undue influence has the burden of establishing the existence of this element; but if there is a parental relationship, the burden of proving the entire fairness of the transaction to a court of equity rests upon the parent, and the same presumption of undue influence is applied to the dealings of certain fiduciaries, namely, attorneys, trustees, executors, promoters, and, in some jurisdictions, directors of a corporation and employers of minors.

PRACTICE PROBLEM

The plaintiff, a dealer in ice, was under a contract to furnish ice each week-day to important customers. Early one morning, when his teams were loaded with ice ready to start on the day's deliveries, defendant, having brought an action on a promissory note made by plaintiff, attached the horses and wagons, and informed the plaintiff that none of the property attached could go unless the claim should be settled by the payment of $300. The plaintiff urged that he had received a discharge in insolvency which discharged the claim, and said he would dissolve the attachment by giving a bond. The defendant replied that the discharge in insolvency did not cut off the claim and that it would take three days to dissolve the attachment. Thereupon, being in fear of great loss to his business, plaintiff paid defendant $300 under protest and as. a means of relieving his property from attachment. If plaintiff can prove that defendant had no legal claim, but made the attachment for the purpose of extorting money from the plaintiff, does he make out a good cause of action for the recovery of the $300 he paid? See Chandler v. Sanger (1874), 114 Mass. 364.

$190

F. LEGALITY OF OBJECT

LAMSON BROS. v. BANE.

U. S. Circuit Court of Appeals, Eighth Circuit, 1913.

[124 C.C.A. 121.]

SMITH, C. J.: The defendant in error, I. W. Bane, is a lawyer engaged in the practice of his profession at Des Moines, Iowa, and will hereafter be called the "plaintiff." Lamson Bros. & Co. are composed of L. J. Lamson, W. A. Lamson, and L. F. Gates, and will hereafter be called the "defendants." They have for a considerable period been engaged in business at Chicago, Ill., as brokers and commission merchants. They maintained branches in 14 Iowa cities, one at Des Moines, where three men, including a manager, were employed. The Des

Moines office received considerable sums of money, which were deposited in a bank in that city, and notice was sent directly to the Chicago office of the amount of these deposits and to whom they should be credited. On December 27, 1909, the plaintiff entered into a contract through the defendants' manager at Des Moines for the purchase of 100 shares of M. K. & T. stock at 484, and after being notified that the stock had been purchased he paid $500 as a margin upon it. On January 8, 1910, he similarly contracted to buy 100 shares of Wabash preferred at 574, and after being notified that the stock had been purchased paid as a margin thereon the sum of $600. Subsequently he from time to time deposited other sums of money to meet declines in the market until his total deposits amounted to $3,800, including $500 deposited at Chicago while there. Both M. K. & T. stock and Wabash preferred were listed at the Stock Exchange in New York, but neither of them was so listed at Chicago.

When the plaintiff authorized the purchase of the 100 shares M. K. & T. stock, the defendants' manager or agent at Des Moines wired them at Chicago to purchase the stock. Defendants telephoned J. J. Townsend & Co., of Chicago, to make the purchase, and they wired to Sternberger, Sinn & Co., of New York, to make the purchase, and upon their reply that they had done so, Townsend & Co. notified the defendants, they sent the news to their Des Moines agency, and it was there delivered to the plaintiff, and he then paid $500 as a margin.

On February 4th, this stock having fallen, the defendants notified J. J. Townsend & Co. to sell the same. They in turn notified Sternberger, Sinn & Co., who reported that they had sold the stock at 3934. In a similar way when the plaintiff gave his order for the purchase of 100 shares of Wabash preferred the defendants' agency at Des Moines telegraphed the home office at Chicago, which telephoned J. J. Townsend & Co., who in turn wired Sternberger, Sinn & Co., at New York, to purchase the stock. They wired back to J. J. Townsend & Co. that the order had been complied with and the stock cost 574. They notified the defendants by telephone, who wired the information to their Des Moines agency, which notified the plaintiff, and thereupon he deposited a margin of $600.

On July 26, 1910, the defendants telegraphed to S. B. Chapin & Co., of New York, to sell the Wabash preferred. They telegraphed back that it had been sold at 304. This left a balance. due the plaintiff on the defendants' theory of $58.64, for which they sent him a check.

It is the theory of the plaintiff that these were mere gambling transactions, that there was no intention that these stocks should

ever be delivered to him, and that if the defendants bought stocks they were "hedging" against loss on their wager.

Under the general law, if these were wagers the plaintiff could not recover the money lost thereon, and this is conceded to be the law of Iowa. Code 1897, §§4967, 4968; Counselman & Co. v. Reichart, 103 Iowa, 430, 72 N. W. 490; People's Savings Bank v. Gifford, 108 Iowa, 277, 79 N. W. 63.

But certain states have believed that gambling could be better suppressed by providing that money lost in gambling may be recovered, among them New York, California, Tennessee, and Illinois.

Assuming that under the Illinois law these were gambling contracts, it then becomes material whether the contracts are governed by the laws of Iowa or of Illinois.

It must be borne in mind that it is the contention of plaintiff that these were gambling contracts, and that he did not in fact buy the M., K. & T. and Wabash preferred, but that he in effect made a wager that the stock would go up against the defendants' wager that it would go down and what the defendants did, if anything, in the way of buying such stock, or an option thereon, was a mere "hedging" against loss, with which he had nothing whatever to do. Consequently, upon his theory the contract was never to be performed or executed in the sense of buying the stock, and the court properly charged the jury that:

"If you find that defendants never intended to deliver the actual stock to the plaintiff upon the payment of the purchase price, and you should then find that defendant did purchase stocks as it did for the purpose of 'hedging' or protecting itself, then the fact that the defendant purchased stock in New York City would not avail it, and there would be no defense here.'

The undisputed evidence is that whatever this contract was, whether a contract for future delivery, as it purported to be, or a gambling contract, plaintiff went to the defendants' manager at Des Moines and there authorized the purchase of the stock in question; the defendants' agent, claiming it was a bona fide purchase, wired the Chicago office. Defendants wired back, not to plaintiff, but to their agent at Des Moines, that the purchase was made. The Des Moines agency so notified the plaintiff at Des Moines and he there paid the 10 per cent. margin.

Importance is attached to the fact that the wire from Chicago to Des Moines was to the defendants' agent and not to the plaintiff.

It is plaintiff's theory that the defendants' agent at Des Moines did not have general authority to close the contract.

Let it be so conceded. Plaintiff, nominally at least, ordered the purchase of the M., K. & T. and Wabash preferred. This he did with the Des Moines and not directly to the Chicago office. The Chicago office sent no message to the plaintiff, but sent a message to its agent at Des Moines. Thus far the transactions tending to a contract were wholly between the plaintiff and the defendants' agent at Des Moines. There was nothing in that to constitute an agreement. The Des Moines agent then told the plaintiff the stock had been bought and plaintiff put up his margin. That closed the contract at Des Moines. There was no evidence of legal acceptance at Chicago.

If the Des Moines agency had no authority to make the alleged wagering contract with the plaintiff and had telegraphed the home office, and it in turn had telegraphed directly to the plaintiff that his proposition was accepted, and he had then gone and paid the first margin at the Des Moines agency, there would be room for the contention that the contract was closed when the defendants delivered the telegram for transmission at Chicago; but, taking the most favorable view of the case for the plaintiff, if this was a wagering contract, and if the Des Moines agency had no authority to make it and telegraphed to Chicago and the defendants there decided to accept the contract and so telegraphed the agency at Des Moines, and that agency notified the plaintiff and took his money, the contract was consummated at Des Moines, and under the policy of Iowa the plaintiff could not recover even though he afterwards paid upon the contract a subsequent margin at Chicago.

There being no evidence that the contract was accepted in Illinois, within the meaning of the instruction given by the court, it was necessarily error to submit that question to the jury, and the case is reversed and remanded, with directions to set aside the verdict and grant a new trial.

$191. Publie Policy and Games of Chance.-After all, which is the better way to check gambling: by leaving the parties where the law finds them, or by stepping in to restore a status quo? The common law has developed the notion: in pari delicto melior est conditio defendentis. In recent times, however, tendencies to depart from this doctrine in the interest of justice have appeared, not only in the statutes with reference to gambling transactions, but also in the judicial tendency to allow a very considerable locus penitentiae (room for repentance) where a contract against public policy has not been fully consummated. Cf. Woodward, Quasi-Contracts, §152.

$192. Resale Prices.-Agreements to fix resale prices have been held void because in restraint of trade and repugnant to the Sherman Anti-Trust Act of July 2, 1890, even in the sale of goods manufactured under a secret process. Dr. Miles Medical Co. v. John D. Park & Sons Co. (1911), 220 U. S. 373. If, however, a manufacturer sells a patented device with the restriction that it should be used only with other supplies, not patented, made by the manufacturer, and a defendant sells supplies to a purchaser of the device, knowing they would be used in violation of this condition, it was held in Henry v. A. B. Duke Co. (1912), 224 U. S. 1, by a divided bench (4 to 3) that the action. of the defendant constituted contributory infringement of the patent. Justice Lurton, in delivery the opinion of the court, said: "The property right to a patented machine may pass to a purchaser with no right of use, or with only the right to use in a specified way, or at a specified place or for a specified purpose there is no difference, in principle, between a sale subject to specific restrictions as to the time, place or purpose of use, and restrictions requiring a use only with other things necessary to the use of the patented article purchased from the patentee. If the violation of the one kind is an infringement, the other is also."

.

§193. Price Restriction on the Resale of Chattels, Note in 33 Harv. L. Rev. 966.—“ Two recent cases' before the Supreme Court of the United States have raised again, in somewhat different form, the question of attempted price maintenance on the resale of chattels-condemned in the well-known case of Dr. Miles Medical Co. v. Park & Sons. In each of these late cases a manufacturing corporation was indicted under Section 1

'United States v. Colgate & Co., 250 U. S. 300 (1919); United States v. A. Schrader's Son, Inc., U. S. Sup. Ct. No. 567, Oct. Term, 1919 (March 1, 1920) [252 U. S. 85].

2220 U S. 373 (1911). While the court in this case had before it only the question of whether a covenant to maintain prices on resale could be enforced against third persons who took the chattel with notice of the covenant, the court based its denial of relief on the ground that the contract was illegal as in restraint of trade.