repudiated by the English courts, on the ground that it is not a wager, and if a wager, not one which tends to injure the public.1 The late English opinion is generally followed in the United States, and it may be stated, as the general American rule, that bona fide contracts for the future delivery of goods are not invalid, because at the time of sale the vendor has not in his actual or potential possession the goods which he has agreed to sell.2

It is also held to be an unobjectionable feature in such contracts, that the vendee has no expectation of receiving the goods purchased into his actual possession, but intends to resell them before the delivery of the possession to him.

with the most mischievous consequences." Lord Tenterden in Bryan v. Lewis, Req. & Moody, 386. See, also, Longmer v. Smith, 1 B. & C. 1.

1 "I have always entertained considerable doubt and suspicion as to the correctness of Lord Tenterden's doctrine in Bryan v. Lewis. It excited a good deal of surprise in my mind at the time, and when examined, I think it is untenable. I cannot see what principle of law is at all affected by a man's being allowed to contract for the sale of goods, of which he has not possession at the time of the bargain, and has no reasonable expectation of receiving. Such a contract does not amount to a wager, inasmuch as both the contracting parties are not in the vendor's possession; and even if it were a wager, it is not illegal, because it has no necessary tendency to injure third parties." Baron Parke in Hibblewhite v. McMorine, 5 M. & W. 58. See Mortimer v. McCallan, 6 M. & W. 58; Wells v. Porter, 3 Scott, 141.

2 Head v. Goodwin, 37 Me. 181; Rumsey v. Berry, 65 Me. 570; Lewis v. Lyman, 22 Pick. 437; Thrall v. Hill, 110 Mass. 328; Heald v. Builders' Ins. Co., 111 Mass. 38; Smith v. Atkins, 18 Vt. 461; Noyes v. Spaulding, 27 Vt. 420; Hull v. Hull, 48 Conn. 250; Haut on v. Small, 3 Sandf. 230; Currie v. White, 45 N. Y. 822; Bigelow v. Benedict, 70 N. Y. 202; Bina's Appeal, 55 Pa. St. 294; Brown v. Speyer, 20 Gratt. 309; Phillips v. Ocmulgee Mills, 55 Ga. 633; Noyes v. Jenkins, 55 Ga. 586; Fonville v. Casey, 1 Murphy, 389; Whitehead v. Root, 2 Metc. (Ky.) 584; McCarty v. Blevins, 13 Tenn. 195; Wilson v. Wilson, 37 Mo. 1; Logan v. Musick, 81 Ill. 415; Pixley v. Boynton, 79 Ill. 351; Pickering v. Cease, 79 Ill. 328; Lyon v. Culbertson, 83 Ill. 33; Corbett v. Underwood, 83 Ill. 324; Sanborn v. Benedict, 78 Ill. 309; Wolcott v. Heath, 78 Ill. 433.

3 Ashton v. Dakin, 4 H. & N. 867; Sawyer, Wallace & Co. v. Laggart, 14 Bush, 730; Cameron ». Durkheim, 55 N. Y. 425. But see contra, Brua's Appeal, 55 Pa. St. 294; Fareira v. Gabell, 89 Pa. St. 89; North v. Phillips 89 Pa. St. 250.

To quote the words of the Kentucky court, "sales for future delivery have long been regarded and held to be indispensable in modern commerce, and as long as they continue to be held valid, one who buys for future delivery has as much right to sell as any other person, and there cannot, in the very nature of things, be any valid reason why one who buys for future delivery may not resolve, before making the purchase, that he will resell before the day of delivery, and especially when, by the rules of trade and the terms of his contract, the person to whom he sells will be bound to receive the goods from the original seller, and pay the contract price." 1

Nor is a contract necessarily hurtful to the public welfare, which provides on payment of a valuable consideration that one at a future day shall have the right to buy certain property or sell other property, according as one or the other happens to be advantageous to him. One may have a lawful and beneficial end in view in acquiring such a right of refusal.2 "Mercantile contracts of this character are not infrequent, and they are consistent with a bona fide intention on the part of both parties to perform them. The vendor of goods may expect to produce or acquire them in time for a future delivery, and, while wishing to make a market for them, is unwilling to enter into an absolute obligation to deliver, and therefore bargains for an option which, while it relieves him from liability, assures him of a sale, in case he is able to deliver; and the purchaser may, in the same way, guard himself against loss beyond the consideration paid for the option, in case of his inability to take the goods, there is no inherent vice in such a contract." And

1 Sawyer et al. v. Taggart, 14 Bush, 730.

2 Story v. Salomon, 71 N. Y. 420; Kingsbury v. Kirwan, 71 N. Y. 612; Harris v. Lumbridge, 83 N. Y. 92; Bigelow v. Benedict, 70 N. Y. 202.

3 Bigelow v. Benedict, 70 N. Y. 202. In this case, A., for a valuable consideration, agreed to purchase gold coin of B. at a named price, the coin to be delivered at any time within six months that B. might choose.

the consideration for this option may very properly be the difference between the ruling market price and the price specified in the contract. For that would be the damage to the other party resulting from the sale of the option or refusal.1

If each of the preceding propositions is correct, then the illegality of option contracts must rest upon the intention of the parties not to deliver the goods bargained for, but merely to pay the difference between the market price and contract price. The cases are unanimous in the opinion that a contract, for the payment of difference in prices, arising out of the rise and fall in the market price above or below the contract price, is a wager on the future price of the commodity, and is therefore invalid. If the contracts were in form, as well as in fact, agreements to pay the difference in prices, they could be easily avoided, and thrown out of court. But the contracts never assume the form of wagers on the price of the commodity. They are always in form undistinguishable from those option contracts, in

This case, as a legitimate transaction, is more easily understood than where the option is to buy certain goods or to sell others, but the latter can exist under lawful circumstances and have a lawful end in view. See Story v. Salomon, 71 N. Y. 420.

1 Story v. Salomon, 71 N. Y. 420; Harris v. Lumbridge, 83 N. Y. 92, and the cases cited in the next note.

2 Rumsey v. Berry, 65 Me. 574; Wyman v. Fiske, 3 Allen, 238; Brigham v. Meade, 10 Allen, 246; Barratt v. Hyde, 7 Gray, 160; Brown v. Phelps, 103 Mass. 303; Hatch v. Douglass, 48 Conn. 116; Noyes v. Spaulding, 27 Vt. 240; Story v. Salomon, 71 N. Y. 420; Bigelow v. Benedict, 70 N. Y. 202; Harris v. Lumbridge, 83, 82, N. Y. 92; North v. Phillips, 89 Pa. St. 250; Ruchizky v. De Haven, 97 Pa. St. 202; Dickson's Ex'or v. Thomas, 97 Pa. St. 278; Kirkpatrick v. Bonsall, 72 Pa. St. 155; Brown v. Speyer, 20 Gratt. 296; Williams v. Carr, 80 N. C. 294; Williams v. Tiedemann, 6 Mo. App. 269; Lyon v. Culbertson, 83 Ill. 33; Cole v. Milmine, 88 Ill. 349; Corbitt v. Underwood, 83 Ill. 324; Pickering v. Cease, 79 Ill. 338; Pixley v. Boynton, 79 Ill. 351; Barnard v. Backhouse, 52 Wis. 593; Sawyer v. Taggert, 14 Bush, 727; Gregory . Wendall, 39 Mich. 337; Shaw v. Clark, 49 Mich. 384; Gregory v. Wattoma, 58 Iowa, 711; Everingham v. Meighan, 55 Wis. 354; Rudolph v. Winters 7 Neb. 125.

which the parties in good faith have bargained for the refusal of the goods, and which are valid contracts. The following is a good illustration of the ambiguity of the form of the contract. "For value received, the bearer (S.) may call on the undersigned for one hundred (100) shares of the capital stock of the Western Union Telegraph Company, at seventy-seven and one-half (771/2) per cent, at any time in thirty (30) days from date. Or the bearer may, at his option, deliver the same to the undersigned at seventy-seven and one-half (772) per cent., any time within the period named, one day's notice required."1 There is no evidence on the face of this contract of the determination of the parties to settle on the differences in price; and while such a contract may be used as a cover for commercial gambling, it is not necessarily a wager on the future price of the commodity.

It is the ordinary rule of law that where a writing is susceptible of two constructions, one of which is legal, and the other illegal, that construction will prevail, which is in conformity with the law. Applying this rule to the construction of option contracts, it has very generally been held that these contracts are valid and enforcible, unless it be proven affirmatively that the parties did not intend to make a delivery of the goods bargained for, but to settle on the differences. And if it be shown that only one of the parties entertained this illegal intention, while the other acted in good faith, the contract will be void as to the

3

1 Story v. Salomon, 71 N. Y. 420.

2 "It is a general rule, that wheresoever the words of a deed, or of the parties without deed, may have a double intendment, and the one standeth with law and right, and the other is wrongful and against law, the intendment that standeth with the law shall be taken." Coke on Lyttleton, 42, 183.

Story v. Salomon, 71 N. Y. 420; Kingsbury v. Kirwan, 71 N. Y. 612; Harris v. Lumbridge, 83 N. Y. 92; Williams v. Tiedemann, 6 Mo. App. 274; Union Nat. Bank of Chicago v. Carr, 15 Fed. Rep. 438; and cases cited in preceding note.

first, but will be enforcible in behalf of the second.1 In delivering the opinion of the New York Court of Appeals2 Earl, J. said: "On the face of the contract the plaintiff provided for the contingency that on that day he might desire to purchase the stock, or he might desire to sell it, and in either case there would have to be a delivery of the stock, or payment in damages in lieu thereof. We should not infer an illegal intent unless obliged to. Such a transaction, unless intended as a mere cover for a bet or wager on the future price of the stock, is legitimate and condemned by no statute, and that it was so intended was not proved. If it had been shown that neither party intended to deliver or accept the shares, but merely to pay differences according to the rise or fall of the market, the contract would have been illegal." This rule of construction is adopted by most of the courts, in determining the legality of these questionable contracts, but a different rule has been laid down by the Supreme Court of Wisconsin. The contract, which constituted the subject of the suit, was in form a legitimate transaction, and there was no proof that it was used as a cover for commercial gambling. The court declared it to be the duty of the plaintiff to show that he had made a bona fide contract for the delivery of the commodities bought and sold, instead of throwing upon the defendant the burden of proving that the contract was made for the payment of differences in price, and did not contemplate any delivery of the grain. The court claimed that it would not do to attach too much weight or importance to the mere form of the contract, for it is quite certain that parties will be as astute in concealing their intention, as the real nature of the transaction, if it be illegal?' It may be safely assumed, that the parties will make such contracts valid in form; but courts must not be deceived

1 Rumsey v. Berry, 65 Me. 570; Williams v. Carr, 80 N. C. 94; Sawyer et al. v. Taggert, 14 Bush, 727; Gregory v. Wendall, 39 Mich. 337.

2 Story v. Salomon, supra.