author: Williams, J. Minshall, J. Speajr, J.

text:
    Kahn, Jr., v. Walton et al.

      Contracts for the sale of personal properly to be delivered at a future day — When valid — When illegal and, void — When commission broker in such illegal sale a pariiceps eriminis — Securities given for illegal considerations — Their infirmities —Parties to such illegal contracts — No standing in a court of equity — Their legal rights.

    1. Contracts for tlie sale of personal property to be delivered at a future day, if the parties intend the property shall be delivered and paid for, are valid, though the seller have not the goods, nor other means of getting them than to go into the market and buy them ; but, when the real intention of the parties is merely to speculate on the rise and fall of prices, and the property is not to be delivered, but one party is to pay the other the difference between the contract price and the market price of the goods at the time specified for executing the contract, the transaction is against public policy, and void.
    2. A commission broker, who with knowledge of its unlawful character, negotiates an illegal agreement between parties, becomes a particeps ci-iminis, and cannot recover for services rendered, or losses incurred by him in behalf of either, in forwarding the unlawful undertaking; and checks, given him for such services or losses, are tainted with the vice of their origin, and subject to all the infirmities of securities given for illegal considerations.
    3. A bank check, being an order on the bank by the drawer to pay his money as therein directed, is revocable by him before its presentation for payment, unless the bank on which it is drawn has accepted or certified it, or otherwise become committed to its payment; and while an affirmative answer by the bank, to a general inquiry whether checks of a person named for a specified sum are good, is information that such person has on deposit, subject to check, money to that amount, it does not constitute an acceptance or certification of, or otherwise create an obligation on the bank to pay, checks which the enquirer may then hold.
    4. A plaintiff, who founds his cause of'action on an illegal or immoral act, has no standing in a court of equity; and where both parties have been engaged in an unlawful transaction, the court will neither lend its active aid to the one party to get rid of the securities taken upon such „ transaction, nor assist the other party in retaining them, but will leave both to their strict legal rights.
    (Decided January 8, 1889.)
    Error to the District Court of Greene County.
    On the 15th day of February, 1882, Moses A. Walton commenced his action in the Court of Common Pleas of Greene County, against the plaintiff in error Charles Kahn, Jr., and The Citizens’ National Bank, of Xenia, to enjoin the bank from paying two checks, one for fifteen hundred dollars and the other for five hundred dollars, drawn by him upon the bank in favor of Kahn. The petition alleges: “that on the 14th day of February, A. D. 1882, the defendant Charles Kahn, Jr., by fraud and misrepresentation obtained from the plaintiff his two certain checks of that date for the sums of fifteen hundred dollars and five hundred dollars respectively, drawn by him upon the Citizens’ National Bank of Xenia, a corporation duly incorporated under the laws of the United States; that said checks were given and are wholly without consideration, and the plaintiff received no value therefor whatever; that defendant, Kahn, is about to present the same for collection, and the bank is about to, and will, unless restrained by the order of the court, pay the checks, which will be an irreparable injury to the plaintiff, and for which he has no adequate remedy at law; that Kahn is not a resident of said county and has no property therein, and who is, as plaintiff is informed and believes, wholly insolvent.” The petition prays “that the bank be restrained and enjoined from paying said checks, and that they may be ordered to be cancelled and delivered up to the plaintiff; and for all other and further relief to which in equity he may be entitled.”
    At the commencement of the action, the plaintiff obtained a temporary injunction as prayed for; and on the 6th day of March, amended his petition by adding to its averments the following : “ That no consideration exists for said checks in said petition mentioned other than certain gaming contracts entered into by said plaintiff on of about the-day of February, 1882, in the city of Cincinnati, Ohio, with the said Kahn, a broker and commission merchant of said city, for the purpose of speculating in the price of wheat, pork and lard, and which said contracts made by said Kahn, were in violation- of the statute of gaming and against public policy, and were false and feigned, and by which he undertook in form to buy and sell wheat, pork and lard for and with this plaintiff without intending thereby either to receive or deliver said wheat, pork or lard, but solely to wager on the market price thereof, and to pay or receive the difference between the price in the contracts and the market rates at any time during the month of March, 1882, at the option of said Kahn, whichever the same would be ; that said contracts were made as a cover for gambling in the prices of wheat, pork and lard; that no wheat, pork or lard was actually to be delivered or received, but-the difference only in price was to be paid on the one side or received on the other at any time during the said month of March, at the option of said Kahn.
    “ That in pursuance of the said gaming contracts, and in addition to the execution and delivery of said checks, this plaintiff delivered and paid to said Kahn the sum of $500; that no consideration for the payment of said sum of $500 passed to the plaintiff other than that set forth aforesaid; that the said Kahn received to the plaintiff’s use said sum of $500 so lost and paid to said defendant, and said defendant, Charles Kahn, Jr., is indebted to plaintiff in the said sum of $500, with interest from the-day of February, 1882.
    “Wherefore plaintiff prays, as in his original petition, and for judgment against said defendant, Kahn, for said sum of $500, with interest from February-, 1882.”
    The temporary injunction was, on motion of the defendant, Kahn, dissolved, and the plaintiff appealed to the district court, where, on the 28th of April, 1882, the plaintiff, by leave of that court, filed another amendment to his petition, adding the following averments: “ That at the time of the execution and delivery of the said checks the plaintiff had on deposit with said bank, sufficient money to pay said checks ; that prior to the presentation thereof, said Kahn, who is insolvent, by his agent, made inquiry of said other defendant as to whether said checks were good and would be paid on presentation ; to which inquiry said bank made answer that said cheeks were good and would be paid, and said bank claims to have certified to said checks, and bound itself thereby to pay the same; that prior to the filing of the petition herein, and the allowance of said restraining order, this plaintiff requested and notified said Citizens’ National Bank not to pay said checks; but said bank refused said request, and threatened to and will, unless restrained, pay said checks.”
    The defendant Kahn then answered, admitting “ the corporate character of said bank; that said Kahn was about to present said checks for collection; his non-residence; that plaintiff had said money on deposit in said bank; said inquiries whether said checks would be honored and the response of said bank that they would; that said bank claims to have certified the same and bound itself to pay the same, and said notification to said bank not to pay the same, and the refusal of said bank. That a contract was made between said Kahn and plaintiff for the sale of property. That sales were made, and $500 cash and said checks were paid thereon, but said Kahn denies each and every other allegation of said-petition.”
    The record shows, that at the April term, 1884, of the district coui-t, the cause was by consent of the parties submitted to the court upon the pleadings and evidence, and the court found the equities of the case in favor of the plaintiff and against said defendant Kahn, made the injunction perpetual, and adjudged the costs against Kahn.
    A motion for a new trial, filed by Kahn, was overruled, and a bill of exceptions was duly taken, containing all the testimony given on the trial of the cause. It also appears in the bill of exceptions that at the close of the testimony the defendant Kalm requested the court to find the facts, and state its conclusions of Jaw, and of fact separately; and also to find “the following conclusions of fact:

      “ First — Whether there was any agreement between the plaintiff and Charles Kahn, Jr., that the property purchased should not be delivered; but that simply the difference, if any, between the price at’which the property was purchased and the price at .which it should rule in March, 1882, should be paid.

      “Second — Whether Charles Kahn, Jr., N. B. Ream & Co., or the persons of whom the property was purchased in January, 1882, intended that it should not be delivered, and that simply the difference, if any, between the price at which it should rule in March, 1882, and the price at which it was purchased should be paid, and who so intended.
    “ Third — -Whether the court finds that simply the difference was to be paid, and no property delivered, from the circumstances of the transaction, and if so, what are the circumstances upon which said finding is predicated ?
    “ Fourth — Whether the price of said property on the Chicago Board of Trade, in March, 1882, was more or less than the purchase-price in January, 1882; and if less, how much less.
    “ Fifth — Whether, by the terms of the contract between the plaintiff and Kahn, or by reason of notice to plaintiff, Kahn was justified in selling said property on March 1, 1882.
    “ Sixth — -Whether the persons of whom the property was purchased in January, 1882, or their brokers, N. B. Ream & Co., bad the property on hand ready to deliver on March 1, 1882, and whether they -gave Kahn notice, and whether Kahn gave plaintiff notice, of their readiness to deliver the property, and that it would be sold March 1, 1882, if plaintiff would not take it. -

      “ Seventh — Upon whom the court finds the burden of proof rests to establish the character of the transaction, whether it was or was not a gambling transaction.
    “ Eighth — Whether Charles Kahn, Jr., was simply a broker, agent and employe of plaintiff in causing the purchase and sale of said property on commission, without .any interest in the qmofit or loss in the transaction.”
    And it further appears from the bill of exceptions that the court in response to the foregoing request found as follows:
    “ Answer to requests 1 and % — We find that the transactions in which the parties were engaged were mere speculations or ventures on the future prices of the products named in the pleadings, without any intention on the part of Walton, Kahn, or Ream & Co., that the property would be either paid for or delivered1, but that the intention was that settlements between buyer and seller would be macle on the differences between the market prices at the date named for delivery and the prices named in the contracts. That this was understood by all parties interested in the deals; that the same were gambling transactions and illegal.

      “ Answer to request 3. — We find the foregoing facts from all the circumstances in the case and surrounding the transactions, and particularly from the fact that if any inquiry had been made it would have developed the fact that Walton was wholly unable to pay one-fourth the amount of the price of the property ostensibly purchased (being $43,000), and that, in fact, said Walton was not worth over $3,000 or $4,000 at the time.
    “ Answer to requests 4 and 5. — We find that in March, 1882, the price of property embraced in the deals mentioned had declined to.an extent that absorbed the margins put up, and that, under the rules of the Board of Trade of Chicago, Kahn was justified in selling whatever interest Walton had in any property under his (Kahn’s) control, but we have not regarded this as an important fact in the case.
    “ Answer to request 6. — We find it probable that' Ream & Co. had control of an amount of property equal in bulk and (quality to that named in the several contracts, and could have delivered it on demand March 1st, 1882, but we further find that in said deals they had no intention of so delivering it, nor had Kahn any intention of receiving it. Ream & Co. gave Kahn notice, and Kahn gave Walton notice, of their readiness to deliver the property, and that it would be sold March 1st, if plaintiff did not take it, but this was done after the commencement of this suit, and with knowledge that it would not be so taken by plaintiff.
    “ Answer to request 7. — Upon the plaintiff.
    “ Answer to request 8. — Kahn was, as between plaintiff and defendant, a broker-agent, interested only to the amount of his commissions.
    “We further find that after the checks named in the pleadings were delivered to Kahn, a bank in Cincinnati telegraphed the Citizens’ National Bank of Xenia, as follows: ' Are M. A.
    Walton’s checks for $2,000 good?’ To which said Citizen’s-Bank sent an answer, as follows: 'Yes, sir.’
    “We find that this does not amount to 'certifying’ the checks, and the Citizens’ Bank did not thereby become bound to the holders of the checks for the amounts.
    “We find that the contract was not executed by the giving of the checks, and that by enjoining the payment, of the checks we simply stop carrying out a gambling contract, and thereby leave the parties where we find them.”
    Judgment having been rendered against Kahn as before stated, he prosecutes error to this court to reverse the same, upon the grounds that the conclusions of law are not supported by the facts found, and the evidenee does not sustain the finding of facts.

      Jordan & Jordans, for plaintiff in error.
    1. Contracts for the purchase of property, not in existence, for future delivery, are valid. Benj. on Sales, s. 78, 82, 241-2, 542; Low v. Pew, 108 Mass. 347.
    2. Although the contract of purchase by Kahn — the broker agent for Walton — might be illegal, yet if Kahn, the agent, had no interest in it except his commissions, he may recover from Walton all damages he paid for him, for his breach of contract, and his commissions, if he was guarantor for Walton. Whai’ton on Cont., sec. 453; Norton v. Blinn, 39 Ohio St. 145; Roundtree v. Smith, 108 U. S. 269; Warren v. Hewitt, 45 Ga. 501; Williams v. Carr, N. C. 299.
    3. Unless both contracting parties intended that the property should not be delivered, but simply the difference paid, the contract is valid.
    It takes two persons to gamble. If either party intended to deliver, he did not intend to gamble. One party may be a trifling, dishonest trickster, without any sense of honor or honesty, and may intend to cheat and repudiate his contract. The other may be an honorable, high-minded man of business, with large responsibilities, with ample ability to perform, and intending and expecting to perform his contract. He should not be denied the full benefit of his contract. Wharton oh Cont. supra; Gregory v. Wendell, 39 Mich. 337; Sawyer v. Taggart, 14 W. P. D. Bush. (Ky.) 727; Williams v. Tiedeman, 6 Mo. Appeal, 269.
    4. The burden of proof is on Walton to show that the contract of purchase is a wagering transaction as to both parties. Produce Exchange, p. 282, sec. 209; Id., sec. 211; Bigelow v. Benedict, 70 N. Y. 202; Story v. Salomon, 71 N. Y. 420; Williams v. Tiedeman, supra.

      5. The mere fact that Kahn was a broker and Walton was worth only $3,000, and the purchase-price of the goods $40,000, will not justify the conclusion of fact that 'only the difference in price was to have been paid and property not delivered, and especially unless Kahn knew of Walton’s financial condition.
    6. It was not the duty of Kahn, as broker agent of Walton, to inquire of Walton or any other person as to his financial condition, the presumption of law being that all men are prima facie solvent, and able to perform their contracts.
    7. A court of equity will not interfere to enjoin the performance of a contract which is against public policy, but will leave the parties to their remedy at law. Thomas v. Cronise, 16 Ohio, 54; Cooper v. Rowley, 29 Ohio St. 547; Roll v. Raguet, 4 Ohio, 400, 418; Hoss v. Layton, 3 Ohio St. 352; Williams v. Englebrecht, 37 Ohio St. 383; Story’s Eq. Jur., sec. 303, 308 ; High, on Inj., sec. 1127 ; Bispham’s Eq., sec. 223.

      John Little, for defendant in error — no brief uku.
   Williams, J.

The evidence tends to prove the facts found by the district court; and, as this court is not required to determine the weight of the evidence, the facts so found, will, in the disposition of the case, be regarded as established by the •evidence. The case, shown by these facts, and those admitted by the pleadings, is, that Kahn who was a commission broker in Cincinnati, doing business with, and for Ream & Co., brokers and commission merchants in Chicago, bought of, or through them wheat and pork for future delivery, so called, on Walton’s account. The transactions were mere speculations, or ventures on the prices of the commodities named, without any intention on the part of the parties concerned, that the property should either be delivered, or paid for; but all the parties understood, and intended that settlements should be made between them," on the differences between the market prices, at the dates fixed for delivery, ■and those named in the contracts. Kahn was to have a commission for his services, and he advanced margins on the deals. Walton was loser, and drew his two checks, amounting to two thousand dollars, on the bank where he had funds, payable to Kahn, for moneys paid by him on the deals and losses. Walton also paid Kalm five hundred dollars in money on the same account. Kahn telegraphed to the bank, inquiring if Walton’s checks for the amount of those drawn to him were good, and received an affirmative answer.

Walton notified the bank not to 'pay the checks, and before their presentation, brought his action to enjoin their payment.

I. Upon this state of case, the first inquiry naturally is, were the speculative transactions in which the parties engaged, in the nature of wagers, and for that reason illegal? In the ■determination of this question it is not deemed material whether they fall within the provisions of our statutes against gaming and wagering, or do not; for, it is generally held in. this country, that wagering contracts, though not prohibited by statute, are illegal, and void as against public policy. And the great weight of authority is to the effect, that, contracts of the kind the district court found those involved in this case, to be, are void as wagering agreements.. This has been held by the courts of last resort in every state where the question has been presented, and by the-Supreme Court of the United States. The rule generally accepted is, that contracts for the sale of personal property to-be delivered in the future are valid, if the parties really intend and agree that the property is to be delivered by the-seller, and the price is to be paid by the purchaser, though the seller have not the goods, nor any other means of getting-them, than to go into the market and buy them. But if the-real intent be merely to speculate on the rise and fall of prices,, and the goods are not to be delivered, but one party is to pay to the other the difference betweeen the contract price and the-market price of the goods at the date fixed for executing the-contract, then the contract partakes of the nature of a wager and is void. Irwin v. Williar, 110 U. S. 499; Higgins v. McCrea, 116 U. S. 671; Man v. Bishop, 136 Mass. 495; Gregory v. Wendel, 40 Mich. 432; Cole v. Milmine, 88 Ill. 349; Kingsbury v. Kirwan, 77 N. Y. 612; Lowry v. Dillman, 59 Wis. 197.

II. The facts found by the district court, plainly defineKahn’s relation to the unlawful agreements. He was directly connected with them; and with full knowledge of their character, performed services and expended money to promote and forward them. It was his intention, as well as the intention of the other parties, that the property should not be delivered,, or paid for, but that the differences in the prices should be adjusted in money. It is true, Kahn was the broker, and had no pecuniary interest in the business except his commissions, and the repayment of whatever sums he might advance for margins and to pay losses as the business progressed. He-nevertheless, negotiated the wagering contracts and was party to them.

The legal effect of . such relation to contracts of that nature, was determined in the case of Irwin v. Williar, supra. The conclusion of the court is thus stated: In Roundtree v. Smith, 108 U. S. 269, it was said that brokers who had negotiated such contracts, suing not on the contracts themselves, but for services performed and money advanced for defendant at his request, though they might under some circumstances be so •connected with the immorality of the contract as to be affected by it, they are not in the same position as a party sued for the •enforcement of the original agreement. It is certainly true that a broker might negotiate such a contract without being privy to the illegal intent of the principal parties to it which renders it void, and in such a case, being innocent of any violation of law, and not suing to enforce an unlawful contract, has a meritorious ground for the recovery of compensation for services and advances. But we are also of the opinion that when the broker is privy to the unlawful design of the parties, and brings them together for the very purpose of entering into an illegal agreement, he is particeps criminis, and can not ■recover for services rendered or losses incurred by himself in behalf of either in forwarding the transaction.” We accept this as a sound and wholesome rule, and under its operation, the checks, given by Walton to Kahn, for services rendered and losses paid by him in the unlawful enterprise, are tainted with the vice of their origin, and are subject to all the infirmities of securities given for illegal considerations.

III. It is contended, that the drawing of the cheeks by Walton on the bank where he had sufficient funds to pay them, and the bank’s response to the inquiry of Kahn’s agent, that checks to their amount were good, was a specific appropriation •of the fund, and amounted to payment of the debt for which they were drawn ; whereby the' contract became fully executed.

A check, being simply a written order of a depositor to his banker to make a certain payment out of his funds’, is executory, and, of course, revocable at any time before the bank has paid it, or committed itself to its payment. It operates, it is true, as an assignment of the fund on which it is drawn pro■ tanto, and binds the bank to its payment out of the fund when presented, unless revoked; but, it is not itself payment of the debt for which it is drawn, unless it be so agreed between the parties. Ordinarily it is only a means of payment, and the debt is not extinguished, unless and until the check be paid, or the holder be guilty of laches which may opei'ate as a discharge of the drawer. The bank is the agent of the drawer. Its duty is to pay his money as he directs. It owes no duty to the holder, except under the drawer’s directions, until by virtue of those directions it assumes some obligation to the holder. Up to that time the latest order from the drawer governs. But after the bank has paid the check, or placed itself under an obligation to pay it, the drawer’s power of revocation is ended. This obligation may be incurred by acceptance. It is sometimes said that the legal effect of the acceptance is to place the holder of the check in the position of a depositor. By the acceptance a new and specific engagement is entered into by the bank, which is, to unconditionally pay the sum named to the legal holder of the check. The acceptance or certification is sometimes evidenced by writing the word “good” on the check by the authorized officer or agent of the bank; but no particular mode or form is necessary, and it is generally held that a verbal acceptance is sufficient. But. whatever the mode or form employed, there must be enough to indicate the acceptance of the particular check.

It is manifest there was no acceptance, or certification of the checks in question in this case. The telegraphic correspondence between the bank and Kahn’s agent amounted to no more than ah assurance that valid checks to the amount stated, drawn by Walton, or that might be drawn by him, were then good. No particular checks were mentioned in the inquiry, nor any intimation given that the enquirer had received, or was about to receive such checks; nor had the bank any means of identifying the checks to which the inquiry related. Its telegram, therefore, did not commit the bank to the payment of any particular check. At most, it was information that Walton had, at its date, money on deposit to the amount stated, subject to-

check. Espy v. Bank, 18 Wall. 604. If, therefore, before the checks were presented for payment, and before they were certified or accepted by the bank, or it otherwise became committed to their payment, Walton revoked them, and notified the bank not to pay them, as he claims, and as the district court found he did, his defensive remedy at law would appear to be adequate.

TV. But what standing has the plaintiff in a court of equity ? The transactions upon which he founds his claim for relief were unlawful; and the remedy he seeks, is protection against the consequences of his own participation in them. In such cases, equity keeps its hands offj and leaves the parties where it finds them. It is a fundamental rule of equity, that parties wanting its aid, must come with clean hands. Courts of equity require honesty, good faith and legality in transactions between men ; and if a party would pursue his remedy therein, his demand must not rest on a violation of law for its foundation, or arise from his own illegal acts, or conduct contra bonos mores. 1 Waite’s Actions and Def. 153; 3 Ibid. 685. It was said by Lord Mansfield in Holman v. Johnson, Cowp. 341, that “ No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If from the plaintiff’s own stating, or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says, he has no right tó be assisted. It is upon that ground the court goes ; • not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to biúng his action against the plaintiff, the latter would then have the advantage of it; for when both are equally in fault, potior est conditio defendentis.” In Atwood v. Fisk, 101 Mass. 363, which was a bill in equity to compel the surrender and cancellation of a note, and mortgage given to secure its payment, on the ground that the consideration for them was illegal, the court in denying the relief sought by the bill, declares it to have long been settled, !< that the law will not aid either party to an illegal contract to enforce it against the other, neither will it relieve a party to such a contract who has actually fulfilled it, and who seeks to reclaim his money or whatever article of property he may have applied to such a purpose. The meaning of the familiar maxim, in pari delicio potior est conditio defendentis, is simply that the law leaves the parties exactly where they stand ; not that it prefers the defendant to the plaintiff, but that it will not recognize a right of action, founded on the illegal contract, in favor of either party against the other. They must settle their own questions in such eases without the aid of the courts.”

The statement of the rule by Chancellor Walworth in Harrington v. Bigelow, 11 Paige 349, may be applied directly to this case. He says : where both parties have been engaged in an illegal transaction, the court will not lend its active aid to the one party to get rid of the securities taken upon the illegal transaction, nor will it aid the other party in retaining them; but will leave both to their strict technical rights.”

In Weakley v. Watkins, 7 Humph. 356, it is held that a ■court of chancery will not entertain a bill to cancel an obligation, the consideration of which is a violation of chastity, the compounding of a felony, smuggling, gaming, false swearing, or the commission of any crime, or a breach of good morals.” This was a bill in chancery filed by Weakley against Watkins and Ferguson, to obtain the cancellation of a note under •seal executed upon a gaming consideration. A demurrer was filed to the bill, and the court in the opinion says : It is true that a court of chancery, upon the principle of quia timet, will order said instruments to be delivered up and cancelled. But this is when the complainant has been imposed upon, and •executed an instrument void, for fraud, accident, mistake or other cause, which renders it iniquitous and unjust that it should be enforced against him, and when in the execution of it, he has himself been guilty of no violation of law or good morals. But this principle has never been held applicable to instruments knowingly executed in violation of good morals, •or express prohibition either by common or statute law. For instance, no court of chancery will entertain a bill to cancel an obligation, the consideration of which was a violation of ■chastity, compounding a felony, the smuggling of goods in violation of the revenue laws, gaming, false swearing, etc.; •and this for very obvious reasons. The complainant shall not be permitted to charge himself with crime, and obtain relief out of it; and because public policy requires that the execution of all such contracts shall be discouraged; which can not be more effectually done, than by repelling all actions upon them in courts of justice. . In contracts of the kind now under ■consideration, we have held that they are inoperative and void, as contrary to good morals and positive enactment, and that as such, they are not fit subjects for the action of 4 court; it is true that in all the cases we have heretofore had, the .attempt has been to enforce them ; but we can see no difference in the position of the winner and loser, so far as to their right in becoming active movers upon such contracts in the courts ; “the one seeking to enforce them by the judgment of a court ■of law, the other, seeking by the aid of a court of chancery to have them delivered up and cancelled; they are equally repelled upon reason and authority.”

It was said by this court in Roll v. Raguet, 4 Ohio, 400, that whenever the agreement appears to be illegal, immoral, or against public policy, a court of justice leaves the parties as it finds them; if the agreement be executed, the court will not rescind it; if executory, the court will not aid in its execution.” This was again held in Raguet v. Roll, 7 Ohio, pt. 1, p. 77. And see Raguet v. Roll, 7 Ohio, pt. 2, p. 70. The doctrine of these cases has recently been approved and ■enforced by this court. McQuade v. Rosecrans, 36 Ohio St. 442; Williams v. Englebrecht, 37 Ohio St. 383.

And in Thomas v. Cronise, 16 Ohio, 54, it is laid down as a universal principle, both ■ in law and equity, that where an agreement is founded upon a consideration illegal, immoral, or against public policy, a court will leave the parties where it finds them.”

In Hooker v. DePalos, 28 Ohio St. 251, the same doctrine is announced in the following language : The maxim ‘ ex turpi eausa, non oritur aetio,’ is an old and familiar one, resting on the clearest principles of public policy, and never to be ignored. In accordance with this maxim, nothing is better settled than that, in regard to contracts which are entered into for fraudulent or illegal purposes, the law will aid neither party to enforce them whilst they remain executory, either in whole or in part, nor, when executed, will it aid either parly to place himself in statu quo by a rescission, but will, in both cases, leave the parties where it- finds them. It is true that particular statutes have been, from time to time, enacted in this state as well as in many of our sister states, which are, to some extent, in contravention of this common law doctrine. The statutes of this state, which allow money won by gaming or betting to be recovered back by the loser, furnish an example of this kind. ; But such statutes are a recognition of the established rule that no recovery could be had in such cases at common law; they are exceptional in their character; are in derogation of the common law; and therefore are to be construed strictly, and not extended by implication beyond the particular eases of illegality for which they provide.” The statutes adverted to, change the common law so far as to give the loser the right to recover back what he has lost, and provide a remedy therefor, but no farther; In all other respects the common law governs. Whether these statutes have any proper application to contracts like those under discussion, need not now be decided; for if it be granted that they have, yet, since they make no provision for equitable actions for injunctions, the right to such remedy must be determined by considerations independent of the statutory regulations. Veach v. Elliott, 1 Ohio St. 139; Thomas v. Cronise, supra.

The legislature, apparently recognizing the inapplicability of the statutes theretofore in force to such contracts and transactions, enacted that of May 4, 1885 (82 Ohio L. 254), which declares all contracts for the sale of grain, provisions and other specified articles, when there is no intention to deliver, or pay for, the articles sold, to be void; and makes them gambling and criminal acts. This statute having been passed after the contracts between these parties were made, of course cannot affect the decision of the case. And if it were otherwise, they do not confer upon the plaintiff the right to maintain the action prosecuted by him.

Precisely what effect has been given the English statutes, in the decisions of the courts of that country upon this subject, is not very clear; it is nevertheless true that parties to gaming securities, were there expressly authorized by statute, to go into chancery for discovery, which gave ground for the application of the familiar rule, that a court of chancery having jurisdiction for one purpose, will retain the case for final relief. In the case of Rawden v. Shadwell, 1 Ambler, 268, which was a bill for discovery, and the cancellation of a bond given for money won at gaming, the report states that Lord Hardwicke decreed with great clearness, and said, by Stat. 9, Anne, all securities for money won at play, are made void, consequently the payment, under any security, can not be supported; ” and Baker v. Williams is referred to in the report as an authority for the decree. In the note to the case it is said that the Statute of 9 Anne gives leave to come into a court of chancery for a discovery; and Sir J. Jeckyll, Master of the Rolls, in the note citing Baker v. Williams, said: “ and if it (the note) was put in suit at law, no doubt but the party might make a defense against it under the act; but that is no objection against coming into this court (chancery), for as the person giving the note is entitled to a discovery here, it could not be the intention of the legislature, that after the discovery, he should be sent to another court for relief; so it is, that upon a discovery of assets, the court grants relief, without sending the party to law.” And it may be noticed that in Woodson v. Barrett, 2 Hen. & Munf. 88, the Supreme Court of Virginia followed Rawden v. Shadwell, under a statute which was an exact copy of 9 Anne, except that the word “contract” was inserted in it, which was omitted in the Statute of Anné. And the case is followed by the same court in Skipwith v. Strother, 3 Rand. 216.

In this respect the Statute of Anne differs essentially from ours. The only actions provided for by our statute are the purely legal ones, to recover back the money lost, and for the conversion of the goods won of the plaintiff. No suit in equity is authorized or contemplated. The provision of the statute that the plaintiff may annex to his petition in the legal actions it permits, interrogatories' for discovery, at once removes the necessity and cause for recourse to equity ; and the statute which created the right/ having specially prescribed the legal remedies mentioned, and none other, they must be deemed exclusive.

It can not be denied, however, that courts have differed in the application of these kindred maxims, “ ex turpi causa non oritur actio,” and “ in pari delicto portior est conditio defendentis”; especially to gaming securities, which, it has been held by some courts, are so far excepted from the operation of the maxims that equity will decree them to be surrendered and cancelled. The reasons given for so holding are that “ the circulation of gaming bonds, is no less to be discountenanced than the giving of them, and no means are more likely to prevent the giving of them, than to put an effectual stop to their circulation; and, that because the losers are permitted to defend against securities given by them, on the ground that they were given for a gaming consideration, courts of equity should entertain suits for their cancellation.

These appear to be arguments, not so much in favor of the asserted exception, as against the maxims themselves; for it is apparent that the same reasoning, would in the same measure, exclude from their operation every contract and security founded upon any other illegal consideration. The circulation of all bonds and securities given for any illegal or immoral consideration, is quite as much to be discountenanced as the giving of them; gaming bonds and securities, no more than others; and, if putting a stop to the circulation of gaming bonds, by a resort to a court of equity to compel their surrender and cancellation, be the most effective means of preventing the giving of them, then the same means should be permitted and adopted, and for the same reason, to accomplish the same end, with regard to bonds and securities given for any other illegal consideration. And, if, because parties may defend against securities given by them, on the ground that they were given for a gaming consideration, is a valid reason why a court of equity should entertain a suit for the cancellation of such securities, it is an equally valid reason why that court should entertain suits for the cancellation of instruments founded upon any other illegal consideration; for such consideration may also be made a ground of defense to them. Such is the logical result of the argument in favor of the exception contended for. And some English cases have gone to that extent. In Neville v. Wilkinson, 1 Bro. Ch. R. 547, Lord Chancellor Thurlow is reported to have said, “ that in all cases where money was paid for an unlawful purpose, the party, though partieeps eriminis, might recover at law; and that the reason was, that if courts of justice mean to prevent the perpetration of crimes, it must be by not allowing a man who has got possession to remain in possession, but by putting the parties back to the state in which they were before.” But Mr. Justice Story, referring to the words of the Lord Chancellor, says: “this is pushing the doctrine to an extravagant extent, and effectually subverting the maxim, ‘In pari delicto potior est conditio defendentis.’ The ground of reasoning upon wdiich his lordship proceeded is exceedingly questionable in itself; and the suppression of illegal contracts is far more likely in general to be accomplished, by leaving the parties without remedy against each other, and by thus introducing a preventive check naturally connected with a want of confidence, and a sole reliance upon personal honor. And so accordingly the modern doctrine is established.” 1 Story’s Eq. Jur. sec. 298. The difference between the earlier cases, and the current authorities on the subject, is pointed out in the following note to this section: “I say, at present; for there has been considerable fluctuation of opinion, both in courts of law and equity, on this subject. The old cases often gave relief both at law and in equity, where the party would otherwise derive an advantage from his iniquity. But the modern doctrine has adopted a more severely just and probably politic moral rule, which is, to leave the parties where it finds them, giving no relief and no countenance to claims of this •sort.” Mr. Bispham, in his “Principles of Equity,” sec. 223, says: “ The rule, both at law and in equity, in regard to gambling transactions, now seems to be that the courts will not only refuse to lend their aid for the purpose of enforcing such contracts, but they will not assist the losing party in setting the contracts aside or recovering back the money paid. The maxim applicable to such cases is “potior est conditio possidentis.” _ The opinion of the Supreme Court of Massachusetts, in the case of Atwood v. Fisk, before cited, is to the same effect. It is there stated as the prevailing doctrine, that the suppression of illegal contracts is far more likely in general to be accomplished by leaving the parties without remedy against each other. And so the modern doctrine is established that relief is not granted’where both parties are m pari delicto.”

A review of all the authorities would occupy much space, and be of little practical value.

The test for determining when the objection that the parties are in pari delicto can be sustained, is whether the plaintiff can make out his case otherwise than through the medium, and by the aid of the illegal transaction to which he was himself a party; and when applied to this case,’ is conclusive against, the plaintiff. He asserts that he knowingly entered into an unlawful engagement; one contrary to good morals and against public policy. He entered into it with knowledge that either he, or the other party must lose, and with the intention of reaping the fruits of.his unlawful venture if he should prove to be the winner. His expectations were disappointed. He lost, paid part of the loss, and for the purpose of making further payment drew his checks on a bank in which he had sufficient funds on. deposit to pay them. These checks he delivered to the winner, or his agent, and having gone thus far, he appeals to a court of equity to interfere in his behalf, and interpose its extraordinary aid by injunction to stop their payment. After he lost, he might have refused further to act, and still be safe; and if by giving the checks the other party has acquired an advantage over him, it results from his voluntary act in the execution of his illegal enterprise. We fail to preceive how, to relieve parties in cases like this, from the consequences in which their own wrongful conduct has involved them, would tend to discourage such adventures, promote good morals, increase respect for the law, or accord with a sound public policy. In reaching this conclusion, we have not overlooked the rule that a party, who advances money upon an undertaking or agreement to do an act that is illegal, immoral or against public policy, may, at any time before the wrongful act is done, and while the agreement or undertaking remains wholly unexecuted, repent and retract. He may wholly rescind the contract, prevent the act from being done, and recover back. The law encourages such repentance and abandonment of the unlawful undertaking, and will aid the party, because it tends to prevent wrongdoing. But to be efficacious, the repentance must be timely; and it comes too late after the unlawful act has been done and the undertaking in whole or in part performed. Then thá law will assist neither party in its further execution, nor to undo what has been done in its execution. Hooker v. DePalos supra.

Judgment reversed and petition dismissed.

Minshall, J.

(dissenting.)

I regret that I am unable to agree with my bretheren in the decision of this case. The finding of facts shows that the checks in question had their origin in a gaming transaction ; and the only question on which we differ is, whether the plaintiff being as is said in pari delicto, can in equity ask to have them delivered up and cancelled. The transaction between the parties was in substance a bet, or series of bets, on the price of wheat, pork and lard at a future time, but, taking the form of fictitious sales for future delivery, was not only reprehensible as a gambling transaction, but was also detrimental to the public by creating a fictitious demand for these' products, and thus disturbing the normal condition of the markets. It is not necessary that we should to any extent point out the evils connected with what is called dealing in “ margins,” the twin evil of “ stock-jobbing,” characterized by Sir John Barnard’s Act, as “ infamous.” (7 Geo. 2, s. 8.) They are illustrated in the history of our markets by numerous instances, entailing not only bankruptcy and ruin upon many of the parties directly concerned, but also, wide-spread distress among all classes of community,, whether producers or consumers. There is no effort of the mind by which such a transaction can be made to appear any thing else than a wager, when reduced to the plain understanding of the parties, as adopted and acted on by themselves. The seller does not intend to deliver the thing sold, nor the-buyer to receive it; the agreement is that the purchaser shall payor receive the "difference according as the price of the thing, ostensibly dealt in, goes up or down by the day. As said by Judge Barr, in Bryant v. W. U. T. Co., 22 Am. L. Reg. 613 : “This business is simply gambling — gambling of the same sort as ‘ three card monte * or ‘ faro.* It is more pernicious and demoralizing than either, for men and women will go upon a ‘stock-exchange,* a ‘ board of trade* or into a ‘bucket-shop* and put up their ‘margins* or bets upon the rise or fall of stocks or grain that would never enter a ‘ gambling hell * to bet upon the turn of a card.’* The so-called settlement takes place upon the determination of the event; one-pays what the other receives, and this is so in every wager, with this difference in language only, that the one loses what the other wins. But courts do not, in a matter of this kind, deal in mere differences of language ; the consequences to the public will be the same whether the act of parting with the money is termed the payment of a debt or the losing of a wager. See the opinion of Justice Matthews in Irwin v. Williar, 110 U. S. 499. It has been well observed that, “ If a contract be a wager in substance, no matter how the end is brought about, it would bfe void, though the object were ever so cunningly concealed in the form given to the transaction.”' Max. Int. Stat. (2nd ed.) 135.

But there is no material difference in the court as to this. The majority hold that the general doctrine, that where parties are equally guilty, a court of equity will not lend its aid to either, but leave them where it finds them, applies. This as a general rule is true, and is both wise and expedient. But it is not universal. It has many exceptions, of which gaming transactions is one. Courts do not ordinarily, independent of statute, aid a party in recovering what he has lost at gaming ; but, so long as the matter remains executory, courts of law and equity will lend their assistance to the defeated party, not by reason of any merit in him, but to promote the public interests by enforcing a sound rule of public policy. Thus in a court of law the loser is permitted to defend in a suit upon a security given by him, on the ground that it was given for a gaming consideration; and, in analogy to this, courts of equity have uniformly entertained suits to require such securities tO' be given up and cancelled, where the party may be deprived of his defense in a court of law by,the negotiation of the security. This seems to be the unquestioned doctrine in a court of equity, and has been applied from an early time. Thus it is said by Mr. Ballow, the supposed author of the text of Fonblanque’s Equity, “ although equity will not usually interfere in cases relating to the gaming ácts, because it considers both winner and loser equally guilty, and, in taking upon them to game they seem to renounce the benefit of the law; yet, even at law, in an action upon a wager, they have given the defendant leave to imparl from time to time; though in strictness, it is not prohibited by the common law. Much more ought equity to discourage it, because the public is concerned that men should not mis-spend their estates and time. And in the civil law, they allow the loser to recover his money, even beyond the ordinary time of prescription.” And, in a note, Fonblanque observes that, “prior to the time of 16 Car. II, equity often interfered for the purpose of restraining the winner from proceeding at law against the loser, upon the security he had obtained for the money won,” — citing a number of cases. Fonbl. Eq. B. 1, ch. 4, § 6, and n. c. The cases cited fully sustain what is said. The same doctrine is stated by Mr. Adams. “ So long,” he says, “ as the contract continues executory, the maxim of in pari delicto does not apply ; for the nature of the contract would be a defense at law, and the decree of cancellation is only an equitable mode of rendering the defense effectual.” Adams’ Eq. m. p. 175. This doctrine is also supported by the authority of Judge Story and the cases which he cites. He says, “ In regard to gaming contracts it would follow, a fortiori, that courts of equity ought not to interfere in their favor, but ought to afford aid to suppress them, since they are not only prohibited by statute, but may justly be pronounced to be immoral, as the practice tends to idleness, dissipation, and the ruin of families. No one has doubted that under such circumstances a bill in equity might bo maintained to have any gaming security- delivered up and cancelled.” Story’s Eq. Juris. § 303. He cites the following eases: Rawden v. Shadwell, 5 Ambler R. 269 and Mr. Blunt’s notes ; Woodroffe v. Farnham, 2 Vern. 291; Wynne v. Callender, 1 Russ. R. 23; Baker v. Williams, cited in Blunt’s notes to Ambler R. 269; Portarlington v. Soulby, 3 Mylne and Keen, 104. I have taken the pains to examine each of these cases, and find that, in each, relief was given a loser by the cancellation of the security he had given for the money lost. Also, Prof. Pomeroy maintains the existence of the jurisdiction in equity to grant-such relief, with no little earnestness and zeal. After stating the rule as to executed transactions of the kind, he says, “finally, as long as the contract is still executory, equity has jurisdim tion to aid the losing party by ordering the written agreement and other securities to be surrendered Up and cancelled, and by granting the ancillary remedy of injunction to restrain their negotiation, transfer or enforcement; and when the circumstances are such that the defensive remedy at law would not be equally certain, complete and adequate, this jurisdiction ought to be and will be exercised.” He then adds, “ this conclusion is sustained by the highest authority, and is in perfect accord with principle.” Pom. Eq. Juris. § 938 and n 1. It is difficult for the mind to make a distinction in principle between a court entertaining the defense that the consideration of a security, in an action upon it by the holder, is immoral, and, for a like reason, entertaining a suit to have it delivered up and cancelled; or to give a reason why if it may entertain the plea, it should not, likewise, entertain the suit. In either case it must listen to the averments of a party who apparently pleads his own turpitude. And so Mr. Pomeroy properly insists that the remedy of cancellation or injunction “is simply the equitable proceeding identical with the setting up the illegality as a defense to defeat a recovery at law, and thus to get rid of the contract as a binding executory obligation.” Eq. Juris. § 940; and, in this, he is sustained by the authority of Mr. Adams, as will be seen by the quotation before made.

All bets or wagers are not equally reprehensible in morals or opposed to public policy. This, as at common law, depends upon the character of the event upon which the wager is laid. In many instances the occurrence of the event will not, in and of itself, be a matter of any public consequence. A wager laid upon such an event, whilst it may influence the occurrence, is not likely to be of detriment to any one beyond its effect upon public and private morals. This is not so, however, in all cases. A bet on the price of whea,t at a future time, when it assumes the form of a fictitious sale of a number of bushels from one to another, necessarily influences prices by creating a fictitious demand for wheat; and, affecting as it does the material as well as moral interest of a people, its discouragement is demanded by every consideration of public policy, that can well influence the judgment of a court to take jurisdiction and grant relief. 2 Pom. Eq. Juris. § 941.

There is much practical wisdom in what is said by Tucker, J., in Woodson v. Barrett, 2 Hen. & Munf. 88, that “ the circulation of gaming bonds is an evil no less to be discountenanced than the giving of them. And no means are more likely to prevent the giving of them that to put an effectual stop to their circulation.” This is approved in Skipwith v. Strother, 3 Rand. 216, as a remark of “great strength and propriety.” In each of these cases the court cancelled a judgment that had been rendered upon a gaming security, after the defendant in each had had an opportunity to defend, and made default; and in the former, also, granted relief in favor of the sheriff, who had been sued for damages by reason of an error in executing an elegit issued upon the judgment, “ on the ground of the turpitude of the original transaction.” These cases involve the whole question, and leave nothing for discussion. Pom. Eq. Juris, n. 1, § 938.

None of the Ohio eases, when rightly considered, militate against the doctrine. The case of Cowles v. Raguet, 14 Ohio, 38, and the cases from which 'it arose in the course of a protracted litigation, present a somewhat curious application of the principle that, in granting relief against agreements based on immoral considerations, distinguishes between an executory and an executed contract. A note secured by a mortgage had been given for compounding a felony. In a suit upon the note the illegality of the consideration was admitted as a defense, on the ground that the contract was executory. Raguet v. Roll, 4 Ohio, 400. Afterwards, a like plea was admitted, aud for a like reason, in a soire faoias upon the mortgage to enforce payment. 7 Ohio, pt. 1, 76. But in an action of ejectment on the mortgage, subsequently brought, Roll, the mortgagor, set up the same defense as in the former case, but it was not allowed, the court holding that a mortgage is an executed and not an executory contract. 7 Ohio, pt. 2, 70. Note the somewhat obsolete grounds upon which the reasoning is placed by Grimke, J., in delivering the opinion at pp. 72 — 73. “Although,” he says, “a strong disposition existed once to treat a mortgage as a mere chose in action, and although individual judges were heard to declare that the money was the principal, and the land only the incident, * * * yet such is not now supposed to be the law. A mortgage is in reality a conditional fee, which is as large an estate as a fee-simple, though it may not be so durable.” "VVe suppose the law, as here stated, is not now the law anywhere; and yet it constitutes the rationale of that decision. Finally, in the case of Cowles v. Raguet, it was held, after much debate, that, notwithstanding the consideration of the note for which the mortgage was given as a security was illegal, and after the land had been recovered in ejectment upon the mortgage, the mortgagor had the right to redeem. We have but two remarks to make upon these cases by way of distinction : (1) The note was not based upon a wagering consideration, and so not within the exception taken by courts of equity upon matters of this kind; and (2) the distinction between an executed and an executory contract was recognized and intended to be applied in each of them, and whether rightly applied in the ejectment suit, or not, cannot affect its application in this case, since there is no question here but that the contract remains executory — a check has been given but the money has not been paid. The case of Thomas v. Cronise, 16 Ohio, 51, was a suit by the relator to have a deed that he had executed and delivered for a lot he had bet and lost upon the gubernatorial election of 1842, to be declared void. From the statement of the court it appears that the winner was in possession under the deed. The relief was denied for the reason, as held, that the contract had been executed. Any statements of the judge in delivering the opinion outside of the case so made, were merely obiter. In Hooker v. De Palos, 28 Ohio St. 251, the action below was a suit by De Palos to recover of Hooker $500 paid on a contract by which H. had agreed to sell the plaintiff a certain farm to be put up as a prize in a lottery, for which he was to be paid part in money and part in tickets in the lottery, and the money sought to be recovered had been paid on this contract. The court treated the transaction as fully executed,” and denied relief. Of this case wc may make the same observations, that apply to Cowles v. Raguet — it was not a wagering contract, and had been executed. We submit that none of these cases conflict with the well recognized doctrine that a court of equity may, and upon principles of public policy should, when appealed to, order the delivering up and cancellation of negotiable securities that have been given for a gaming consideration. In all of them where relief was denied, the defendant was within the correct interpretation of the maxim in pari delicto potior est conditio possidentis, the maxim applicable to such cases, and not that which refers generally to the condition of the defendant, as pointed out by Professor Pomeroy : If the contract is still executory, the promisor is left undisturbed in the possession of the money or other property which he agreed to pay or transfer; if the contract has been executed, the promisee is left undisturbed in the possession of money or other property which has been paid or conveyed to him. This is the true meaning of the maxim, and it involves no requirement that the contract, as a mere executory instrument, should remain unmolested; it deals solely with the rights flowing, or which would flow from the agreement.” Pom. Eq. Juris. § 939.

The fact that the Statute 9 Anne, c. 14, provided for a discovery in aid of an action to recover back money lost at gaming, was not the ground on which courts of equity granted relief against gaming securities. The jurisdiction had been exercised, long prior to that statute. Fonb. Eq. note c, supra. Moreover, our statute not only declares all securities given for wagering considerations void, as did the Statute of Anne, but goes farther, and declares all wagering contracts to be void, § '4269, Revised Statutes; and, like the Statute of Anne, gives an action to the loser for a recovery of the money lost § 4270; and such has been the law since 1831, S. & C. 664.

It is true that Bispham seems to treat a gaming security, so far as relief in equity is concerned, as in the same catagory with all other securities based upon an illegal consideration. He cites no. cases nor authorities, and it is more than likely that the doctrine as to such securities had escaped his attention. ' If, however, he is to be understood as stating what is claimed from his text, he is unsupported by any other writer on equity jurisdiction, that I have been able to consult. In' addition to the citations heretofore made, I cite Snell’s Eq. 518; and Willard’s Eq. Juris. 225. The former observes that the jurisdiction is based on the ground that it is “better to prevent than relieve,” and the latter asserts that “ there is no doubt” about its existence. After a diligent search, I have been able to And but one case, Weakly v. Watkins, 7 Humph. (Tenn.) 356, decided in 1846, in whieh a contrary doctrine has been directly held. In a suit to enjoin a judgment that had been rendered pro confesso on a sealed bill on the ground that it had been given for a wagering consideration, the chancellor had decreed for the plaintiff. The decree was reversed by the Supreme Court, the judge delivering the opinion saying that he “ could see no difference in the position of the winner or loser so far as (relates) to their rights in becoming active movers upon such contracts in the courts.” The court differed with the chancellor, who was doubtless more conversant with the doctrine of equity on the subject than the judge who delivered the opinion of the court. He failed to preceive that the action by the loser is simply sub- j servient to a wise public policy, and not on the contract at all.

The learned judge, in the cases he has cited in support of the opinion of the majority, seems to overlook or does not regard, the difference between an executed and an executory contract; and that gaming securities have, for reasons before stated, been singled out by courts of equity as proper subjects for relief by cancellation or injunction, although the parties may be in pari delicto.

I think the judgment should be affirmed.

Speajr, J.

The principle of most consequence in the case seems to be one of public policy. Which will best conserve the public interest, to allow relief to one in the circumstances which surround the defendant in error, Walton, or to refuse it? When a court, in disposing of a case, has declared a correct principle of law, and correctly applied it, a like application should be made in a subsequent case involving a like principle. In Barholt v. Wright, 45 Ohio St. 177, where a party provoked a quarrel, made the first assault, and then got worsted in the combat, the court held that the assailant had a a right of recovery for damages accruing from the excess of resistance used by his opponent. If a party thus circumstanced may have a standing in court to have his self-invited wrongs righted, in an action at law, by a verdict and judgment which will inflict pecuniary loss on the other party, (and the authorities seem to warrant the holding), it is not easy to see why one who has engaged in a gambling contract, though it be an unlawful transaction, may not have a standing in a court of equity, and ask that court to extend its aid in preventing his more lucky accomplice from enjoying the usufruct of his ill-gotten gains; and if breaches of the peace are more discouraged by giving the defeated party, though the aggressor, and a violator of the criminal law, a right of action and the opportunity to use the courts of the state to enforce it in the former ease, than by refusing it, it would seem that a like policy would be subserved by giving the unlucky loser tbe aid of equity, in tbe latter. The maxim that one asking aid of a court of equity must come with clean hands, is not forgotten, but,i along with it is another maxim, that a court of equity will follow the analogies of the law. And the court, having fixed the rule of law in the case referred to, ought not, it is respectfully submitted, to hesitate to apply the rule to the case at bar. Following the principle of that case, I think the judgment of the district court .should have been affirmed.


source: Caselaw Access Project

author: Dickman, J.

license: Public Domain

text:
    Bridge Co. v. Savings Bank.

      Collateral security made payable at a particular bank — Duty of pledgee.

    1. Where a note is indorsed and delivered as collateral security, the indorser and indorsee are to be regarded as sustaining towards each other the relation of pledgor and pledgee; and if such collateral paper' matures before the principal debt, the duty and obligation of the pledgee in the collection thereof, is performed by the exercise of reasonable and ordinary care and diligence.
    2. If a note is made payable at a designated bank for the convenience of the maker, with no objection by the payee to the place of payment, and is indorsed and delivered by the payee to another bank as collateral security for the payee’s own note, and if the collateral paper falls due before the principal debt, it is the duty of the receiver of the collateral, in the absence of any sufficient reason to doubt the solvency of the designated bank, to lodge it with such bank for collection.
    (Decided January 29, 1889.)
    Error to the Circuit Court of Knox County.
    The Knox County Savings Bank — the defendant in error-filed in the Court of Common Pleas of Knox County its amended petition, which reads as follows:
    “The plaintiff, by leave of the court first had, files its amended petition, and avers that it is a corporation duly organized under the laws of Ohio, under the name of The Knox ■County Savings Bank, and fully authorized to loan money, and receive the notes hereinafter described.

      “ That the defendant is a corporation duly organized under the laws of Ohio, under the name of The Mount Vernon Bridge Company, and doing business and having its principal •office at the city of Mount Vernon, in said county and state.
    “ The plaintiff states that on or about the 14th day of February, A. D. 1883, the defendant, being desirous of borrowing money, made and delivered to plaintiff their promissory note, ■of which the following is a true copy j,
    ‘Mt. Vernon, O., Feb. 14, 1883.
    ‘ Thirty days after date, for value received, we jointly and severally promise to pay The Knox County Savings Bank, or •order, at their banking house, Mount Vernon, Ohio, twenty-eight hundred dollars, with interest, after maturity, at the rate of eight per cent, per annum, until paid. And we jointly and • severally hereby authorize any attorney-at-law to appear for us or any of us, in an action on the above note brought against us, or either of us, by said Knox County Savings Bank, at any time after said note becomes due, in any court of record in the state of Ohio or elsewhere, to waive the issuing and service of process against us, or any of us, and confess a judgment in favor of said Knox County Savings Bank against us, or any of us, for the amount that may be then due thereon, with interest at the rate therein mentioned and costs of suit; and, also, in behalf of us to waive and release all errors and the right of appeal in said proceedings and judgment and all proceedings, petitions and writs of error therein. As witness our hands and seals, this 14th day of February, A. D. 1883.
    ‘ $2,800.00.
    ‘Due March 16-19, 1883.
    ‘No. 2634.
    ‘Mt. Vernon Bridge Company,
    [seal.] ‘J. N. Keadington,
    ‘ Secretary.’

    “ To secure the payment of said note, the defendant duly endorsed and deposited with the plaintiff, as collateral security for the payment of said above mentioned note, and loan, two notes or orders, one calling for one thousand and ninety-two-dollars ($1,092), which was duly collected, and after collection applied in part payment of said loan, and one note or order, on the Commissioners of Highways of Panola township, Woodford county, in the state of Illinois, in favor of the defendant, of which note or order the following is a true copy :
    ‘ $1,740.00. The Commissioners of Highways of Panola township, Woodford county, state of Illinois, will pay to the order of The Mount Vernon Bridge Company, seventeen hundred and forty dollars, without interest, payable at the El Paso Bank, El Paso, on the 10th day of March, 1883.
    ‘ James Forsythe,
    ‘ Michael Gilbert,
    ‘Commissioners of Highways of Panola Township.’

    “ Plaintiff says that shortly before said claim fell due, its-, cashier consulted the defendant’s secretary and treasurer, who as such had had other and like business transactions with plaintiff, and who had negotiated said loan, as to its'collection,, whereupon plaintiff’s cashier according to the custom of banks, in such cases and the usage of plaintiff in like cases, sent said collateral to the El Paso Bank, with instructions to collect and forward the money in the usual way — by exchange on New York. The plaintiff’s cashier received a letter from the-officers of the El Paso Bank, bearing date the same day said collateral matured saying ‘ that it had not been paid,’ which advice he promptly communicated to the defendants’s secretary.
    “ Plaintiff says that the El Paso Bank, about the same time said collateral fell due, did receive the money on said collateral, and shortly thereafter failed. That on learning of the failure of the El Paso Bank, plaintiff immediately communicated that fact to the defendant’s secretary, who wrote to one of the agents of defendant then traveling in the west, to go to El Paso and look after the matter.
    “ The plaintiff further says that it had no other business than-what grew out of said collateral with the El Paso Bank, either before or since sending said claim for collection, nor did plaintiff know of the existence of said bank before it received said collateral; that so far as it could learn either through the commercial agencies, or otherwise, said El Paso Bank was in good credit when plaintiff forwarded said collateral for collection. Plaintiff says, there is not now, nor was there at the time plaintiff sent said collateral for collection, any other bank or collection broker in said town of El Paso, save the bank at which said collateral was made payable. That at the time said note or order was made payable at the El Paso Bank, the plaintiff had no connection with or knowledge of the making of such obligation. That the same grew out of a business transaction between the defendant and the Commissioners of Highways of Panola township. Plaintiff further says that since said $2800 note fell due, the defendant wholly failed and refused to pay said note, or any part thereof, and claims that said payment of said order to the bank of El Paso was a payment to the plaintiff. Plaintiff therefore asks judgment against the defendant for the sum of seventeen hundred and nine dollars and 24-100 with interest.”
    To this petition, The Mount Vernon Bridge Company — the plaintiff in error — filed its answer, of which the following is a copy:
    “And now comes the defendant and for answer to the petition of plaintiff, says, that it assigned and transferred to plaintiff, by its written endorsement thereon, the said $1,740.00 order, and delivered the same to plaintiff under the circumstances and upon the consideration set forth in said petition, and never afterwards assumed or pretended to have any authority or control over the same or the manner in which it should be collected, and never assumed any of the risks incident to the collection thereof; that defendant never gave any advice or directions to plaintiff, or any of its officers, as to the place to which, or the persons to whom, or the agency through which, the collection of said order should be made, and never was consulted by plaintiff or any of its officers as to the manner or means of making said collection.
    “ Defendant says that it is true that shortly after the failure of said El Paso Bank, its secretary did write to one of defendant’s agents then traveling in the west, to go to El Paso and look after this matter ; but defendant says that its secretary did so at the request of plaintiff, and wrote to defendant’s said agent that the plaintiff, the Savings Bank, requested him to see Panola Township Commissioners, and state what time the money was paid in, etc.

      “ Defendant says that it never had any business transactions or business relations with said El Paso Bank, and in fact did not know of its existence until said order was delivered to it already executed; that said order was made payable at said bank by the makers thereof merely for their own convenience in making payment, and without consulting defendant.
    “ Defendant says that it is not true that no other payments have been made upon said nóte than the $1,092 endorsed thereon, but defendant says that the entire residue of said note had been fully paid and satisfied by the collection of said $1,740 order, and that defendant is entitled to a judgment against plaintiff for the sum of thirty-two dollars ($32), the residue thereof after paying the balance of said note.

      “ Wherefore defendant not gainsaying the other allegations ®f said petition, prays a judgment against said plaintiff for said sum of $32, with interest thereon from the 13th day of March, 1883.”
    There was a demurrer to the answer, which demurrer was sustained, and judgment was rendered for the Savings Bank for the amount claimed, with interest and costs. '
    The judgment was affirmed by the circuit court, and to reverse such judgment of affirmance, a petition in error is filed in this court.

      A. JR. JMelntyre, for plaintiff in error.

      Samuel Israel and William M. Koons, for defendant in error.
   Dickman, J.

It is alleged in the original petition, that to secure the payment of the note upon which the action was founded, the Bridge Company indorsed and deposited with the Savings Bank, as collateral security, the note made by the Commissioners of Highways of Panola township. And the Bridge Company avers, that it assigned and transferred to the plaintiff below, by its written indorsement thereon, the note of the commissioners, and delivered the same to the plaintiff, under the circumstances and upon the consideration set forth in the petition. The Bridge Company and the Savings Bank, therefore, sustain towards each other, the relation of pledgor and pledgee. Notes deposited as collateral security are regarded as pledges, whether they have been indorsed and delivered as a part of the transaction of loan, or have been simply delivered without indorsement, where indorsement is required.

What then was the obligation resting upon the Savings Bank in reference to the collateral note which it held ? The general rule is that, where negotiable instruments, executed by third parties, are indorsed and delivered as collateral security for the promissory note of the pledgor, so that the pledgee of them becomes a party thereto, and such collateral paper matures before the principal ■ debt, the obligation of the pledgee in collection thereof is performed by the exercise of reasonable and ordinary care and diligence. As held in Roberts v. Thompson, 14 Ohio St. 1, where a party receives a note as collatei’al security for an existing debt, without any special agreement, he is bound to use ordinary care and diligence in collecting it, and such cases are not governed by the strict rules of commercial law applicable to negotiable paper. See Reeves v. Plough, 41 Ind. 204; Lawrence v. McCalmont, 2 How. U. S. 426; Noland v. Clark, 10 B. Mon. 239; Miller v. Gettysburg Bank, 8 Watts, 192.

We do not find, nor is it claimed, that there was any negligence, or want of due diligence on the part of the Savings Bank, in taking the proper steps for the collection of the collateral note or pledge. The facts, as admitted by the record are, that a short time before the collateral fell due, the cashier of the Savings Bank, according to the custom of banks and the usage of the Savings Bank in like cases, sent the collateral note to the El Paso Bank, where, by its terms, it was made payable, with instructions to collect and forward the money in the usual way — by exchange on New York. The cashier received a letter from the officers of the El Paso Bank, dated the day the collateral matured, saying, “that it had not been paid,” which information he promptly conveyed to the Bridge Company. But about the time the collateral fell due, the El Paso Bank did receive the amount due thereon, and shortly thereafter failed, and the Savings Bank immediately communicated that fact to the secretary of the Bridge Company, who wrote to one of that company’s agents travelling in the west, requesting him to go to El Paso and look after the matter. Before receiving the collateral paper, the Savings Bank had no knowledge of the existence of the El Paso Bank, and when the collateral was forwarded to it for collection, that bank, so far as was learned through commercial agencies and otherwise, was in good credit, nor was there any other bank or collection broker at that timo in the town of El Paso.

There was nothing to put the pledgee of the collateral on guard, or create suspicion as to the solvency of the collecting bank. Under the existing circumstances, it was the plain duty of the Savings Bank to 'lodge the collateral for collection at the designated bank, and in no other place. Had the Commissioners of Highways, with funds in hand and ready to pay, failed to find their note on deposit at the place appointed for payment, and afterwards become insolvent, the Bridge Company might well have charged the Savings Bank with supine negligence. So far as it pertained to the degree of care and diligence required of the Savings Bank as a pledgee, it was not for it to ask why the collateral note was made payable at a particular bank, or whether so made payable for the convenience of the makers or payee or both, unless, before forwarding it for collection, the pledgee had reason to doubt the good credit of the collecting bank — which it did not have in the present instance. The language of the instrument, and the delivery of it by the payee and owner as collateral security, without any new or qualifying direction, served as a notice and guide to the pledgee which it could not safely disregard. The pledgee, it is said, is a savings bank, but generally, while it is not among the powers and privileges of such institutions to make collections for the holders of negotiable paper, when tbey loan money upon collateral security, and it devolves upon them to collect such collateral, their duties, rights and liabilities as pledgees, arc to be determined by the same rules and principles that govern natural persons.

It is true that it seems'to be the accepted doctrine in America, that no presentment or demand of payment need be made at the specified place, on the day when a note becomes due, orafterwards, in order to maintain a suit against the maker.’ But if the maker has funds at the appointed place at the time to pay the note, and it is not duly presented, he will in the suit be exonerated, not, indeed, from the payment of the principal sum, but from the payment of all damages and costs in that suit. While, however, the payee and holder of the paper may, if he pleases, neglect presentment and demand at the appointed bank or place, the receiver of the paper as collateral, in the exercise of due care and diligence, should have the paper at the appointed place, for payment at maturity.

It is urged, however, in behalf of the plaintiff in error, that the Savings Bank received the note made by the commissioners of highways merely for the purpose of collection — the amount realized therefrom to be applied towards the payment of the note in suit. The El Paso Bank, it is claimed, was the agent of the Savings Bank — that payment to the agent was payment to the principal — and that, therefore, the loss of the collateral through the insolvency of the El Paso Bank, must be born by the Savings Bank, and not by the Bridge Company.

Granting that it was incumbent upon the defendant in error to transmit the paper at the proper time and to the proper place for payment, the defendant did not select the agent to collect the note, for that, as we think, had already been done by the plaintiff in error. It is alleged that the note was made payable at the bank by the makers, merely for their own convenience in making payment, and without consulting the payee. But the payee accepted and became party to the note, and delivered it as security without intimation that any other place of payment was contemplated, than that named in the body of the instrument. Nor can the bank as the place of payment, be separated from its officers who received, in due course of business, the amount of the note from its makers. It is generally understood in the mercantile world when negotiable instruments are made payable at a particular bank, that the paper will in due time be lodged in that bank for collection, and that the bank through its proper officer will receive the money when paid by the debtor. In Ward v. Smith, 7 Wall447, Field, J., in delivering the opinion of the court, says: “It is undoubtedly true that the designation of the place of payment in the bonds imported a stipulation that the holder should have them at the bank, when due, to receive payment, and that the obligors would'produce there the funds to pay them. It was inserted for the mutual convenience of the parties. And it is the general usage in such cases for the holder of the instrument to lodge it with the bank for collection, and the party bound for its payment can call there and take it up. If the instrument be not there lodged, and the obligor is there at its maturity with the necessary funds to pay it, he so far satisfies the contract that he cannot be made responsible for any future damages, either as costs of suit or interest, for delay.”

And in the early case of Wallace v. McConnell, 13 Peters, 136, it is stated by the court, that the place of payment in a promissory note, or in an acceptance of a bill of exchange, is always matter of arrangement between the parties, for their mutual accommodation, and may be stipulated in any manner that may best suit their convenience; and that when a note or bill is made payable at a bank, it is well known that, according to the usual course of business, the note or bill is lodged at the bank for collection; and, that if the maker or acceptor calls to take it up when it falls due, it will be delivered to him, and the business be then closed. Indeed, the common understanding is, that the appointment of the bank as the place where the note is to'be paid, implies the agency of the bank in making the collection.

The El Paso Bank being, in our opinion, the appointee of the Bridge Company and the Commissioner of Highways, and not of the defendant in error, the decision in Reeves v. The State Bank, 8 Ohio St. 465, can have no immediate bearing upon the present case. The rule, resting upon the soundest judgment, was there laid down, that where a bank in this state receives for collection a draft payable in another state, and for the same purpose forwards the draft to its correspondent in such other state, the bank here is responsible to the owner for the conduct of such correspondent, and for the proceeds of the draft, immediately upon its collection by such correspondent. Such correspondent, it was held, is the agent of the bank here, and not the sub-agent of the owner of the draft; and payment to the agent is payment to the bank, unless there was some agreement or authority between the owner and the bank, beyond the mere fact of the draft being received for collection. It entered into the reasoning of the court of errors, in Allen v. The Merchants’ Bank of New York, 22 Wend. 215, that when a note is left by the owner at a bank, and received for the purpose of being sent to some distant place for collection, he makes an implied contract with the bank, that the proper and expedient means shall be used to collect the note, and he presumes that proper agents will be employed The owner having no part in the selection of those agents and the bank in making collections for its customers not rendering a gratuitous, but more often a lucrative service, it has been deemed not unreasonable to hold the bank responsible for the conduct of the agents it employs. But it can not, consistently with the facts in the present case, be said, that the Savings Bank was left to the exercise of its discretion, in the appointment of an agent to collect the note which it held as security. On the contrary, the El Paso Bank must be held to have been adopted by the plaintiff in error and the Commissioners of Highways, for their own convenience, as their agent for that purpose. For the foregoing reasons, we have reached the conclusion that the judgment of the circuit court should be affirmed.

Judgment accordingly.