The Central Bank of Brooklyn v. Lang.

regarded precisely as if the makers had endorsed it, provided they negotiated it. And we consider that a note is negotiated within the statute, when it is delivered out by the maker for a consideration received, or agreed to be received, or delivered for circulation; and when, had it been actually endorsed, it would have possessed the character of negotiability. The note in question was certainly negotiated in this sense.

In Stevens v. Strang (2 Sandf. S. C. R. 138), a note was given by Benjamin H. Strong & Co. to the order of Ebenezer Stevens & Sons. There was no such firm in existence. It had ceased twelve years before, by the death of the father, Ebenezer. But there was a firm of Ebenezer Stevens' Sons. Proof was allowed of the consideration of the note being a sale of brandy to the makers by the plaintiffs. It was held to be a negotiation within the statute.

In the case of Brouwer v. Hill (1 Sandf. S. C. R. 648), the Court noticed an objection, that the legal title was not in the company, the note being payable to the maker's order, and not being endorsed, and say: "If it were delivered to the Company as an operative and valid security, the title and the property in it became vested in the company." The receiver was held entitled

to recover.

And upon the point of consideration, the case of Deraismes v. The Merchants' Mu. Ins. Co. (1 Comstock, 371), is decisive. A note like the present is a statutory security, independent of consideration; and if that was necessary, the obligation upon the company, and other circumstances, afforded ample consideration to support it.

Without entering upon the question not arising in the case, how far the contract would have been available, had the note remained in the Company's hands, and whether it was not capable of being rescinded at any time, except for premiums earned, we are satisfied that it was negotiated within the statute. And we are also satisfied that the plaintiffs, as bona fide holders, are entitled to recover the whole amount, however small may have been the amount of risks undertaken for the makers. There is no evidence that the notes were discounted for unwarranted purposes. There is nothing to charge the plaintiffs with any knowledge of a misapplication, even if such misapplication in fact existed, The judgment must be affirmed, with costs.

Cassard v. Hinman.

GEORGE CASSARD v. ELISHA HINMAN.

A contract of sale for the delivery of goods on a future day is valid in law, although the goods at the date of the contract are not in the possession, nor within the control of the seller.

Although such a contract may be valid on its face, yet, if it was the intention and understanding of the parties when it was made, that the goods should not be delivered, but that the difference between the market price on the day of delivery and that stipulated in the contract, should be paid by one of the parties to the other, according as such market price might exceed or fall short of that stipulated, the contract is not a legitimate mercantile speculation, but is a mere wager, and as such is void under the 8th section of the act "of betting and gaming" (1 R. S. p. 662). Whether such was the intention of the parties is a question of fact, which in an action for the breach of the contract, in which a defence under the statute is set up, must be determined by the jury upon extrinsic evidence. The admission of such proof is not a violation of the rule that forbids the introduction of parole evidence to contradict or vary the terms of a written agreement. Order overruling a demurrer to a defence under the statute, affirmed with costs. (Before DUER, BOSWORTH, HOFFMAN, SLOSSON, and WOODRUFF, J.J.)

Heard, May 9; decided, May 16, 1857.

THIS action comes before the Court, at General Term, on an appeal by the plaintiff from an order made by Mr. JUSTICE HOFFMANN, in November, 1856, at Special Term, overruling a demurrer to a separate defence in the answer.

The complaint set forth two contracts in writing, signed by the defendant, by each of which he agreed to sell and deliver to the plaintiff 500 barrels of new mess pork, in all the month of September, 1856, at the price of $17 per barrel. It alleged a breach of these contracts, and that the plaintiff had sustained damages to the amount of $3,000, for which sum, with interest and costs, judgment was demanded.

The answer set up the following, as a third defence;

"That at the times of making the supposed contracts in the complaint contained, the defendant was not a dealer in pork, nor did he ever hold, possess, or control the pork mentioned in the supposed contracts, nor any part thereof, all which the plaintiff well knew, as the defendant is informed and believes; that it then was not the intention of the defendant to make any actual

Cassard v. Hinman.

sale or delivery of pork to the plaintiff, nor was it the intention of the plaintiff actually to buy or receive any pork from the defendant, as the defendant is informed and believes; that it was the mutual design and intention of both the plaintiff and the defendant, at the making of said supposed contracts, that the same should not be specifically performed in whole or in part, but on the contrary, that at the maturity of said supposed contracts the differences between the then market value of the pork therein mentioned, and the price of the same fixed in said supposed contracts, should be paid by the one party to the other, as performance or satisfaction of said supposed contracts, that the market price of pork in the month of September, then future, was at the time of the making of said supposed contracts an unknown and contingent event and a chance, and the said supposed contracts were not actual bargains and agreements for the sale of the actual property, but were mere wagers on such future market price of pork, and on the chance of such future price, and were gambling transactions, and the defendant insists that said supposed contracts by reason of the matters in this third defence stated, were and are illegal, invalid, and void, and are contrary to the statute in such case made and provided, and repugnant to the common law."

To this defence the plaintiff demurred, and from the order, overruling the demurrer, the plaintiff appealed to the General Term.

Mr. Justice HOFFMAN delivered an opinion, in support of his decision, which is reported in 14 How. Pr. R. P. 84.

James C. Carter, for plaintiff and appellant, insisted that § 8 of art. 3d, title 8, chap. 20, Part I. of the Revised Statutes, was not intended to apply, and should not be interpreted to apply, to transactions like those presented by this record. They are not within the intent of the Statute.

The transactions appearing on this record are, clearly, outside of the letter of the statute.

Even if it be conceded, that this statute applies to contracts in reference to sales of merchandise, when the contract falls within its provisions, and assuming, as now contended, that the

Cassard v. Hinman.

present transaction does not come within the letter of the statute, then it is insisted, that the present case does not come within the intent of the statute, even upon this large view of its intent.

The transaction in question is not open to objection as being an attempt to evade the statute. The intent to evade would, in such a case, be the unlawful ingredient, and should, therefore, form the gravamen of the plea. The defence, demurred to, does not allege it. A statute cannot be evaded by doing a thing which does not fall within the scope of its prohibition.

The order appealed from should be reversed, and an order entered sustaining the demurrer, with costs.

Charles Tracy, for defendant, the respondent, contended that, admitting the facts set forth in the part of the answer demurred to, the supposed contracts were, plainly, gaming contracts and wagers, and as such unlawful and void. He cited Grizewood v. Blane, 8 Eng. L. & Eq. R. 415, and 20 id.; Rourke v. Short, 34 id. 219.

BY THE COURT. SLOSSON, J.-The contract was, in itself, a good executory contract for the sale and delivery, by the defendant, of the article in question.

A party may, lawfully, contract to deliver at a future day goods of which he has not at the time, possession. (Stanton v. Small, 3 Sandf. R. 230.)

The question, in the present case, arises under the averments in the answer, "that it was not the intention of the defendant to make any actual sale or delivery of pork to the plaintiff, nor was it the intention of the plaintiff, actually, to buy or receive any pork from the defendant; that it was the mutual design of both the plaintiff and the defendant, at the making of the said supposed contracts, that the same should not be specifically performed, in whole or in part; but, on the contrary, that, at the maturity of said supposed contracts, the differences between the then market value of the pork therein mentioned, and the price of the same fixed in said supposed contracts, should be paid by the one party to the other, as performance or satisfaction of said supposed contracts."

The answer then avers, that the market price of pork in the

Cassard v. Hinman.

then future month of September, (the period fixed in the contract for the delivery of the pork,) "being an unknown and contingent event, and a chance," the contract was a mere wager on the future market price, and on the chance of such a future price, and a gambling transaction, contrary to the statute, and void.

The plaintiff contends, that this was a speculative contract merely, and not in the nature of a wager; and neither within the letter nor the intent of the Statute against Betting and Gaming. That the contract, on its face, contains nothing contrary to the statute, and being in writing, cannot be varied or contradicted by parol evidence of an intent, which would go to show that it was never to be performed, and that therefore the allegation of such an intent is not good in pleading, and does not raise the question of wager at all; and he further contends, that, even if this objection is not fatal, the answer is defective, in not alleging, that the transaction was entered into with intent to evade the statute.

The rule which excludes parol evidence to contradict or vary the terms of a written instrument, applies to the construction of it only as a valid subsisting contract: but a party might always show that the instrument was void, either by reason of fraud, want of consideration, or as contravening a statute, or some express rule of the common law, or as against public policy, and for other reasons.

So infancy, coverture, or insanity may, when pleaded, be shown by parol, to avoid a written agreement.

That the answer should have alleged that the contract was entered into with intent to evade the statute, cannot be necessary, if the intent was, to do what the statute forbids, and such intent is sufficiently averred.

When the intent is to do what the statute prohibits, the adoption of a form of contract which is good on its face, necessarily shows an intent to evade the statute,

We think the averment of intent, in the present case, alleged distinctly to be that of both parties, and mutual, is sufficiently made. It is an averment of a material fact, and, therefore, admitted by the demurrer.

The question, then, is, whether the agreement thus read is