MARGIN DEALS (OF. margine, from Lat. niargo. boundary). Transactions in which one person, in the character of purchaser, puts up collateral security for the performance of his agreement to purchase. At times, they are legal transactions. For example, a person employs a broker to purchase stock or other property for him. Not having the money with which to pay the price, the broker advances it, upon receiving from the buyer (his principal) the deposit of a specified sum and an agreement that he (the broker) may sell the stock in case it depreciates so that the stock and margin are no longer ample security for his advance. Such a transaction is perfectly valid and enforceable at common law. By constitutional or statutory provisions in some of our States, however, even margin deals of that sort have been put under the ban and are void. In such jnrisdictions the buyer may repudiate the agreement and recover from the broker any moneys put into his hands as a margin.
The term is more frequently applied to con tracts entered into, and deposits made, to dis guise gambling transactions in stocks or in prop erty sold for future delivery. Deals of this sort are illegal and void at common law. Not only is the contract itself unenforceable, but nego tiable paper or other securities given as a part of the transactions are void, and property de posited as a margin may be recovered. :Margin deals, which are in reality gambling transac tions, are punishable in sonic of our States as criminal offenses. Consult : Mechem. The Law of Agency (Chicago, 1889) ; Constitution of Cali fornia, Art. 4, § 26; Sheeby rs. Shim, 103 Cal. Rep., p. 325, or 37 l'ac. Rep., p. 393 (1894) ; Ir win vs. Willard, 110 Ti. S. Rep. 499, or 4 Sup. Ct. Rep. IGO (1884).