LAW.coLAW.co

Walters vs. Comer & Company

Supreme Court of Georgia1888-03-03
79 Ga. 796

Summary

Holding. The judgment was reversed because Comer & Company, having been privy to and actively participated in an illegal wagering contract for cotton futures, was barred under Georgia law from recovering losses incurred through that illegal transaction, and the jury's verdict in their favor was therefore contrary to law and the evidence.

Comer & Company sought to foreclose on a mortgage held against J. W. Walters for an alleged debt of $1,403. Walters challenged the enforceability of the underlying obligation, arguing that a substantial portion of the debt—$1,009.70—arose from an illegal wagering contract involving cotton futures transactions. The parties acknowledged that Walters had ordered Comer & Company to purchase 200 bales of cotton futures (100 for March delivery and 100 for August delivery), that no actual cotton was delivered, that money advanced by neither party was at risk, and that the transaction was understood by both sides to be pure speculation on price movements rather than a genuine commodity sale.

At trial, the jury returned a verdict in favor of Comer & Company for the full amount claimed. The trial court rejected Walters's motion for a new trial. On appeal, the court examined whether Comer & Company could recover losses from an admittedly illegal wagering contract. The court determined that because Comer & Company had knowingly participated in facilitating the illegal betting arrangement—acting as principals rather than neutral agents—they were barred from recovering any portion of the losses under established Georgia law prohibiting brokers and other participants in illegal wagering contracts from enforcing collection.

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

Key issues

  • Enforceability of obligations arising from illegal wagering contracts
  • Whether a broker or principal can recover losses from an illegal speculation transaction in which it actively participated
  • The distinction between a lawful commodity transaction and an illegal future contract based on the intent of the parties

Procedural posture

Walters appealed after a jury verdict in favor of Comer & Company on a mortgage foreclosure action, following the trial court's denial of his motion for a new trial on grounds that the verdict was contrary to law and the evidence.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Simmons, Justice.

Comer & Co. applied for a rule nisi to foreclose a mortgage against J. W. Walters, wherein they alleged that Walters was indebted to them in the sum of $1,403, with interest and counsel fees. A rule nisi was thereupon issued by the court, calling on Walters to show cause by the next term of the court why the rule should not be made absolute. Walters filed a special plea, wherein he alleged that, except as to $228.89, the mortgage and the note the mortgage was given to secure, the foundation of the plaintiff’s action, are illegal and void in this, to-wit: That the same were given to said plaintiffs to make good and pay the losses, to-wit, the sum of $1,009.70, which the plaintiffs claimed to have sustained in a certain wagering, illegal and void contract or transaction between plaintiffs and defendant for the purchase of cotton by the defendant, with the intention and understanding, by both the plaintiffs and the defendant, that said cotton was not to be delivered to or received by the defendant. Into the consideration thereof no skill and labor or expense entered, but, the defendant avers, both parties were aware that the transaction was a mere speculation upon chances, and was what is commonly known as the purchase of “ cotton futures the same being the purchase of 100 bales for the month of March, on which the plaintiffs claimed a loss of $347.20, and 100 bales for the month of August, on which plaintiffs claimed a loss of $662 50; making the sum of $1,-009.70, as a part of the consideration of said note and-mortgage; to the extent whereof, the defendant alleged that said consideration, note and mortgage, were illegal and void.

The defendant amended his plea, and alleged that he telegraphed to the plaintiffs that he desired to bujr 200 bales of cotton futures; that he advanced no money, nor was he called on to advance any, nor did the plaintiffs, by his request or ratification, as his agents in said trans action, advance any money. He says that the plaintiffs negotiated with other parties for said futures, and that he dealt with the plaintiffs in their own name and on their own responsibility, and with them alone, and as principals and not as agents. Upon the trial of the case, the jury, under the charge of the court, returned a verdict for the plaintiffs for the full amount, principal, interest and costs. The defendant made a motion for a new trial, upon the various grounds set out in the motion, which was overruled by the court, and the defendant excepted.

One of the grounds of the motion for a new trial is, that the jury found contrary to law and to the evidence. The evidence in this case discloses the fact that Walters ordered Comer & Co. to buy him 200 bales of cotton, 100 for March and 100 for August. Comer & Co. through their agents in New York, bought in their own name the 200 bales. It appears that $1,009.70 was lost upon the cotton, which loss was charged by Comer & Co. to Walters upon their books. Walters testifies that at the time he ordered the cotton bought, he had the money in the hands of Comer & Co. to pay them; that it was a speculation in chances; that the cotton was not delivered to him by Comer & Co. Comer & Co. admit all this; that it was a purchase of what is known as cotton futures, and that the losses occurred as set out in their account.

We think the court erred in refusing to grant a new trial in this case, under the rule laid down in National Bank of Augusta vs. Cunningham, 75 Ga. 366. It is there held that, “ where a broker is privy to a wagering contract, and brings the parties together for the very purpose of entering into the illegal agreement, he is jparticeps oriminis, and cannot recover for services or losses incurred by himself in forwarding the transaction.” Comer & Co. claimed to be the agents of Walters in making this contract, and that they expended and paid these losses for him. Walters denies that he ever authorized them to pay the losses. Even if he did, Comer & Co., under the ruling in the case above cited, could not recover, because the contract was illegal and void under the laws of Georgia. This being our view of the case, it is unnecessary to notice the other grounds of the motion for a new trial. We think the court erred in not granting a new trial upon this ground, that the verdict was contrary to law and the evidence.

Judgment reversed.