{ "id": 11270374, "name": "STATE v. McGINNIS", "name_abbreviation": "State v. McGinnis", "decision_date": "1905-05-23", "docket_number": "", "first_page": "724", "last_page": "731", "citations": [ { "type": "official", "cite": "138 N.C. 724" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "184 Ill., 425", "category": "reporters:state", "reporter": "Ill.", "opinion_index": 0 }, { "cite": "149 U. S., 481", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3569473 ], "opinion_index": 0, "case_paths": [ "/us/149/0481-01" ] }, { "cite": "79 Ill., 328", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2687743 ], "opinion_index": 0, "case_paths": [ "/ill/79/0328-01" ] }, { "cite": "182 U. S., 461", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 383929 ], "opinion_index": 0, "case_paths": [ "/us/182/0461-01" ] }, { "cite": "72 N. H., 315", "category": "reporters:state", "reporter": "N.H.", "case_ids": [ 1809683 ], "opinion_index": 0, "case_paths": [ "/nh/72/0315-01" ] }, { "cite": "167 Ill., 388", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 3091629 ], "opinion_index": 0, "case_paths": [ "/ill/167/0388-01" ] }, { "cite": "187 Pa. St., 136", "category": "reporters:state", "reporter": "Pa.", "case_ids": [ 900252 ], "opinion_index": 0, "case_paths": [ "/pa/187/0136-01" ] }, { "cite": "110 U. S., 499", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3504835 ], "opinion_index": 0, "case_paths": [ "/us/110/0499-01" ] }, { "cite": "186 Ill., 43", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 3228700 ], "opinion_index": 0, "case_paths": [ "/ill/186/0043-01" ] }, { "cite": "184 U. S., 425", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3626267 ], "opinion_index": 0, "case_paths": [ "/us/184/0425-01" ] }, { "cite": "134 Ill., 66", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5438548 ], "opinion_index": 0, "case_paths": [ "/ill/134/0066-01" ] }, { "cite": "209 Ill., 528", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 3299706 ], "opinion_index": 0, "case_paths": [ "/ill/209/0528-01" ] }, { "cite": "47 Ark., 192", "category": "reporters:state", "reporter": "Ark.", "opinion_index": 0 }, { "cite": "17 Fed. Rep., 825", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3744677 ], "opinion_index": 0, "case_paths": [ "/f/17/0825-01" ] }, { "cite": "84 Ky., 664", "category": "reporters:state", "reporter": "Ky.", "case_ids": [ 1319183 ], "opinion_index": 0, "case_paths": [ "/ky/84/0664-01" ] }, { "cite": "115 Fed. Rep., 574", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3704264 ], "opinion_index": 0, "case_paths": [ "/f/115/0574-01" ] } ], "analysis": { "cardinality": 629, "char_count": 15721, "ocr_confidence": 0.449, "pagerank": { "raw": 2.9624540785834114e-07, "percentile": 0.8496645943450757 }, "sha256": "f32a4b43f9e3011dec77c177ba4a70314ae0691694c3d162a357b5fcb15c52a3", "simhash": "1:3695df699e9eef0f", "word_count": 2672 }, "last_updated": "2023-07-14T14:59:46.048294+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "STATE v. McGINNIS." ], "opinions": [ { "text": "Clark, C. J.\nTliis is an indictment under chapter 538, Laws 1905, \u201cto prevent dealing in futures.\u201d\nBy chapter 221, Laws 1889, \u201cto suppress and prevent certain kinds of vicious contracts,\u201d it was in substance enacted as follows: section one made void all contracts for the sale of articles therein named for future delivery, wherein (notwithstanding any terms used) it is not intended that the articles agreed to be sold and delivered shall be actually delivered, but only the difference' between the contract price and the market value at the time stipulated shall be paid. Section two enacted that when the defense provided by that act is set up in a verified answer, the burden shall be upon the plaintiff to prove a lawful contract, but the answer shall not be used against the defendant on an indictment for the transaction. Section three made the parties to such contract, and agents concerned therein, indictable, and section four made persons while in this State consenting to become parties to such contract, made in another State, and all agents in this State, aiding and furthering such contract, made in another State, indictable.\nChapter 538, Laws 1905, provides: Section. 1. That it shall be unlawful to open or establish an office in this State for dealing in futures, as forbidden by aforesaid act. Section 2 makes such act a misdemeanor. Section 3 provides that no person participating in such act shall be excused from testifying, but a party so testifying is pardoned for such offense. Section 4 specifies certain acts which shall be prima facie evidence of a violation of this statute. Section 5 specifies what shall be prima facie evidence of a contract forbidden by the Act of 1889, and section 6 provides what shall be prima facie proof of the opening and establishing an office in violation of this act and the Act of 1889.\nSo far, the provisions of both acts clearly fall within the police power of the State, and it is not denied that if nothing further appeared in the statute, the defendant is guilty upon the facts found in the special verdict, which are that the defendant opened and established an office in Raleigh for the purpose of carrying on the business forbidden by the above cited statutes, Laws 1889, ch. 221, and Laws 1905, ch. 538.\nThe business forbidden by the Act of 1905 is \u2014 to avoid a paraphrasis, and following the usual American method of describing an act by a word or a phrase \u2014 the business of running a \u201cbucket shop,\u201d which is defined by the Century Dictionary as, \u201cAn establishment, nominally for the transaction of a stock exchange business, or business of a similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in.\u201d In Board of Trade of Chicago v. Odell Commission Co., 115 Fed. Rep., 574, the president of the Board of Trade, in answer to a question, thus defined a \u201cbucket shop:\u201d \u201cIt is a place where dealings are had upon the fluctuations in the market price, without any bona fide transactions.\u201d The definition of \u201cbucket shop\u201d in Webster\u2019s Dictionary is, \u201cAn office or place where facilities are given for betting small sums on current prices of stocks, petroleum, etc.\nIn Smith v. Tel. Co., 84 Ky., 664, the court describes the manner of dealing at a \u201cbucket shop\u201d in full detail, and defines its business, \u201cwhile purporting to be actual transactions\u201d as being \"in fact merely wagers on the market price of some commodity, at some specified time in the future,\u201d and in the absence there of any statute, held that such business was \u201ca species of gambling as well defined and reprehensible as that of keeping a faro bank or a dice machine, and it is therefore illegal and contrary to public policy.\u201d A \u201cbucket shop\u201d is defined (Bryant v. Tel. Co., 17 Fed. Rep., 825, and Fortenbury v. State, 47 Ark., 192), as \u201ca place where wagers are made upon the fluctuations in the price of grain and other commodities,\u201d and in both cases the course of dealings at such establishment is fully described, as in Smith v. Tel. Co., supra, but in all these cases, of course, solely upon the information given the learned judges by the testimony of witnesses, set out in the record.\nIn Weare v. People, 209 Ill., 528, is a recent, full and able discussion of statutes against \u201cbucket shops,\u201d sustaining Soby v. People, 134 Ill., 66. Indeed, the word \u201cbucket shop,\u201d as well as the business it transacts, is mentioned and denounced in many statutes and decisions, and both the name and the business have become matters of general knowledge. In Booth v. Illinois, 184 U. S., 425, it was held that the Illinois statute making all \u201cdealings in futures\u201d gambling contracts and punishable, was within the police power of the State and not prohibited by the Fourteenth Amendment\u2014 affirming s. c., 186 Ill., 43.\nIn Irwin v. Williar, 110 U. S., 499, the court said: \u201cIf under guise of the contract to deliver goods at a future day the real intent be to speculate in the rise or fall of prices, and the goods are not to be delivered, but one party is to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, the whole transaction is nothing more than a wager, and is null and void.\u201d Wagner v. Hildebrand, 187 Pa. St., 136; Jamieson v. Wallace, 167 Ill., 388; Wheeler v. Stock Exchange, 72 N. H., 315; Clews v. Jamieson, 182 U. S., 461; Pickering v. Cease, 79 Ill., 328; Bibb v. Allen, 149 U. S., 481; 1 Cook on Stock and Stockholders, 3rd Ed., sec. 341.\nFreund on Police Power (1904), p. 186, says: \u201cIt is well established that if there is no intention to buy or sell, but only to pay or receive differences in value, the transaction is simply betting on the rise or fall of market prices, and hence illegal and void.\u201d\nWhile the facts found bring the defendant within the words of the statute, it is contended that the addition of the seventh and last section made the whole act unconstitutional and void under the Fourteenth Amendment to the Constitution of the United States, which guarantees the equal protection of the laws. Said section 7 reads: \u201cThis act shall not be construed so as to apply to any person, firm, corporation, or his or their agent, engaged in the business of manufacturing or wholesale merchandising in the purchase or sale of the necessary commodities required in the ordinary course of their business.\u201d This section-is stated by counsel, and we believe was admitted on the argument, to have been added upon the passage of the bill in the second House. It was doubtless hastily drawn, for it is clearly not germane to the statute which is for the prohibition of the establishment or opening an office for the purpose of engaging in or carrying on the business of a \u201cbucket shop,\u201d i. e., dealing in the sale of futures, where \u201cit is not intended by the parties thereto that the articles agreed to be sold and delivered shall be actually delivered, or the value thereof paid, but it is intended and understood by them\u201d that merely the difference between the contract price and the market price of the article at the time specified shall be paid. Such condemned business has no connection with, 'and the constitutionality of the prohibitive act is in no wise \u00e1ifected by, the provision in -section 7, that when any person, firm or corporation engaged in manufacturing or wholesale merchandise shall purchase or sell \u201cthe necessary commodities required in the ordinary course of their business,\u201d it shall not be deemed a violation \u201cof this act\u201d \u2014 the act forbidding the business of carrying on a \u201cbucket shop.\u201d\nThe defendant, however, contends that the purpose of section 7 is to provide that where any manufactory or wholesale merchandising house shall contract to deliver goods at a future date, such establishment may protect itself or \u201chedge\u201d '(as it is called) by purchasing a \u201cfuture\u201d contract for raw commodities, without intending to demand actual delivery of those identical goods, but, by the profit thereby made, to recoup the loss by the rise in price of the same commodity subsequently bought, perhaps for actual delivery nearer home, to save freight. It is enough to say that no such intent is expressed in section 7, and we must construe it as it is written.\nBut a purchase for actual future delivery of necessary commodities required in the ordinary course of business and not for \u201cwagering\u201d or gambling on the fluctuations of the market, would not be against the statute. The statute of this State does not prohibit all purchases or sales for future delivery, but only such dealings as are in the nature of gambling or wagering contracts. Though section 7 mentions only manufacturers and wholesale merchantile establishments as authorized to make bona fide dealings in \u201cfutures,\u201d- this was done unnecessarily, we think, and only out of abundant cau-\u2019 tion. It is not a discrimination, for there is no prohibition upon any one else or any other business to buy commodities for future delivery bona fide in the \u201cordinary course of such business,\u201d when not for' speculative or gambling purposes. That no other businesses or persons are mentioned as authorized to deal tona fide for the purchase of commodities on \u201cmargin/\u2019 is not an implied restriction upon others to do an act not forbidden by any statute.\nSection 7 does not confer any exclusive right or privilege upon manufacturers or wholesale merchants. It does not authorize them to engage in any business prohibited by the Act of 1889. It does not authorize them to speculate in cotton or other commodities. It simply provides that the courts shall not construe the Act of 1905 to have the effect of preventing them from buying and selling for future delivery the necessary commodities required in their ordinary business.\nThe defendant further contends that by section 5, chapter 538, Laws 1905, proof that nothing was actually delivered at the date of the contract and that a \u201cmargin\u201d was put up, shall be prima facie evidence that the contract is a \u201cwagering\u201d one and forbidden by chapter 221, Laws 1889, and that section 7, chapter 538, Laws 1905, providing that this last act shall not apply to purchases or sales by manufacturers or wholesale merchants of the necessary commodities required in the ordinary course of their business, is a discrimination forbidden by the 14th Amendment. We do not think so, for the prescribing when and under what circumstances and as to what offenses a certain act shall be prima facie evidence, is necessarily a matter left to legislative discretion in the exercise of the police power. There may be good reasons why the purchase of \u201cnecessary commodities required in the ordinary course of their business\u201d for future delivery on a \u201cmargin,\u201d by manufacturers and wholesale merchants, shall not raise a presumption that such dealings are \u201cwagering\u201d contracts, while purchases by them, not of such commodities, or when not \u201crequired in the ordinary course of their business,\u201d or the purchase by others of any commodities, when made on the deposit of a \u201cmargin\u201d and for \u201cfuture\u201d delivery, shall raise the presumption of a \u201cwagering\u201d contract. Whether the reason is good and sound for making the purchase of commodities upon \u201cmargin\u201d prima facie evidence of a \u201cwagering\u201d contract, under a certain state of facts, and providing that upon a different state of facts such purchase upon \u201cmargin\u201d does not constitute prima facie evidence of a \u201cwagering\u201d contract, is a matter for the Legislature. The courts have no veto power upon such exercise of the police power. State v. Barrett, at this term.\nBut aside from what we have already sard, the defendant is indicted for carrying on a \u201cbucket shop\u201d business. The Legislature had unquestionably power to make such business indictable. Booth v. Ill., 184 Ill., 425, and other cases cited, supra. The facts found are that the defendant was carrying on the forbidden business. It can in no wise affect the validity of the statute making such business indictable that the purchase of commodities by others upon \u201cmargin,\u201d shall under certain circumstances raise a prima facie case that such purchases were void, and under other circumstances shall not constitute such prima facie evidence. A statute may be void in part and valid in part. If the provision as to prima facie evidence, as to certain purchases, upon \u201cmargin\u201d were null, because not applying to all purchases upon \u201cmargin,\u201d this would in no wise invalidate that part of the statute which forbids carrying on the business of running a \u201cbucket shop.\u201d The defendant is not indicted for buying commodities for future delivery upon a \u201cmargin;\u201d nor are manufacturers and wholesale merchants, nor any one else, exempted from the prohibition of carrying on the \u201cbucket shop\u201d business. Upon the special verdict the defendant was properly adjudged guilty.\nNo Error.", "type": "majority", "author": "Clark, C. J." } ], "attorneys": [ "Robert D. Gilmer, Attorney-General, for tbe State.", "Busbee & Busbee and Argo \u00e9 Shaffer for tbe defendant." ], "corrections": "", "head_matter": "STATE v. McGINNIS.\n(Filed May 23, 1905.)\nDealing in Futures \u2014 Bucket Shops \u2014 Police Power \u2014 Unlawful Discrimination \u2014 Gambling of Wagering Contracts \u2014 \u2022 Constitutional Law \u2014 Prima Facie Evidence.\n1. The Act of 1889, ch. 221, making- void all contracts for the sale of articles for future delivery, wherein it is not intended there shall be an actual delivery, but only the difference between the contract price and the market value at the time stipulated shall be paid; and the Act of 1905, ch. 538, forbidding the business of running a \u201cbucket-shop\u201d are clearly within the police power of the State.\n2. The Act of 1905, forbidding the business of running a \u201cbucket shop,\u201d is not void under the Fourteenth Amendment to U. S. Constitution, because the 7th section provides that the act \u201cshall not be construed so as to apply to any person, etc., engaged in the business of manufacturing or wholesale merchandising, in the purchase or sale of the necessary commodities required in the ordinary course of their business.\u201d\n3. A purchase for actual future delivery of necessary commodities required in the ordinary course of business and not for wagering or gambling on the fluctuations of' the market, is not prohibited by the \u201cbucket shop\u201d statutes.\n4. Section 7, of the Act of 1905, does not confer any exclusive right or privilege upon manufacturers or wholesale merchants \u2014 it does not authorize them to engage in any business prohibited by the Act of 1889, nor to speculate in cotton or other commodities.\n5. The Legislature can, in the exercise of the police power, prescribe when and under what circumstances and as to what offenses a certain act shall be prima facie evidente. Therefore, a provision that the purchase of commodities upon margin under certain circumstances shall raise a prima facie case that such purchases were void, and other circumstances shall not constitute such prima facie evidence, is not a discrimination forbidden by the Fourteenth Amendment.\n6. The Legislature has unquestionably power to make the business of carrying on a \u201cbucket shop\u201d indictable.\n7. If a provision as to prima facie evidence as to certain purchases upon margin, were null because not applying to all purchases upon margin, this would in no wise invalidate that part of the statute which forbids carrying on the business of running a \u201cbucket shop,\u201d as a statute may be void in part and valid in part.\nINDICTMENT against E. C. McGinnis, beard by Judge Walter H. Neal and a jury, at tbe March Criminal Term, 1905, of. tbe Superior Court of Wake County. Erom a judgment of \u201cguilty\u201d upon a special verdict, tbe defendant appealed.\nRobert D. Gilmer, Attorney-General, for tbe State.\nBusbee & Busbee and Argo \u00e9 Shaffer for tbe defendant." }, "file_name": "0724-01", "first_page_order": 764, "last_page_order": 771 }