so that his deed to Warren, Wallace & Co. to secure the payment of the note might be good security; his recollection was that Cunningham conveyed other property to his sisters for their interest in the Millview place, Wallace having testified that the thousand dollars thus advanced to Cunningham constituted a part of the consideration of the notes sued on. The testimony of Black, in connection with the deed admitted in evidence, tended to contradict Wallace, and also to show that no such consideration as one thousand dollars entered into the note sued on.

It is not necessary to notice any other of the assignments of error, as what we have said rules and controls this.case

Judgment affirmed.