Wagner v. Hildebrand

Citations

• 187 Pa. 136
• 41 A. 34
• 1898 Pa. LEXIS 1098

Syllabus

<p>Contract — Wagering contracts — Stock gambling — Buying on margin— Evidence.</p> <p>If it is the intention of the parties that an actual purchase of stock on margin shall be made by a broker, the transaction is legal, although the delivery may be postponed, or made to depend upon future conditions; but if the intention is that there is not to be a delivery to complete the purchase, but that the account is to be settled on the basis of a rise or fall in prices, it is a mere wager, and the contract cannot be enforced by either party.</p> <p>In an action by an assignee of a firm of brokers to recover a balance alleged to be due in the purchase and sale of stocks, it appeared that the accounts between the firm and the defendant covered a period of fifteen months, and involved purchases amounting to over $300,000, during which time no securities were delivered or tendered, except one purchase of stock for a special purpose amounting to $100. The calls on defendant were not to take up his stocks and bonds, but to deposit more margin. When the brokers were carrying securities to the amount of $150,000, they wrote to defendant that in ordinary times a margin of five per cent would be required, and that while they did not ask that he should put up that much, they desired that he should better protect his holdings, and added: “We will gladly allow you to withdraw money again as soon as the market improves.” In addition to this, defendant testified that there was an understanding and agreement that he would not be called on to pay for the securities, but that the account would be settled by the payment of the difference in prices. There was other testimony to the same effect. Held, that a verdict and judgment for the defendant should be sustained.</p>