Villars' Admr. supra; Harris v. Bressler, 119 Ill. 467; Bank v. Davis, 108 id. 633, and other cases.

"It may therefore be regarded as the settled law of this State, whatever may be the rule elsewhere, that parties to a contract can not stipulate in advance for the payment of interest upon interest. An exception to this rule is made in respect of interest-bearing coupons attached to bonds or other securities for the payment of money. By commercial usage, such coupons, when payable to bearer, have the legal effect of promissory notes, by the law merchant, and possess the attributes of negotiable paper. Jones on Railway Securities, sec. 320, and cases cited. See, also, Aurora City v. West, 7 Wall. 105; Clark v. Iowa City, 20 id. 583; Miller v. Town of Berlin, 13 Blatch. 245; Evertson v. Bank, 4 Hun, 692; 66 N. Y. 14; Partridge v. Bank of England, 9 Q. B. 396. They are written contracts for the payment of a definite sum of money on a given day, and pass from hand to hand, by commercial usage, as negotiable paper, and it is for this reason that they have been sustained.

"In the case of coupons the interest is not compounded indefinitely, and that is one of the reasons given by the courts for excepting them from the operation of the general rule, and it is said that interest is not here sought to be compounded indefinitely, but only upon the annual interest upon the principal sum as it fell due and remained unpaid. This is undoubtedly true, but it is here reserved or contracted to be paid in the same instrument, and the commercial usage before referred to, in respect of detached coupons, or which may be detached, and pass as independent commercial paper, can not apply. As said in Drury v. Wolfe, supra: "There is therefore no authority in this (the rule in respect of interest-bearing coupons) for holding that interest may be compounded indefinitely, or at all, in cases where the payment of the interest is not secured by some negotiable instrument, independent of the instrument whereby the original indebtedness is promised to be paid.'

"The contract not being usurious, it follows that appel

lee was entitled to recover the principal and simple interest at the rate fixed by the note, being the legal rate at the time of its execution, less the payments that had been made, but not interest upon interest, and that the circuit court erred in rendering judgment therefor. The judgments of the Appellate and Circuit courts will be reversed, and the cause remanded to the circuit court for retrial, in conformity with the views here expressed."

Judgment reversed.

Question 106: Was the charge for the use of the money usurious in Case 106? What was the illegality claimed by the borrower? Did he prevail? In what cases can interest be compounded? Did the lender get any interest in this case? Why was the statutory penalty for charging usury not applied?

(Note: "Compounding interest" is charging interest upon interest, and whether valid or not, is not usury, which consists in charging a greater rate of interest than the law allows. Therefore statutory penalties for charging usurious rates, as for instance, loss of all interest, do not follow an attempt to compound interest. That is to say, the compounding, if considered invalid, is merely unenforceable and carries no penalty.

The above case holds that parties cannot, before interest is due, agree that interest if unpaid, shall bear interest unless it is done by way of setting forth the interest in interest coupons. This seems to be the general rule. But the contrary doctrine has also been upheld in a few jurisdictions. (Georgia, Tennessee, Texas, Mississippi.) See note on the subject with full collection of authorities in 33 Lawyers Reports Annotated, new series, p. 296.

It is valid to add the interest to the debt to itself bear interest after the interest has accrued, if the parties so agree. But without agreement interest can never be compounded.)

§ 96. (Contracts, Sec. 64.) Wager agreements.

Case 107. Bernard v. Taylor, 23 Oregon, 416.

Facts: Suit by Bernard to recover from a stakeholder the sum of $650 deposited by Bernard as a wager on the outcome of a footrace, and demanded by him of the stakeholder before the race was run.

Point Involved: Whether a wagering agreement is valid. Whether the court will relieve one from the consequences of his illegal treatment.

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LORD, C. J.: * The first contention for the defendant is that wagers or wagering contracts upon indifferent subjects are valid in this state, by force of the common law, except when prohibited by statute. There can be no doubt that wager contracts upon indifferent matters are valid at common law. But all wagers that tended to a breach of the peace, or to injure the feelings, character or interests of third persons, or which were against the principles of morality or of sound policy, were void at common law. And all wagers in contravention of the positive provisions of any statute are also void. Of late years by legislation and judicial decision the hostility to wagers of every nature has been marked. This is doubtless due to the increase of betting and the evil consequences resulting therefrom.

*

(The court allowed the recovery of the money from the stakeholder on the ground that the suit was to rescind an illegal agreement from which plaintiff attempted to withdraw while it was entirely executory on the other side. See Subdivision D, post, this chapter, for a discussion of this principle.)

Question 107: Were wagers illegal by the common law? What is the law now? If one deposits money for wagering purposes with a stakeholder, can he recover it back if he demands it before the money is paid over to the other party by the stakeholder?

Case 108. Pope v. Hanke, 155 Ill. 617.

Facts: Suit on notes. Defense, that they were given in settlement of a gambling transaction, consisting in a speculation on the future price of grain. The court found that the transaction consisted in the form of contracts for the future sale and delivery of grain, but with the understanding that no grain was to be called for or de

livered, but a settlement was to be effected between the parties on the basis of the difference between the contract rate and the market price on the day of delivery.

Point Involved: Whether an agreement in form of a sale of property, but in spirit a speculation on the future price of such property, is valid.

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*

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were mere

MR. JUSTICE MAGRUDER delivered the opinion of the Court: The transactions speculations upon the future prices of grain. The contracts for the delivery and sale of grain in the future. were not made with the intention that any grain should be received or delivered, but with the understanding that each transaction should be settled by the payment of the difference between the contract price and the market price at the time fixed. It is well settled that all such contracts are mere wagers or gambling contracts and are void. Such is the law of Missouri where the notes sued on are admitted to have been executed.. In Crawford v. Spencer, 92 Mo. 498, the Supreme Court of Missouri said: "The law is now settled that a sale of goods to be delivered in the future is valid though there is an option as to the time of delivery and though the seller has no other means of getting them than to go into the market and buy them; but if under the guise of such a contract, valid on its face, the real purpose and intention of the parties is merely to speculate on the rise or fall of prices, and the goods are not to be delivered, but the difference between the contract and market price only paid, then the transaction is a wager and the contract is void.' Such also is the law in Illinois, where the present suit has been brought.

"This intention (merely to speculate) may be established not merely by the assertions of the parties, but by all the attending circumstances. (Defendant) had a mill at Trenton, but its capacity was only 200,000 bushels per annum; and yet the volume of transac

tions between the parties

*

period of a little more than three months, to 2,190,000 bushels of wheat, 1,240,000 bushels of corn, and 60,000 bushels of oats. The question of intention is

a question for the jury, to be determined by a consideration of all the evidence.

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Question 108: Is a contract to sell goods to be delivered in the future valid? Even if at time of sale seller doesn't own Why was the transaction in the above case

the goods? invalid?

Sec. 97. (Contracts, Sec. 65.)

Contracts tending to

corrupt the public service.

Case 109. Mills v. Mills, 40 N. Y. 543.

Facts: A contracted with B "that he would give all the aid in his power and spend such reasonable time as may be necessary, and generally use his utmost influence and exertions to procure the passage into a law of the said bill heretofore introduced into the senate, etc." He now sues for his fees. Defense, that the agreement was illegal.

Point Involved: Whether an agreement to use influence and to exert one's self to secure the passage of a particular law in behalf of private interests is against public policy.

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HUNT, C. J., delivered the opinion of the Court: It is not suggested that the plaintiff was a professional man whose calling it was to address legislative committees. It is not suggested he had any claims. of right, which he proposed to advocate. To procure the passage of such a law for the benefit of the defendant he undertook to use his utmost influence and exertions. This contract is void as against public policy. It is a contract leading to secret, improper and corrupt tampering with legislative action. is not necessary to adjudge that the parties stipulated for corrupt action, or that they intended that secret and improper resort should be had. It is enough that the

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It