Baltimore Trust Co. v. Stanton , 144 S.C. 490 ( 1928 )

April 11, 1928.

The opinion of the Court was delivered by This suit involves the validity of a note given by the respondent, Lila M. Stanton, to the Bank of Clio and by the Bank of Clio pledged with the Baltimore Trust Company for a loan.

On or about June 25, 1920, Mrs. Lila M. Stanton executed three notes, each in the sum of $2,500, which were by her delivered to a man by the name of O.G. Hale, who, at the same time, it is claimed by Mrs. Stanton, gave her a written memorandum on a yellow stock receipt. These notes were each payable to "myself," and were by the said O.G. Hale delivered to the Bank of Clio for a certificate of deposit in that bank, payable in the fall of 1920. Thereafter, upon the notes coming due, they were renewed either once or twice; and finally, at last, converted into one note for $7,500, payable to the Bank of Clio, and by the Bank of Clio assigned by blank indorsement to the Baltimore Trust Company. Upon such note for $7,500 coming due, and not being paid, suit was instituted and resulted in a verdict by the jury for the defendant, on the issue submitted to the jury by the trial Judge of whether the note was void under the gambling statutes of the State.

The exceptions complain of error in not directing a verdict for the plaintiff and in not excluding evidence and in reference to the Act of the Legislature in regard to "futures." The defendant asks that the verdict be sustained on additional grounds.

The defendant cannot have additional grounds to sustain the findings of the Circuit Court in a law case.

The Act of the Legislature affecting this case, Section 5165 (Civ. Code, 1922), declares:

"Every contract * * * for the sale or transfer at any future time * * * of stock * * * shall be void unless the party contracting, * * * is at the time * * * the owner or assignee thereof, or is at the time authorized by the owner or assignee thereof, or his duly authorized agent to make and enter into such contract * * * or unless it is the bona fide intention of both the parties * * * at the time of making the same, that the said certificate, * * * shall be actually delivered in kind * * * at the period * * * mentioned and specified * * *"

Section 5166 sets forth:

"That in any and all actions brought in any Court to enforce such contract, * * * or to collect any note * * * the burden of proof shall be upon the plaintiff to establish that at the time of making such contract * * * the party making the same was the owner or assignee * * * or was at the time authorized by the owner or assignee thereof, or his duly authorized agent, to make and enter into such contract, * * * or that at the time of making such contract * * * it was the bona fide intention of both parties thereto that the said certificate * * * should be actually delivered," etc.

Section 5169 provides in the statutes that any note given in these circumstances "shall be utterly void, frustrate and of none effect, to all intents and purposes whatsoever."

Here was some kind of a transfer of some kind of an interest in stock to Mrs. Stanton. Who did O.G. Hale represent? We do not know from the proof. Who was the owner of the stock; was it O.G. Hale or some other person? There is no answer in the proof to these questions. It is clear that no stock was delivered to Mrs. Stanton upon the date of the transaction, June 25, 1920. In fact, none was ever attempted to be sent to the Bank of Clio until four months thereafter on October 13, 1920. But there is no claim that the Bank of Clio or any one else ever notified Mrs. Stanton that the Fisheries Products Company had sent this stock to the Bank of Clio. Her unequivocal statement is that no stock was delivered to her or promised to her by Hale, but that he was to keep it and sell it for her at an advance. Her statement about it is absolutely borne out by his written stipulation of June 25, 1920, given to her simultaneously by Hale when she signed the notes. In this stipulation Hale agreed to sell her stock for not less than $17.50 per share at any time after December 1, 1920. What clearer showing could there be that the parties were merely trading upon margins? Mrs. Stanton went into it to make a profit of $2.50 per share. No stock was delivered to her or promised to her.

Besides, all these issues were submitted to the jury and have been found against the appellant. The points made by appellant in its exceptions seem to be: (1) That the giving of the new note by Mrs. Stanton had the effect of rendering the transaction legal; (2) that the presiding Judge should have excluded all testimony tending to show that the transaction fell under the Futures Act; (3) the presiding Judge should have directed a verdict; (4) that the presiding Judge committed error in not charging that delay in delivery of the stock or delivery to the wrong person would not prevent the contract from being a binding obligation. There was no testimony in this case that there had been a delay in delivery of the stock, nor was there any testimony that there had been delivery to the wrong person. Everything that appeared in the case along this line was the unexplained letter of the Fisheries Products Company of October 13, 1920, found in the vault of the Bank of Clio by H.J. Bennett after he became receiver of the bank. There is absolutely nothing to show that the stock was intended to be delivered any sooner or to any other person than the Bank of Clio. We think that the cases of Gaillard v. LeRoy, 1 McMul. (26 S.C. Law), 225, and Blanchard Pressv. Stanton, 134 S.C. 218; 132 S.E., 617, settled the question. In this latter case Mr. Justice Cothran, in his concurring opinion, says this:

"2. As to the refusal to direct a verdict in favor of the plaintiff: The foregoing observations are conclusive as to the correctness of the presiding Judge's action.

"3. As to errors assigned to the charge: The appellant contends that the presiding Judge committed error in charging the jury that, the contract being for the future delivery of stock, if it did not comply with the requirements of Sections 5165 to 5169; 3 Code of Laws, 1922, it was an illegal and an unenforceable contract, and that a note given in attempted compliance therewith was void, even in the hands of a holder in due course. Section 5169 explicitly declares that a note given under the circumstances forbidden shall be ``utterly void, frustrate and of none effect, to all intents and purposes whatsoever.' The following authorities amply sustain the ruling of the Court below: Gaillard v.Le Roy, 1 McMul., 225. Tidmore v. Boyce, 2 Mill, Const., 200. Payne v. Trezevant, 2 Bay, 23; 3 R.C.L., 910, 1017.Eskridge v. Thomas, 79 W. Va., 322; 91 S.E., 7, L.R.A., 1918-C, 769; 8 C.J., 764, 768. Plank v. Swift,187 Iowa, 293; 174 N.W., 236; 8 A.L.R., 309. Levy v. Doernhoefer'sEx'r, 188 Ky., 413; 222 S.W. 515; 11 A.L.R., 207."

We see no error as complained of. All exceptions are overruled, and judgment affirmed.

MESSRS. JUSTICES BLEASE, STABLER and CARTER concur.