Opinion
No. 2129.
April 24, 1919.
Appeal from District Court, McLennan County; H. M. Richey, Special Judge.
Suit by the Wilson Bros. Mercantile Company against W. M. Puckett. From judgment for plaintiff, defendant appeals. Reversed, and cause remanded.
The suit was by appellee against appellant for damages for breach of a contract as follows:
"State of Texas, County of McLennan. This contract made and entered into this April 18, 1916, by and between Wilson Bros. Mere. Co. of Mart, Texas, party of the first part, and W. M. Puckett, party of the second part, witnesseth: That W. M. Puckett has this day sold to Wilson Bros. Mere. Co. 30 bales of cotton at 11 cts. per pound, basis middling, weight of bales to average 500 pounds (over or under weight settled for at market value at time of delivery), to be delivered to said Wilson Bros. Merc. Co. on or before November 1, 1916, delivery to be made at Mart, Texas, all cotton to be delivered at one time. It is further agreed that if grades different from middling be tendered the prevailing differences on and off middling shall govern. No cotton commonly known as half and half cotton shall be tenderable on this contract, and no cotton staple below one inch shall be acceptable. And it is agreed if W. M. Puckett should fail to carry out this contract, then he, W. M. Puckett, shall be liable to Wilson Bros. Mere. Co. for such difference as exists between 11 cts. basis middling cotton and the price of middling cotton above 11 cts. on November 1, 1916, f. o. b. Mart, Texas. And it is also agreed if Wilson Bros. Merc. Co. should fail to carry out this contract then they Wilson Bros. Merc. Co. shall be liable to W. M. Puckett for such difference as exists between 11 cts. basis middling cotton and the price of middling cotton below 11 cts. on November 1, 1916, f. o. b. Mart, Texas. Signed at Mart, Texas, April 18, 1916. Wilson Bros. Merc. Co., by Jno. E. Punchard. W. M. Puckett."
In its petition appellee alleged, and at the trial proved, that appellant failed to deliver cotton to it as he had agreed to. Appellee further alleged that by such refusal appellant became liable and bound to pay it as damages the difference between the contract price of the cotton he should have delivered to it and the market value thereof on November 1, 1916, which it alleged and proved to be the sum of $1,020. By exceptions to appellee's petition which the court overruled, and averments in his answer, appellant attacked the contract sued upon as illegal because a gambling contract in violation of the laws of this state, in that the parties thereto, it was charged, did not contemplate performance thereof by an actual delivery of the cotton, but instead intended same to be discharged by the payment of the difference between the contract price and the market price of such cotton at Mart on November 1, 1916.
On special issues submitted to them, the jury found: (1) It was the bona fide intention of the parties at the time they made the contract that the cotton "should be actually delivered and paid for under said contract." (2) It was not the intention of either of the parties at that time that the contract "should, or at the option of either of them might, be settled by paying or receiving money as the margin or profit thereon." On said findings, and others he himself made, 3, the trial court rendered judgment in appellee's favor for the sum it sued for, to wit, $1,020, whereupon appellant prosecuted this appeal.
Williams Williams, of Waco, for appellant.
Neff Taylor, of Waco, for appellee.
A contention presented by four of the five assignments is that the undertaking declared on was a gambling contract in violation of law. It is insisted that, because it was such a contract, the trial court erred when he overruled the exceptions to appellee's petition, and when he refused to instruct the jury to find in appellant's favor.
The claim that the contract was illegal is predicated on the Act April 10, 1907 (General Laws, p. 172; Vernon's Penal Code, arts. 538 to 547). Provision is made in section 6 of said act for punishment of a person who "makes or offers to make for himself any future contract." In section 2 a "future contract" is defined as follows:
"1. A sale or purchase, or contract to sell, or any offer to sell or purchase, any cotton * * * to be delivered in the future, when it was not the bona fide intention of the party being prosecuted under this Act at the time that such sale, contract, purchase, or offer to sell or purchase, was made, that the thing mentioned in such transaction should be delivered and paid for as specified in such transaction. 2. Any such sale, purchase, offer or contract, where it was the intention of the party being prosecuted hereunder at the time of making such contract or offer, that the same should, or, at the option of either party, might be settled by paying or receiving a margin or profit on such contract."
It will be noted that whether the contract sued on was a "future contract" within the meaning of the statute, or not, depended on the intention of the parties at the time they made it. It was not such a contract if it was not their intention that it "should, or at the option" of either of them, "might be settled by paying or receiving a margin or profit" thereon, but, instead, was their intention that the cotton should be actually delivered and paid for as specified therein. It will also be noted that the jury found that neither of the parties intended at the time they made it that the contract "should or might be" so settled, but, on the contrary, intended that the cotton "should be actually delivered and paid for under said contract."
If effect should be given said findings, it is plain that appellant's contention should be overruled; for it would then appear that the contract was not an illegal one because a "future contract" within the meaning of the statute. The findings are not attacked in any of the assignments. Therefore they must be given effect, unless it should be said the contrary thereof so conclusively appeared from the face of the contract that the court should have declared it to be illegal as a matter of law. Should the court have done that? We think not. The most the court had a right to say was that the contract, because it was for delivery of cotton in the future, was prima facie illegal. If it was only prima facie (that is, presumptively) illegal, appellee had a right to show that it was in fact valid (that is, he had a right to rebut by proof to the contrary the presumption the law raised of illegality because of the fact that the cotton was bought for delivery in the future).
It may be there is a conflict between the conclusion we have reached and that reached by the Court of Civil Appeals of the Third District in Pate v. Wilson Bros. Merc. Co., 208 S.W. 235. In that case the contract in question was like the one here sued on. When the case was first before it, said court held that the contract was prima facie illegal, because it showed on its face that it was for future delivery of cotton, and because it showed on its face that it "might be settled at the option of either party by paying the profit or loss without delivering the cotton"; and further held, as we have here, that Wilson Bros. Mercantile Company had a right to rebut the presumption of illegality by proof to the contrary. The court reversed the judgment in favor of Wilson Bros. Mercantile Company, because said company had not by proof rebutted the presumption. So far there is no conflict between the holding in that case and the holding in this one. The conflict, if there is any, arises from the fact that the court on a rehearing, without withdrawing or in any way qualifying what they had said when the case was first before them, held the plaintiff's petition, which declared on the contract, to be subject to a general demurrer. If the conflict between the ruling in that case and the ruling in this one is a real one, we think the ruling in that one is erroneous in the light of the authorities. Vernon's Penal Code, arts. 539, 545, 546; 13 C.J. p. 783; 2 Elliott on Contracts, § 995 et seq.; 6 R.C.L. p. 783 et seq.; 12 R.C.L. p. 751 et seq.; Seeligcon v. Lewis, 65 Tex. 215, 57 Am.Rep. 593; Cleveland v. Heidenheimer, 44 S.W. 551; Heidenheimer v. Cleveland (Sup.) 17 S.W. 524; Wolffe v. Perryman, 93 Ala. 290, 9 So. 148.
The remaining assignment challenges as erroneous the action of the trial court in refusing to permit appellant to prove by John Young and other named witnesses that, about the time appellant and appellee entered into the contract here sued on, they (respectively) and appellee entered into a contract like the one here in question, and at the time they (respectively) did so were told by appellee that they (respectively) "need not deliver the cotton, but could pay the difference according to the terms of the contract in money." The only controverted issue in the case, as we view it, was one as to the intent of the parties when they made the contract. In support of his contention that an actual delivery of the cotton was not intended we think the testimony excluded was admissible. Raby v. Frank, 12 Tex. Civ. App. 125, 34 S.W. 777; Davis v. Vories, 141 Mo. 234, 42 S.W. 707; 10 R.C.L. p. 938 et seq.
As we are not satisfied that the error in excluding the testimony did not cause the rendition of an improper judgment in the case, the judgment will be reversed, and the cause will be remanded for a new trial.