or a "call," which is an option to buy,' or a "straddle," which is an option to buy or sell,2 is not per se invalid; it is valid or not according as the parties, or one of them, contemplated an actual sale and delivery of the goods.

§ 1035. The fact that one party is required to deposit a "margin" for the security of the other is likewise not conclusive; for a margin may accompany an actual and bona fide transaction as well as a fictitious one; neither is the fact that the transaction is to be governed by the rules or prices prevailing in a particular "chamber of commerce; " or that delivery is to be made in warehouse receipts rather than in specie."

§ 1036. Form of contract immaterial.-The form which the contract takes is unimportant, for it is the substance of the transaction which determines its nature. The question in each case, to which all other considerations are obviously subordinate, is, What was the intention of the parties at the time they

Gregory v. Wattowa, 58 Iowa, 711, 12 N. W. R. 726. To same effect: Williams v. Tiedeman, 6 Mo. App. 269; Kirkpatrick v. Bonsall, 72 Pa. St. 155; Wall v. Schneider, 59 Wis. 352, 18 N. W. R. 443, 48 Am. R. 520; Story v. Salomon, 71 N. Y. 420; Melchert v. Telegraph Co., 11 Fed. R. 193; Union National Bank v. Carr, 15 Fed. R. 438.

In Estate of L. H. Taylor & Co. (1899), 192 Pa. St. 304, 43 Atl. R. 973, quoting from Peters v. Grim, 149 Pa. St. 163, it is said: "Here is the divid. ing line. If there was not under any circumstances to be a delivery, as part of and completing a purchase, then the transaction was a mere wager on the rise and fall of prices; but if there was in good faith a purchase, then the delivery might be postponed, or made to depend on a future condition, and the stock carried on margin or otherwise in the

meanwhile, without affecting the legality of the operation."

The statute in Illinois changes the rule for that State. See preceding note.

1A "call," as defined in Pixley v. Boynton, supra, is a “privilege of calling or not calling for the grain." See also note to Cobb v. Prell, 22 Am. L. Reg. (N. S.) 609.

2 A "straddle" means the double privilege of a "put" and a “call.” Harris v. Tumbridge, 83 N. Y. 92, 38 Am. R. 398.

3 Whitesides v. Hunt, 97 Ind. 191, 49 Am. R. 441; Wall v. Schneider, 59 Wis. 352, 18 N. W. R. 443, 48 Am. R. 520; Hatch v. Douglass, 48 Conn. 116, 40 Am. R. 154.

4 Wall v. Schneider, supra.

5 Gregory v. Wendell, 39 Mich. 337, 33 Am. R. 390; Wall v. Schneider, supra; Farnum v. Pitcher, 151 Mass. 470, 24 N. E. R. 590.

entered into this transaction? And in determining this question all the circumstances surrounding the transaction may be taken into account, and the jury have the right "to go behind the mere form given to their transactions and ascertain from all the evidence the real purpose of the parties and the actual character of their dealings with each other."1

§ 1037.

-

Mere agreement to repurchase unobjectionable. The mere fact, however, that the sale is coupled with an agreement by the seller to repurchase the property at the same or some other price, within some period named, does not bring the contract within the contemplation of either the common law or the statutory rules governing the so-called option contracts. As said by the court in Illinois: "It is difficult to see how a contract of that character can be termed a gambling contract, or one that should be prohibited by law. Is it contrary to law or justice, or does it violate any rule of public policy, for a person to sell a horse, a cow, a promissory note or a bond for a specified sum, and agree to take the article back within a given time for the same price?"

§ 1038.

Or that vendee has an option as to quantity. So the mere fact that the vendee in a contract of sale has an option as to the quantity of goods which he will receive under the contract — as in the familiar agreements to supply another with such goods as he may require in a given season - does not make the contract such an optional one as is condemned by the rules or statutes above considered.3

1 Gaw v. Bennett, 153 Pa. St. 247, 25 Atl. R. 1114. That the form of the contract does not control see also: Barnard v. Backhaus, 52 Wis. 593, 6 N. W. R. 252, 9 N. W. R. 595; Gregory v. Wendell, 39 Mich. 337, 33 Am. R. 390; Whitesides v. Hunt, 97 Ind. 191, 49 Am. R. 441; Tenney v. Foote, 95 Ill. 99; Melchert v. Am. Un. Tel. Co.,

11 Fed. R. 193; Justh v. Holliday, 2 Mackey (D. C.), 346.

2 Wolf v. National Bank of Illinois (1899), 178 Ill. 85, 52 N. E. R. 896; Ubben v. Binnian (1899), 182 Ill. 508, 55 N. E. R. 552; Richter v. Frank, 41 Fed. R. 859.

3 Minnesota Lumber Co. v. Whitebreast Coal Co. (1896), 160 Ill. 85, 43 N. E. R. 774.

Effect upon rights of brokers and other

§ 1039. agents. The gambling feature of such contracts may not only affect the rights of the immediate parties to the contract, but it may also extend in its operation to collateral and incidental contracts, such as that existing between one of the parties and his broker or agent through whom the contract was negotiated. The question here most frequently arising is whether the broker or other agent can recover his commissions earned or his advances, expenditures or losses incurred in negotiating or conducting illegal speculations for his principal. This question must be determined by the nature and extent of his knowledge of and participation in the illegal intention of his principal. For it is said by the supreme court of the United States, speaking through Mr. Justice Matthews, and the rule laid down is sustained by the great weight of authority in the United States: "It is certainly true that a broker might negotiate such a contract without being privy to the

1 Irwin v. Williar, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. R. 160.

2 Bibb v. Allen, 149 U. S. 481, 37 L. ed. 819, 13 Sup. Ct. R. 950; Embrey v. Jemison, 131 U. S. 336, 33 L. ed. 172, 9 S. Ct. R. 776; White v. Barber, 123 U. S. 392, 31 L. ed. 243, 8 S. Ct. R. 221; Seeligson v. Lewis, 65 Tex. 215, 57 Am. R. 593; Flagg v. Baldwin, 38 N. J. Eq. 219, 48 Am. R. 308; Crawford v. Spencer, 92 Mo. 498, 4 S. W. R. 713, 1 Am. St. R. 745; Harvey v. Merrill, 150 Mass. 1, 5 L. R. A. 200. 22 N. E. R. 49; Kahn v. Walton, 46 Ohio St. 195, 20 N. E. R. 203; Pearce v. Foot, 113 Ill. 228, 55 Am. R. 414; Cothran v. Ellis, 125 Ill. 496, 16 N. E. R. 646: Whitesides v. Hunt, 97 Ind. 191, 49 Am. R. 441; Snoddy v. American Nat. Bank, 88 Tenn. 573, 17 Am. St. R. 918, 7 L. R. A. 705, 13 S. W. R. 127; Riordan v. Doty, 50 S. C. 537, 27 S. E. R. 939; Wagner v. Hildebrand, 187 Pa. St. 136, 41 Atl. R. 34.

It has been thought in some cases that if, at the close of the negotiations, a note had been given to the agent for the amount due him, he could recover on the note. See Lehman v. Strassberger, 2 Woods, 554; Hentz v. Jewell, 20 Fed. R. 592. But this distinction is denied in other cases. Embrey v. Jemison, supra; Seeligson v. Lewis, 65 Tex. 215, 57 Am. R. 593; Cothran v. Ellis, supra.

Under the codes of Georgia and Tennessee the infirmity extends to any holder of the note (Moss v. Exchange Bank, 102 Ga. 808. 30 S. E. R. 267; Cunningham v. National Bank, 71 Ga. 400, 51 Am. R. 266; Snoddy v. American Nat. Bank, supra); but. in the absence of such a statute, a bona fide holder of the note may recover upon it. Sondheim v. Gilbert. 117 Ind. 71, 10 Am. St. R. 23, 5 L. R A. 432, 18 N. E. R. 687.

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 cannot recover for services rendered or losses incurred by himself on behalf of either in forwarding the transaction."

1040. Sales in furtherance of unlawful combinations,— In some instances by express statute, and in others by force of the common law, combinations in restraint of trade, to avoid competition, or to create monopolies are illegal; and, in accordance with the principles of the foregoing sections, contracts of sale which have for their purpose to aid or promote such an unlawful end may be avoided. Thus, a contract for the sale of stock, made for the purpose of bringing about an unlawful consolidation of corporations against the objection of the minority, is illegal and will not be enforced; and an agreement of sale and purchase whose object is to bring about a "corner" in the corn market falls within the same prohibitions.3

§ 1041. Sales designed to impose upon the public.-"The authorities," it is said in a recent case, "conform to a wholesome and sound rule of public policy that no cause of action shall arise in behalf of a person engaged in a business which is illegal, or which is a fraud and imposition upon the public, and the law will not uphold or enforce a contract or aid a party where the purpose is to cheat and deceive the public gener

1 See Arnot v. Pittston, etc. Coal Co. (1877), 68 N. Y. 558, 23 Am. R. 190; Morris Run Coal Co. v. Barclay Coal Co. (1871), 68 Pa. St. 173.

4 Church v. Proctor (1895), 66 Fed. R. 240, 13 C. C. A. 426, 33 U. S. App. 1. So in Materne v. Horwitz (1886), 101 N. Y. 469, 5 N. E. R. 331, it was held

2 Tompkins v. Compton, 93 Ga. 520, that the price could not be recovered 21 S. E. R. 79.

for goods packed with false labels,

3 Foss v. Cummings, 149 Ill. 353, 36 though here there was a statute N. E. R. 553.

against it.

ally." "Humanity," it is said in the same case, "is entitled to know what it buys and consumes. Government is instituted and maintained and law is administered for the protection of the people; and justice influenced by enlightened public policy and controlled by legal principles requires that contracts shall not be upheld and enforced for the benefit of a wrong-doer, where the subject-matter thereof is designed to be used in furtherance of a public enterprise which contemplates imposition upon the general public through false, misleading and deceptive brands and labels placed upon sealed packages of food products in a manner calculated to deceive, and forward the sale of such articles for what they are not." Accordingly, in this case, it was held that one who had contracted for the purchase of fish which he intended to pack and label in such manner as to deceive the public as to their character could not maintain an action to recover damages for a failure to supply him with the fish as agreed.

§ 1042. Sales of public offices.-"By the theory of our government, all offices, whether civil or military, whether general or professional, are trusts held solely for the public good, and in which no man can have a property to sell or can acquire one by purchase." Contracts, therefore, for the sale, transfer or assignment of public offices are opposed to the policy of the law and void.

§ 1043. Lex loci. It is the general rule that contracts which are valid where made are valid everywhere, and if void where made are void everywhere. Their validity is to be determined ordinarily, therefore, by the law of the place where made, unless they are to be performed in some other place, in which event the law of the latter place controls. These principles have usually been applied to the contracts now under

1 Ames, C. J., in Eddy v. Capron, 4 Dec. 530; Edwards v. Randle, 63 Ark. R. I. 394, 67 Am. Dec. 541. 318, 38 S. W. R. 343, 36 L. R. A. 174.

2 Mechem on Public Officers, SS 356358; Eddy v. Capron, supra; Groton v. Waldoborough, 11 Me. 306, 26 Am.

As to liquor laws see ante, §§ 10271029. As to Sunday laws, see post, § 1059.