Sec 4536

It has been held in Massachusetts,1 that a contract to get up a corner in stock, connected with a plan by the "cornerers" to make large purchases to be delivered to them after the "corner" had been completed by them, is invalid at common law. This may be sustained on the ground that such a "corner' involves a cheat by false pretence. When the "cornerers" go to A., and say to him, " we want to buy 10,000 bales of cotton, to be delivered next month," this is equivalent to a representation on their part that as far as they know the cotton is obtainable; and if they have taken measures making it impossible that it should be obtained, their conduct amounts to a false pretence. For another reason such a contract may be regarded as inoperative. A contract whose performance is made impossible by any action of the promisee does not bind the promisor.2 Now this is the case when a "cornerer " makes a contract for the purchase of articles which he has prevented the party purchasing from delivering to him except at a ruinous sacrifice. The-Illinois statute, as has been just seen, invalidates sales based on corners; and of this we have the following exposition by Judge Jameson, in the charge just quoted: "The offence of cornering the market is not, so far as I am aware, mentioned in the books, but it is one of the numerous family of frauds of which the various members in their fight with society assume an infinitude of shapes and colors. To detect and punish these, notwithstanding the novelty and apparent innocence of their disguises, is the first business of courts and justices. The thing which we know as a ' corner ' in the market, might be briefly described as a process of driving unsuspecting. dealers in grain, stocks, and the like, into a ' corral,' and relieving them of their purses. The essence of the offence consists in was a gambling transaction, and as such prohibited by statute. It may have been, but there is no proof that it was, and no such defence was pleaded. The contract was not of necessity a wager contract." See, to the effect that a broker who advances to his principal money to be employed by the latter in stock wagering cannot recover, Thacker v. Hardy, 27 W. R. 158; Lehman v. Strassberger, 2 Wood C. C. 554; Wood-worth p. Bennett, 43 N. Y. 273.

" Cornering" invalidates contract.

1 Sampson v. Shaw, 101 Mass. 145.

2 Supra, sec 312.

1 The parties to a corner are divided as "bulls" and "bears." The "bears " are looking forward to a decline, and agree to sell certain securities, which they do not hold, for delivery at a fixed price at a future date; and their object is to beat down the stocks as much as they can prior to the time of sale. The "bulls" are speculators who hear of this, and who try to get into their hands as much of the securities as they can, so as to compel the " bears " to buy from them at an exorbitant price. In itself there is nothing illegal in a contract to sell a security at a future day, nor is there anything illegal in purchasing securities under the impression that they are going to rise in value. The illegality comes in (1) when there is a combination by several parties by false pretences or false rumors to raise or depress value, or (2) when the object is to absorb a staple in such a way as to produce public distress.

By the New York statute of 1858, ch. 134, heretofore specified, "short" sales of securities (i. e. sales of securities by a party by whom they are not at the time held) are sanctioned. How far they are prohibited by the Illinois statute has been already discussed.

The question in the text is thus discussed by me in the Criminal Law Magazine for January, 1882: -

" It does not follow, as we will see, that because a transaction is invalid it is indictable; and on principle we must hold that the indictability of a 'corner' depends not upon the object itself, but on the means employed. For one man to 'corner' another by buying something that that other wants, is not an indictable offence; since the whole basis of trade is the purchase of goods by one person in order to sell to another person at an advance. If this is allowable for one person, it is allowable for a number of persons acting in combination. In fact, it has been by companies of men combining to buy certain commodities and to refuse to sell except on highly remunerative terms, that some of our most beneficial business enterprises have been conducted. Had it been held to be indictable for two or more capitalists to combine to hold any property until it reaches a specific figure, there is scarcely a railroad that could have been built, scarcely a mine that could have been dug. Nor are such combinations when directed to the preservation of property, likely to be less beneficial. Some months ago, when the credit of the Reading railroad received a great shock, some of its leading friends agreed not to let the stock fall below 40; to buy up all offered below that figure, and not to sell until that figure was reached. They argued that if the threatened panic should not be checked, not only would their property, but the property of multitudes of meritorious small holders, be exposed to disastrous fluctuations. Similar operations took place in England more than once, during the Napoleonic wars, sec 454. The statute of 9 Anne, c. 14, s. 1, avoids all securities of which the whole or part of the consideration is money won large purchases of the public funds being made from time to time by great capitalists, in the interest of the administration, for the purpose of keeping up the funds to a specific mark. Such movements are often not only salutary but in a high degree public spirited. Nor, even when these attributes cannot be claimed, can it be said that the criminal law ought to take hold of all cases in which 'corners' are got up for the purpose of compelling purchasers to buy at an inordinate advance. To determine what advance is and what is not inordinate is a function that (fraud not being charged) no court of justice is competent to exercise. Nor can it be said that because a contract is void in law, the parties to it, or any one of them, is obnoxious to indictment. Unlawfulness and indict-ability, we must remember, are far from being convertible. So far from all contracts which are void in law being indictable, it is a settled principle that indictments do not lie to punish participation in void contracts which are not tainted by fraud or coercion. Sunday contracts are void; usurious contracts are in many states void; but to make participation in Sunday contracts and usurious contracts indictable, would be to abolish the distinction between civil and criminal jurisdiction, so far as concerns the object of trial, and to impose upon the community an intolerable burden of espionage and of misrule. The conditions of indictability in such cases should be coercion or fraud.