THE
LAW RELATING TO BETTING,
TIME-BARGAINS AND GAMING.
BY
G. HERBERT STUTFIELD,
_Barrister-at-Law, late Vinerian Scholar, Oxon; Author of “Tattersall’s
Rules of Betting,” Field Office; “The Rules and Usages of the Stock
Exchange.”_
_THIRD EDITION._
BY
G. HERBERT STUTFIELD
AND
HENRY STROTHER CAUTLEY,
_Barrister-at-Law of the North-Eastern Circuit, late Exhibitioner of
King’s College, Cambridge_.
LONDON:
WATERLOW & SONS, LIMITED, LONDON WALL,
1892.
TO THE
HON. SIR HENRY HAWKINS,
ONE OF THE JUDGES OF
HER MAJESTY’S HIGH COURT OF JUSTICE,
THIS WORK IS,
BY PERMISSION, RESPECTFULLY DEDICATED
BY
THE AUTHOR.
PREFACE TO THE THIRD EDITION.
Since the publication of the last edition of this work the somewhat
varied topics treated of herein have never ceased to occupy the
attention of the Courts. Nor is it to be wondered at, considering the
diverse and complex forms of gambling which the ingenuity, combined with
the cupidity of mankind, is constantly inventing, that our judges should
from time to time be called upon to adjudicate upon the legal attributes
of the most recent devices.
Of legislative interference there has been but little. The Gaming
Amendment Act, which was passed to prevent the evasion of the Act of
1845, by the interposition of an Agent, seems in reality to have
substituted another anomaly, seeing that while it has abrogated the
right of the Agent to recover reimbursement or commission from his
principal, it at the same time leaves unaffected the right of the
principal to recover winnings received by the Agent on his behalf. The
only other statute which has been passed touching the subject, is the
Infants’ Betting and Loans Act, which may have its uses in protecting
youths at the Universities, Schools and Training Ships from unnecessary
temptation.
Turning now to the fresh material afforded by the Contents of the Law
Reports, it will be noticed that the course of business in what are
commonly known as “bucket shops” has been considered in two cases in the
Scotch Courts, _Shaw_ v. _The Caledonian Railway_, and _The Liquidator
of the Universal Stock Exchange_ v. _Mowat_, with a view to ascertaining
the identity of the transactions therein conducted with wager contracts.
As to these two cases the Authors have ventured to give reasons for
suggesting that they might have been decided the other way; and it is
believed that similar cases are pending in this country, so that it is
not unlikely that the question may soon be considered again. To the
keepers of these establishments the question has a more serious
importance than the mere rights and liabilities of parties to a
particular bargain, seeing, as it is pointed out in the Chapter on
Betting Houses, that if the transactions are wager contracts, the
Betting House Act applies, and it would be difficult to contest the
legality of a police raid.
In the Chapter on Lotteries the principal new case is that of the
Persian Investment Corporation, which establishes the legality of
companies formed to set up lotteries abroad.
But it is the Chapter on Betting Houses which has afforded the greatest
scope for enlargement. That old and much vexed question “What is a
place?” has several times of late been before the Courts. But what is
perhaps the question of the greatest general interest under this
heading, do Tattersalls and the other betting clubs contravene the Act?
has never yet been raised in a practical form. At the same time the
reader will find some dicta set out in extenso which go far to confirm
the views previously expressed in these pages as to the distinction
between legal and illegal betting. A careful consideration of the very
difficult and complicated wording of the Act of 1853 has led the Authors
to a conclusion which may have some important practical consequences on
its enforcement, viz., that so far as betting on credit goes, business
conducted by correspondence does not infringe the Act. Added to this we
have the recent case of _Davis_ v. _Stephenson_, that in order to
constitute an illegal ready-money establishment the actual receipt of
money must be within the establishment itself, the effect of which is
considered in these pages.
One blank the Authors have endeavoured to fill. Great difficulty seems
constantly to be experienced by those who have to do with the gambling
laws, whether as judges, counsel or gamblers, owing to the absence of a
clear understanding of various legal conceptions, such as “wager” and
“lottery.” Authoritative description or definition there certainly is
none. To define is proverbially hazardous and difficult. But an attempt
is made in this edition to analyse the component parts of these two very
difficult conceptions, thereby no doubt opening the door to numerous
criticisms, but it is hoped at the same time throwing out some
suggestions which may tend to prevent a confusion of ideas.
A few words on a more theoretical aspect of our gambling laws. The
reader will not fail to have been struck with the frequent Parliamentary
interpellations on the subject; many a time has the Home Secretary been
called upon to reply to questions as to the intentions of the Government
to introduce a general scheme of revision. No doubt a semblance of
justification for this movement is afforded by a seeming want of
impartiality in the attitude of the law to different sorts and
conditions of men. The author of this work ventured not many years ago
to offer to the public a synopsis of this branch of our jurisprudence
(_Nineteenth Century_, November, 1889), in which an attempt was made to
show that laws in restriction of gambling, if they are to effect their
object, must in terms be so wide as to cover mere cases of gambling for
innocent recreation; that, in consequence, their enforcement must
largely be left to the discretion of the executive. This is not the
place for a discussion of this somewhat broad and difficult question.
The point is that it will behove those who embark in this enterprise of
supposed reformation to formulate clearly first, the line of policy they
would themselves like to pursue; second, the extent to which
interference is likely to be tolerated by public opinion. Is all betting
to be suppressed, including that carried on at Tattersall’s and the
clubs? If you penalize playing “skittle-pool” for money in a public
house, are you also going to bring the sixpenny rubber of whist at a
West End club or private house under the ban of illegality? If, as at
present, you connive at the Derby “sweeps” in Clubland, do you or do you
not think it necessary to affect consistency and repeal the law under
which a publican is fined for getting up a raffle for the Christmas
goose? These are questions which must be settled, and it may be
compromised before any reform of practical value can be carried through.
Mere consolidations of statutes and case law may facilitate reference
for practitioners, but they will not settle questions of public
expediency.
G. H. S.
H. S. C.
_June, 1892._
TABLE OF CONTENTS
CHAPTER I.
_PART I._
At Common Law what Wagers Illegal, 1–4; Statutes 16 Car. II., and 9
Anne, 4, 5; Betting at Games alone within Statutes, 7–9; whether
Contract avoided as well as Security, 9; _bonâ fide_ Indorsee for Value
could not sue Acceptor of Bill, 10.
_PART II._
5 & 6 Wm. IV., c. 41.
1. All Bills and Securities within Statute of Anne deemed to be for
Illegal Consideration, 11; Law as to Bills and Notes for Illegal
Consideration, 11; What cases are within the Act, 11; Wagers on
Games only, 11, 12; Cheque for Gaming Debts incurred abroad, 14;
Loans for Gaming purposes, 15, 16; Deposit of Stakes under £10 net,
12; Results of Illegality, 18; Void Consideration different, 20;
Notice, 21; Pleading Illegality, 23; Drawer’s Liability to Indorser,
11–12; Bonds within Act, 28; Consideration Illegal in part,
Contracts Divisible and Indivisible, 24; Test of whether Contract
affected with Illegality, Agents, Partners, &c., 16–18.
2. Acceptor who has paid Bill for Gaming Debts can recover from
Drawer, 26; with Interest when, 27; Acceptor paying by Cheque, 27;
Instruments within the Act, 28.
_PART III._
8 & 9 Vict., c. 109, s. 18, p. 28.
Statute makes Wagers Void, not Illegal, 29–; Indian Law of Wagers,
31.
Decisions under the Statute—
I. What are Contracts by way of Wagering, 32; _consensus ad idem_
necessary, 32; mutuality, 33; One must win, the other must lose, 33;
Each party selects an event in which he is to be paid, 33; Substance
rather than the form of Contract must be looked at, 33; Wagers under
guise of Sales, void, 35; Agreement with Tipster, 36; Executors must
not pay betting debts, 38; Deposit of Stakes on Horse Race, 36;
Rescission by Wager, 38; Speculative Sales valid, 39; Principal and
Turf Commission Agent, agreements between, not in nature of Wager,
40–; Agent must account to Principal for Winnings, 40–; Authority of
Agent to pay Losses, 45; such authority irrevocable, 47–; What Agent
must prove, 52; Gaming Amendment Act, 53; Agent cannot recover from
third party, 53.
II. No action to be brought on Wager, or to recover money deposited,
&c., 51–; Depositor can recover Stake from Stakeholder before money
paid to Winner, 51–; Notice necessary to determine Stakeholder’s
authority, 54; other ways in which authority determined, 57; His
liability, 60; When he Guarantees Stakes, 60; Guarantee of Wager,
60; Forfeits or Penalty for non-performance of Wagers not
recoverable, 61; Money deposited on bet, right to recover, 64;
ditto, from keeper of betting house, 65; Conflict of laws, 66;
Wagers made abroad, 68.
III. The Proviso in favour of a Subscription to a Prize for the
Winner of a lawful Game, 68.
(_a._) The meaning of a Subscription to a Prize, deposits by
Competitors in a race are not, 69 _et seq._; “Sum added” by
Third Party is, 73; Entrance Money, Stakes, Forfeits, Cups,
Plates, 74.
(_b._) When a person is the “Winner,” 74; Second Horse within
term, 75; must be Two competing, 75; Winner must be a
competitor, 75; _semble_ Breeder cannot recover Produce Stakes,
76; must have decision of Judge or Umpire in his favour, 76;
when authority of Umpire to decide exists, 76; Stewards of
Racecourse, Decision final, 78; Person cannot sue as Winner
unless their decision in his favour, 79; Construction of
Agreement by Court, parol evidence, 81; Starter requisite, 81.
(_c._) What are Lawful Games within Statute, 82; _Horse-racing_,
History of, 82; _Cock-fighting_ illegal, 85; Billiards on Public
Tables, 85; Games prohibited by the Statutes of Geo. II., 86;
Royal Palaces, Exception in favour of, 86.
CHAPTER II.
TRANSACTIONS ON THE STOCK EXCHANGE.
Barnard’s Act, 7 Geo. II., c. 8, effect of, 87 _et seq._; repeal of, 89;
Cases of _Nicholson_ v. _Gooch_ and _ex parte Grant_, 88–92; Official
Assignee, _ibid._, receives differences due to defaulter, _ibid._,
defaulters trustee in bankruptcy cannot recover from, _ibid._, bargains
for differences, 92; test of a wagering contract, 94, not known on Stock
Exchange, 96; Broker can recover differences paid for client, 96–97;
defaulter, adjustment of differences, 99; effect of 8 & 9 Vict. c. 109
s. 18, very limited in Stock Exchange, 100; Time bargains, 101;
Prospective Dividends, sale of, 102; bucket shops, dealings in, when
wagers; _Shaw_ v. _Caledonian Railway_, _Universal Stock Exchange_ v.
_Howat_, 103 _et seq._; Options, 106; Continuations, 108; difference
between and loan, 110; Results of Authorities, 113; Bankruptcy Discharge
refused on ground of Speculation, 115.
30 & 31 Vict., c. 29—
Leeman’s Act, 116 _et seq._; History of Legislation on Stock
Exchange Transactions, _ibid._; Act not observed on Stock Exchange,
117; Liability of Broker for not observing, 117. Broker’s right to
indemnity _query_, 122; actual transfer not affected, 122.
Review of Law relating to Wager Contracts, 123.
CHAPTER III.
LOTTERIES.
Statutory Provisions respecting, 128; Summary, 132; Foreign Lotteries,
133; Sweepstakes, 134; Companies distributing Benefits by Lot, 136 _et
seq._; Test of a Lottery, 140; Bazaars, Fishponds, 141; Illegality
affects subsequent Contract, 142; Recovery of Deposit on demand, 143;
Partnership or Company infringing Acts, Account of Profits, 145;
Proceedings in case of, 146; Art Unions, 147; no Privilege of
Parliament, 148.
CHAPTER IV.
GAMING HOUSES.
Nuisances at Common Law, 149; Houses for Unlawful Games, 151; Unlawful
Games, 152; Summary of Statutes, 155–; What constitutes a Gaming House,
155; Private Houses, 157; Public Billiard Tables, 157; Keeping a house
for Unlawful Gaming, the _Park Club Case_, 157 _et seq._; The Players,
160–161; Lending money for Unlawful Gaming, 162; Partner or principal in
gaming house cannot sue co-partner or manager for profits, 162–164;
Third party (ex-banker) cannot set up illegality, 164; Cheating at play,
164; No privilege of Parliament, _ibid._
BETTING HOUSES.
16 & 17 Vict., c. 119, Summary of Provisions and Offences created by
Statute, 165–7; What is a “Place,” 168–; A Room, 174; Persons
liable—owner, occupier, using or permitting user, 175 _et seq._;
Persons using the same, 179; What is “User,” 176; Manager, 179;
Illegal betting within the Act (_a_) with persons resorting thereto,
182 _et seq._; Tattersall’s not within Act, 183; _query_ Bucket
shops, 184; _query_ Betting by Correspondence, 184; Commission
Agents, 185; Coupons and Competitions, 186; (_b_) Keeping house for
ready-money betting, 187; _query_ Receiving cover in bucket shop,
189; receipt must be in house, etc., 189; _secus_ under Sec. 4, 190;
Stakeholder of Race Meeting not liable, 190; Commission Agent taking
ready-money liable, 190; Betting Partnerships, 191; Income Tax
payable, 191; Steward’s authority in Grand Stand, 191; Advertising
Betting Houses, 191; Betting Lists, 192; Scotland included, 192; 37
Vict., c. 15, as to advertising the giving of Tips, Information,
&c., Clubs and Foreign houses, 193, 194; Infants’ Betting and Loans’
Act, 194; Welshing, 195.
PROCEDURE.
Search Warrants against Gaming and Betting Houses and arrest of persons
found therein, 196–202.
Licensed Premises, Allowing Gaming in, 202–; 35 & 36 Vict., c. 94,
_ibid._; Knowledge or Connivance of Owner or Servant, 202, 203; What
Gaming is within the Act, 204; When Betting is legal, 205.
Public Place, Betting in, 205; Instruments of Gaming, 205; a Public
Place, 206; Game of Chance, what is, 207.
Betting in Metropolitan Street, 208.
APPENDIX.
A. _Higginson v. Simpson_, notes on.
B. Rules on Betting.
C. _Carlill v. Smoke Ball Company_, observations on.
TABLE OF CASES.
_N.B.—In the more modern cases references are given to all the reports._
PAGE
Adams, Beyer _v._ 40
Allport _v._ Nutt 134
Anderson _v._ Hume 197, 198, 200
Applegarth _v._ Colley 7, 9, 12, 14, 16, 30,
31, 37, 75, 83
Atherfold _v._ Beard 4
Aubert _v._ Walsh 52
Balfe _v._ West 82
Barclay _v._ Pearce 120
Barjean _v._ Walmsley 9
Barry _v._ Crosskey 94
Bate _v._ Cartwright 54
Batson _v._ Newson 75
Batty _v._ Marriott 69 _et seq._
Beeston _v._ Beeston, 1 Ex. Div. 13; 33 L. T.
N. S., 700; 45 L. J. Ex., 230; 24 W. R. 96 18, 42
Benbow _v._ Jones 78
Bentinck _v._ Connop 7, 37
Bew _v._ Harston 204
Beyer _v._ Adams 40
Bingham _v._ Stanley 23
Blake _v._ Beech, 1 Ex. Div. 320; 2 Ex. Div.
335; 45 L. J. M. C., 111; 34 L. T. N. S.,
764; 4 J. P., 678 198, 200
Blaxton _v._ Pye 7, 33, 83
Bolton _v._ Coghlan 23
Bond _v._ Evans, 21 Q.B.D., 249; 57 L. J. M.
C., 105; 59 L. T. N. S., 411; 36 W. R., 767;
52 J. P. 613 203
Bongiovanni _v._ Société Générale 110
Bosley _v._ Davies 203
Bower _v._ Brampton 10
Bows _v._ Fenwick, 36 J. P., 440; L. R., 9;
C. P., 339; 43 L. J. M. C., 107; 30 L. T.,
524 170 _et seq._
Bridger _v._ Savage, 15 Q. B. D., 363; 54 L.
J. Q. B., 464; 33 W. R., 891; 49 J. P., 725;
53 L. T. N. S., 129 42, 52, 163
Bridges, Fisher _v._ 143
Britten _v._ Cook 53
Brogden _v._ Marriott 36
Brown _v._ Overbury 70, 74
Browning _v._ Morris 144
Bryan _v._ Lewis 39, 97
Bubb _v._ Yelverton, L. R. 9 Eq., 471; 24 L.
T. N. S., 822; 39 L. J. Ch., 428; 18 and 19
W. R. 25, 28, 46
Byers _v._ Beattie 100
Caminada _v._ Hulton, 60 L. J. M. C., 116; 64
L. T. N. S., 572; 39 W. R., 540; 55 J. P.,
727 140, 186
Cannan _v._ Bryce 88
Carlill _v._ Smoke Ball Company Appendix C.
Carr _v._ Martinson 60, 76, 81
Charlton _v._ Hill 62
Clarke _v._ Wright 168
Clayton _v._ Dilley 25, 46
Coates _v._ Pacey 122
Cohen _v._ Kittle, 22 Q. B. D., 680; 58 L. J.
Q. B., 241; 60 L. T. N. S., 932; 37 W. R.,
400; 53 J.P., 469 42
Coles _v._ Bristowe 118
Collins _v._ Blantern 24
Coombe _v._ De la Bere 86
Coombs _v._ Dibble 71
Cooper _v._ Niel 94
Cooper _v._ Osborne 204
Cowan _v._ O’Connor 44
Cox _v._ Andrews, 12 Q. B. D., 126; 53 L. J.
M. C., 34; 32 W. R., 289; 48 J. P., 247 193
Crockford _v._ Maidenhead 182
Crofton _v._ Colgan 35, 71, 74
Da Costa _v._ Jones 2
Daintree _v._ Hutchinson 8, 63, 80
Danford _v._ Taylor 204
Davies _v._ Stephenson, 24 Q. B. D., 529; 59
L. J. M. C., 73; 62 L. T. N. S., 436; 38 W.
R., 492; 54 J. P., 565 189
Diggle _v._ Higgs, 2 Ex. D., 422; 46 L. J.
Ex., 721; 37 L. T. N. S., 27; 25 W. R., 777 37, 58, 72
Dines _v._ Wolfe 62, 78, 81
Ditchburn _v._ Goldsmith 2
Doggett _v._ Catterns 65, 169
Dowsen _v._ Scriven 74
Dyson _v._ Mason, 22 Q. B. D., 351; 58 L. J.
M. C., 55; 60 L. T. N. S., 265; 53 J. P.,
262 151, 204, 207
Eastwood _v._ Miller, L. R. 9 Q. B., 339; 43
L. J. M. C., 30; L. T. N. S., 716; 22 W. R.,
799; 38 J. P., 647 169, 171, 177
Edmunds _v._ Grove 23
Edwards _v._ Dick 10, 22, 24
Elliott _v._ Farmer 164
Ellis _v._ Hopper 78
Eltham _v._ Kingsman 2
Emery _v._ Richards 9, 14, 55
Evans _v._ Jones 1
Evans _v._ Pratt 80, 83
Evans _v._ Sumner 82
Faikney _v._ Reynous 88
Ferrao’s case 44
Fisher _v._ Bridges 143
Fisher _v._ Waltham 4
Fitch _v._ Jones 12, 20, 23, 31
Foote _v._ Baker 16, 204
Foote _v._ Butler 178
Fox _v._ Hill 26
_re_ Freeston 206
Galloway _v._ Maires, 8 Q. B. D., 30; W. R.,
151; 51 L. J. M. C., 53; 45 L. T. N. S.,
763; 46 J. P., 326 171, 183
Gatty _v._ Field 57, 135, 144
Gilbert _v._ Sykes 1, 4
Gilpin _v._ Clutterbuck 26
Godefroi, _ex parte_ 46, 114
Goldsmith _v._ Martin 59
Goode _v._ Elliott 3
Graham _v._ Thompson 58
Grant, _ex parte_ 90, 99
Grizewood _v._ Blane 35, 93 _et seq._
Greville _v._ Chapman 81
Haigh _v._ Town Council of Sheffield, L. R. 10
Q. B., 44; L. J. M. C., 17; 31 L. T. N. S.,
536; 23 W. R., 547; 39 J. P., 230 29, 171, 178, 182
Hampden _v._ Walsh, L. R. 1 Q. B. D., 189; 45
L. J. Q. B., 238; 33 L. T. N. S., 852; 24 W.
R., 607 57, 58, 61
Hare _v._ Osborne 204
Harvey _v._ Towers 23
Hastelow _v._ Jackson 52, 56
Hawker _v._ Hallewell 21, 24, 28
Hay _v._ Ayling 25
Henkin _v._ Guerss 4
Henretty _v._ Hart 174
Hibblethwaite _v._ McMorine 38, 90
Higginson _v._ Simpson, 46 L. J. C. P., 192; 2
C. P. D., 76; 36 L. T., 17; 25 W. R., 303;
41 J. P., 200 _see_ Appendix A. 16, 35
Hill _v._ Fox 33
Hirst _v._ Molesbury, L. R. 6 Q. B. 130; 40 L.
J. M. C., 76; 19 W. R., 246 184
Hodson _v._ Ferrill 52
Hornsby _v._ Raggett, 1892, 1 Q. B., 20; 61 L.
J. M. C., 24; 66 L. T. N. S., 21; 40 W. R.,
111 175, 183
Howson _v._ Hancock 54
Hunt _v._ Williams 140
Hussey _v._ Crickett 2, 80
Inchbald _v._ Cotterill 31
Irwin _v._ Osborne 63, 70, 75
Jaques _v._ Golightly 144
Jefferys _v._ Walter 8
Jenks _v._ Turpin 158 _et seq._
Jessop _v._ Lutwyche 45
Johnson _v._ Lansley 39, 41, 70
Jones, Fitch, _v._ 12, 20, 23, 31
Jones _v._ Randall 1
Kearley _v._ Thomson 144
King _v._ Kemp 16, 67, 68
Kittle _v._ Cohen, 22 Q. B. D., 680; 58 L. J.
Q. B., 241; 60 L. T. N. S., 932; 37 W. R.,
400; 53 J. P., 469 42
Knight _v._ Chambers 45
Langrish _v._ Archer, 10 Q. B. D., 44; 52 L.
J. M. C., 47; 31 W. R., 183; 47 J. P., 295;
47 L. T., 548 206
Lansley, Johnson, _v._ 18, 41, 70
Leadbitter, Wood _v._ 191
Lee _v._ Gold 201
Leroux _v._ Brown 68
Lilley _v._ Rankin 21
Liston, R. _v._ 146
Lorimer _v._ Smith 39
Loring _v._ Davis 123
Lynal _v._ Longbottom 8
Lynch _v._ Godwin 47
Lyne _v._ Siesfield 26, 88, 164
Lynn _v._ Bell 27, 28
Macalister _v._ Haden 9
MacElwaine _v._ Mercer 59
Mackinnell _v._ Robinson 4, 16, 86
MacNee _v._ Persian Corporation, 44 Ch. D.,
306; 59 L. J. Ch., 695; 62 L. T. N. S., 894;
38 W. R., 59 133
MacRae _v._ Clark 43
Manning _v._ Purcell 38, 60, 64
Markwich _v._ Hardingham 61
Marnham, _ex parte_ 112
Marten _v._ Gibbons 39, 48, 102
Martin _v._ Hewson 56
Maryat _v._ Broderick 55
Matheson, _ex parte_ 114
Mearing _v._ Hellings 54, 132
Milltown _v._ Stewart 26
Mollison _v._ Noltie 102
Moon _v._ Durden 29
Morley _v._ Greenhalgh 85, 169
Moore _v._ Peachey 44
Morris _v._ Blackman 135
Mortimer _v._ MacCallan 88, 122, 164
Mullins _v._ Collins 203
Neilson _v._ James 117 _et seq._
Newcomen _v._ Lynch 80
Nicholson _v._ Gooch 88
O’Connor _v._ Bradshaw 135
Oldham _v._ Ramsden, 44 L. J. C. P., 309; 32
L. T., 825 47, 175
Onley _v._ Gee 201
Oulds _v._ Harrison 45
Ovenden _v._ Raymond 85
Parr _v._ Winteringham 78
Parsons _v._ Alexander 28, 69, 85
Partridge _v._ Mallandaine 191
Patten _v._ Rymer 205
Pearce, Barclay _v._ 120
Pearce _v._ Gray 26
Perry _v._ Barnett, 15 Q. B. D., 388; 54 L. J.
Q. B., 466; 53 L. T., 585 121
Phillips, _ex parte_ 111
Pickard _v._ Seears 22
Pugh _v._ Jenkins 9, 11, 30
Pyke, _ex parte_, L. R., 8 Ch. Div., 47; L.
J., Bankruptcy, 100; 38 L. T., 923; 26 W.
R., 806 15, 16, 31
Quarrier _v._ Coulston 14, 67
Read _v._ Anderson 31, 48
Redgate _v._ Haynes 202
Reg _v._ Ashton 86, 151, 204
Reg _v._ Buckmaster, 20 Q. B. D., 182; 57 L.
J. M. C., 25; 57 L. T. N. S., 720; 36 W. R.,
701; 52 J. P., 358 195
Reg _v._ Cook 155, 173, 180
Reg _v._ Crawshaw 146
Reg _v._ Gregory 146
Reg _v._ Harris 139
Reg _v._ Holmes 206
Reg _v._ Hudson 165
Reg _v._ Liston 146
Reg _v._ Newton 196
Reg _v._ O’Connor 165
Reg _v._ Preedie 173, 174, 189
Reg _v._ Rogiere 150, 160
Reg _v._ Tuddenham 146
Reg _v._ Steven 64, 102
Robinson _v._ Bland 9, 67
Robinson _v._ Mearns 54
Robinson _v._ Mollett 53
Rogers, _ex parte_ 98
Rosewarne _v._ Billing 45
Rouguette _v._ Overmann 67
Rourke _v._ Short 35
Ryder, _ex parte_ 114
Sadler _v._ Smith 62, 77
Savage _v._ Madder 41, 144
Seymour _v._ Bridge 122
Sharp _v._ Taylor 17, 162
Shaw _v._ Caledonian Railway 95, 103
Shaw _v._ Morley, L. R. 3 Ex. 137; 37 L. J. M.
C., 105; 19 L. T. N. S., 15; 16 W. R., 763;
J. P. 170
Shillito _v._ Theed 8, 10
Sim _v._ Page, 58 L. J. M. C., 39; 60 L. T. N.
S., 602; 53 J. P., 420 205
Simpson _v._ Bloss 10, 162
Slatter _v._ Bailey 179
Smart _v._ Sandars 47
Smith _v._ Anderson 17
Smith _v._ Bickmore 54
Smith _v._ Bond 7, 165
Smith _v._ Littledale 80
Smith, Sadler _v._, L. R. 4 Q. B., 214; 38 L.
J. Q. B., 19; 19 L. T. N. S.; 17 W. R., 371 60, 68, 72
Snow _v._ Hill 173, 179
Somerset _v._ Hart 175, 203
Soulby _v._ Portarlington 21, 26
Squiers _v._ Waiskin 4, 8, 85
Stevens _v._ Universal Stock Exchange 106
Sykes _v._ Beadon 17, 137, 145, 163
Tatham _v._ Hasler 19
Taylor _v._ Smetten 139, 147
Tennant _v._ Elliott 17,164
Thacker _v._ Hardy, 4 Q. B. D., 685; 48 L. J.
Q. B., 289; 39 L. T., 595; 27 W. R., 158; 43 31, 32, 39, 40
J. P., 221 46, 108, 164
Thorpe _v._ Coleman 13
Tollet _v._ Thomas, L.R. 6 Q.B., 514; 40 L. J.
M. C., 209; 19 W.R., 246 205
Trimble _v._ Hill, L. R. 5 App. Ca., 342; L.
J. P. C., 49; 42, L. T., 103; 28 W. R., 479; 30, 59, 72
Truman _v._ Harris 74
Tuddenham, Reg., _v._ 145
Turnbull _v._ Appleton 206
Turner, _ex parte_ 112, 115
Turpin, Jenks _v._ 158 _et seq._
Universal Stock Exchange _v._ Howat 105
Universal Stock Exchange _v._ Stevens 106
Varney _v._ Hickman 55 _et seq._
Wade, _ex parte_ 114
Wallingford _v._ Mutual Society 138
Walmesley _v._ Mathews 81
Watson _v._ Martin 205
Webster _v._ De Tastet 43
Weller _v._ Deakin 59, 81
Wells _v._ Porter 88
Whitehurst _v._ Fincher 173, 175, 179
Williams _v._ Trye 88
Wilson _v._ Coleman 38
Wilson _v._ Strugnell 144
Wood _v._ Leadbitter 191
Wray _v._ Ellis 198
Wright _v._ Clarke 187
Wynne _v._ Callander 67
THE LAW OF BETTING.
CHAPTER I.
WAGER-CONTRACTS.
_PART I._
[Sidenote: At Common Law.]
At Common Law wager-contracts were neither illegal nor void;
technically, they could, like any other legal contract, be enforced by
an action at law. The only obstacle in the way of obtaining this remedy
was that the Courts, grudging the amount of time consumed in
adjudicating upon what were often exceedingly frivolous wagers, when
other more important causes were waiting for trial, took upon themselves
to postpone all actions of this kind until the rest of the business had
been disposed of; or, in the language of Lord ELLENBOROUGH in _Gilbert_
v. _Sykes_,[1] “until the Courts had nothing better to do.” At the same
time there were certain kinds of wagers which could not be enforced, as
being of a mischievous, immoral tendency, or contrary to the policy of
the law. Among such were:—
[Sidenote: Wagers illegal at Common Law.]
(1.) A wager which would give either party an interest in interfering
with the course of justice—_e.g._, a wager on the conviction or
acquittal of a man charged with forgery.[2] On the other hand, in
_Jones_ v. _Randall_,[3] it was held that there was nothing illegal in a
wager as to the result of an appeal from the Court of Chancery to the
House of Lords, it not being in the power of the parties to influence
the judgment of the House, but _secus_ if the bet had been made with a
noble lord or a judge.[4]
(2.) Where the ascertainment of the fact or the event would involve
inquiries respecting the age or sex of third persons or tend to make
them objects of public curiosity. Thus in _Da Costa_ v. _Jones_[5] a
wager as to the sex of a third party was held to be illegal. In
_Ditchburn_ v. _Goldsmith_[6] a wager that a certain woman would be
delivered of a male child before a certain date was held illegal on the
ground that neither party had any interest in the question; and this in
spite of the fact that the woman had herself challenged inquiry on the
subject.
In _Eltham_ v. _Kingsman_[7] two parties were proprietors of certain
carriages called “Fly by nights,” which they let to hire at Cheltenham;
the plaintiff laid a wager that a certain person would go in his “Fly by
night” to the assembly room that evening. The Court were inclined to
think this would be illegal as tending “to subject a third party to
great inconvenience by exposing him to the importunities of the
proprietors of these vehicles; any person who has walked through
Piccadilly must be sensible that this is no small inconvenience.”
[Sidenote: Where question concerned parties themselves.]
The law, however, was different where the question related to a matter
affecting either or both of the parties to the wager.
In _Hussey_ v. _Crickett_[8] the plaintiff and defendant were dining one
evening with seven other gentlemen at Furnival’s Inn Hall. The two
entered into a wager of a “Rump and dozen” as to which was the elder.
Each appointed one gentleman to name a day on which the registers of
baptism should be produced, and to order a dinner for the “Rump and
dozen.” The two gentlemen named appointed a day and ordered a dinner at
the Albion in Aldersgate Street, which was paid for by one of them, but
the money was repaid him by the plaintiff. Plaintiff won the bet, but
the defendant refused to attend the dinner. Plaintiff sued to recover
the amount he had paid.
While for the defendant it was argued that the wager was of a frivolous,
immoral nature, and that at most plaintiff could only recover his share
of the entertainment, it was replied for the plaintiff, that the wager
relating to the parties themselves was not void as if it related to a
stranger; that it was not of an immoral nature, as “it was for the
public benefit to promote conviviality and good humour;” that the
plaintiff’s loss of a share in a good dinner was not a frivolous loss in
the eye of the law. Indeed, it appeared from a quotation from the Roman
law, that that very universal system of jurisprudence, while
discouraging wagers in general, recognised an exception where the terms
of the wager bound either party to provide any form of conviviality.
MANSFIELD, C. J., having confessed himself judicially ignorant of the
meaning of the term “Rump and dozen,” parol evidence was admitted to
explain this exceedingly patent ambiguity. The term, as explained by the
witnesses, seemed at any rate to bring the case within the Roman law, it
being stated to signify “a good dinner and plenty of wine for all
present.” Upon this state of the facts, the judges, while regretting
that they had allowed the action to trouble the Court at all, judicially
decided that there was nothing immoral in sitting down to a festivity!
Therefore, adjudging the wager to be valid, the Court, in spite of the
fact that defendant had not partaken of the dinner, ordered him to pay
for the whole of it. This case is a good illustration of the kind of
issues which the Courts had to try, when wagers were enforceable.
So again in _Good_ v. _Elliott_[9] defendant bet the plaintiff five
guineas that one Susannah Tye had purchased a certain wagon from one
Coleman. This important controversy was to be determined by two
arbitrators, specially appointed, and the sum of one shilling was
deposited by each party to abide the event. The majority of the Court
held that the action would lie, seeing that it did not involve any
enquiry that would affect the peace of mind of a third party. BULLER,
J., dissented, holding that any wager which conceded a third party at
all was bad. “I am of opinion that a bet on a lady’s age, or as to
whether she has a mole on her face, whether she has a wart on her face
(which is considered a nasty thing) is void.”
(3.) Wagers which would tend to improper discussion, _e.g._, concerning
the amount of any branch of the Revenue.[10]
(4.) Wagers concerning any illegal sport or game, such as a
cock-fight,[11] or hazard.[12]
(5.) Where one party could determine the event in his own favor,[13] as
a wager by an attorney’s clerk that he would not pass his examination.
(6.) Wagers were also illegal which gave either party an interest in
doing or procuring some unlawful act, as a wager that Napoleon would be
assassinated by a oration day,[14] or which might bias a person in the
discharge of a public duty, such as a wager between two voters as to the
election of a member for a county; but this was not the case where the
wager was made between two persons who were not voters for that
county.[15]
[Sidenote: Wagers on abstract point of Law.]
(7.) A curious attempt was made in the case of _Henkin_ v. _Guerss_[16]
to obtain the opinion of the Court on an abstract question of law by
means of a wager. Lord ELLENBOROUGH strongly reprehended the proceeding,
and refused to try the cause. The Court in Banco confirmed this
decision: although they said there was nothing immoral in this wager,
yet they considered it an impudent attempt to compel the Court to decide
an abstract question of law not arising out of circumstances in which
the parties had any interest. This reminds us of one means by which the
old Roman law was developed—viz., by the practice of pupils-at-law
posing the advocates in whose “chambers” they read with theoretical
points of law and recording their answers.
[Sidenote: 16 Car. II. c. 7.]
The earliest statutory enactment restricting the power of enforcing
gaming debts in a Court of Law was 16 Car. II., c. 7. A great
improvement had been introduced into the breed of horses by the
importation of a number of horses from Tangier, which formed part of
Queen Catherine’s dowry, and racing under the patronage of Charles II.
was fast becoming a national pastime. As a natural consequence the
practice of betting increased at a proportionate rate, and to such an
extent as to interfere with individuals pursuing their ordinary
avocations. The statute, after reciting that all games and exercises
should not be used otherwise than as innocent and moderate recreations,
and not as a calling or means of livelihood, and that young people
wasted their time and fortunes in the immoderate use of the same,
enacts:
(1.) That if any person or persons of any degree or quality whatsoever,
at any time or times, shall, by any fraud or shift in playing at or with
cards, dice tables, tennis, bowls, skittles, shovel-board, or in
cock-fighting, horse-races, dog matches, or other pastimes or games
whatsoever, or in bearing a share or part in the stakes, wagers, or
adventures, or in or by betting on the sides or hands of such as do or
shall play, act, ride or run as aforesaid, win, obtain, or acquire to
him or themselves, or to any other or others any sum of money or
valuable thing, shall forfeit treble the sum or value of the thing won.
Sect. 3. Any person who shall play at any game aforesaid, or any other
game other than with or for ready money, or shall bet on the sides of
them that do play thereat, and shall lose any sum or sums of money, or
other thing or things so played for, exceeding the sum of £100 at any
one time or meeting, upon ticket, or credit or otherways, and shall not
pay down the same at the time when he or they shall lose the same, shall
not be compellable to make good the same, but the contract or contracts
for the same, and for every part thereof, and all and singular
judgments, statutes, recognisances, mortgages, conveyances, occurrences,
bonds, bills, specialities, promises, covenants, agreements, and other
acts, deeds, and securities whatsoever given for the same shall be void.
It will be observed that this statute aims solely at (1) cheating at
play; (2) excessive gaming on credit. It does not make wagering illegal
so long as it is unaccompanied by fraud, and the parties are at liberty
to wager to any extent provided they pay ready money.
The next statute is 9 Anne, c. 14.
[Sidenote: Anne, c. 14.]
Section 1. All notes, bills, bonds, judgments, mortgages, or other
securities or conveyances whatsoever, given, granted, drawn, entered
into, or executed by any person or persons whatsoever, where the whole
or any part of the consideration of such conveyances or securities shall
be for any money, or other valuable thing whatsoever won by gaming or
playing at any game whatsoever, or by betting on the sides or hands of
them that do or shall game at any of the said games, or for repaying any
money knowingly lent for the purpose of gaming or betting as aforesaid,
or lent or advanced at the time and place of such play to any person
playing shall be void to all intents and purposes, and that all property
so encumbered shall devolve on such person as would be entitled if the
owner were dead.
By section 2 any person, who at any time or sitting, by playing at
cards, dice tables, or other game, losing £10, should pay the same, was
entitled to recover the same by action of debt, or in default of such
person suing any person, might recover treble the amount for the benefit
of the poor of the parish.
Section 5 inflicts penalties on any person winning any sum of money by
any fraud, and on any person who should win over £10 from any person or
persons at one time or sitting.
It will be observed that this statute carried the restrictions on
private betting and gaming considerably further than the Statute of
Charles II. It prescribed additional penalties for fraud; it made a
great reduction in the test of excessive gaming by substituting £10 for
£100 as the maximum sum which a person might lose.[17] Further than
this, it made it penal to exceed the limit thus laid down, instead of
merely making the money irrecoverable. It has been held that the offence
under the statute was complete by the mere fact of winning the moneys
whether it were paid over or not.[18]
[Sidenote: Betting at games alone within statute.]
It should be observed that the statute does not deal with wagering
generally, but only with gambling and betting at games, sports, or
pastimes. In _Applegarth_ v. _Colley_[19] it was decided that the games
and pastimes aimed at by both statutes are the same.
Both these points have an important bearing on the law as it exists at
the present day, as will be seen when we come to discuss the provisions
of 5 & 6 William IV. Before dealing with the latter statute, it will be
important to notice a few points which were decided on the effect of the
two earlier statutes, otherwise the provisions of the Statute of William
IV. will not be intelligible.
[Sidenote: Games within the statute.]
(1.) As to the games dealt with, the Statutes of Charles II. and of Anne
are very general, speaking of “any games whatsoever.” At the same time
certain games have in particular been expressly decided to be within the
Acts.
[Sidenote: Horse-racing.]
Thus _horse-racing_ is specifically mentioned in the Act of Charles II.,
but not in that of Anne. However, in _Blaxton_ v. _Pye_[20] and in
_Applegarth_ v. _Colley_,[21] this species of pastime was decided to be
within the Statute of Anne, the “games” mentioned in which statute were
the same as those mentioned in the Statute of Charles II. This subject
will be treated more fully when we come to the Statute 8 & 9 Vict., c.
109. For a long time horse-racing was illegal, except under certain
conditions[22], but was early in this reign legalised generally by 3 & 4
Vict., c. 35. But although the racing itself was made legal, that did
not affect the provisions of the statute against wagering.
[Sidenote: Wagers not legalised by 3 & 4 Vict., c. 35.]
Thus in _Bentinck_ v. _Connop_[23] a race was to be run for stakes of
£50 for each colt, to which the plaintiff and defendant were
subscribers, the defendant subscribing for three colts. The plaintiff
won the race, but the defendant disputing the result refused to pay his
stakes. Plaintiff sued him to recover the amount he should have paid by
the agreement. It was admitted that the race itself was not illegal as
it did not infringe the Statute of George II., but _held_ that the fact
of the race being legal did not make the contract enforceable—that the
contract was within the Statute of Charles II., a contract to pay a sum
of money exceeding £100 lost at horse-racing, and not paid down at the
time; but that it would have been recoverable (? from the stakeholder)
if the money had been deposited before the race. To the same effect was
the decision in _Shillito_ v. _Theed_,[24] that the Statute of George
II. had not repealed the provisions of the earlier statutes as to
wagering.
_Dog matches_[25] mentioned in the Statute of Charles II. include
coursing matches as well as dog fights.
_Cricket_[26] is a game within the statute, so that a match for £20 was
illegal, even though not finished in one day. A bond given to secure
payment of a bet on a cricket match was void.
_Foot-races_,[27] even though against time. Of course whereever any game
is declared illegal of itself no sum of money could be recovered as
being won thereat. Thus in _MacKinnell_ v. _Robinson_[28] it was held
that money lent for the purpose of playing at hazard (which game,
together with ace of hearts, pharaoh, and basset, were declared illegal
by 12 Geo. II., c. 28) could not be recovered back, and that the statute
applied to gaming at private as well as public tables.
_Cock-fighting_[29] seems to be illegal at Common Law, but no doubt it
is a game within the statute which speaks of games generally.
[Sidenote: Statute only applies to bet before or at time of race, &c.]
It should be noted that the statute only speaks of betting on the sides
of them that “do and shall” play.
In _Pugh_ v. _Jenkins_[30] it was held that these words did not apply to
a wager between parties as to the accuracy of their information as to
the results after the race was over.
The statute also left unaffected any wager in a game for a sum not over
£10 and paid down at once, _e.g._, by deposit with a stakeholder.[31]
(2.) Another question which arose on these statutes was whether they
avoided the contract itself or only the security. In _Robinson_ v.
_Bland_[32] Lord MANSFIELD distinctly lays it down that the contract
might be good but the security void, and in the same case it is pointed
out that whereas the Statute of Charles II. expressly avoids the
contract, that of Anne deals only with the security, and that probably
all reference to the contract in the latter statute was designedly
omitted. In _Macalister_ v. _Haden_[33] it was held that an action would
lie on a wager for a sum under £10 on a race for over £50, races for
under that sum being at that time illegal by the Statutes of George II.
In _Barjean_ v. _Walmsley_[34] money lent for betting purposes was held
to be recoverable, as the statute applied to the security only, and not
to the contract. However, the Court of Exchequer in the case of
_Applegarth_ v. _Colley_[35] seem to have inclined to a different view
as to the effect of the statutes. It was argued by counsel in this case
that the Statute of Anne had avoided the security only, and not the
contract, but Baron ROLFE in delivering the judgment of the Court said
that the Legislature had by the provisions of the Statute 5 & 6 William
IV., c. 41, to which fuller reference will be made hereafter, virtually
decided the question. “It is impossible,” he says, “to impute to the
Legislature an intention so absurd as that the consideration should be
good and capable of being enforced until some security is given for the
amount, and then by the giving of the security the consideration should
become bad.[36]
(3.) The Statute of Anne in making securities “void to all intents and
purposes” worked great injustice in the case of innocent holders for
value of bills and notes which had originally been given for gaming
transactions. Thus, in _Shillito_ v. _Theed_[37] the defendant had
accepted a bill of exchange for £185, drawn on him for the payment of a
wager on a legal horse-race. It was argued that as the plaintiff was a
_bonâ fide_ indorsee of the bill for value, it was not avoided in his
hands. TINDAL, C. J., held that as the statute avoided the security to
all intents and purposes, not even a _bonâ fide_ indorsee for value
could sue. It would seem, however, that the statutes did not prevent an
indorsee of a bill or note originally accepted or made in payment of a
betting debt from suing the indorser on his indorsement, if such
indorsement were in consideration of a valid debt. [Sidenote: _Bower_ v.
_Brampton_.] Thus in _Bower_ v. _Brampton_[38] the plaintiff sued as
indorsee of promissory notes given by defendant to one Church for money
knowingly advanced to defendant to game with at dice, and Church
indorsed them to the plaintiff for value without notice—_Held_ that he
could not sue the defendant as maker of the notes, as that would be a
means of evading the Act; but that he could sue Church on his
indorsement. [Sidenote: _Edwards_ v. _Dick_.] Again, in _Edwards_ v.
_Dick_[39] the plaintiff sued as indorsee of a bill of exchange drawn by
the defendant on the acceptor in payment of a betting debt, but indorsed
by the defendant to the plaintiff in payment of a valid debt. _Held_,
that although no action would lie against the acceptor either by the
drawer, or any one else claiming through him, still the defendant could
not set up as against the plaintiff the gaming consideration as between
himself and the acceptor.
_PART II._
[Sidenote: 5 & 6 Wm. IV., c. 41. Section 1.—Securities]
Such was the state of the law when the Statute 5 & 6, William IV., c. 41
was passed, which in effect provides by section 1 that so much of the
Statutes of Charles II. and [Sidenote: deemed to be given for illegal
consideration.] Anne which declared that any note, bill, or mortgage
should be absolutely void should be repealed, but that any note, bill,
or mortgage which were declared void by such statutes should be deemed
to have been made, drawn, accepted, given, or executed for an illegal
consideration.
[Sidenote: Section 2.—Acceptor can recover from drawer.]
By section 2 it is enacted that if the person who gives such note, bill,
or mortgage should actually pay to the holder of such security the money
secured thereby, such payment shall be taken to have been made for and
on account of the person to whom the security was originally given.
It should be noticed that the only alteration in the law made by this
statute is that instead of avoiding the securities, given for gaming
debts altogether, it declares that the consideration for which they are
given shall be illegal, or in other words, it puts such securities on
the same footing as those which are given for an illegal consideration.
We have to consider—
I. What transactions are within the statute.
II. The legal result of a cheque, bill, &c., being given for an illegal
consideration.
III. The remedy of a person who has given such an instrument.
I. Transactions within the statute.
[Sidenote: Transactions within statute.]
(1.) The statute only applies to bets on games, which term, as has been
explained under the Statute of Anne, includes horse races. It must be
remembered that the decisions under the latter statute apply to the
present statute, except so far as the present statute has expressly
altered the provisions of the earlier statute.
[Sidenote: Bets after race not within statute.]
(2.) It was decided in _Pugh_ v. _Jenkins_[40] that the statute of Anne
only applied to bets either before or during the game or race, the words
being “do and shall play.” It often happens that, immediately after the
horses have passed the post, people bet on the correctness of their
judgment as to whether a horse has won or got a place. It would seem,
therefore, that a note or cheque given in payment of such a bet would
not be given for an illegal consideration, though, of course, as in
_Fitch_ v. _Jones_[41], the consideration would be void. The difference
between the two will be explained hereafter.
[Sidenote: Statute did not apply to stakes under £10 deposited.]
(3.) The Statute of Anne did not apply where the stakes for under £10
were deposited before the race by the competitors. This point was
settled in the well-known case of [Sidenote: _Applegarth_ v. _Colley_.]
_Applegarth_ v. _Colley_[42], to which some allusion has already been
made, but which is specially important, not only as an authority on the
construction of the earlier Statutes of Charles II. and Anne, but also
showing the extent to which those statutes were incorporated into 5 & 6
William IV., c. 41. The plaintiff was a subscriber to a horse-race for
which the stakes were £2 with £15 added; the whole sum subscribed
amounted to less than £50. The plaintiff won the race and sued the
defendant with whom the money had been deposited to recover the stakes.
The defendant pleaded the above facts as a defence, and the plaintiff
demurred. The first point raised by the plea was, that as the race was
for under £50 it was illegal under the Statutes of George II.’s reign;
but as all horse-racing had been held to be legalised by 3 & 4 Vict., c.
5, this plea could not be supported. But it was also argued that the
plea disclosed a good defence, on the ground that it was a suit to
recover a sum of money over £10 won by horse-racing, and so could not be
maintained by virtue of the Statutes of Charles II. and Anne. Against
this it was argued that the Statute of Anne only avoided the security
given to repay a debt, and not the contract itself. The judgment of the
Court, which was delivered by Baron ROLFE, established the following
propositions:—
(_a._) That however the law may have stood under the earlier statutes
with respect to the avoidance of the contract, the Legislature had
virtually decided the question by passing the Statute 5 & 6 William IV.,
c. 41, it being “impossible to impute to the Legislature an intention so
absurd as that the consideration should be good and capable of being
enforced until some security is given for the amount, and that then the
consideration should become bad.” That, therefore, since the passing of
this statute, all _contracts for the payment of money_ won at play must
be taken to be avoided.
(_b._) That in the present case the stakes having been deposited with a
stakeholder before the race, there was no contract for the payment of
money lost at play, within the meaning of the Statute of Anne: that
statute must be read in conjunction with that of Charles II., and was
intended to prevent gaming on credit, and not to interfere with playing
for ready money.
(_c._) That plaintiff was not precluded from recovering by sections 2
and 5 (according to which the loser of £10 or upwards at any one time or
sitting may recover it back, and the winner at any one time or sitting
of over £10 is subject to heavy penalties) on the ground that by a fair
construction of the statutes, the penalties inflicted on “the winner,”
&c., only applied where there was a corresponding “loser” of over £10,
and in this case the loss of each person was £2 only. It was, however,
the Court added, unnecessary to decide that point, as the plaintiff was
at any rate entitled to recover the £15, which had been subscribed by a
stranger by way of prize to the winner; and the defendant’s plea was bad
as having covered too much.
It will be seen that the decision leaves untouched the question as to
the right to recover where the stakes amount to £10 each; but it would
seem that this question could now only be of importance where a bill or
note had been given to the winner for the amount, and the winner sues on
that instrument; otherwise any such case would now fall under the
Statute 8 & 9 Vict. c. 109 (as to which _see post_).
[Sidenote: _Thorpe_ v. _Coleman_.]
In _Thorpe_ v. _Coleman_[43] an action was brought to recover £10, a
wager on the Derby. It was sought, in argument for the plaintiff, to
upset the decision in _Applegarth_ v. _Colley_ that the statute applied
to the contract as well as to the security. TINDAL, C. J., in giving
judgment, said that as to the sums of £10 or upwards the contract was
clearly not enforceable, seeing that section 2 of the Act of Anne
enabled the loser, who had paid the sum of £10, right to recover it by
action. He expressly reserved the question, as to whether the statutes
affected bets under £10, that is whether the contracts themselves were
void as well as the securities given for payment. But to enable a person
to recover what could immediately be recovered back from him would only
encourage circuity of action.
It seems, therefore, that the statutes did not apply, provided (1) that
the stakes were deposited before the event came off, (2) and that they
were not more than £10 each. This view of the matter was adopted in
_Emery_ v. _Richards_,[44] which was an action to recover a stake of
10s. from a stakeholder deposited to abide the event of a wager upon a
foot-race. It was held that neither party could revoke the stakeholder’s
authority, as it was a valid wager. “It was not gaming on ticket,
because here the money was parted with, nor is it excessive gaming
within the Act,” it being for a sum under £10.
It must not be forgotten that under the present state of the law (as
will appear hereafter) any wager would be void as an agreement, and the
stake could be recovered from the stakeholder by the depositor. But the
point of importance under the Statute 5 & 6 William IV., c. 41, is
whether a wager when forming the consideration for a bill of exchange
would be an illegal consideration and so a defective title.
[Sidenote: Cheque for gaming debts incurred abroad.]
It does not appear to have been decided how far a cheque or promissory
note given for a gaming debt incurred abroad can be sued upon in this
country, provided they be not void or illegal in the country where they
are incurred. It would seem clear that any such cheque would not be
given for an illegal consideration within the Statute of William IV. The
Statute of Anne, on which that statute is founded, containing as it does
penal provisions, could only have reference to gaming in this country.
The case of _Quarrier_ v. _Coulston_[45] seems at first sight an
authority for the suggestion that an action on such a cheque could be
maintained. In that case, however, the greater part of the sum for which
the I O U was given was for money lent for gaming at the public Baden
gaming tables, the presumption being that such gaming was legal: while
the small balance was made up of money won at cards in sums of less than
£10 at each sitting; so that the transaction would not have been illegal
under the Statute of Anne. On principle it would seem that the _lex loci
contractus_ would govern the matter, _i.e._, the place where the gaming
debt was incurred. But later on in this work, p. 68, it is suggested
that the words of section 18 of 8 & 9 Vict., c. 109, “no action shall be
brought,” etc., introduce the _lex fori_. If an action on a wager made
abroad cannot be maintained it is difficult to see how an action could
be brought on a cheque given in respect of such wager.
[Sidenote: Loans for gaming purposes.]
(5.) The Statute of Anne avoided all securities for money knowingly lent
for gaming or betting or advanced at the time and place of such gaming
to any person so gaming or betting, or that should during such gaming or
betting so play or bet. The following propositions would seem to explain
the law as to money lent for gaming purposes.
(_a._) As already explained the statute avoids the contract as well as
the security.
(_b._) It only applies to money lent for gaming or betting on games
and horse races.
(_c._) Therefore money lent to a person knowing that he is going to
apply it in such ways cannot be recovered; this seems to be recognised
in _ex parte Pyke_.[46] The statute makes it illegal.
(_d._) The words of the statute seem to establish an irrebuttable
presumption that money advanced during play (including, of course,
during a race meeting) to any one who at the same sitting or meeting
(the words “during such play” seem to point to this) should take part
in such games or betting was knowingly advanced for that purpose.
(_e._) The statute does not apply to money advanced to pay debts
already incurred.
[Sidenote: Money lent for paying a gaming debt.]
In _ex parte Pyke_[47] a question arose as to the right to recover money
lent to enable the borrower to pay off a gaming debt. A employed B as
his agent to back horses for him, which horses lost. B at A’s request
paid the bets in the settlement at Tattersall’s, taking A’s promissory
notes for the amount. A became bankrupt and B claimed to prove in the
bankruptcy, not upon the notes, but for the money thus advanced. The
registrar allowed the proof, and the trustees appealed. The Statutes of
Anne and William IV. apply not only to money won by gaming, but to
securities given to repay “any money knowingly lent or advanced for such
gaming or betting as aforesaid, or lent or advanced at the time and
place of such play, to any person or persons so gaming or betting as
aforesaid.” It was argued for the trustee that this was a debt for an
illegal consideration within the above quoted words, as according to
_Applegarth_ v. _Colley_ the statute applied to the contract, and not
only to the security, also that on the authority of _Higginson_ v.
_Simpson_ the whole transaction was in the nature of a wager. The Court
held that as the money had been advanced after the bets had been made,
it could be recovered: but that it would have been different had it been
lent with a view to gaming.
(_f._) The statute does not apply to money lent for gaming abroad[48].
(_g._) Of course money advanced to enable a person to play any
unlawful game as hazard, as in _McKinnell_ v. _Robinson_[49] or for
unlawful gaming within 17 & 18 Vict., c. 38, s. 4, cannot be
recovered[50].
[Sidenote: Test of illegality.]
It is sometimes difficult to determine whether a transaction, to some
extent mixed up with an illegal transaction, is so inseparable from it
as to be within the statute.
[Sidenote: _Simpson_ v. _Bloss_.]
In _Simpson_ v. _Bloss_[51] it was laid down that the real test whether
a demand connected with an illegal transaction is capable of being
enforced at law, was, whether plaintiff requires any aid from the
illegal transaction to establish his case. The plaintiff laid an illegal
wager with B in which the defendant assumed a part. The plaintiff won.
Plaintiff, expecting that B would pay by a certain time, advanced to
defendant his share of the winnings to which he was entitled by his
agreement by plaintiff. B became insolvent and never paid the bet.
_Held_ that as plaintiff could not establish his case without the aid of
the illegal wager, he could not recover.
[Sidenote: Liability of partners in illegal firm to account.]
In _Sharp_ v. _Taylor_[52] the Court drew a distinction between
enforcing an illegal contract, and enforcing a subsidiary contract
arising therefrom. They held that although a partnership might have been
formed to carry out an illegal object which the Court would not aid in
effecting, yet one partner who has received moneys which have been
realised in the illegal business, cannot set up the illegality in answer
to a claim by his co-partner for an account.
But this case was subject to some unfavourable criticism by the late
Master of the Rolls in the case of _Sykes_ v. _Beadon_.[53] This was a
case of a society not registered under the Companies Act, which the
Master of the Rolls held was illegal as infringing that Act, though his
decision on that point was overruled by the Court of Appeal in _Smith_
v. _Anderson_.[54]
His lordship also was of opinion that it was illegal as infringing the
Lottery Acts. The object of the suit was to have the trusts of the
society administered by the Court. But his lordship held that as the
society was illegal, it was impossible that its objects could be carried
out by the Court. Even supposing a suit were framed for the object of
putting an end to the society and dividing the assets, he thought it
very doubtful whether the reasoning in _Sharp_ v. _Taylor_ was correct,
that because an illegal transaction is closed, that therefore a Court of
Equity is to interfere in dividing the proceeds of the illegal
transaction.
In the case of _Beeston_ v. _Beeston_.[55] Plaintiff had paid money to
defendant to bet with on their joint account, plaintiff to receive a
share of the winnings. Defendant won, and gave plaintiff a cheque in
payment of his share. The cheque was dishonoured, and plaintiff sued
defendant on it. It was urged for the defendant that it was a contract
by way of gaming, and that the cheque was given to secure the moneys won
thereby, and was therefore a void security, both under 8 & 9 Vict., c.
109, and 5 & 6 William IV., c. 41. The Court held that the plea was bad
and the plaintiff was entitled to recover on the ground that the
consideration for the cheque was entirely distinct from the wagering.
_Sharp_ v. _Taylor_ was cited with approval as showing that one partner
cannot set up the illegality of a transaction against a co-partner and
thereby retain the whole of the profits arising from that transaction.
It was remarked by POLLOCK, B., that the two statutes quoted only
applied to contracts and securities as between the parties to the wager.
This case will be referred to again when we come to deal with the rights
of principal and agent;[56] and in the Chapter on Gaming Houses the
question of illegal partnership is fully discussed (p. 162).
II. The consequences of an instrument being given for an illegal
consideration.
[Sidenote: Law as to illegal consideration.]
[Sidenote: Bills and notes.]
The general rule is that if A accepts a bill drawn upon him by B, or
gives him a promissory note, for an illegal consideration, the
instrument no doubt is entirely void as between A and B, so that the
latter cannot sue the former upon it; still if B transfers the
instrument by endorsement or otherwise to C, who takes without notice
that it was originally given for an illegal consideration, and gives
value for it, C may sue all the prior parties and recover upon it. The
chief difference that such illegality makes to C is, that a presumption
is raised that C is the agent for the original holder, _i.e._, that the
indorsement to him is presumed to be merely a means of evading the law
and enforcing the originally illegal contract.[57] [Sidenote: Burden of
proof is on transferee.] Consequently the rule is that the burden of
proof lies on the transferee of showing that he took the instrument
_bonâ fide_, _i.e._, without notice of the illegality, and that he gave
value for it. Moreover, the illegality would affect the interests of a
transferee if at the time of the transfer the bill were overdue. Before
the late Bill of Exchange Act, it was commonly said that an indorsee of
an [Sidenote: Overdue bill.] overdue bill took it subject to all the
equities attaching to the bill. Thus, if a bill were obtained from the
acceptor by fraud or undue influence, or given for an illegal
consideration, those were equities between the original parties which
would prevent the instruments being enforced as between them; but would
not affect a _bonâ fide_ transferee for value. The fact, however, of a
bill being overdue would be sufficient notice of the infirmity to
prevent his being a _bonâ fide_ holder. [Sidenote: 45 & 46 Vict., c.
61.] The new Bill of Exchange Act[58] leaves the law practically
unchanged, excepting in phraseology. [Sidenote: “Holder in due course.”]
For “_bonâ fide_ holder” is substituted the expression “holder in due
course.”
By section 29, the holder in due course is defined to be (1) a person
who takes a bill not overdue and without notice of dishonour, if any;
(2) and takes it in good faith and for value, and at the time the bill
was negotiated to him he had no notice of any defect of title of the
person who negotiated it.
The expression “defect of title,” which occurs in this section, is
substituted for the older and more cumbrous one of “equity attaching,”
&c. By section 29, the title of a person who negotiates the bill is
“defective” when he obtains the bill or acceptance thereof by fraud
duress (“force or fear” in Scotland), or other unlawful means, or for an
illegal consideration (which includes a gaming debt).
[Sidenote: Defect of title shifts burden of proof.]
By section 30, the holder is presumed to be a holder in due course until
the contrary is proved; but in that event the burden of proving that
value has been given for the bill and in good faith, is shifted on to
the holder. See _Tatham_ v. _Hasler_.[59]
[Sidenote: Overdue bill.]
By section 36, an overdue bill is negotiated subject to all defects of
title affecting it.
The result of these enactments, stated in the language of the law at the
present day, seems to be shortly as follows:—
(1.) A bill or note accepted or made for a gaming debt (such as is
dealt with by the Statute of Anne) is subject to a defect in title.
(2.) If such instrument be overdue, any transfer is made subject to
such defect.
(3.) The holder must in all cases, to entitle himself to sue when once
the illegality has been proved, show that he took the bill or note
_bonâ fide_ and for value.
[Sidenote: Absence of consideration not a defect.]
As will be seen by reference to any work on Bills of Exchange, mere
absence of consideration does not constitute a defect of title:
consequently the indorsee for value of an overdue accommodation bill can
recover on the bill from the acceptor.
[Sidenote: Nor is a void consideration.]
In _Fitch_ v. _Jones_[60] the question was raised as to whether a
consideration not illegal but merely void by Act of Parliament
constituted an “equity.” It was an action on a promissory note by the
indorsee against the maker. Defendant pleaded that the note was given by
him to one C in payment of a debt on the amount of hop duty in 1854, the
bet being made since the passing of 8 & 9 Vict., c. 109. It was not an
illegal consideration within 5 & 6 William IV., as the bet was not on a
game or pastime. A question was raised at the trial as to whether the
plaintiff had given value for the note when endorsed to him. The judge
directed the jury that the onus was on the defendant of proving that no
value was given. On this ruling the substantial question in the case was
raised before the Court, viz., whether the voidness of the consideration
had the same effect as illegality, in throwing the burden on to the
indorsee (_i.e._, the plaintiff) of showing that he took the note for
value and without notice. The Court held that the consideration was
merely void by 8 & 9 Vict., c. 109, and not illegal; and that this had
not the effect of raising the presumption that the plaintiff took the
note without value.
In _Lilley_ v. _Rankin_[61] the same ruling was applied to cheques given
in payment in respect of gambling transactions in stocks.
Questions have sometimes arisen upon what amounts to notice of the
illegality, which, as has been seen, a holder of a bill is sometimes
called upon to disprove. On this subject reference should be made to
works on Bills of Exchange. It seems that there need be no express or
precise notice, but that any circumstance of suspicion which ought to
have put the holder upon enquiry is sufficient. [Sidenote: What notice
is sufficient.] Thus, in _Soulby_ v. _Portarlington_,[62] defendant was
acceptor of a bill for £1,000, payable to one Aldridge, who was keeper
of a gaming house, for money lost at play. It was endorsed to one
Brooke, who discounted it with Soulby & Co., wine merchants, the
plaintiffs in the action, with whom Brooke, a retail wine dealer, had
dealings. The plaintiffs advanced £700 on the bill, agreeing to deliver
£300 in wine. Soulby commenced an action in Ireland on the note. The
defendant instituted a suit in the Court of Chancery in England to
restrain the plaintiffs from proceeding with the action, on the ground
that it was given for a gambling debt. _Held_ that the facts were such
as to put the plaintiffs on enquiry as to what the origin of the bill
was, especially as it was not denied by the plaintiffs in their
affidavits that they knew that Aldridge was the keeper of a gambling
house. That the Court had clearly jurisdiction to restrain the
plaintiffs (who were resident in England) from proceeding with their
action in Ireland, and also to order the bill to be delivered up to be
cancelled.
[Sidenote: _Hawker_ v. _Hallewell_, 3 Findley. 3 Sm. & G.]
The case of _Hawker_ v. _Hallewell_[63] is a good illustration of cases
where the transferee will not be held to have taken with notice, and
also of cases where the transferor by his conduct estops himself from
alleging the illegality of the original consideration. [Sidenote:
Assignee of bond.] In _Hawker_ v. _Hallewell_[63] the plaintiff gave a
bond in 1841 to one Jenkins to secure repayment of a betting debt; at
least, this was assumed for the purposes of argument, though the
evidence did pot prove it. Jenkins assigned the bond and a policy of
assurance to a bank. Plaintiff, in June, 1848, made a proposal to the
bank that the bond and policy should be given up, and that the existing
debt, together with a further advance, should be secured by mortgage on
some reversionary property of the plaintiff. The plaintiff alleged that
he had given notice to the bank that the bond was given for a gaming
debt. The plaintiff, in 1853, assigned all his property to trustees for
the benefit of his creditors, and now filed a bill to administer the
trusts. The Chief Clerk disallowed the claim of the bank. The plaintiff
contended that the bond was void under 9 Anne, c. 14, which had not been
repealed by 5 & 6 William IV., so far as regards bonds. 8 & 9 Vict., c.
109, which repealed so much of the Statute of Anne as was not repealed
by 5 & 6 William IV., was not retrospective. The Vice-Chancellor decided
on the facts that the bank had taken the bond without notice of the
original consideration. He also held that, although the operative part
of the Statute of William IV. only applied to negotiable securities, yet
the recitals included bonds and securities of every kind; so that an
obligee was within the equity of the statute, and that, on the principle
of Equity follows the Law, a _bonâ fide_ assignee of a bond for valuable
consideration would be treated in the same way as a _bonâ fide_ holder
of a bill of exchange. But there was a further ground on which his
honour decided in favour of the [Sidenote: Estoppel of obligor.]
bank—that the plaintiff by his proposal in 1848 had held out to the bank
that the bond was a valid security and that on the principle of
_Pickard_ v. _Seears_[64] he could not be heard to set up its
invalidity. This latter point seems to be the same as that on which
_Edwards_ v. _Dick_[65] was decided, viz., the ordinary principle of
estoppel—that if one person by his acts or representations induces
another person to believe in the existence of a certain state of facts,
and acting on such belief to enter into a contract with him, he cannot
be heard to say that those facts do not exist.
[Sidenote: Pleading illegality.]
Of course, the burden of proving the illegality of the consideration
lies on the person who sets it up, on the principle that he who alleges
the affirmative must prove it. This was clearly recognised by the Court
in _Fitch_ v. _Jones_.[66] By the Rules of Court, 1883, facts showing
illegality either by Statute or Common Law must be specially pleaded. It
seems, too, at any rate under the old system of pleading, that it was
not sufficient for defendant to plead a fact showing illegality, but he
must also aver that plaintiff gave no value for the bill, although the
illegality once established would raise a presumption to that
effect.[67]
[Sidenote: Admission in pleadings enough to shift burden of proof.]
It seems that in order to throw the burden of proof on to the shoulders
of an indorsee, it was not sufficient that the illegality should be
admitted on the pleadings; it must be proved in evidence. Thus in
_Edmunds_ v. _Grove_[68] in an action by the indorsee against the maker
of a note. _Plea_, that the note was made for a gaming debt, and
indorsed to plaintiff without consideration and with notice. To this
plaintiff replied denying the notice and absence of consideration
without denying the illegality. _Held_, that although the pleadings by
not putting in issue the illegality admitted it, still that had not the
effect of throwing the burden of proof on to the plaintiff that he took
without notice and for good consideration. Presumptions or inferences of
fact could only be drawn by the jury from facts proved before them. The
issues only, and not the pleadings, were before the jury. But now by the
Bill of Exchange Act, s. 30 (2) it is sufficient that the illegality
should be _admitted_ or _proved_.
[Sidenote: The exact nature of the consideration should be stated.]
It is always advisable, particularly where a plea of illegality is set
up, to state fully the circumstances under which the contract or
security is affected with illegality. Thus in _Bolton_ v. _Coghlan_[69]
plaintiff sued as indorsee of a note made by defendant. The latter
pleaded that it was made for money lost at play.
The evidence showed that defendant lost money at play to one Aldridge,
and accepted a bill for the amount drawn by Aldridge. Aldridge indorsed
to Knight. It was then agreed between defendant and Aldridge that
defendant should in substitution for the bill give Knight his note of
hand for the amount Knight indorsed to plaintiff.
_Held_ that as the plea implied that the note was originally given for a
gaming debt, whereas it was really only a substituted agreement, the
defendant should not be allowed to take plaintiff by surprise and go
into evidence of the subsequent agreement.
But under the Rules of Court the judge at the trial has power to allow
amendments in the pleadings upon terms as to costs or otherwise.[70]
[Sidenote: Action against indorser.]
The statute only affects the liability of the acceptor of a bill or
maker of a note given for a gaming debt. It does not prevent the
indorsee suing the indorser where the indorsement was, as between them,
for a legal consideration: the statute leaves the law, as settled in
_Edwards_ v. _Dick_,[71] untouched.
[Sidenote: Deeds for illegal consideration.]
(2.) Another consequence of the consideration being declared illegal is,
that although the absence of consideration does not affect a deed, an
illegal consideration avoids it. It seems, too, from _Hawker_ v.
_Hallewell_,[72] that a bond is within the equity of the Statute of
William IV. For the general authorities on the subject of Bonds and
Deeds given for an illegal consideration, the reader should refer to
Smith’s Leading cases under _Collins_ v. _Blantern_.
[Sidenote: Contracts divisible and indivisible.]
(3.) Again, if part of the consideration for which an instrument is
given be illegal, the whole is vitiated.
But here a distinction must be drawn between contracts that are
divisible and those that are indivisible.
[Sidenote: _Hay_ v. _Ayling_.]
_Hay_ v. _Ayling_[73] is an example of an indivisible contract. In 1848
the defendant owed one A £100 on a bet on a horse-race. A was also
indebted to the plaintiff. A by arrangement drew a bill on the defendant
for the amount which the defendant accepted and was indorsed by A to
plaintiff. The bill was dishonoured and the plaintiff at defendant’s
request gave him further time and took from him a renewed acceptance,
knowing at that time that the original acceptance was given for a gaming
debt. _Held_ (1) That the fact of there being an additional
consideration for the bill sued upon (_i.e._ the giving of time) would
not be an answer to the plea of illegality, as illegality in any part of
the consideration is sufficient to avoid the contract. (2) That the
plaintiff having notice of the illegality could not recover as a _bonâ
fide_ holder. (3) That the bills were avoided not by 8 & 9 Vict., c.
109, s. 18 (which statute, as we shall see hereafter, only avoids
wagering contracts without making them illegal), but by 5 & 6 William
IV., c. 41. It must at the same time be admitted that this view of the
matter was not adopted in _Bubb_ v. _Yelverton_.[74] [Sidenote: _Bubb_
v. _Yelverton_.] This was a summons in an administration suit to
determine the legality of a claim on a bond given by the Marquis of
Hastings. Having got into racing difficulties, and being unable to pay
his debts, his creditors threatened to bring the matter before the
Jockey Club and have the Marquis posted at Tattersall’s as a defaulter.
To avoid this the Marquis arranged to secure the payment of certain sums
to his creditors by bonds with sureties. Lord ROMILLY decided in favour
of the claims, on the ground that the consideration for the bonds was
not so much the existence of a betting debt, but the forbearance of the
creditors to bring the matter before the Jockey Club. It is, however,
submitted that the bonds were void as having been given partially for an
illegal consideration, viz., a series of gaming debts. [Sidenote:
Contract divisible.] On the other hand, as an instance of a divisible
contract, [Sidenote: _Clayton_ v. _Dilley_.] in _Clayton_ v.
_Dilley_[75] the defendant authorised plaintiff to bet for him at the
Epsom races. Plaintiff made two bets of £100 each, which were illegal
under the Statute of Anne, and another of £5, which was admitted to be
legal; all of them were lost, and paid by the plaintiff, who sued to
recover from defendant. The Court held that he could recover the £5, but
not the 200. It is obvious the commissions to make the different bets
were separable.
So in _Lyne_ v. _Siesfield_[76] a broker sued his client for money paid
to his use, to which defendant pleaded that the money was paid in
respect of differences on certain contracts by way of gaming relating to
the public funds and railway shares. _Held_, that as the plea was bad in
parts, and had been united in one, the whole was bad.
[Sidenote: Remedy of person who has given bond or note, &c.]
III. It seems that a person who has given a bond, bill, or note to
secure payment of a gambling debt, can bring an action in the Chancery
Division to have the security delivered up to be cancelled, and also
under the whole practice could obtain an injunction against suing at law
to recover upon it.[77] But since the Judicature Act,[78] no proceeding
in the High Court can be restrained by injunction, though probably this
does not affect an injunction against suing in any other court. In some
of the cases referred to, the action restrained was brought in an Irish
Court; in such a case probably an injunction would lie even since the
Judicature Act. In the case of the acceptor of a bill or maker of a note
being compelled to pay the amount to a _bonâ fide_ holder, [Sidenote:
Section 2 of Act.] section 2 of the Act provides that he can recover
from the drawer or payee for money “paid for and on account of the
person to whom the bill was originally given upon such illegal
consideration.”
In _Gilpin_ v. _Clutterbuck_[79] the plaintiff had been compelled to pay
an indorsee of a bill which he had accepted in payment of a gaming debt;
and it was held that he was entitled by the statute to sue the original
payee in an action of “assumpsit,” and was not bound to sue in “debt
under the statute.”
The bill bore interest on the face of it. _Held_ that plaintiff was
entitled to recover the interest from the defendant as well as the
principal sum. _Secus_ if the bill does not on the face of it provide
for the payment of interest.
[Sidenote: _Lynn_ v. _Bell_.]
In _Lynn_ v. _Bell_[80] the plaintiff, in payment of certain bets on
horse-races, gave to the defendant three cheques on the plaintiff’s
bankers, payable to bearer; two of these were indorsed by the defendant
and by his indorsees to third parties, and a third was indorsed by the
defendant alone in payment of a betting debt; all were eventually paid
by the plaintiff’s bankers. Plaintiff sued the defendant to recover
under this section the amount of the three cheques. It was urged for the
defendant (1) That the cashing of the cheques by the plaintiff’s bankers
was not a payment of a bill or note within the statute. (2) That he was
entitled to set off the amount of a cheque drawn by one A in his favour,
and indorsed by him to the plaintiff in payment of a betting debt, and
for which the plaintiff had received cash at A’s bankers. _Held_ (1) as
stated above, that the term “bill” in the statute includes “cheque.” (2)
That the payment by the plaintiff’s bankers of the amount of the cheques
drawn by the plaintiff to the holders was in effect a payment by the
plaintiff himself. “He pays when his banker pays on his account.” A
cheque is a direction to pay so much money of the drawer, “actually or
assumedly in the possession of the drawee.” It would be different if, in
payment of a betting debt, the plaintiff had drawn a bill of exchange
which was subsequently paid by the acceptor, as “it is not necessary nor
usual that there should be money of the drawers in the hands of the
drawee of a bill of exchange.” The language of this part of the judgment
would seem to leave it an open question, if the drawer of the cheque had
at the time no assets at the bank; or in the case of a bill of exchange
being given instead of a cheque, if the acceptor recovered the amount
from the drawer, whether this would not amount to a “payment” by the
drawer within the section. (3) As to the set-off, the same reasoning was
applied. The amount of the cheque was not paid by the defendant or his
bankers, but by A’s bankers, consequently it could not have been
recovered in an action by the defendant under this section, and could
not be made the subject of a set-off. [Sidenote: What instruments are
within the statute.] As to the instruments that are within the statute
in the above case of _Hawker_ v. _Hallewell_[81] the Vice-Chancellor
seemed clearly of opinion that _bonds_ were within the equity of the
statute. In the above case of _Lynn_ v. _Bell_[82] it was held that
“bills” in the statute included “cheques.” In the judgment are to be
found some instructive observations as to the similarities and
differences between cheques and ordinary bills of exchange. In _Parsons_
v. _Alexander_[83] the plaintiff sued on a cheque and also on an I O U,
both given for a gaming debt; as the cheque was unstamped the plaintiff
relied on the I O U. But as an I O U is not an instrument or security
for a debt, but only evidence of it, it was treated as void under 8 & 9
Vict., c. 108, and not as illegal under 5 & 6 William IV., c. 41. See,
too, _Quarrier_ v. _Coulston_[84].
_PART III._
[Sidenote: 8 & 9 Vict., c. 109.]
Such was the state of the law at the commencement of the present reign,
until it was attempted to deal with wagers by a broad and general
enactment, which, however, left the provisions of the Act of William IV.
untouched.
The Statute 8 & 9 Vict., c. 109, s. 18 provides “that all contracts or
agreements, whether by parol or in writing, by way of gaming or wagering
shall be null and void, and no suit shall be brought or maintained[85]
in any court of law or equity to recover any sum of money or valuable
thing alleged to be won upon any wager or which should have been
deposited in the hands of any person to abide the event on which any
wager should have been made. Provided that this enactment shall not be
deemed to apply to any subscription, contribution, or agreement to
subscribe or contribute for or towards any plate, prize, or sum of money
to be awarded to the winner or winners of any lawful game, sport or
pastime.”
Section 15 of the Act repeals the Statute of Charles II., and so much of
the Statute of Anne as was not altered by 5 & 6 William IV., c. 41, and
so much of 18 George II., c. 34, as related to the Statute of Anne or as
rendered any person liable to be indicted and punished for winning or
losing at any one time at play or by betting, the sum of £10 or £20
within 24 hours.
[Sidenote: General effect of statute.]
It will be observed that this statute includes under one sweeping
enactment _all contracts by way of wagering_, and therefore has a much
wider application than the previous Statutes of Charles II., Anne and
William IV., which, as has been before pointed out, apply only to wagers
on games and pastimes. Further, the statute introduces a change in the
attitude of the law towards transactions of this description in that
they are in no sense declared illegal; and all the penal provisions of
the earlier statutes are expressly repealed. It merely makes them void
and incapable of legal enforcement, or, in the language of LUSH, J., in
the case of _Haigh_ v. _Town Council of Sheffield_,[86] a wager is made
“a thing of a neutral character; not to be encouraged, but not to be
absolutely forbidden; it leaves an ordinary betting debt a mere debt of
honour, depriving it of legal obligation, but not making it illegal.”
The wording of the statute seems moreover to be framed so as to cover
the case which arose in _Pugh_ v. _Jenkins_,[87] where the parties made
a bet on a race which had already been run, but the event was unknown to
either, and it was held that the earlier statutes applied only to wagers
before or at the time the gaming was going on.
It may be convenient in the present place to consider what is the
precise operation of this statute on contracts within 5 & 6 William IV.
That statute declared that securities for the payment of bets on games
and pastimes (including horse-racing), as well as all contracts for the
payment of the same, shall be deemed to be for an illegal consideration;
at any rate, that is the effect given to the statute by _Applegarth_ v.
_Colley_. [Sidenote: ? Combined effect of 5 & 6 Wm. IV. and 8 & 9 Vict.]
It might well be questioned whether 8 & 9 Vict. c. 109, s. 18, leaves
that statute unaffected (in which case all such contracts would still be
illegal), or whether the wording of the Act is not sufficiently wide to
embrace such contracts and make them merely void like other wagers, that
is, in the language of Sir MONTAGUE SMITH in _Trimble_ v. _Hill_,[88] to
“abolish the distinction between legal and illegal wagers.” Of course
the latter construction leaves the seeming anomaly of a contract being
merely void when standing by itself, but illegal when forming the
consideration for a bill of exchange or other security. It is, however,
submitted that this is the true view of the matter. There is good reason
for declaring such a consideration for a bill of exchange illegal,
because there are certain well-known rules of law relating to bills of
exchange given for illegal consideration, rules based on convenience,
and designed for the protection of innocent holders; and it was, no
doubt, thought advisable to put bills given for betting debts on the
same footing. It is a strong argument in favour of this view that in
nearly all the cases of actions in respect of betting transactions
(where the bet was on a horse-race or other game) it seems to have been
almost assumed that such gaming is only void under 8 & 9 Vict., c. 109:
at the same time with the single exception of _ex parte Pyke_[89] the
point does not seem to have been raised; but in that case it was argued
that the effect of the Statute 5 & 6 William IV. was, as interpreted by
_Applegarth_ v. _Colley_,[90] to make bets on games, &c., illegal. The
point, however, was not decided, as the Court held that the facts did
not bring the case within the statute. There is at any rate no question
that wager-contracts are avoided only, and not rendered illegal by
virtue of 8 & 9 Vict., c. 109. [Sidenote: Wagers void, not illegal by 8
& 9 Vict.] It is not necessary to refer to every case which recognises
that fact. The following are perhaps the cases which best illustrate the
difference in the effects of illegal and void contracts.—_Inchbald_ v.
_Cotterill_,[91] where a broker sued for work and labour done and money
paid at defendant’s request, in and about the purchases and sales of
shares in a Railway Company. _Held_, that even supposing the “money
paid” could not be recovered, there was no answer to the count for work
done: and as there was nothing illegal about paying money on gaming
transactions (as there was under Barnard’s Act), the rest of the
consideration was not tainted. In _Thacker_ v. _Hardy_[92] and _Read_ v.
_Anderson_,[93] the agent was assumed entitled to indemnity from his
principal in respect of gaming transactions entered into on his behalf,
which he clearly would not be entitled to recover in respect of illegal
contracts. So in _Fitch_ v. _Jones_,[94] where a bill was given for a
betting debt not illegal within 5 & 6 William IV., it was held that a
merely void consideration did not throw the onus on to the indorsee’s
shoulders of proving that he was a _bonâ fide_ holder for value.
[Sidenote: Indian Law.]
It may be advisable here to notice that the Indian Contract Act contains
provisions of a very similar character. By Art. 30, “all agreements by
way of wager are void; and no suit shall be brought to recover anything
alleged to be won on any wager or entrusted to any person to abide the
result of any game or other uncertain event.
“This section shall not be deemed to render unlawful a subscription or
contribution or agreement for any subscription or contribution for any
plate, prize, or sums of money of the value of 500 rupees or upwards, to
be awarded to the winner of any horse-race.”
It is evident that nearly all the cases decided on the English Statute
will apply to these provisions of the Indian Act.
The questions which have arisen as to the construction and effect of the
Statute 8 & 9 Vict., c. 109, s. 18, may perhaps be grouped under the
three following main headings.
I.—What are contracts by way of gaming within the statute.
II.—The effect of the declaration that “no action shall be brought,”
&c.
III.—The proviso in favour of a subscription or contribution to a
prize.
[Sidenote: I.—Contracts by way of gaming.]
I.—Under this heading the following topics are of importance.
[Sidenote: _Consensus ad idem._]
(1) There must be a _consensus ad idem_ by both sides to the agreement,
and that _consensus_ must relate to an agreement, which of itself
constitutes a wager. It is not sufficient that one of the parties should
have it in his mind to speculate or gamble, terms which are used
metaphorically and are inclined to be misleading: it is essential that
the other party should be privy to and assist in the intent to wager. It
is of great importance to bear this in mind in dealings on the Stock
Exchange, where a purchaser may simply buy for the purpose of selling
again, receiving the difference in price in case of a rise. The vendor
is probably entirely ignorant of the purchaser’s ultimate intentions. If
this is so the contract cannot be in the nature of a wager, as is dearly
laid down in _Marten_ v. _Gibbons_[95] and _Thacker_ v. _Hardy_.[96]
[Sidenote: One must win, the other must lose.]
(2.) It is essential to a wager-contract that “one party should win and
another should lose upon a future uncertain event.... Some transactions,
however, on which the parties may win or lose upon a future uncertain
event, are not within 8 & 9 Vict., c. 109; for instance, the sale of
next year’s apple crop, in which the parties may be losers or winners,
but the essential element of a wager-contract is wanting.”[97]
It is probable that the Lord Justice did not mean this to be an
exhaustive definition of a wager, as it seems to omit one important
requisite, viz., mutuality. [Sidenote: Mutuality necessary.] If a man
promises to give his wife a new ball dress if the gold mine pays a 10
per cent. dividend for the current half-year, this would scarcely be a
wager, as the wife would not stand to lose anything. That this is the
ordinary understanding on the subject is clear from the fact that by the
“Rules of Betting” it is no bet unless there is a possibility for each
to lose as well as to win. Under the old law, when wagers were
enforceable, one party could not have sued the other unless the other
would have been able to sue him. In _Blaxton_ v. _Pye_[98] the plaintiff
laid odds of 14 to 8 against a horse to the defendant. By the then law
no greater sum than £10 could be recovered on a wager, so that the
defendant could not have sued the plaintiff if the horse had won. The
horse lost, but _held_ that the plaintiff could not recover the £8 on
the ground of want of mutuality.[99]
(3.) It is, however, clear that not every contract which contains the
element of mutual promises to pay is a wager. A builder agrees with an
owner of land to build a house by a certain date, he to be paid £1,000
on completion; in default, he to pay £100 by way of penalty. This would
not seem to be a wager. On the other hand, if A promises to pay B £100
if the house be finished by the time fixed, and B promises to pay £100
if it is not, both A and B being independent of the building contract,
this would appear to be a wager. It is submitted that the true test is
that in a wager the sole elements of the contract must be made up of the
reciprocal promises to pay on the happening of given alternative
contingencies.[100] A promises to pay B on the happening of contingency
_x_, B promises to pay A on the happening of contingency _y_; _y_, of
course, may be negative, such as the non-happening of _x_. The
difference between the two is illustrated by an ordinary bet on a horse
race. A backs a horse with B; B is popularly said to “lay against” the
horse, _i.e._, to back the negative contingency of the horse not
winning. As a matter of fact, “the layer” backs “the field.”[101] Each
event or contingency must, of course, be uncertain, or, at all events,
unknown to the parties, that is, it represents a chance, and where the
chances are agreed to be uneven the inequality is represented by odds.
It must not, however, be supposed that a wager necessarily embodies the
backing of conflicting opinions; the parties back their respective
chances or contingencies, not their opinions on them, _e.g._, a man
backs a horse for a race at a long price: if the horse goes to a much
shorter price, he will very likely hedge by backing the field against
him, though feeling certain that he will win. (See Appendix C.)
It is not necessary that the event should be independent of the control
of the parties, _e.g._, two persons agree to run a match for £5 a side.
This criticism certainly seems to suggest the distinction between the
two cases above given of agreements with respect to the completion of
the building. The first case contains more than mutual promises to pay
on contingencies—it is a contract of personal service, an agreement to
do something at the request of another. The second case contains no such
element; _the sole factors of the contract are the mutual promises to
pay each other on the happening of their respective events_. It is easy
to apply this test to such ordinary wagers as bets on horse races, and
to the less common cases of wagers on the rise or fall of stocks on
difference bargains. (See more fully as to this the chapters on Stock
Exchange Transactions.)
[Sidenote: Substance rather than form of contract important.]
(4.) In conjunction with the last proposition a rule may, perhaps, be
stated as follows, that it is not the form, but the substance of the
contract that is important. Thus, in _Hill_ v. _Fox_[102] the loser of
several bets borrowed £2,000 from one of his creditors, and paid him the
bets out of the money. The lender sued to recover the money lent. The
Court held that if at the time of the advance there was an “agreement or
stipulation” that the bets should be repaid out of the £2,000, then the
transaction was merely a colourable evasion for obtaining a security for
a betting debt; but that if the borrower were at liberty to do as he
pleased with the money, even though the lender hoped that he would be
repaid out of the money, then it would be a _bonâ fide_ loan, which
could be recovered. So in _Rourke_ v. _Short_,[103] the plaintiff was
about to sell some rags to the defendant, when a dispute arose about the
price of a former lot of rags, the plaintiff asserting them to have been
of one price, and the defendant said they were sold for more. [Sidenote:
Wagers under guise of sales.] They agreed to refer the dispute to M, a
wine and spirit merchant, and that whichever party was wrong should pay
M for a gallon of brandy, and that if the plaintiff was right the price
of the present lot should be 6s. per cwt., but if the defendant was
right the price was to be 3s. M decided that the plaintiff was right.
Plaintiff tendered the rags to the defendant, but he refused to accept
them at 6s., but offered 5s. The plaintiff sued to recover the higher
price, and defendant pleaded that it was a wager within the statute. The
Court held that the plea was good, as the contract was, both in form and
substance, nothing but a wager; it was not like a case of determining
the price by the mere ascertainment of the former price. It was not the
value of the goods that was to be determined, but the correctness of the
parties’ opinions. In the course of argument, _Grizewood_ v.
_Blaine_[104] was quoted. In that case it was held that a contract
nominally for the sale of shares, but in reality an agreement for the
payment of differences was a wager. But in the present case LORD
CAMPBELL observed that the contract was in form a wager, and that it lay
on the plaintiff to show that it was in substance something else.
With this case should be compared _Crofton_ v. _Colgan_.[105] There the
agreement was that the defendant should take the plaintiff’s mare in
exchange for his own; and that defendant should give plaintiff half the
winnings of her first two races, or in case she should be sold before
then, defendant should pay plaintiff one-third of what she should be
sold for. _Held_ that this was not a wager, but only a means of
assessing the price of the mare in certain events.
[Sidenote: Sale with contingencies.]
It is not difficult to apply the decision in this case to a transaction
which is by no means uncommon in respect of a race horse, viz.: a sale
with contingencies, _i.e._, where the purchaser agrees to pay the seller
a share of whatever the horse may win in any one or more engagements.
Such a contract is in no way a wager.
[Sidenote: _Brogden_ v. _Marriott_, 3 Bing., N.C.]
On the other hand, in _Brogden_ v. _Marriott_,[106] the agreement was
for the purchase of a horse for £200, if he trotted 18 miles within a
hour, and for a shilling if he failed. The Court held that this was
simply a wager on a trotting match against time, and so void under the
Statute of Anne.
[Sidenote: Agreement with a tipster for a share of winnings.]
In _Higginson_ v. _Simpson_[107] the plaintiff was what is known as a
“tipster,” or a person who supplied other persons with information as to
likely winners of races, and had supplied defendant with the name of a
horse called Regal for the Grand National, and it was agreed between
them that the plaintiff should have £2 on Regal, at 25 to 1 against that
horse for that race, _i.e._, that if the defendant backed Regal and the
horse won the plaintiff was to have £50, but if it lost plaintiff was to
pay defendant £2. Defendant backed Regal, and it won; and plaintiff sued
to recover £50. The Court held that it was necessary to look not only at
the form of the contract, but also at the substance; that even if one
element in the contract was the remuneration of the plaintiff for his
personal skill, yet “the ultimate effect of the bargain was to be wholly
dependent upon the occurring of an event over which neither party had
any control.” But see Appendix A, where some observations on this case
are suggested.
[Sidenote: Stakes deposited on horse-races, games, &c.]
(4.) There appears to be no difference between competing in horse-races
or games for stakes deposited by the competitors, and betting on the
competitors; both are equally agreements by way of wagering. Thus until
the passing of the Statute 3 & 4 Vict., c. 35, horse-racing was subject
to certain penal restrictions. Even after it had been legalised
generally by that statute, it was held in _Bentinck_ v. _Connop_[108]
that the only effect of the statute was to exempt it from the penal
provisions of earlier statutes; it did not make wagers on horse-races
recoverable: consequently where two or more persons agreed upon a
horse-race for certain stakes (not deposited), it was held that such an
agreement was a wager and nothing more; so that the winner could not
recover the stakes from the loser. So in the more modern case of
_Diggle_ v. _Higgs_[109] the Court construed an agreement between two
persons for a walking match for £200 a side as a wager. We shall have
occasion to revert to this case again when we come to treat of the
difference between a wager and a contribution to a prize.
[Sidenote: Distinction between “stakes” and “sum added.”]
An important distinction was drawn in the case of _Applegarth_ v.
_Colley_,[110] between stakes contributed by the competitors (which were
then irrecoverable under certain circumstances) and a “sum added” by a
third party as part of the prize to the winner. The latter it was held
could be recovered by the winner. A race for a prize given by a third
party seems to lack one of the elements of a wager suggested above,
viz., that “one must win and the other must lose;” for while one party
might be said to win the prize, the other cannot be said to lose it.
If then, as it is submitted, an agreement for an ordinary horse-race for
stakes deposited or subscribed by the competitors themselves is in
strict law a mere wager, it must be borne in mind that the law as to
depositors and stakeholders, the determination of the authority of the
latter, &c., is applicable to such cases. A full account of the cases on
this subject is given _post_ p. 60 _et seq._
It must be remembered moreover that since the passing of 8 & 9 Vict. c.
109, s. 11, which avoids “all contracts by way of wagering,” the
distinctions drawn in _Applegarth_ v. _Colley_ with regard to prepayment
and the amount of the stakes will only hold good so far as it affects a
cheque given in payment of the stakes. This has been explained above,
Cap. I., Pt. 2.
[Sidenote: Void nominations—could executors pay stakes?]
This view of the law has an important bearing on a question which was a
great deal discussed not long ago as to the propriety of the rule (Rule
86 of the Rules of Racing) which provides that all entries become void
on the death of the nominator or person in whose name the entry is made.
It has been urged that executors ought to have the option of paying the
stakes and so adopting the horse’s engagements (see the leading article
in _The Sporting Life_, December 21, 1885). But even if the rule were
altered to allow of this, it seems impossible to escape from the
decision just referred to—that the payment of stakes in respect of a
horse-race is nothing less than the payment of a wager between the
competitors. [Sidenote: Or forfeits.] The difficulty would occur in the
payment of “Forfeits,” which seem to be in the nature of a penalty for
not keeping a horse in his engagements. As we shall point out hereafter
a penalty payable on making default in a wager cannot legally be
recovered, _post_ p. 63. [Sidenote: Executors cannot pay betting debts.]
It is perfectly clear that an executor must not pay the gaming debts of
his testator. See _Manning_ v. _Purcell_.[111]
When we come to the law as to stakeholders, we have occasion to make one
or two suggestions as to the rights or duties of executors where their
testator has actually paid in respect of entries, stakes, &c.
If the rule were altered as suggested, it would be wise for turfites to
give their executors full powers in their wills.
[Sidenote: Rescission by wager.]
(5.) Sometimes a valid contract is attempted to be rescinded by a wager,
_e.g._, if A is indebted to B in a certain sum, and they agree to toss
for “double or quits.” It seems clear that this being simply a wager
would not be valid, and that A’s original liability would remain.
In _Wilson_ v. _Coleman_[112] plaintiff had contracted to take a lease
of defendant’s house, having paid a deposit of £25. Defendant offered
plaintiff £50 to rescind the agreement, which plaintiff refused. The
parties then tossed whether the contract should be rescinded for £50 or
£75. The defendant won, and plaintiff sued to recover £50. The Court
interpreted the agreement as an absolute rescission for £50 with £25
more if plaintiff won the toss. The two bargains were therefore
separate, and the first part of the agreement was not vitiated by the
second part being a wager. Otherwise the whole rescission would have
been void.
[Sidenote: Speculative sales or purchases.]
(6.) Speculative sales, that is, of goods or merchandise not in the
possession of the vendor at the time of the contract, are neither
illegal at Common Law, nor are they wagers within the statute. But in
the early part of this century a doctrine was propounded that they were
illegal. Thus, in _Bryan_ v. _Lewis_[113] the plaintiff sued a broker
for negligence in carrying out instructions for the sale of nutmegs. It
appeared that the plaintiff was not the owner of the nutmegs at the
time, but intended to go into the market and buy. ABBOTT, C. J., who had
previously, in _Lorymer_ v. _Smith_,[114] said that such contracts were
not to be encouraged, now laid it down that no action could be
maintained on a contract to sell goods which he has not in possession at
the time, but which he simply intends to go and purchase in the market,
adding that “the law was not new.” The ground of this opinion seems to
have been, that such contracts amounted to a wager on the price, and had
a tendency to make prices unsteady; at any rate, this was the line of
argument adopted in _Hibblethwaite_ v. _M’Morine_,[115] in 1839, when
the same point came before the Court of Exchequer; but the Court
unanimously overruled _Bryan_ v. _Lewis_. [Sidenote: Engrossing.] There
was an offence at Common Law, known as “Engrossing,” which meant buying
up large quantities of goods with intent to sell them again, which seems
to hinge upon the same principle as the speculative sales denounced by
ABBOTT, C. J. But the law in this respect, which had long been a dead
letter, was repealed by a statute, 7 & 8 Vict., c. 24.
Besides, as was said in _Thacker_ v. _Hardy_,[116] and _Martin_ v.
_Gibbons_,[117] neither the sale of next year’s apple crop nor of the
next haul of a fisherman’s net were wagers.
The selling of public stocks, not in the possession of the vendor, was
made an offence by BARNARD’S Act, but this was repealed by 23 & 24
Vict., c. 28. It was decided by LINDLEY, J., in _Thacker_ v.
_Hardy_[118] that there was nothing contrary to public policy, as was
contended, in making large purchases on the Stock Exchange by way of
speculation, _i.e._, for the purpose of reselling at an advanced price.
It is fortunate that already too elastic phrase “contrary to public
policy” was not allowed to stretch to so unreasonable a length, as it is
difficult precisely to estimate what the result would have been to the
business world if such a contention had prevailed.
The law as now settled in England has been incorporated into the Indian
Contract Act, Art. 88 of which provides that “a contract for the sale of
goods to be delivered at a future day is binding though the goods are
not in the possession of the vendor at the time of the contract, and
though he has not at the time any expectation of acquiring them
otherwise than by purchase.”
[Sidenote: Contracts between principal and agent not wagers.]
(7.) Questions frequently occur as to the rights as between principal
and agent when the latter has been employed by the former to make a
wager for him. We have then to consider—
(_a._) The rights of the principal against the agent.
(_b._) The rights of the agent against the principal.
The general result appears to be, that the contract between the
principal and the agent, by which the latter undertakes to carry out
wagering transactions on behalf of the former, does not itself partake
of the nature of a wager.
[Sidenote: Rights of principal against agent.]
(_a._) It seems that if an agent employed to bet for a principal receive
money in respect of winnings he is liable to account to his principal
for it. The obligation of the agent arises not by virtue of a contract
by way of wagering, but out of an implied contract to pay over money
received to his principal’s use; it is in fact a new and independent
contract. There is, it is true, a decision of STUART, V.C., to a
contrary effect. In _Beyer_ v. _Adams_[119] the loser of a bet paid the
money into the hands of the plaintiff’s betting agent, who had
negotiated the bet for him. The agent died and the plaintiff sought to
prove against his estate in respect of the sum the agent had received.
His honour held that the claim could not be sustained. “The language of
the statute was perfectly general as to the persons against whom an
action was not to lie; and did not solely apply to actions against the
loser of a wager. The cases quoted in support of the claim only decided
that the receipt of money by the agent was a good consideration for a
bill of exchange, as in _Johnson_ v. _Lansley_. Those cases like
_Tenant_ v. _Elliott_ which showed that an agent could not set up
illegality against his principal only dealt with general principles, and
not with the words of an express Act of Parliament.” It is no doubt a
perfectly true distinction between that case and the earlier ones, and
that the latter turned on the question of sufficiency of consideration
for a bill of exchange, and the same was the case in _Beeston_ v.
_Beeston_, where AMPHLETT, B., expressly reserves the question “Whether
the defendant could keep the money in his pocket if he won?”
[Sidenote: Partners.]
In _Johnson_ v. _Lansley_[120] the plaintiff and A were partners in
betting transactions. A received the whole of the winnings, and endorsed
to the plaintiff a bill accepted by the defendant in payment of
plaintiff’s share. Defendant pleaded that the statute deprived the
plaintiff of his remedy, but _held_ that the consideration for the
endorsement was money for which A was bound to account to plaintiff, and
the statue did not relieve him from that liability.
[Sidenote: _Savage_ v. _Madden_.]
Again, in _Savage_ v. _Madden_[121], where plaintiff sued defendant for
money had and received to the use of the plaintiff, defendant pleaded
that the money was due to plaintiff on wagers upon a horse-race. Baron
MARTIN said: “If I were called upon to give a judgment on this plea, I
should be disposed to say it was bad, as it does not allege that the
money was won by the plaintiff _from the defendant himself_. I think the
common form of an account stated would be all satisfied by the money
claimed by the plaintiff having come into the hands of the defendant, a
third person for the purpose of his paying it over to the plaintiff.”
It is quite clear that his lordship considers the obligation of an agent
who has received money won on a wager on behalf of his principal, to pay
over what he has received is in no way a wagering transaction in itself,
though it may arise out of such. This seems in accordance with the view
of Baron POLLOCK in _Beeston_ v. _Beeston_[122], that the statutes only
apply to contracts as between the parties to the wager.
This view of the matter has lately been confirmed by the Court of Appeal
in _Bridger_ v. _Savage_[123], so that _Beyer_ v. _Adams_ must be
considered as overruled. Seeing, however, that in these cases the
transactions were not illegal, they must not be considered as deciding a
somewhat vexed question whether a principal agent or a partner can
recover, and where the transactions are illegal, [Sidenote: Qy. if
transaction illegal.] as for instance, under the Gaming House or Betting
House Acts, we shall deal with this subject in the chapter on such
establishments.
Actions of this description, that is, by principals against their agents
for money received, have of late been numerous, as well as by agents
against their principals to recover commission and reimbursements; but
of this latter class of action we speak later on. Experience seems to
show that the advantage is on the side of the agent, seeing that the
plaintiff has to prove facts which are generally solely within the
agent’s knowledge. [Sidenote: What principal must prove.] (1) The
agreement between himself and the agent. Where this agreement is in
writing, as where the parties have contracted on the footing of written
conditions, the difficulty should not be great; but frequently the
instructions are given verbally. (2) That the agent made the bet in his,
the plaintiff’s, behalf. If he did not, of course no action could lie
for money had and received. [Sidenote: _Cohen_ v. _Kittle_.] In the case
of _Cohen_ v. _Kittle_[124] this difficulty was felt; consequently an
alternative claim was inserted in the pleadings for damages for breach
of contract in neglecting to make the bet. The case was ultimately
fought in the question whether such an action was maintainable. The
Court held chiefly on the authority of _Webster_ v. _De Tastet_[125]
that no such action would lie, seeing that even if the agent had made
such a bet the plaintiff could not have enforced it legally against any
third party.
It is, however, submitted with great deference that this decision is
incorrect. It appears to confuse two distinct questions: (_a_) whether
the action would lie; (_b_) proof of damage sustained. Betting contracts
not being illegal there would seem to be no reason why the breach of an
agreement to make a bet should not be a cause of action. _Webster_ v.
_De Tastet_ was an action to recover commission on a policy contrary to
the policy of the law. It, moreover, did not appear that there was any
conventional forum by which such a policy could have been enforced. In
most betting transactions the agent belongs to a club, the committee of
which would enforce any bet that was made against a defaulter by the
penalty of expulsion.[126]
[Sidenote: The Gaming Amendment Act.]
It is noticeable that Lord Herschel’s Act, the Gaming Act Amendment Act,
of which further mention will be made hereafter, while preventing an
agent from recovering commission or reimbursement from his principal,
does not contain a reciprocal restriction on the principal’s right to
recover winnings from his agent; consequently the principal’s rights
against his agent, as established by the cases above quoted, remain
untouched. Seeing, however, that, by Lord Herschel’s Act, the agent
cannot recover his commission in respect of his services, he would seem
now to be in the position of a gratuitous agent, in which case no action
would lie against him at the suit of his principal for neglecting to
carry out his instructions unless, _semble_, he receives his commission
in advance.
(3.) The plaintiff also has to show that the agent received the money in
respect of his bet. This proposition scarcely requires authority. See,
however, the dictum of Hawkins, J., in _Cowan_ v. _O’Connor_;[127] but
it is sometimes a difficulty in the plaintiff’s way. No doubt it is not
necessary to show that actual cash passed. [Sidenote: Payment by set
off.] If the agent settled with the bookmakers by balancing accounts
with him, this would no doubt be equivalent to payment.[128]
[Sidenote: Estoppel of agent.]
The case of _Moore_ v. _Peachey_[129] will no doubt go some way to
remove the plaintiff’s difficulty in this respect. CHARLES, J., held
that the defendant having entered into an agency agreement, and from
time to time rendered accounts to the plaintiff, showing bets to have
been made and moneys received or paid on his behalf, was estopped from
denying the truth of his representations.
It must, however, be admitted, for it is common knowledge, that the
documents passing between the supposed principal and agent do not
represent the real facts. In a majority of such cases the agent is a
myth; he is in reality a bookmaker making a book with his different
clients, that is if his _clientèle_ is sufficiently large. If not, a
common course of business (and this has frequently been proved in the
Courts) is for him to lay his clients the odds at a point or two below
the market odds, and “back the horse back” in a club at the longer odds.
Of course, if this be professedly his business, he is amenable to the
provisions of the Betting House Act (as to which see _post_). That is no
doubt the reason why he affects to act as agent; but _Moore_ v.
_Peachey_ (_ubi sup._) says that he cannot afterwards turn round and say
he was a principal.
[Sidenote: Rights of agent against principal.]
(_b._) The next class of cases in which the application of the statute
has come in question is where an agent has been employed to enter into
wager-contracts on behalf of a principal; the bets are lost; the agent
pays, and seeks to recover from the principal.
Upon this matter two distinct questions have arisen.
I. Whether an authority to bet implies an authority to pay the bet if
lost.
II. Granted such implied authority, can the principal revoke the
authority to pay, after the event has been determined, and before
payment has been made?
[Sidenote: Does authority to bet imply authority to pay?]
I. Upon this question none of the older authorities go very close to the
mark. Thus in _Oulds_ v. _Harrison_[130] the defendant employed one
Bennett to bet for him, and Bennett laid the bets in his own name on the
defendant’s account. The bets were lost, and Bennett, without further
authority from defendant, paid them, and drew a bill on defendant for
the amounts, which was accepted by the defendant, and indorsed by
Bennett to the plaintiff. Plaintiff sued defendant on the bill. For the
defendant it was argued that the payment of the debts by Bennett was in
his own wrong and not authorised by his agency. But the Court held that
defendant by accepting the bill acknowledged that the payments had been
made on his account, and that consequently there was a sufficient
consideration for the bill. It must be observed that this case did not
decide the point, viz., whether an authority to bet included an
authority to pay the bets if lost; from a remark of PARKE’S, B. (at page
577), “the defendant was not bound in law to repay the drawer,” it would
seem that in his view it did not. _Jessop_ v. _Lutwyche_[131] turned on
a pleading point: the plaintiff, a broker, sued to recover differences
paid by him on the sale of certain stocks and shares on behalf of the
plaintiff. Defendant simply pleaded the Statute 8 & 9 Vict., c. 109, and
it was held that the plea was bad, as being consistent with the
plaintiff’s having paid the money at defendant’s _express_ request. The
plea in _Knight_ v. _Chambers_[132] was overruled on the same grounds.
The case of _Rosewarne_ v. _Billing_[133] carried the point no further.
This was another action by a broker to recover differences paid for his
principal. The defendant pleaded the statute without traversing the
averment that the money was paid at defendant’s request. The Court,
following the former cases, held the plea bad; but ERLE, C. J., in
giving judgment, expressed his opinion that an authority to bet implied
an authority to pay if the bets are lost; and _semble_ that if a broker
be compellable by the usage of the stock market to pay losses himself,
the principal could not rescind the authority to pay. The older case of
_Clayton_ v. _Dilley_[134] was decided in the Statute of Anne. The
plaintiff, the defendant’s betting agent, sought to recover money he had
paid for the defendant without express authority to do so. The bets were
admittedly illegal by statute. It was held that plaintiff could not
recover on the ground that there being no express direction to pay, it
could not be implied in an illegal transaction. This case would
therefore seem to have little importance at the present day, betting
transactions being void and not illegal. The case of _ex parte
Godfrey_[135] seems to be the earliest direct decision on the point,
where it was held by BACON, V.C., that money paid by a broker on
so-called gaming transactions entered into by him for a principal, was a
debt for which a bankruptcy petition might be presented, as the
principal knew that the broker was liable under the rules of the Stock
Exchange to pay losses, a request to pay on behalf of the principal must
be implied. From this decision it would seem that this authority to pay
would not be implied unless the principal knew of the liability which
the agent was incurring. In _Bubb_ v. _Yelverton_[136] (which is
reported very shortly) Lord ROMILLY laid down in general terms that an
authority to bet implied authority to pay; but in that case (in which
Lord Charles Ker claimed payment out of the Marquis of Hastings’ estate
for money paid on lost bets, he having been the Marquis’ agent to bet
for him) there could have been no question as to knowledge on the part
of the Marquis of the consequences that would result from the agent’s
not paying.
The case of _Thacker_ v. _Hardy_[137] does not afford much assistance on
the present point as to the authority to pay being implied from
authority to bet, as according to the view taken of the facts by
LINDLEY, L.J., which view was supported by the Court of Appeal, the
transaction does not seem to have been in the nature of a wager. The
case, however, being an action by an agent for indemnity against his
principal, the knowledge of the latter as to the course of business the
agent would have to pursue, is made one of the grounds of his liability
to his agent.
In _Oldham_ v. _Ramsbotham_[138] the question was slightly touched upon
in argument, but not noticed in the judgment.
In _Lynch_ v. _Godwin_[139] plaintiff at defendant’s instructions and in
his presence laid £40 on a horse called Vril for the Ascot Stakes. The
horse lost and plaintiff paid the bet. The Court of Appeal held that he
could recover the money he had paid from the defendant. Per JESSEL,
M.R., “If you employ an agent to bet for you, _you know_ that he must
pay or be subject to unpleasant consequences. _If you do not withdraw
your request_, it must continue; and if he pays, he pays at your
request.” LINDLEY, L.J., also added a more general proposition that an
authority to pay was implied in an authority to bet. It is clear that
the agent in this case laid the bet in his own name.
From these remarks of the MASTER OF THE ROLLS it would seem (1) That the
implied authority of the agent to pay depends on the knowledge of the
principal that the agent was himself liable legally or otherwise, which
knowledge would probably be presumed in cases of betting through regular
betting agents, as in both such cases it is well known that the agent is
bound by usage to incur personal responsibility. [Sidenote: Is authority
to pay revocable?] (2) That the principal might withdraw this implied
authority to pay any time before the agent had paid the money over to
the winner, and so prevent the agent’s paying on his account.
II. The general rule of law is that where an agent is invested with an
authority coupled with an interest, that is, where the authority is
given to the donee of such authority for a good consideration for the
purpose of securing to him some benefit, such authority is
irrevocable.[140] Now it has of late been a much vexed question whether
the express or implied authority of a betting agent to pay a bet if
lost, where the agent has made the bet in his own name, can be revoked
by the principal, or, in other words, whether such authority is so
coupled with an interest as to be irrevocable.
Not long ago the very point came before the Courts, in _Read_ v.
_Anderson_,[141] and this was the first occasion on which it underwent
serious discussion. There were a few dicta on the subject—that by EARLE,
C.J., in _Rosewarne_ v. _Billing_,[142] and again the point was mooted
in _Marten_ v. _Gibbons_.[143] In this case the defendant had, through
the plaintiff, a stock broker, sold a future dividend on railway stock
to a firm of jobbers. The dividend was eventually declared at a higher
rate than that at which the defendant had sold it. Defendant being
called upon to pay the difference refused, and revoked the authority of
the plaintiff to pay. Plaintiff paid and sued to recover from defendant.
Sales of future dividends were not enforceable by the rules of the Stock
Exchange. Defendant contended that the authority of the plaintiff to pay
had been revoked, but BLACKBURN, J., in giving judgment said: “If the
contract was binding on the plaintiff it was impossible for the
defendant to revoke it. If not enforceable and not revoked they would be
liable. If not enforceable and revoked, I am inclined to agree that they
would still be liable.” But in this case the plaintiffs had, as brokers,
entered into a contract which, although not enforceable against them by
expulsion according to the rules of the Stock Exchange, left them, in
the opinion of the Court, under a legal liability to the jobbers. In a
wagering transaction the case is different, as the agent is under no
legal liability.
On the other side the dictum of the MASTER OF THE ROLLS in _Lynch_ v.
_Godwin_ seems to imply that the authority in a betting transaction can
be revoked.
[Sidenote: _Read_ v. _Anderson_.]
In _Read_ v. _Anderson_[144] the following were the material facts of
the case.
The plaintiff was a turf commission agent, and a member of Tattersall’s
subscription rooms. The defendant had been in the habit of employing
plaintiff to bet for him, paying losses to him and receiving winnings
from him. By a well-established usage _known to defendant_, such
commission agent employed to back horses does so in his own name, and
becomes responsible for payment if the bet is lost to him. The defendant
by telegram instructed the plaintiff to back certain horses for him,
which plaintiff did in his own name. The race was fixed for 2 o’clock,
and at 3.5 plaintiff handed in at the office a telegram announcing that
the horses had lost. Defendant the same evening repudiated the bets, and
all liability under them, on the ground that the plaintiff ought to have
informed him that he was “on” before the race was run. On the settling
day plaintiff paid the bets in question to the winners; had he not done
so he would have been liable as a defaulter under Rule 3 of Tattersall’s
subscription room to be excluded from it, and also under Rule 50 of the
Jockey Club would, on being reported by such committee as a defaulter,
have been subject to various disqualifications under Rule 49 of the
rules of racing as to entering and running horses. It does not appear
from the report of the case that the defendant knew of the specific
consequences that would ensue from the plaintiff’s making default in
payment of the bets. On behalf of the defendant it was contended (1)
That the plaintiff’s authority to bet was subject to an express
condition that plaintiff should before the race inform defendant that he
was “on.” (2) That anyhow such condition was implied by universal usage.
(3) That the bets were wagering contracts that the plaintiff had no
authority to pay them, or that if he had such authority was revoked. The
judgment of HAWKINS, J., proceeded on the following grounds: (1) He
found as a fact that there was no such condition, either express or
implied, as that contended for by defendant; also that the bets had
_bonâ fide_ been made in accordance with the authority. (2) That
wagering contracts being only void, and not illegal by 8 & 9 Vict., c.
109, the loser of the bet might lawfully either pay himself, or request
somebody else to pay for him. (3) That such request might be express or
implied, and he found _as a fact_ that defendant, in giving authority to
make the bets, also gave authority to pay them if lost. (4) Found, _as a
fact_, that defendant had not revoked this implied authority to pay. (5)
Irrespective of the latter finding such authority was irrecoverable as
being an authority which plaintiff had an interest in carrying out; as
otherwise he would have incurred serious penalties as a defaulter. (6)
That the plaintiff’s case might also be put on the following ground:
That if one man employs another to do a legal act, which, in the
ordinary course of things will involve the agent in obligations
pecuniary or otherwise, a contract on the part of the employer to
indemnify his agent is implied by law ... and it signifies nothing that
such obligation is not enforceable in a Court of Justice. (7) His
lordship distinctly reserved the question as to how far these incidents
would apply where the agent bets, not in his own name, but in that of
his principal.
[Sidenote: Indemnity.]
Perhaps the more logical and less artificial way of putting the rights
of the agent is the alternative suggested by HAWKINS, J.—his right to
indemnity. The “authority coupled with an interest” seems rather too
wide, seeing that the agent has an interest in making the bet directly
the instructions are given; yet the judgments seem to recognise that the
authority could have been withdrawn before the bet was made.
The case has lately been decided by the Court of Appeal.[145] BOWEN and
FRY, L.JJ., affirming the decision of HAWKINS, J., BRETT, M.R.,
dissenting. The grounds upon which the MASTER OF THE ROLLS bases his
judgment are that, although an authority might imply an authority to
pay, yet, as betting contracts were void, and as the only inconvenience
to the agent consists in his being barred from pursuing a calling to
which the law wholly objects, no promise could be implied that such
authority should not be revoked. His lordship considered that as a
matter of fact defendant had revoked plantiff’s authority to pay; thus
differing on that point from HAWKINS, J. BOWEN, L.J., treats the whole
question as an inference of fact. In his lordship’s opinion, the only
inference of fact proper to be drawn was that if the agent carried out
his contract, and involved himself in a difficulty, from which he could
only escape by paying money, the defendant was to indemnify the
plaintiff; further that the plaintiff had paid the bets by virtue of a
contract between himself and his principal, that the latter should not
revoke the original contract.
His lordship therefore treats the matter somewhat differently from
HAWKINS, J., for it will be observed that in the Court below, HAWKINS,
J., treats the implied authority to pay as an inference of fact; which
was no doubt amply justified by the previous dealings between the
parties, while he deals with the question of revocation of authority as
a matter of law.
However, perhaps the result of the authorities may be shortly expressed
in the following way:—(1) Authority to pay is implied in authority to
bet (_a_) where the agent lays the bet in his own name, (_b_) and where
to the knowledge of the defendant non-payment of the bet would entail
serious inconvenience to the agent.
(2.) That under such circumstances the authority to pay is irrevocable
directly the bet has been made.
But it would seem that the cases do not expressly decide how the law
would stand in two cases. (1) Where the agent lays the bet, not in his
own name, but in that of his principal, thus incurring no personal
responsibility. (2) In cases where the principal instructs an agent who
is not a professional betting man or not (at any rate to the knowledge
of the principal) in any other way connected with the turf so as to
incur such penalties for default as the plaintiff in _Read_ v.
_Anderson_ would have incurred. Would the risk of mere social obloquy
give the agent such an interest in paying the bet, as to make the
authority to pay irrevocable? or supposing the agent belonged to a club,
a fact which was unknown to the principal, by the rules of which the
committee were empowered to expel any of its members who failed to
discharge debts of honour. It will be observed that in nearly all the
cases alluded to above that the principal’s knowledge, actual or
implied, of the agent’s responsibility, was the ground of inferring an
authority to pay from the authority bet. [Sidenote: Agent’s authority
revocable before bet made.] Of course this question of revocation only
arises after the bet has been made, when the responsibility of the agent
has attached. There is no doubt, as remarked by HAWKINS, J., in _Read_
v. _Anderson_, that the agent’s authority might have been revoked before
the bet was made.
In actions against the agent as in _Bridges_ v. _Savage_,[146] the
defence of wagering and gaming is often raised, _i.e._, that the person
to whom the instructions were given had acted not as agent but as a
party to the wager. In the former case it was raised by the principal,
who was sued for indemnity; in the latter by the agent, who was called
upon to account for winnings. To avoid such difficulties in future it
would be wise both for persons who employ commission agents, and for the
latter who execute commissions, to have the terms of their bargain
definitely in writing. “Please back for me,” “Taken for you,” seem to
form a contract of agency on which no such question could arise.
[Sidenote: What agent must prove.]
Of course the agent must prove that the payment made to the winner of
the bet was an authorised payment. In none of the cases as between
principal and agent has any dispute arisen either as to whether the bet
remained valid to the end, or whether the horse really lost or won. It
is however, by no means impossible that such questions might be put in
issue. Supposing after the bet was made the nominator of the horse, in
respect of which the bet was made, died, so that (at any rate according
to the new Rules of Betting) the bet would be off, or supposing
defendant had instructed plaintiff to back horse A; horse B is placed
first by the judge and A second, but B is disqualified afterwards for
reasons which would cause the bets to go with the stakes.[147] It is
obvious that if the agent paid on this as for losses he could not
recover from his principal. The real point of difficulty is on what
evidence the Court would act. It is submitted (1) That the employment of
an agent to make bets in a betting market implies an authority to bet
according to the rules and usages of such market, and that the Court
would look at the Rules of Betting or other document proved to regulate
such transactions. (2) That in all bets the question whether a horse is
the winner or the loser is impliedly to be determined by the Rules and
Conditions under which the particular race is run. We shall hereafter,
page 74, deal more fully with the term “winner,” but it will be noticed
all the cases thereunder were decided on a construction of the Rules and
Conditions.[148]
[Sidenote: Gaming Amendment Act, 1892.]
But the law respecting the rights of the agent against his principal has
lately been materially altered by the Gaming Amendment Act, 1892, 55
Vict., c. 9. This Act provides that “any promise express or implied to
pay any person any sum of money paid by him under, or in respect of any
contract or agreement rendered null and void by the Act 8 & 9, Vict., c.
109, or to pay any sum of money by way of commission fee, reward or
otherwise in respect of any such contract, or of any services relating
thereto or in connection therewith shall be null and void, and no action
shall be brought to recover such sum of money.” Of course the cases
already dealt with will still apply to transactions which took effect
before this statute came into operation. But as to dealings between
principal and agent to which the act applies, _Read_ v. _Anderson_ can
no longer have any application. As has been pointed out above, the
principal’s right of action against his agent to recover winnings
remains untouched.
[Sidenote: Agent cannot recover from third party.]
In _Britten_ v. _Cook_[149] the plaintiff made bets on behalf of his
principal with defendant, which bets he won. Plaintiff not having
received the money from defendant, settled with his principal for the
amount, because he would have been subjected to disagreeable
consequences if he did not, and sued the defendant for the amount.
_Held_ that there being no express request by defendant to plaintiff to
pay on his behalf, and no implied request, seeing plaintiff was not
defendant’s agent, the action would not lie.
[Sidenote: No action shall be brought, &c.]
II. The next class of cases to consider are those which deal with the
interpretation of that part of section 18 of the Act in question, which
provides that “no action shall be brought or maintained in any Court of
Law or Equity, for recovering any sum of money or valuable thing alleged
to be won upon any wager, or which shall have been deposited in the
hands of any person to abide the event on which any wager shall have
been made.”
[Sidenote: Right to recover from stakeholder.]
Nearly all the questions which have arisen on this part of the section
relate to the right of a party to a wager to recover his stakes from a
stakeholder with whom both parties have deposited their stakes. Such
questions are of course entirely distinct from the right of the winner
to recover the whole stakes from the stakeholder, as they usually occur
when one party desires to repudiate the wager, and brings his action
before the stakeholder has paid over the money to the winner.
[Sidenote: Cases before the statute illegal wagers.]
Before the statute 8 & 9 Vict., c. 109, some wagers were legal, some
illegal. With respect to illegal wagers it seems never to have been
questioned, but that one party could at any time before the money was
paid over to the winner revoke the authority of the stakeholder, and
demand back his stakes. All the cases recognise the distinction between
recovering stakes from a stakeholder and recovering on the wager
itself.[150] And in _Hastelow_ v. _Jackson_ it seems to have been
considered that where one of the parties to the wager considering
himself to be the winner demanded the whole of the stakes from the
stakeholder, whereas the other party had really been decided to be the
winner, such demand was a sufficient revocation of the stakeholder’s
authority to pay his stake over to the winner. But this decision was
doubted in _Mearing_ v. _Hellings_.[151]
[Sidenote: Legal wagers.]
But with respect to wagers which were legal the decisions were not
uniform. Thus in _Eltham_ v. _Kingsman_[152] it was held that where two
parties to a wager had deposited two watches to abide the event of a
wager, which was for the purposes of the case assumed to be a legal
wager, either of the parties could, while the contract was executory,
revoke the authority of the stakeholder and recover his watch in trover.
The Court compared the authority of a stakeholder to that of an
arbitrator which was clearly countermandable before he had given his
decision. On the other hand, in the later case of _Emery_ v.
_Richards_,[153] where the plaintiff sued a stakeholder to recover his
deposit on a legal foot-race (the sum deposited being under £10). _Held_
that as the contract was not illegal under the Statutes of Charles II.
and Anne, neither party could retract without the consent of the other.
All such questions as to the right to recover a deposit from a
stakeholder have, since the passing of the Statute 8 & 9 Vict., c. 109,
turned out on the construction of the words “no action shall be
brought,” &c. [Sidenote: Statute only applies to actions by winner.]
There is a long series of decisions to the effect that this provision
only applies to actions brought by the winner of a wager either against
a stakeholder or against the loser to recover his winnings, and does not
prevent either party from revoking the authority of the stakeholder
before the money is paid over to the winner, and suing to recover his
stakes.
In _Varney_ v. _Hickman_,[154] plaintiff and one Isaacs agreed to bet
£20 on a race to be run between their respective horses, the stakes
being deposited with defendant. Before the race the plaintiff declined
the bet and demanded back his deposit. On behalf of defendant it was
contended that it was an action within the meaning of the section.
MAULE, J., in giving judgment, discussed the effect of the part of the
section. “The first part of the section,” he says, “declares the
contract to be null and void; the second prevents the winner from
bringing an action to recover the amount of the bet from the loser; the
third prevents the winner from suing the stakeholder. It certainly is
true that the second branch is involved in the first, _i.e._, if the
section had stopped at the end of the first branch it would have
followed that no action could be brought to enforce a contract so
declared to be void. But I apprehend there is nothing unusual in an Act
of Parliament stating a legal consequence in this way. Then the third
branch of the clause, it is said, will be idle and insensible unless
there be given to it the further effect of prohibiting the parties from
recovering their deposits from the stakeholder upon the repudiation of
the illegal contract.... But I think if the second branch of the clause
be looked at, it is more consistent with the whole to treat the third as
an exposition only of the first.... Although perhaps the third clause
might have been omitted as well as the second, yet, the second being
inserted, the third became necessary also. Looking, therefore, at the
whole section, critically and grammatically, I am of opinion that it
does not apply to an action like this, where a party seeks to recover
_his deposit_ from a stakeholder, upon a repudiation of the wager. Upon
higher grounds also, I think that is the true construction of the Act.
This cannot be considered as an action brought for recovering a sum of
money alleged to be won upon a wager; nor do I think it is an action
brought to recover a sum deposited in the hands of the defendant to
_abide_ the event of a wager. As soon as the defendant received notice
from the plaintiff that he declined to abide by the wager, the money
ceased to be money deposited in the hands of the former to abide the
event, and became money of the plaintiff in his hands without any good
reason for detaining it.”
In _Martin_ v. _Hewson_,[155] where money had been deposited to abide
the event of a cock-fight, it was held that the words “no action shall
be brought,” &c., did not apply where the original object of the deposit
has been revoked by the depositor; and that (assuming cock-fighting to
be illegal) either depositor could _before the event_, revoke the
stakeholder’s authority and recover his stake.
[Sidenote: Notice necessary to determine stakeholder’s authority.]
In _Gatty_ v. _Field_[156] it was held that it was necessary to serve
the stakeholder with a notice to determine his agency before bringing
the action; this would seem to follow from the remarks of MAULE, J., in
_Varney_ v. _Hickman_ that the effect of the notice was to change the
character of the deposit. So in _Savage_ v. _Madder_,[157] to which
allusion has been made above on another point; to an action for money
had and received the defendant pleaded (_inter al._): “That the money
was deposited in the hands of the defendant to abide the event on which
the wager was made and is claimed by the plaintiff as the winner of the
said wager, and the plaintiff did not repudiate the said wager or demand
back his said money _before the event of the said wager_.” The Court
were unanimously of opinion that this was a good plea; but from the form
the plea assumed the case cannot be said to decide that one depositor
can revoke the stakeholder’s authority; indeed an observation of MARTIN,
B. (at p. 180), would seem to imply that section 18 prohibited all
actions against the stakeholder at all. It only shows that, at any rate
where the wager has not been repudiated, the money retains its character
of money deposited to abide the event. The plea, moreover, seems framed
upon the assumption that the revocation must take place before the event
and not merely before the money is paid over, as was also suggested in
_Martin_ v. _Hewson_.
[Sidenote: Relation of stakeholder to depositors.]
The great difficulty in these cases seems to have arisen from the want
of a proper understanding of the real relation in which a stakeholder
stands to persons who deposit money in his hands. This question was much
discussed in _Hampden_ v. _Walsh_.[158] Plaintiff and Wallace deposited
£500 each with defendant, as stakeholder, on an agreement that if
Wallace should by a certain date prove to the satisfaction of the
defendant the truth of some scientific proposition, Wallace should
receive the two sums deposited. Defendant decided in Wallace’s favor.
Plaintiff objected to the decision, and before the money was paid over
to Wallace demanded repayment of his deposit from defendant. In spite of
this notice defendant paid the whole to Wallace. COCKBURN, C. J., in
delivering judgment, alludes to this particular point, which had
evidently been dealt with in argument: “We cannot concur in what is said
in ‘Chitty on Contracts,’ 8th edition, p. 574, that ‘a stakeholder is
the agent of both parties, or rather their trustee.’ It may be true that
he is the trustee of both parties in a certain sense, so that, if the
event comes off and the authority to pay over the money by the depositor
be not revoked, he may be bound to pay it over. But primarily he is the
agent of the depositor, and can deal with the money deposited so long as
his authority subsists. We should look upon the defendant merely as the
agent of the plaintiff and as no longer justified in paying over the
money when once his authority had been countermanded.” The Court held
plaintiff entitled to recover, and the case seems to go one step further
than previous cases on the statute in showing that the stakeholder’s
authority may be countermanded after, as well as before, the event has
came off, as in _Hastelow_ v. _Jackson_.[159]
The same view seems to have been taken of the matter by the Irish
Courts.[160]
These decisions afterwards were supported, first by the Court of
Exchequer Chambers, and next by the Privy Council. In _Diggle_ v.
_Higgs_,[161] plaintiff and A agreed to walk a match for £200 a side,
that sum to be deposited by each with defendant. A was declared winner;
but before the money was paid over plaintiff gave notice to defendant
not to pay to A. Defendant disregarded the notice and plaintiff sued to
recover his stakes. The Court were unanimous in upholding the authority
of the previous decisions. COCKBURN, C. J., however, who had in
_Hampden_ v. _Walsh_ hinted a doubt as to the correctness of the
authorities, here expressly intimates, that if the matter were _res
integra_, he would have thought that the words of the statute precluded
an action to recover even a deposit; but that he was unwilling to
disturb the law as settled.
BRAMWELL, L. J., touching on the meaning of the words “no action shall
be brought,” thinks that they are wholly superfluous and might have been
left out. It will be remembered that MAULE, J., in _Varney_ v.
_Hickman_, looked upon them as a statement of legal consequence, not
strictly necessary, but intended by way of explanation of the results of
the general enactment. It seems, however, not improbable that the words
were inserted to prevent any question arising as to the right of the
winner to recover from the stakeholder on a count for money received to
his use—a point which would have presented more difficulty than an
action by the winner against the loser, and which might have been made a
means of evading the Act, by doing through the interposition of a
stakeholder what could not be done directly. It being thought advisable
to provide for the one case, the other more obvious provision would be
inserted for the sake of completeness.
It will be unnecessary to refer to _Trimble_ v. _Hill_,[162] further
than to say that the same point was decided in the same way.[163]
It seems, therefore, to be clearly settled law, subject only to reversal
by the House of Lords, that a stakeholder holds each stake as agent for
the depositor and that a depositor can recall his stake at any time
before it is paid over to the winner, whether before or after the event
has been decided. [Sidenote: Qy. Where horse disqualified.] It was,
however, held in two cases[164] that where the owner entered a horse
that was afterwards disqualified he could not recover his stakes on the
ground that he would be playing a game of heads I win, tails you lose.
But it is very doubtful whether these decisions would be supported at
the present day considering the bias of the more recent cases.
His authority may be determined in the same way as that of an ordinary
agent—
[Sidenote: Determination of stakeholder’s authority.]
(1.) By express notice of revocation, as in all the cases quoted above.
(2.) Where the objects for which the deposit was made have, to the
knowledge of the stakeholder, become impossible of performance. Thus in
_Carr_ v. _Martinson_[165] where stakes had been deposited with
defendant to abide the event of a horse-race between the plaintiff and
one C, the race to be decided by a person named as judge, C on the day
appointed did not appear and A’s horse walked over the course, and was
decided by the judge to be the winner. Plaintiff demanded the whole of
the stakes from the defendant, which defendant refused to pay except
with the consent of C.
_Held_, that as soon as the race became impossible to the knowledge of
the defendant, he held the stake _eo instanti_ as money had and received
to the use of the defendant, the defendant’s authority to pay the winner
being thereby revoked; and that although plaintiff demanded the whole of
the stakes as winner, yet that was a sufficient demand of his own stake,
which defendant ought to have handed over. Per Lord CAMPBELL, C. J., a
demand was unnecessary in this case at all.
[Sidenote: Death of principal.]
(3.) Probably by the death of one of the depositors. That is the general
rule in ordinary transactions between principal and agent, that the
authority of the agent is revoked by the principal’s death. This point
occurred, but was not taken in _Manning_ v. _Purcell_.[166] Testator had
deposited with two stakeholders a sum of money to abide the result of
bets made by himself. It appeared from the evidence that a bet is always
“off” on the death of one of the parties. On testator’s death the
stakeholders repaid the deposit to his administratrix. One question
raised in the case was whether this deposit passed under a gift in the
will of all testator’s “money.” The Court held that it did not, as
although, according to _Varney_ v. _Hickman_, testator had power to
revoke the stakeholders’ authority, he had not in his lifetime exercised
this right: therefore the deposit was in no sense his moneys, though
since his death it had become part of his assets. The point was not
taken that the principal’s death of itself revoked the stakeholders’
authority, though that result seems to have been arrived at by means of
the custom among betting men. But, as Lord Justice Bruce seems to imply,
that if testator had before his death given notice to the stakeholders
to return the deposit, it might then have been considered his money, it
is not easy to see why the same result should not follow from a
revocation by operation of law.
It will be remembered that it has been suggested above (p. 36) that the
deposit of stakes by the competitors in a race is the same thing legally
as the deposit in respect of an ordinary bet. If it be true, therefore,
that the death of a depositor revokes the authority of the stakeholder
with respect to that particular stake, [Sidenote: Right of executors
against stakeholders.] it would seem that where a competitor in a race
happens to die between the time of paying his stake or forfeit and the
time when the whole is paid to the winner strictly speaking and from a
legal point of view the stakeholder should repay them to his
representatives, seeing that by Rule 156 of the Rules of Racing stakes
and forfeits are part of the fund payable to the winner. The same would
apply to entrance money where, according to Rule 160, it is payable to
the winner as part of the stakes. But, of course, entrance money would
not be part of the stakes where, as is usual, it is paid into the race
fund.
[Sidenote: Bankruptcy.]
(4.) As a general rule the authority of an agent (_i.e._, a bare
authority not coupled with an interest) is revoked by the
bankruptcy[167] of the principal. Although there seems to be no express
decision on the point, it seems probable that the same rule would apply
in the case of a stakeholder where either of the depositors became
bankrupt before the money was paid over to the winner. As the
stakeholder is, according to _Hampden_ v. _Walsh_,[168] merely the agent
for each depositor, the safest plan for him to adopt on receiving notice
of a depositor’s bankruptcy would be to consider his authority as to
that stake revoked, and repay it to the trustee in bankruptcy; or
perhaps he would be safe in paying it to the bankrupt himself, if the
trustee had not intervened to claim it.
[Sidenote: Stakeholder cannot sue for stakes.]
As the stakeholder is merely the agent for the depositors, he cannot
maintain an action for the stakes. Thus, in _Charlton_ v. _Hill_[169]
the Clerk of the Course of a race meeting, who was sued by the plaintiff
for the stakes won by him in one race, attempted to set off against that
claim a sum due from plaintiff in respect of the stakes of another race.
_Held_, that he could not do so as no action could have been maintained
by the defendant seeing that the plaintiff could at any time recover the
stakes back again.
[Sidenote: Competitors can choose their own stakeholder.]
It is, moreover, competent to the competitors to choose their own
stakeholder or to select a substitute for the one nominated by the rules
of the race. Thus, in _Dines_ v. _Wolf_[170] by the rules of the race
the stakes should have been paid to the Treasurer of the Australian
Jockey Club, but plaintiff insisted on their being retained by the
defendant. _Held_, therefore, that plaintiff could not make defendant
liable as he had acquiesced in the change.
[Sidenote: Liability of steward for default of stakeholder.]
A question has occasionally been raised whether a steward who nominates
a stakeholder can be made liable for the latter’s insolvency or default.
It is difficult to see how he could be without express agreement, or
perhaps unless he wilfully appointed a man unfit for the post.
[Sidenote: Liability of stakeholder.]
The stakeholder should be very careful before he pays the stakes to the
winner to ascertain that the winner has been so declared by a competent
authority, seeing that if he pays and it turns out that the judge,
umpire, or stewards have not acted in accordance with his or their
authority, he may be liable to the other subscribers. See _Smith_ v.
_Sadler_.[171]
[Sidenote: When responsible for stakes.]
By Rule 28 of the Rules of Racing the clerk of the course, who is
generally the stakeholder, is responsible for the stakes if he allows a
horse to start in respect of which the stakes have not been paid. This
seems to be a liability in the nature of a guarantee of a wager, seeing
that the liability for stakes is simply the liability on a wager.
[Sidenote: Guarantee of a wager.]
There seems no reason why an action should not be maintained in a
contract by one person to guarantee the due performance of a wager
contract by another. Such a contract could not of itself be void as a
wager seeing that the statutes as we have seen only apply to the parties
to the wager itself. Probably, it would have to be in writing to satisfy
the Statute of Frauds as being a promise to answer for the _default_ of
another, but this is by no means certain seeing that it is not a default
in paying a legal demand. If the contract be held to be within the
Statute of Frauds the stakeholder ought to be required to sign an
acceptance of the post, subject to the Rules of Racing, so that he may
be subject to the liability provided by Rule 28.
[Sidenote: Forfeit or penalty not enforceable.]
As no action will lie on a wager, so no action can be brought to enforce
a penalty for non-performance of a wager. In _Irwin_ v. _Osborne_[172]
the plaintiff and defendant agreed each to nominate a mare for a race,
the party or parties nominating the winner to receive from the parties
or party nominating the other mare the sum of £100; the party or parties
who should make default in nominating a mare to pay a forfeit to the
other side of £100. Defendants failed to cause their mare to run and
plaintiff sued to recover £100 penalty.
_Held_, that it could not be recovered, as the agreement was a mere
wager. “If the agreement be legal there is no obstacle to prevent the
recovery of the penalty for non-performance, but if illegal the penalty
can no more be recovered than damages for non-performance.”[173]
It has been shewn above, p. 36, that no action will lie to recover
stakes from any of the competitors in a horse race, a sweepstakes being
on the same footing as any other game for money. This decision would
therefore show that what are known as “forfeits” in racing, _i.e._, sums
payable in withdrawing a horse from the race, frequently half the stake
(see Rule of Racing 105) are equally irrecoverable.
[Sidenote: Deposits on bets.]
It may here be convenient to consider the rights of the parties with
respect to money deposited by one party with the other on bets made
between the two.
In _Manning_ v. _Purcell_,[174] persons who had made wagers with the
testator had deposited with him the sums they had staked. Some of these
bets were lost to the testator in his life time, and after his death his
testatrix paid the winners both the amounts they had deposited and the
amounts they had won. Some of the bets were undecided at the time of
testator’s death, and in respect of these the executrix repaid the
depositors the amount of their deposits.
It was proved that by the custom among betting men bets are off on the
death of one of the parties. It was held that in respect of bets decided
against testator in his life time, the executrix was not justified in
paying either the sum won or the deposit; but that as to the bets which
had not been decided, she was justified in repaying the deposits. KNIGHT
BRUCE, L. J., put the case on the ground that the contract being
illegal, the executrix was justified in determining the bets before they
came off. It is difficult to justify the first part of this decision
relating to the deposits on the bets which had been decided in
testator’s life time. A makes a ready money bet with a book maker at 5
to 1, depositing the £1 with him. A’s horse wins; A of course cannot
recover the £5, but why not the £1? The truth seems to be that the
deposit is made as a security for what A might lose to B on the bet, an
event which became impossible. The fallacy seems to be treating the
betting contract as illegal; no doubt if A had lost the bet he could not
have recovered the deposit (see, however, p. 66).
In _Reggio_ v. _Stevens_,[175] the plaintiff had deposited sums of money
with the defendants in respect of stock exchange transactions which he
intended to open at the defendant’s office. These transactions being for
differences were held by the Court to be wagering contracts (see _post_
on the Chapter on Stock Exchange). The plaintiff, as he was by the
agreement entitled to do, gave notice to close the transactions, which
showed a balance in his favour, at the same time demanding the winnings
and repayment of his deposit.
It was contended under the authority of _Manning_ v. _Purcell_, that
inasmuch as the notice to close the transaction was in effect determined
the wager, the deposit could be recovered. The Court held that inasmuch
as the money had been deposited in respect, not of one, but of a series
of transactions, the case came under the second part of _Manning_ v.
_Purcell_, and that the deposit could be recovered.
By sect. 5 of the Act of 1853: “Any money or valuable thing received by
any such person as aforesaid, as a deposit on any bet, or as or for the
consideration for any such assurance, undertaking, promise, or agreement
as aforesaid, shall be deemed to have been received to or for the use of
the person from whom the same was received, [Sidenote: Deposit with
keeper of betting house.] and such money or valuable thing or the value
thereof may be recovered accordingly with full costs of suit.” It is
obvious that the section is hardly intelligible without reference to the
other sections of the Act, which will be found set out in the Chapter on
Betting Houses. In _Doggett_ v. _Catterns_,[176] the defendant was in
the habit of standing by a tree in Hyde Park, making bets with other
persons. The plaintiff deposited a sum of money with the defendant in
respect of one of these bets, which sum plaintiff now sued to recover.
The majority of the Court held that the “person aforesaid,” in section
5, alluded to the persons specified in section 4, _i.e._, the owner or
occupier of the place, &c., or person acting on his behalf, or having
the care or management of the business. That the section did not include
any “person using the same,” and that as the defendant could not be said
to be the owner or occupier of any place in Hyde Park, the section did
not apply.
It will, however, be noticed that the section speaks of a deposit (1) on
any bet, (2) as or for the consideration for any assurance as aforesaid.
Now the assurance spoken of in the previous section refers only to an
agreement to pay on the contingency of a horse-race or other sport. It
would seem, therefore, that while the penal provisions of section 4 are
confined to deposits on bets on horse-races, &c., [Sidenote: Does s. 5
apply to bets in stocks and shares?] the right of action given by
section 5 to recover deposits on any bet applies to bets of every kind,
and therefore to wagering transactions, &c., on stocks and shares. It is
to transactions of the latter kind that this question would have a
practical application. In the outside Stock Exchange places, commonly
known as “bucket shops,” bargains for differences (which are really
wagers) are well known. (See _post_, the Chapter on Stock Exchange).
Another point which would seem somewhat doubtful under the section is,
supposing a deposit be made within the section, _i.e._, with the owner
or occupier, &c., of the place kept for the unlawful purpose, and the
bet is determined against the depositor, can he still recover this as a
deposit on the bet, [Sidenote: After bet lost to depositor.] even though
the money ceases to retain its character as a deposit, and has been
appropriated to the payment of a lost bet? It would seem that he could.
The Act was passed to discourage and penalize establishments of a
specified kind. Besides, it would seem that even before the Act,
according to _Manning_ v. _Purcell_ (_ubi sup._) money deposited on a
bet can in all cases be recovered before the event, so that for this
purpose the Act was unnecessary.
At all events, before an action can be brought under this section at
all, the following circumstances must combine: (1) Receipt of money on
deposit (2) by the owner or occupier (or his agent or manager in the
betting business) (3) of a place, etc., kept or used for the purposes
mentioned in sections 1 and 3. As to this and “place” and “user,” see
the Chapter on Betting Houses; but (4) it is at p. 190 pointed out that
the receipt under section 4 need not be in the house or place.
[Sidenote: Foreign law.]
The insertion of the clause commencing with the words, “no action shall
be brought,” may, perhaps, have a practical significance in one case,
where an action is brought in England on a wager-contract made in a
foreign country where such contracts are enforceable.
It will be sufficient for present purposes to state a few general rules
which prevail in a case of what is called a conflict of laws:—
(1.) Where a contract contemplates any particular country as the place
of performance, the contract is governed by the law of that country, the
_lex loci solutionis_; _e.g._, the liability of the acceptor and
indorser of a bill of exchange, drawn and accepted in France, but
accepted payable in England, must be decided according to the law of
England.[177]
_Robinson_ v. _Bland_[178] is an example of a bill accepted for gaming
debts contracted abroad. Plaintiff sued on an acceptance given in
France, payable in England, for money lost at play in France. The
acceptor died before action brought. It appeared that the debt could
only have been enforced in France by the marshals in a court of honour
and not in the ordinary courts, and the only process ultimately
available was personal attachment, which in the present case would have
been impossible as the debtor was dead. So as the debt could not have
been enforced in France, no action would lie here. According to English
law the bill was void by the Statute of Anne.
(2.) Where no special place of performance is named, the _lex loci
contractus_ prevails, that is, the law of the place where the contract
is made; or in the case of an executed contract, where the transaction
is carried out; _e.g._, money advanced in France for the purposes of
gaming is a transaction governed by French law.[179]
In _Quarrier_ v. _Coulston_,[180] a bill was filed by the personal
representative of a deceased person to have an I O U given to defendant
by deceased delivered up to be cancelled, on the ground that it was
given in respect of money won from deceased at cards, or lent to him for
gaming purposes, while travelling on the Continent at Baden-Baden and
other places in Germany. Judgment was given for the defendants, on the
ground that it did not appear that the games were unlawful by the laws
of the country where the money was won.
(3.) The formalities necessary for a contract must be decided by the law
of the place where the contract is made.
(4.) Questions of procedure are decided according to the law of the
forum where the case is tried.
In _Leroux_ v. _Brown_,[181] it was decided the words in the 4th section
of the Statute of Frauds, which provide that “no action shall be
brought” upon certain contracts therein specified unless there be some
memorandum of them in writing, refer to procedure only, and do not
affect the substance of the contract; consequently, where an action was
brought in England on a verbal contract entered into in France, where no
writing was required, but which by the 4th section of the Statute of
Frauds ought to have been in writing in England, it was held that as the
Statute of Frauds referred to procedure only, the law of England must
prevail where the action was brought, and that the rule above stated as
to the formalities did not apply.
[Sidenote: Qy. Effect words in 8 & 9 Vict., c. 109.]
It may be, therefore, that the same words used in 8 & 9 Vict., c. 109,
section 18, would have the same effect, viz., in preventing an action
being brought in English Courts on a wager-contract entered into abroad
in a country where they are legally enforceable.[182] This, of course,
would not apply to money lent for gaming purposes,[183] which depends on
5 & 6 William IV. and not on 8 & 9 Vict., c. 109. (See _ante_ p. 14.)
[Sidenote: The “Proviso.”]
III. We now come to the last part of the section, commonly called the
“Proviso,” which says that “this enactment shall not be deemed to apply
to any subscription or contribution, or agreement to subscribe or
contribute for or towards any plate, prize, or sum of money to be
awarded to the winner or winners of any lawful game, sport, pastime, or
exercise.”
There are three series of questions on this proviso.
I. As to what is “a subscription or contribution to a prize”?
II. As to when a person is “the winner” within the statute?
III. What are lawful games, sports, &c.?
[Sidenote: Subscription or contribution.]
I. What is the meaning of a subscription or contribution to a prize?
In many of the cases the line is very fine between such subscription and
a deposit of sweepstakes. In _Batty_ v. _Marriott_,[184] a foot-race was
agreed upon between plaintiff and A for £10 a side, and each deposited
£10 with the defendant as stakeholder. A was declared winner, but
plaintiff disputed the decision and demanded back his stakes. The Court
held that the provisions of 16 Car. II. and 9 Anne relating to the
question, were repealed by 8 & 9 Vict., c. 109; and that although the
contract was in the nature of a wager, still the Act laid down no rule
with respect to the number of subscribers necessary to form “a
subscription to a prize.” It made no difference between the case of two
or fifty. They all intimated that their decision went farther than the
Legislature intended to go—consequently, as a foot-race is a lawful
game, and as one party who has paid money on a legal contract cannot
recall it without the consent of the others, they held that the
plaintiff could not recover his stake.
If this case were good law, it would follow that the real test to be
applied is, whether or not the money were deposited before the event
came off in the hands of a stakeholder.
But the decision was not regarded with much favour in the later case of
_Parsons_ v. _Alexander_.[185] Plaintiff sued on an account stated for
money which had been won at billiards. Defendant having, to start with,
a few shillings in his pocket played the plaintiff for a certain sum and
lost. They then played again for “double or quits,” and defendant was
again unsuccessful. This was repeated until the defendant lost to the
plaintiff about £65, for which he gave an I O U. The Court, while
intimating doubts as to the correctness of _Batty_ v. _Marriott_,
distinguished the case before them on the ground that the parties had
played entirely on credit, and had not, as in _Batty_ v. _Marriott_,
deposited the stakes before the event came off.
Per ERLE, J.: “The distinction is between gaming and cases where a
person either pays down a contribution to a stake, or holds himself
forth as having contributed.” Per CRAMPTON, J.: “This was an agreement,
if you win, I pay you; if you lose, you pay me.”
This distinction suggested by the Court of cases where the money is
actually deposited by the parties who play, and cases where it is not,
seems also to have occurred to MAULE, J., in _Johnson_ v.
_Lansley_:[186] “The 18th section seems to treat the money which is in a
man’s pocket at the time as the reasonable limit to which he may
lawfully gamble.” So, too, under the older statutes of Charles II. and
Anne, as interpreted by _Applegarth_ v. _Colley_, there was no objection
to gaming so long as the stakes were prepaid.
Some of the Court said that but for _Batty_ v. _Marriott_, they would
have thought the proviso was confined to subscriptions by outside
parties to a prize, and not to deposits by the players themselves. In
_Brown_ v. _Overbury_,[187] the plaintiff was a subscriber to a race.
The stewards could not agree as to the winner. Plaintiff claimed that
his horse had won, and brought an action against the stakeholder to
recover the stakes, thereby submitting the decision of the race to the
jury. At the trial it was contended that he was, at all events, entitled
to recover his own contribution. It was not even argued that this case
was within the “proviso” as a contribution to a prize. The Court held
that as it had not been shown that it had become impossible to obtain
the decision of the stewards, he could not call on the stakeholder to
return his contribution.
In _Irwin_ v. _Osborne_,[188] plaintiff agreed with the defendants that
a match should be run between a mare, the property of M, and a mare the
property of the plaintiff; that the party who nominated the winner
should receive from the party or parties nominating the other mare the
sum of £100; and that if either party who nominated a mare should make
default in causing such mare to run, he or they should pay the other
party £100. The defendants made such default, and plaintiff sued for
£100. The Court held that this was not within the proviso of the
statute; there was “no subscription; no contribution; no deposit. This
action has been brought, not for a contribution, but to recover a
penalty.... For the amount is not made up by a contribution or money
deposited, and the winner had to depend on his good fortune in
nominating the successful horse.... The contract depended on an
accidental circumstance, not on the running of a race.”
Per CRAMPTON, J.: “If it be an ordinary wager it is unlawful; all
betting is disallowed, but an exception is made on what I may call a
particular species of wagering, namely, a number of persons making a
fund, the whole of which is to become the property of the successful
party.”
It is clear that in this case the test of prepayment of stakes was
adopted by the Court, following _Batty_ v. _Marriott_.
In _Crofton_ v. _Colgan_ it seems to have been assumed that a
subscription to a race by all the owners of the horses running, and a
further sum added by the stewards of the race was within the proviso;
but the real dispute in this case was on the meaning of the term
“winner,” which will be fully discussed hereafter. So the case is of no
great value in laying down any test or principle for determining what
amounts to “subscription” or “prize.”
In _Coombes_ v. _Dibble_,[189] plaintiff and defendant agreed to ride a
race on their own horses, the winner to keep both horses as his own
property. _Held_ that this was not within the proviso, as there was in
no sense a contribution to a prize. Neither party could be said to
“contribute” their horses if they won. MARTIN, B., however, suggested
that if a horse had been placed in the custody of a stakeholder before
the race came off, that might have been in the nature of a contribution
to a prize within the statute.
So far the balance of authority seems to have been in favour of the
decision in _Batty_ v. _Marriott_ and the test therein suggested, the
only dicta to the contrary were the remarks made by some of the judges
in _Parsons_ v. _Alexander_.
But the point has now been decided the other way by the Court of Appeal
and by the Judicial Committee of the Privy Council, in two cases to
which we have alluded above on another point, viz., _Diggle_ v.
_Higgs_[190] and _Trimble_ v. _Hill_.[191] In _Diggle_ v. _Higgs_, in
addition to the point decided above, it was contended for the defendant
that the deposits were in the nature of a contribution to a prize; but
the Court held—
(1.) That the agreement was a mere wager, in spite of the fact that the
money was deposited with a stake holder;
(2.) That the proviso in favour of subscription to a prize was only
meant to apply to agreements which were not in the nature of wagers. Per
Lord CAIRNS, L. C.: “It is clear that there may be in scores of forms
‘subscriptions or contributions’ towards a plate or prize without there
being any wager, and I cannot read this proviso, which has a natural and
intelligible meaning, in a different way, any one which would have the
effect of neutralizing the enactment.... I read the proviso thus:
‘Provided that so long as there is a subscription which is not a wager,
the second part of the section shall not apply.’”
(3.) That the enactment avoiding wagers apply to all wagers,
irrespective of the legality or illegality of the game.
This case was afterwards followed by the Privy Council in _Trimble_ v.
_Hill_.[192]
[Sidenote: Result of foregoing cases.]
The foregoing cases do not leave the matter very clearly settled. They
afford a number of illustrations of transactions which are _not_ within
the proviso as subscriptions to a prize; and finally _Diggle_ v. _Higgs_
lays down the general rule that the proviso is not intended to apply to
any case which is at all in the nature of a wager. But with the
exception of the case of _Crofton_ v. _Colgan_, they do not go far
towards showing what is a subscription or contribution to a prize. It is
obvious that the exact line of distinction between a wager and a prize
is very difficult to draw. _Diggle_ v. _Higgs_ shows that a mere deposit
of stakes to be awarded to the winner of a race between two persons is a
wager and nothing more; a decision that would seem to apply to the
agreements in _Sadler_ v. _Smith_[193] and _Dines_ v. _Wolfe_.[194] In
both these cases the parties agreed to race, in one case a horse-race
and in the other a sculling race, having previously deposited stakes
with the stakeholder to be awarded to the winner, though in the latter
cases the point did not arise, as in neither of those actions did the
plaintiff show himself to be the winner. Thus the test suggested in
_Batty_ v. _Marriott_ is completely rejected, viz., the distinction
between cases where money is deposited before the event and cases where
it is not. Another test, hinted by the Court in _Parsons_ v.
_Alexander_, was between cases where the winnings are contributed by the
competitors themselves, and where they are given by some outside person.
If this be the true test, the result would be that many _bonâ fide_
races would be placed simply on the footing of wagers,[195] at any rate
so far as the right of the winner to recover the stakes is concerned.
Where the winnings consist of sums deposited and a sum added, [Sidenote:
Distinction between the stakes and a sum added.] the case of
_Applegarth_ v. _Colley_ shows that a distinction can be drawn between
the two; the deposits might be in the nature of money won at gaming and
so not recoverable, while it was held that the “sum added” by some
outside person was under any circumstances recoverable by the winner. It
seems that that distinction exists under the present state of the law,
and that strictly and technically speaking, the stakes deposited
previously to a race are not recoverable; though, no doubt, any sum of
money contributed by a stranger would be a contribution to a prize
within the proviso.
It is some argument in favour of this view that section 6 of the Betting
House Act exempts from the penal provisions of the Act any “deposit of
stakes.” This would have been unnecessary if a sweepstakes were not in
the nature of a wager.
[Sidenote: Entries, stakes, forfeit, cups.]
If this, as it is submitted, is the true principle, it is not difficult
to ascertain how far the different forms of prizes given for races are
recoverable, or how far they come within the law of wagers. Thus “a
plate,” which, according to the Rules of Racing, is a prize in money not
made up by subscription among the competitors, would seem to be on the
same footing as “added money” as decided in _Applegarth_ v. _Colley_.
Entrance money would be on the same footing as the stakes in cases
where, according to Rule 160, it is payable to the winner.[196] As to
“forfeits,” they would seem to be, as their name implies, in the nature
of small penalties payable for withdrawing a horse from his engagements.
By Rule 109 horses coming up in time to start are liable for the whole
stake. It has already been pointed out (_sup._ p. 63), that such a
penalty is not recoverable. A “cup” is any prize not consisting of
money. If awarded by some outside person it would, no doubt, be within
the proviso, a prize to be awarded to the winner. But if it is obtained
by subscription among the competitors it would seem to be on the same
footing as a money fund made up of stakes, and the subscribers would be
joint owners of aliquot shares,[197] until they have all assented to its
being handed over to the winner, otherwise the statute might be evaded
by the parties purchasing a chattel with the stakes.
[Sidenote: Meaning of term “winner.”]
II. With respect to the term “winner,” some rather curious points have
been decided. In _Crofton_ v. _Colgan_,[198] the parties subscribed £3
each in respect of their stakes, the stewards of the race subscribing
£30. There were two prizes to be awarded. It was contended that this did
not come within the proviso as a prize to be awarded to the winner, on
the ground that the horse that came in second could not be considered a
“winner,” and, therefore, as the whole sum was not to be awarded to the
winner the statute did not apply. [Sidenote: 2nd horse may be “winner.”]
But the Court held (1) that the term “winner” might apply to a second
horse as well as to a first;[199] and (2) that, apart from that
objection, the mere fact that part of the stakes were not to go to the
winner would not take the case out of the statute.
Another point arose in _Batson_ v. _Newson_,[200] where a man called
Hawkins wagered with the plaintiff, that his, Hawkins’, horse would trot
eighteen miles in one hour. Hawkins and plaintiff deposited £50 each
with defendant as stakeholder to abide the event. The referee decided in
Hawkins’ favour, but plaintiff, disputing the decision, gave notice to
defendant to pay him back his stakes. Defendant disregarded the notice,
and paid the whole to Hawkins. Plaintiff sued to recover his deposit.
[Sidenote: There must be a “loser.”] _Held_, that the agreement was a
mere wager; there could be no winner in such a case as only one person
was to do anything. In such a case there could be no “loser,” and
without a loser there can be no winner. It will be remembered that in
_Applegarth_ v. _Colley_ the same view was taken as to the meaning of
the term “winner of £10” in the Statute of Anne, and the Court there
held that a man could not be said to be a winner of £10 within the
statute, unless there were a corresponding loser of the same sum.
[Sidenote: Winner must be a competitor in the race, &c.] It would seem,
too, that a person cannot be called a winner unless he either take some
part himself in a competition or be the owner of an animal engaged
therein. Thus, in _Irvine_ v. _Osborne_[201] the plaintiff and
defendants simply nominated the winner of a race, the person who
nominated the successful horse to have the stakes. Plaintiff nominated a
horse not belonging to himself. _Held_, that he could not be a winner of
the race, as “the contract depended on some accidental circumstance, not
on the winning of a race.”
[Sidenote: Breeders’ stakes.]
A case that seems to fall within this rule is that of breeders’ stakes,
where a certain sum is, by the conditions of the race, to be awarded to
the breeder of the winner. It would seem according to the above case
that not being the owner of the animal winning, the breeder could not
recover under this proviso of the section.
[Sidenote: Disputes as to the winner.]
It is obvious that any person suing to recover stakes as winner has cast
upon him the burthen of proving himself to be such. The determination of
such a question will generally depend upon agreement or special
conditions by which competitors agree to be bound. Thus, horse-races are
generally run either subject to the rules of the Jockey Club, or subject
to specially advertised regulations. However, it may be taken that the
winner is declared by the judge, all further questions or objections—as
to, for instance, qualification—being decided by the stewards.
[Sidenote: The judge.]
With respect to the authority of the judge to declare the winner, the
conditions upon which it is exercisable must be strictly observed, and
the same in the case of the arbitrators or umpires of other kinds of
races. In the head note to _Carr_ v. _Martinson_[202] it is stated the
power of the judge of a horse-race to award the stakes to a winner does
not arise until the race has been run! This extraordinary point arose in
the following way: the parties agreed on a race between their respective
horses, naming both a starter and a judge, and fixing a particular hour
on a certain day. The stakes were deposited with the defendant, to be
handed over to the winner according to the decision of the judge. The
parties made their appearance, but the starter did not turn up. One of
the parties refused to run and the plaintiff walked over the course and
was declared by the judge to be the winner. But the Court held that the
presence of the starter was, by the agreement, a condition precedent to
the race, and so to the judge’s authority. There had been no starter,
and so no race; consequently, the judge’s authority to declare the
plaintiff winner did not arise. The other point decided in this case as
to recovering stakes has been noticed above.
N.B.—This case by no means decides that an umpire never has power to
award the stakes to a person whose horse has simply walked over the
course.
[Sidenote: _Smith_ v. _Sadler_, L.R., 4 Q.B., 214.]
A somewhat similar point occurred in _Smith_ v. _Sadler_.[203] The
plaintiff and K deposited stakes with the defendant to abide the event
of a sculling race between themselves, “to row according to the
recognised rules of boat-racing.” The decision of the referee to be
final. It was proved in evidence that according to custom in a sculler’s
race between watermen the men start themselves, but in the event of
either or both making a default in starting, the referee was entitled to
interfere. At the time appointed, a great difficulty took place in the
men starting themselves. K complained to the referee, who told him to
give notice to the plaintiff that if he did not start K was to row over
the course without him. K rowed over without giving plaintiff such
notice. The referee, without further inquiry, ordered the stakes to be
paid to K, which the defendant did. Plaintiff sued to recover his
deposit, thus disputing the decision of the referee. For the defendant
(_i.e._, practically in favour of the referee’s decision) it was
argued—(1) That the referee was in the position of an arbitrator; that
therefore not even misconduct on his part could be pleaded in answer to
an action on the award; but the award must first be set aside; (2) that
the referee had virtually decided that there had been a proper start and
a proper race, and that according to the authorities such decision was
binding. The Court, however, held (1) That the cases as to setting aside
the award did not apply because the jurisdiction of the referee had
never arisen. The order he had given to K was conditional and K had not
carried it out; therefore the race had never been rowed and there was
nothing for the referee to decide. (2) That although _primâ facie_ it
would be implied from the award of the stakes that there had been a
proper start and a race, that inference had been rebutted by the
evidence given at the trial. Therefore the referee never had authority
to declare K the winner, and the plaintiff was entitled to recover his
stake from defendant.[204]
[Sidenote: Decision of stewards.]
Whenever it is made part of the conditions of a horse-race that the
decision of the stewards shall be final, it is not competent for any
party to question their decision, and it seems that they are not in the
same position as arbitrators. They are not bound to hear the parties
before deciding, they need not give a joint decision, they are not
disqualified by having an interest in the race. Thus in the case of
_Benbow_ v. _Jones_[205] the plaintiff was the owner of the horse that
came in first, but the steward had previously decided, without hearing
him, that his horse was disqualified. The Court held that these
circumstances did not prevent the decision being final. As ALDERSON, B.,
humorously expressed it, the next contention would be that the steward
was bound to hear the parties on oath and counsel on both sides. In
_Parr_ v. _Winteringham_[206], where the stewards gave separate
decisions without consultation, it was held that this was sufficient. In
_Ellis_ v. _Hopper_[207] a steward was held not to be disqualified by
his having made a bet on the race. In _Brown_ v. _Overbury_,[208] where
the stewards could not agree as to the winner, it was held that the
exclusive right of the stewards to decide lasted until it had become
impossible to obtain their decision.
Again, in _Dines_ v. _Wolfe_,[209] the facts were as follows; Agreement
between plaintiff and A for a race between their respective horses for
£500 aside, weight for age, to be run under Australian Jockey Club
rules; £100 aside deposited with defendant as stakeholder, balance to be
paid to defendant fourteen days before the race. According to the rules
of the Jockey Club, the stakes ought previously to the race to have been
paid over to the Treasurer of the Jockey Club, but plaintiff insisted on
their being retained by defendant. A’s horse won; after the race,
plaintiff, finding that A’s horse had only been weighted as a
four-year-old, objected that he was a five-year-old. He wrote a letter
to this effect to the stewards, objecting to A’s horse being declared
winner. By the rules of the Jockey Club, when the age or qualification
of a horse was objected to, either before or after the running, the
stewards should call for such evidence as they might require, and their
decision was to be final. The stewards met to consider their decision
and the plaintiff produced certificates as to the age of A’s horse;
after the meeting had been several times adjourned, the plaintiff
demanded another adjournment, which the stewards refused. They finally
decided in favour of A’s horse. The defendant paid over the money to A.
It does not appear that the plaintiff had previously demanded his stakes
back from defendant.
Plaintiff sued defendant for the whole of the stakes as winner of the
race. He contended (1) that the rules of the Jockey Club had not been
complied with, inasmuch as the stakes had not been deposited with the
treasurer of the club; therefore the race had never been run according
to agreement; (2) that the stewards had not fairly decided the case,
having refused his request for a further adjournment.[210]
The jury awarded the plaintiff £500 (the amount of his own stakes) on
the ground that the rules of the Jockey Club had not been complied with.
The Supreme Court granted a new trial, and from this plaintiff appealed
to the Privy Council. The judgment of the Privy Council was delivered by
Lord CHELMSFORD. Plaintiff could not recover the whole of the stakes
without a decision of the stewards that he was the winner. He could not
recover even his own stakes back unless he had repudiated the agreement
before the race was run (_i.e._, run according to the agreement). The
plaintiff could not maintain his objection that the agreement had not
been complied with, as he himself had consented to the money remaining
in the stakeholder’s hands instead of being paid over to the treasurer;
further, that plaintiff in writing to the stewards was really claiming
the benefit of the rules, and could not therefore be heard to say that
the race was not run under them. _Held_, also, that the stewards had
acted _bonâ fide_, and that according to the rules there was no appeal
from their decision.
[Sidenote: Provisional decision.]
Again, in _Smith_ v. _Littledale_,[211] where objections were taken to
the winner on several grounds, the stewards in the weighing room decided
in his favour on one point, subject to the other questions.
Subsequently, the winner was disqualified on grounds that were
inconsistent with the first decision. _Held_, that the first decision
was provisional only and therefore, _ultra vires_, that the final
decision was binding.
[Sidenote: Stewards’ decision on points of construction.]
In _Newcomen_ v. _Lynch_[212] it was held, where the rules of a race
provide that the decision of the stewards should be final, that applies
to questions of construction of the rules of the race, as well as to
questions of fact.
[Sidenote: Construction of agreement by the Court.]
But where the agreement does not contemplate any special method of
deciding disputes, the Court will construe it. If necessary, parol
evidence will be admitted to explain conventional or sporting terms.
[Sidenote: Parol evidence.]
Thus, in _Hussey_ v. _Crickett_,[213] evidence was admitted to explain
the term “Rump and dozen.” In _Evans_ v. _Pratt_,[214] it was explained
that an agreement for a steeplechase “across country” meant a course
over all obstructions, and prohibited going through open gates.
In _Daintree_ v. _Hutchinson_[215] there was an agreement between
plaintiff and defendant for a dog match to be run on the Wednesday
during the Newmarket February Meeting, 1841, P.P. Plaintiff was member
of the Newmarket Club, but defendant was not. By the rules of this club,
the February Meeting was fixed at the previous November Meeting, for a
certain date, weather permitting. On the day of the meeting there was a
hard frost, and the club adjourned to another day, weather permitting.
The meeting had again to be put off to a subsequent Tuesday. On the
Wednesday after that, the plaintiff appeared, ready to run the race, but
defendant did not turn up. Defendant contended that the agreement meant
the Wednesday in the week originally fixed for the Newmarket Meeting.
But the Court held that the rules of the club were admissible to show
that the meeting was what Baron PARKE called a “moveable feast,” and
that the true construction was that the race should come off on the
Wednesday in any week in which the meeting should actually take place.
_Held_, also, that parol evidence was admissible to explain that the
letters P.P. meant that the parties were either to run the match or
forfeit the stakes.
[Sidenote: Play or pay.]
It may, perhaps, be mentioned here that the term “play or pay” is well
known and understood both in racing and betting matters. In most races
the conditions provide, that if the owner of a horse nominated withdraws
him from the race he pays a smaller sum than the stake, usually half the
stake, by way of “forfeit.” In some cases, however, he still remains
liable for the whole stake and then it is called a “play or pay” race.
So in betting, to say that a bet is “p.p.” means that if the horse
backed does not run the backer still has to pay.[216]
[Sidenote: Gentleman rider.]
As to the construction of the term “gentleman rider,” see _Walmsley_ v.
_Mathews_ (3 M. & G., 133).
[Sidenote: Rules of racing are evidence.]
In construing an agreement, the Court will look at the Rules of Racing
or other the conditions of the race,[217] [Sidenote: Agreement requires
stamp.] but it seems that any sporting agreement should be stamped
before the Court can look at it.[218]
[Sidenote: Starter when requisite.]
Thus in _Carr_ v. _Martinson_ (_sup._ p. 76) the Court held on the
construction of the agreement that the presence of a starter was
necessary before the race could properly be run at all. By the Jockey
Club Rules the horses must be started by the official starter or his
authorised substitute.
[Sidenote: Parties can waive conditions.]
The parties can, of course, waive any of the conditions of the race by
mutual consent or acquiescence, as was done in _Dines_ v. _Woolf_;[219]
or any party can without the consent of the others waive a condition
which tells solely for his benefit. In _Evans_ v. _Sumner_ (35 J.P.
761), the plaintiff sued the stakeholder for the stakes. An objection
had been lodged against the plaintiff as winner on the ground of his
being on the unpaid forfeit list, but the objection was, according both
to the local rules and the Newmarket Rules, lodged too late. The
plaintiff appeared before the stewards and did not raise the point as to
time, and the objection was sustained. _Held_, that he could not now set
up the point, as he waived the benefit of the rule, which under the
circumstances told solely in his favour. _Quis que renunciare potest_,
&c., &c.
[Sidenote: Qy. in case of a Plate or “added money.”]
At least this would appear to be the case so far as regards the
authority of the stakeholder to pay over mere stakes to the winner; the
waiver of the competitors who have subscribed them would be sufficient.
But in the case of a Plate, or where there is “added money” (_ante_ pp.
73 and 74) contributed by an outsider, the consent of such person or
persons would be necessary before any of the conditions could be waived.
Compare with this suggestion Rule of Racing 143, which provides that in
a sweepstakes the competitors may waive a walk over, but in a Plate the
consent of the Stewards is necessary.
[Sidenote: Stewards’ liability.]
A steward, being an unpaid official, is not liable for negligence in not
appointing a judge,[220] nor, _semble_, could he be responsible for the
default of the stakeholder unless he knowingly appointed an unfit
person.
[Sidenote: Games and sports within the Act.]
III. What are “lawful games, sports, or pastimes or exercises” within
the Act?
[Sidenote: Horse-racing.]
The question can be best answered by showing what games are unlawful
either at Common Law or by statute. Some have a history. Thus
horse-racing was for a long time subjected to considerable restriction.
It will be remembered that by the Statute of Anne, section 5, it was
made penal to win any sum over £10 at any one time, by means of gaming.
It was always understood that horse-racing, which was expressly
mentioned in the Statute of Charles II., was a game within the Statute
of Anne, the games in both statutes being the same.[221] The result was,
as is shown in _Evans_ v. _Pratt_[222], that a horse-race for a prize of
over £10 was held to be illegal. Curiously enough, in _Applegarth_ v.
_Colley_, an entirely different construction was put upon those statutes
by the Court of Exchequer; it being there held that the statutes did not
affect a case (1) where the stakes were deposited with a stakeholder
before the race was run, the statutes aiming at gaming on credit and
“contracts for the payment of money won at gaming;” (2) where the stakes
were made up of subscriptions under the value of £10, the term winner of
£10 only contemplating a case where there was a corresponding loser of
that sum. However, by the time that this case was decided, all
restrictions on horse-racing had been wiped off the statute books: so
that this more lenient construction of the earlier prohibitive statutes
came rather late.
The immediate result of the statutes was that a large number of races
were started for small prizes under £10, so as not to infringe the Act,
a practice which tended to deteriorate rather than improve the breed of
horses. [Sidenote: 13 Geo. II., c. 19.] To remedy this the Statute 13
George II., c. 19, was passed, which prohibited any horse-race being run
except at Newmarket or Blackhambleton in Yorkshire, for any prize of
less value than £50. It also prescribed some arbitrary regulations as to
the weights which horses of certain age should carry. The object, of
course, of this statute was to prevent horse-races being run where the
prize was not sufficiently remunerative to encourage the improvement of
the breed. [Sidenote: 18 Geo. II., c. 34.] The Statute 18 George II., c.
34, repealed so much of the previous statute as related to the carrying
of weights, but the other provisions of 13 George II., c. 19, which
restricted the practice of horse-racing, remained in force until the
passing of 3 & 4 Vict., c. 35. [Sidenote: 3 & 4 Vict., c. 35.] By this
statute all the enactments of 13 George II., c. 19, relating to
horse-racing, were repealed. [Sidenote: _Evans_ v. _Pratt_.] In _Evans_
v. _Pratt_[223] a question was raised as to the exact effect or result
of this statute. The plaintiff sued to recover the stakes of a
steeplechase “across country,” of which he had been declared winner. The
main point was whether such a steeplechase for a prize of more than £10
was within the Statutes of Charles II. and Anne. It was argued on the
one hand, that by the repeal of the earlier Statute of George II.,
without mentioning the statutes of Charles II. and Anne, the law as it
existed under the latter was virtually restored, and, therefore, that a
race for £10 was illegal. On the other hand, it was contended that the
restrictions on horse-racing contained in the Statutes of Charles II.
and Anne were repealed by 13 George II., c. 19, which substituted other
provisions; and that the repeal of the latter statute had given “a new
charter to horse-racing.” [Sidenote: All horse-racing made legal.] The
Court held that the Statute 3 and 4 Vict., c. 35, had legalised all
horse-racing, and that steeplechases were included in that term.
[Sidenote: 42 & 43 Vict., c. 18. Horse races near London require a
license.]
The only restriction in modern times to which horse-racing has been
subjected is in the case of races within ten miles of London, the
increase of which had been productive of great inconvenience.
By 42 and 43 Vict., c. 18, it is provided—
By section 1, a horse-race is in substance defined to be any competition
between horses, or any race against time for any prize or any wager in
respect of any such horse, at which more than 20 persons shall be
present.
Section 2 makes all horse-races within 10 miles from Charing Cross
unlawful unless licensed.
Sections 3 and 4 prescribe the method of obtaining such license.
Section 5 inflicts a penalty of £10 or two months on any person taking
part in such unlicensed horse-race.
Section 6 inflicts a penalty of from £5 to £25 on owner or occupier of
ground where no such race takes place.
Section 7 makes any horse-race contrary to the Act a common nuisance.
Cock-fighting seems to have been illegal at Common Law. In “Bacon’s
Abridgment” it is stated that an information would lie at Common Law for
using the game of cock-fighting. In _Squiers_ v. _Waiskin_, Lord
ELLENBOROUGH described it “a barbarous diversion not to be encouraged in
a Court of Justice. I believe that cruelty to these animals in throwing
at them forms part of the dehortatory charge of judges to grand juries.”
It was forbidden in the metropolis by 2 & 3 Vict., c. 47, section 47,
under a penalty of £5, and by 12 & 13 Vict., c. 92, the same penalty is
inflicted for keeping or using any “place” for the purpose of fighting
or baiting any bull, bear, badger, dog, cock, or other animal. But these
Acts[224] only apply to a place kept for the purpose. A case was lately
noticed in the newspapers of a cock-fight having taken place on board a
ship out at sea, and the question was suggested whether this could be a
“place” within the Act. It should be remembered that the Statute 4
George IV., c. 60, defines the word “place” in previous statutes as
including places “on land or water.”
_Billiards_ is a perfectly lawful game,[225] except that the keeping of
public tables is subject to restrictions. By 8 & 9 Vict., c. 109,
sections 11 and 13, it is necessary for the keeper of any public house,
or any person setting up a public table, to take out a license for the
same. It is made penal to allow playing on such table between the hours
of 1 a.m. and 8 p.m., or in the case of a licensed victualler’s, at any
time when his premises may not be open for the sale of intoxicating
liquors. However, a subsequent statute, 37 & 38 Vic., c. 49, section 10,
empowered licensed victuallers to sell liquor at any time to persons
residing on their premises, but it has been held that that does not
authorise the playing of billiards except at the times mentioned in the
previous statute; it was, the Court said, a _casus omissus_ in the
statute.[226] So, of course, games played on public tables at other than
the authorised hours are not within section 18 of 8 and 9 Vict., c. 109.
This will be more fully discussed in the chapter on gaming houses.
_Lotteries_ are illegal, as will be explained in a future part of this
work.
By 12 George II., c. 28, section 2, _ace of hearts_, _pharaoh_,
_bassett_ and _hazard_,[227] are declared to be illegal games, to which
list 13 George II., c. 19, section 19, has added the games of _passage_
and any game with one or more dice or instrument in the nature of dice
with one or more figures or numbers thereon, except _backgammon_.
18 George II., c. 34, provides that no person shall keep any house or
place for playing _roulet_ or _roly-poly_ or any game with cards or dice
prohibited by law.
[Sidenote: 33 Henry VIII., c. 9.]
A number of games were made unlawful by a statute 33 Henry VIII., c. 9,
on the ground that they diverted people’s attention from the pursuit of
archery. Among these were _bowling_, _coyting_, _tennis_, when played by
artificers and apprentices; and all persons were bound, under penalty of
6s. 8d., to provide themselves with bow and arrow. But these provisions
of the statute were repealed by section 1, 8 & 9 Vict., c. 109.
_Dominoes_ has been held to be a lawful game.[228]
The subject of unlawful games will be more fully treated in the Chapter
on Gaming Houses.[229]
[Sidenote: Exception in favour of Royal Palaces.]
All the statutes against unlawful games contain exceptions in favour of
royal palaces during the actual residence of the Sovereign.
As to what constitutes a royal palace see _Coombe_ v. _De la Bere_ (22
Ch. Div. 316) and cases therein quoted.
CHAPTER II.
TRANSACTIONS ON THE STOCK EXCHANGE.
It has been deemed advisable to treat of transactions on the Stock
Exchange under a separate heading: not that they are, in the main,
subject to different statutory provisions; but as the facts in these
cases are of a very special character, and to a great extent stand on
common ground, it will probably facilitate reference if they are all
grouped together instead of being scattered over the rest of the work.
This Chapter is not intended to give an exposition of Stock Exchange
transactions generally, but only so far as it has been sought to apply
the gambling statutes thereto.[230]
It will be remembered that wagering transactions of this description
were not touched by the earlier statutes of Charles II. and Anne, which
applied solely to games and pastimes. So that until the passing of the
statute we are about to mention, time-bargains, as they have been
called, were not only lawful but were enforceable by action.
The chief statute on this subject was 7 George II., c. 8, commonly
called Barnard’s Act, which provided—“That [Sidenote: 7 Geo. II., c. 8.]
all contracts or agreements upon which any premium should be paid for
liberty to put upon, or to deliver, receive, accept, or refuse any
public or joint-stock or public securities whatsoever ... and all wagers
and contracts in the nature of wagers, and all contracts in the nature
of puts and refusals relating to the then present or future value of any
such stock or securities as aforesaid, shall be null and void.” The
statute also inflicted penalties both for entering into such contracts
and for making payments in respect thereof.
Section 8 made invalid all sales of stock not in the vendor’s
possession.
[Sidenote: Statute only applied to public English stocks.]
The statute only applied to English public stocks, and not to foreign
stocks nor to shares in companies.[231]
It also made the contracts and compounding for differences not merely
void but illegal. Thus in _Cannan_ v. _Bryce_[232] it was held that
money lent for the purpose of compounding such differences could not be
recovered. But in _Faikney_ v. _Reynous_,[233] where a bond was given to
repay money advanced by plaintiff to settle for differences, it was held
that the bond was good.
[Sidenote: _Nicholson_ v. _Gooch_, 5 E. & B., 999.]
The case of _Nicholson_ v. _Gooch_[234] was an important case under this
statute, and also seems to have some bearing on Stock Exchange
transactions at the present day.
The bankrupt Lodge was a member of the Stock Exchange and the defendant
was the official assignee of that body. By the rules of the Stock
Exchange every member unable to fulfil his engagements was declared a
defaulter, and all members indebted to him in respect of Stock Exchange
transactions were to pay their debts to official assignees appointed by
the Stock Exchange, whose duty it was to distribute the money received
rateably among his Stock Exchange creditors. On 11th November, Lodge
wrote to the secretary to say he could not meet his engagements, and
large sums were paid to defendant by members who were his debtors. On
23rd November a petition in bankruptcy was presented against Lodge; on
the 31st, Lodge was adjudicated bankrupt. The plaintiffs were Lodge’s
assignees in bankruptcy. It seemed from the evidence that according to
the customary way of dealing, speculative transactions and genuine sales
were so mixed up, that it was impossible to separate the two; but the
jury found that the majority of the transactions were speculative and
the parties merely intended to settle differences. It seemed that the
method of settling these differences was for the members on the account
day to set off the amount of stock which they had respectively agreed to
buy and sell, and by a fictitious bargain for the sale at the price of
the day of as much stock as would cover the balance, and then settle by
paying the difference in the price. The plaintiff sued defendant for the
moneys they had received from Lodge’s debtors. The Court drew an
inference of fact that they were all contract for differences only.
_Held_, that the settling of differences without actual delivery of
stock was, so far as the public stock was concerned, illegal by section
5 of Barnard’s Act. That money paid to defendant in pursuance of this
illegal arrangement, and forming the fund sought to be recovered, could
not be recovered, as it could not form part of Lodge’s estate.[235]
Therefore the assignees had no title to it.
It had been attempted on the plaintiff’s behalf to apply the doctrine of
_Tennant_ v. _Elliott_, and so prevent the defendant from setting up the
illegality against them.[236] But the Court held that this did not apply
because defendant received the money, not as agent for Lodge or for his
use, [Sidenote: Position of Official Assignee of Stock Exchange.] but on
an implied mandate to distribute it according to the rules of the Stock
Exchange.
CRAMPTON, J., distinguished the receipt of money for differences on
public stock which was illegal, and on ordinary shares which were not
within the statute. In the latter case the doctrine of _Tennant_ v.
_Elliott_ might have applied if defendant had received the money as
Lodge’s agent, and subject to his disposal. But the receipt seems to
have been under _an adverse claim_ by virtue of the stock Exchange rules
rather than as agent of the bankrupt.
Of course to a great extent the importance of this case was diminished
by the Statute 23 & 24 Vict., c. 28 by which Barnard’s Act was repealed.
[Sidenote: Repeal of Barnard’s Act.] At the same time it seems still of
importance as showing the position of the official assignee of the Stock
Exchange, _i.e._, the agent of the Stock Exchange, to distribute the
money according to their rules; the defaulter, as a member of that body,
binding himself to authorise the money in the event of his default to be
paid to the Stock Exchange or their agent.
[Sidenote: _Ex parte Grant._ 15 Ch. D.]
A late case bearing on this topic, and to a great extent confirming the
views of CRAMPTON, J., in _Nicholson_ v. _Gooch_, is that of _ex parte
Grant re Plumbly_.[237] Plumbly declared himself a defaulter and on the
same day presented his petition in bankruptcy. By virtue of his being a
defaulter the official assignee, as stated above, became entitled to
receive money due to him for differences. An injunction was obtained in
bankruptcy against the official assignee against receiving and
collecting such debts, and an order to pay all sums that he had received
to the trustee in bankruptcy. Against this order the official assignee
appealed.
The evidence chiefly consisted of affidavits filed by leading members of
the Stock Exchange. Some points in these affidavits call for special
notice.
(1.) That contracts on the Stock Exchange are never for payment of
differences, but are real transactions for cash ... contemplating
transfer or delivery of the stocks, &c. The transfer and payment can
only be rendered unnecessary by a new and equally real bargain, on the
one part to accept and pay for on the same day, and on the other part to
transfer or deliver, an equivalent amount of the same stocks, &c.
(2.) Members having bargains open in stocks and shares which the
defaulter has contracted either to take or deliver, but which contracts
he breaks by his default, pay to the official assignee the difference in
value of stocks, &c., as determined by the prices fixed by the official
assignee, at the time of such default, when the change in price is
against such members; and on the other hand become entitled to claim
against the fund so created in the hands of the official assignee for
any such differences when in their favour.
(3.) The defaulter cannot claim differences on damages in respect of
contracts which he has broken by his default, nor can he claim the
moneys payable as differences under the rules to the official assignee.
(4.) Had Plumbly not become a defaulter nor a liquidating debtor, and
had all the contracts been duly performed by him, none of the
differences received by the official assignee would have found their way
into Plumbly’s possession. In payment of differences, bank notes and
cash do not pass and cannot be demanded. All payments on account of
differences must be by crossed cheques on a clearing house banker, and
the whole of the differences which a member is entitled to pay or liable
to receive on each account day must all pass through the Clearing House
together. If the balance is in his favour, he receives only the
difference; otherwise, the general balance of all his dealings goes to
his debit through the operation of the bankers’ clearing. The credit
differences of each member are thus directly hypothecated for the
payment of his debit differences.
The reader is referred generally to the affidavits in the case, which
are set out _in extenso_ in the report; but the above will be sufficient
to render the judgment intelligible. _Held_ (1) that the official
assignee received the moneys by a title adverse to the trustee, who on
that account could not claim them as received to his use. (2) The fund
claimed was an entirely artificial fund, created by the rules of the
Stock Exchange: if the contracts were winning ones, the trustee could
not have enforced them at law, as the defaulter had shown his incapacity
to perform the contracts himself: so that the differences could never
have been payable to the trustee who was now claiming them. (3) That the
trustee could not take advantage of those rules, to which alone the fund
owed its existence, and claim the moneys, without also complying with
them with respect to the distribution; _i.e._, he could not claim for
distribution among the general body of creditors. JAMES, L.J., put the
case on a more general ground. If A owes money which is claimed by B and
C, and he pays B, C cannot sue B; but payment does not discharge A, if
wrongful.
The case shortly seems to come to this:—“Differences” are payable simply
by the rules of the Stock Exchange, and not as a matter of contract
between two parties; being payable to the official assignee by virtue of
those rules, the fund thereby created in his hands must be subject to
the same rules. That the official assignee receives these differences in
his own right and not to the use of the defaulter’s trustee in
bankruptcy.
It seems, then, that even if bargains for “differences” were known on
the Stock Exchange (which it appears they are not), the rights of the
official assignee with respect to them as against the trustee in
bankruptcy would be governed by the above case, as he could only receive
them under the rules, and not as a legal debt. [Sidenote: _Nicholson_ v.
_Gooch_ and _ex parte Grant_ compared.] The two cases seem to a great
extent to stand on a common ground, though the former was not cited in
argument in the latter. In both it was held that the title of the
official assignee was adverse to that of the trustee in bankruptcy, so
that the former could in no sense be considered his agent. In both the
ratio of the decision was that the fund was entirely artificial and owed
its existence to the Stock Exchange rules, as the moneys which formed
the funds were irrecoverable at law. They were irrecoverable in
_Nicholson_ v. _Gooch_ on the ground that the payments were in pursuance
of illegal or void contracts; and in Plumbly’s case there was the
additional reason pointed out that as he by his default was incapable of
performing his part of the contract, he could not enforce it himself.
[Sidenote: 8 & 9 Vict., c. 109.]
The next statutory provision concerning this class of cases is contained
in the statute we have discussed above, declaring all wager-contracts to
be void. The question of the application of this statute to Stock
Exchange transactions, depends upon how far such transactions are in the
nature of wagers.
[Sidenote: Contracts for payment of differences.]
The Courts have more than once been called upon to adjudicate upon what
have been supposed to be contracts for the payment of “differences,”
that is the difference between the present and the future price of
stock. Contracts of this sort have been called “time-bargains”; a phrase
we shall avoid, as it seems to be used in more senses than one. An
instance of such a contract, or rather of a contract which the jury
found to be of this nature, is to be found in _Grizewood_ v.
_Blane_.[238] It will be seen that the bargain as the jury found the
facts took the form of two collateral bargains, the result of which was
that differences only passed between the parties.
[Sidenote: _Grizewood_ v. _Blane_, 11 C. B., 526.]
The bargain was that plaintiff should purchase of defendant, and
defendant should sell to plaintiff a certain number of shares in certain
companies at a specified price. The said shares rose in price. The
parties then entered into a second agreement to rescind the former one,
and that defendant should buy of plaintiff the same number of similar
shares at such increased prices, and that defendant should merely pay
the plaintiff the difference between the two prices.
Defendant pleaded generally that the contracts were void under the
statute, which plea was held bad, for not stating the facts which
brought the case within the statute.
The case went to trial on issues of facts raised in the pleadings—that
the contract was by way of wagering on the price of the shares, and was
merely colourable; that it never was intended that the said shares
should be bought and sold, but was a mere wager.
The plaintiff was a stock jobber; and the defendant had dealt with
plaintiff through his broker. Evidence was given to show the former
course of dealing between parties, that no shares ever passed, but the
parties merely settled differences.
[Sidenote: Test of a gaming transaction.]
JERVIS, C.J., directed the jury that if at the time of making the first
contract the intention of the parties, as understood by both of them,
was neither to purchase nor sell the shares, but only to settle
differences, then the transaction was void under the statute.
The Court held that this ruling was right. The jury found that it was a
mere gambling transaction—_i.e._, that it was the intention of the
parties at the time that there should be no actual acceptance or
delivery of the shares.
This finding of the jury upon the facts of this case have been
questioned in later cases, probably through the Courts being in
possession of more complete information as to the true nature of
transactions on the Stock Exchange. Thus BRAMWELL, L.J., in _Marten_ v.
_Gibbons_,[239] and BRETT, L.J., in _Thacker_ v. _Hardy_,[240] both
express their doubts as to the correctness of the view the jury took of
the facts. The case had one peculiar feature, viz., that it was an
action by a jobber against the principal on transactions affected
through a broker, and as evidence was given of a long course of dealing
between the parties, there may have been special circumstances in the
case. It is remarkable that in _Cooper_ v. _Niel_[241] the jury there
found that the contract was simply for the payment of differences; but
again BRETT, L.J., in _Thacker_ v. _Hardy_,[242] says he could see no
evidence of it.
In the former case the broker became insolvent, and his trustee sued the
defendant for indemnity in respect of the claims of the jobbers. But as
the jury found that the contracts were mere wagers, the jobbers could
not claim in respect thereof against the estate of the broker, and,
being insolvent, payment could not be enforced against him by the rules
of the Stock Exchange.
[Sidenote: Suggested test of a difference bargain.]
It seems that the test adopted in some of the cases, viz:—the intention
of the parties to deliver or not is unless properly qualified and
understood likely to be misleading. A sells to B. A may be a “bear” or
speculative seller of what he does not possess; and B may be a “bull” or
speculative buyer. Both parties may hope or intend to secure a
difference in their favour, the one by re-purchasing, the other by a
resale. Each party may suppose that the other may be willing at any time
to close the bargain and settle by payment of differences, yet the
bargain as stated in this simple way is in no sense a wager. The real
test seems to be, what is the primary bargain between the two parties,
to ascertain whether each of the parties could be called upon by the
other in any contingency, under the terms of the contract, to deliver,
or to take delivery and make payment. The subsequent arrangements which
the parties may make, _i.e._, to close or settle by payment of
differences even if carried out through a long series of transactions
and even though in contemplation of the parties at the time of the
contract, do not affect the question if it was not part of the original
agreement that the bargain should be settled in this way, and if not the
contract could not be a wager. The expectation of the parties might be
upset by such a contingency as the winding up of the Company; and it is
the strict rights of the parties to the bargain that must be regarded.
This view of the matter is confirmed by a passage in the judgment of
LINDLEY, L.J., in _Thacker_ v. _Hardy_, 4 Q.B.D., at p. 689.
“What are called time bargains are in effect the result of two distinct
and perfectly legal bargains, viz: (1) a bargain to buy or sell; (2) a
subsequent bargain that the 1st shall not be carried through, and it is
only when the first is entered into upon the understanding that it is
not to be carried out, that you get a time bargain in the sense of an
unenforceable bargain.” In a more recent case in the Court of Sessions,
Scotland, _Shaw_ v. _The Caledonian Railway Company_, a passage in Lord
SHAND’S[243] judgment requires attention. “If it appears clearly that
the contracts and the dealings between the parties were for differences
only and were not intended in any sense to be real transactions, and
were not in effect real transactions, then they must be regarded as
gambling transactions. If it appears that any writings which passed
between the parties in the form of sale notes or otherwise were a mere
form intended by both parties, to give form to the transaction, and to
have no legal effect of any kind, then I do not think that writings
under such circumstances would take the case out of the rule I have
mentioned. But if contracts for the sale of shares or goods are entered
into _so as to create mutual obligations upon the parties, on the one
hand to give and the other to take delivery, if the obligation is such
as can be enforced if either of the parties_ think fit to do so, then I
think we get out of the region of arrangements of mere differences of
the nature of betting or gambling.
“If either one or both of the parties may, as and when he thinks fit
demand or give delivery of stock and ask payment of the price under the
contract, if that be so as to one of the parties, then I think the
transaction has the mark or stamp of a real transaction and is
inconsistent with the notion of transaction for mere differences.”
The passage in the judgment down to “betting or gambling” seems entirely
to confirm the view above expressed, that a real transaction of purchase
and sale must create “mutual obligations” to deliver and accept. A can
call on B to complete and B can call on A. But the passage which follows
seems to contain a somewhat different proposition: “If either one or
both the parties may demand,” etc. This would cover a case where A can
demand delivery from B, but B cannot from A. We shall have occasion
again to allude to this seeming discrepancy when we come to deal with
the case of _Shaw_ v. _Caledonian Railway_ again.
From the cases to which we are about to refer it would appear that in
point of fact transactions on the Stock Exchange never do take the form
of contracts for the mere payment of differences. [Sidenote: Contracts
for differences not really known on Stock Exchange. _Thacker_ v.
_Hardy_, 4 Q. B. D.] Thus in _Thacker_ v. _Hardy_,[244] from a remark in
LINDLEY, J.’S judgment at (p. 689), it seems to have been stated by
witnesses that time-bargains are unknown on the Stock Exchange. The real
nature of the agreement in that case was found by LINDLEY, J., to have
been as follows:—(1) That defendant was a speculator and employed
plaintiff, a stock broker, to speculate for him on the Stock Exchange.
(2) Defendant knew that in order to do so plaintiff would have to enter
into contracts to buy or sell stocks, &c., and, to protect himself, to
make other contracts to sell or buy respectively. (3) Plaintiff knew, as
was the fact, that defendant never intended to accept or make actual
delivery of the stocks, &c., bought or sold for him. (4) That defendant
took the risk of having to accept or deliver, &c., hoping that plaintiff
would be able so to arrange matters that nothing but differences would
be payable to or by defendant. (5) That otherwise defendant would be
unable to pay for what was bought or deliver what was sold.
Plaintiff brought an action for indemnity for what he had been called
upon to pay in respect of these transactions.
[Sidenote: A case between broker and principal.]
This was a case it will be noticed turning on dealings between a broker
and a member of the outside public, and so differed from _Grizewood_ v.
_Blane_. The judgment of LINDLEY, J., decided the following points:—
(1.) That agreements between buyers and sellers of stock to pay
differences are gaming contracts within 8 & 9 Vict., c. 109, s. 18.
(2.) That that section of the statute only affects the contract which
constitutes the wager. In this case plaintiff was bound to enter into
the contract himself as principal. The contract between himself and the
real principal was not a wager-contract, but an implied contract of
indemnity.
(3.) That an agent is entitled to be indemnified against all liabilities
incurred on behalf of his principal, unless such were illegal.
(4.) That the statute made gaming transactions void, and not illegal.
(5.) It had been argued that such gambling transactions were illegal at
Common Law on the ground of public policy, relying on Lord TENTERDEN’S
opinion in _Bryan_ v. _Lewis_. But this was overruled in _Hibblethwaite_
v. _M‘Morrine_.[245] Besides, it had required a special Act of
Parliament to make gambling in the funds illegal, and that Act was
repealed by 23 & 24 Vict., c. 28.
(6.) He did not infer as a fact that this contract was a contract for
differences. The real nature of the transaction is stated above.
It will be seen, therefore, that the judgment treats of the case from
two points of view: first, granted the main contract were in the nature
of a wager. _Held_, in this case, that according to previous
authorities, the right of an agent to be indemnified, was not affected.
Second, that as a matter of fact, there was no wagering in the
transaction at all, so that 8 & 9 Vict., c. 109, did not affect the
question.
The case was taken up to the Court of Appeal, where the view taken by
Lindley, J., as to the facts was confirmed; consequently it became
unnecessary to consider the application of the statute to the case.
BRAMWELL, L.J., said he would assume that the broker might by the terms
of the bargain be called upon to resell the stock, so that the principal
would only have had to pay differences. That would not infringe the
statute as a gaming contract, for the principal might at any time elect
to take the stock and hold it as an investment ... also the broker might
be unable to sell, if, for instance he had bought shares in an insolvent
bank. There is no wagering in a transaction of that kind—the broker has
no interest in the stock—it does not matter to him whether the market
rises or falls; but when a transaction comes within the statute against
gambling and wagering, the result of it does affect both parties.
[Sidenote: _Ex parte Rogers._]
In _ex parte Rogers_[246] the facts seem to have been substantially the
same. A stockbroker named Evans issued a debtor’s summons against Rogers
in respect of money due to Evans on the purchase and sale of stocks and
shares on Rogers’ behalf, and for commission, and for money paid by
Evans for carrying over[247] a portion of the said stocks and shares.
The contracts were made by Evans, subject to the rules of the Stock
Exchange, according to which Evans had to deal as principal between
himself and the jobbers. It was understood between Evans and Rogers that
the latter was only buying for the rise and never intended to accept
delivery, but meant to sell them again before the next account day and
receive or pay differences. Evans admitted that sometimes in buying the
same kind of stock for two clients he bought the whole amount in one
from the jobber, and then resold to the clients, but he could not say
whether that had been done in respect of any transactions for Rogers.
There was also evidence to show that Rogers had met Evans in his office,
and authorised him to borrow money and pay the jobbers. It was sought on
behalf of the debtor to distinguish the case from _Thacker_ v. _Hardy_,
on the ground that the broker had acted as a principal and not as an
agent, having purchased for himself and resold to his clients, and that
the transaction being in the nature of a wager was illegal (? void). But
the Court held that there was sufficient evidence that the broker had
paid money at the debtor’s request, therefore the case was within
_Thacker_ v. _Hardy_.
[Sidenote: _Ex parte Grant_, 13 Ch. Div. Dealings between members of the
House.]
The case of _ex parte Grant_,[248] to which we have alluded above, is
important on the present subject, chiefly from the evidence given in the
case as to the course of dealing on the Stock Exchange, which seems to
confirm the finding of LINDLEY, J., and the Court of Appeal, as to the
facts of the case in _Thacker_ v. _Hardy_. At p. 671 it is stated:
“Contracts on the Stock Exchange are never for payment or receipt of
differences. All contracts, &c., are real transactions for cash or for a
day named, contemplating the actual transfer or delivery ... and which
transfer or delivery can only be rendered unnecessary by a new and
equally real bargain on the one part to accept and pay for on the same
day, and on the other part to transfer or deliver an equivalent amount
of the same stock.” It is then further stated that if a member having,
say, bought stock which he was unable or unwilling to take up, he
balances the transaction by selling a similar amount of (but not the
identical) stock for the same settling day for which the bargain was
originally made, so as to enable that particular transaction to be
written off and balanced. “The whole amount of stock or shares to be
taken and delivered balances itself at all times, [Sidenote:
Differences, how adjusted.] but the amount of stock to be accepted from
or delivered to the several persons with whom any member has dealings,
is liable to vary with every new transaction entered into.” “When the
settling day arrives each member only transfers or delivers and accepts
and pays for the then balance of each particular description of stocks
or shares contracted for with each person with whom he has dealt.”
The affidavits in this case should be carefully perused, as they afford
a great deal of information as to the method of doing business on the
Stock Exchange. It seems clear that the transactions there described can
in no sense be in the nature of wagers—they consist of an original
purchase or sale and a sub-sale or sub-purchase, the latter being
probably to a person who was not a party to the original contract.
Possibly if the sub-sale or sub-purchase were made between the original
parties and were contemporaneous with the first contract, this might,
according to the case of _Grizewood_ v. _Blane_, amount to a wager, but
this method of dealing seems to be unknown on the Stock Exchange.
No doubt the transactions which go on may be made a means of reckless
gambling; but it is necessary to bear in mind LINDLEY, J.’S warning in
_Thacker_ v. _Hardy_ against being misled by an epithet.
[Sidenote: Qy. _Byers_ v. _Beattie_.]
There is, however, an Irish case,[249] which certainly seems open to
question, in which the agreement was that the plaintiffs, as
stockbrokers, should buy and sell for the defendant such stocks, &c., as
the defendant might require on the terms that if a profit should result
from the sale the plaintiffs should account to the defendant for such
profit, deducting commission; if a loss, then the defendant was to pay
the amount of such loss to the plaintiff, plus commission. _Held_ that
this was a wagering contract, as involving an agreement for the payment
in receipt of losses or profits, and that the result would have been the
same even if the plaintiffs had shown themselves liable to third parties
and had sued on an implied contract of indemnity. The answer to this
decision seems to be that even if there were a wager at all it was not a
wager between plaintiffs and defendant.
It seems probable, therefore, in view of the facts laid before the Court
as to the customary course of dealing on the Stock Exchange, and
particularly having regard to the decision in _Thacker_ v. _Hardy_, that
the statute will have but little application to Stock Exchange
transactions. [Sidenote: Effect of 8 & 9 Vict., c. 109, likely to be
very small on the Stock Exchange.] Bargains may no doubt in many cases
be mere speculations on the part of one party, but it is clearly stated
by many witnesses before the Stock Exchange Commissioners in 1878, that
a man’s intentions as to holding or reselling his purchases is not known
to the other party, so that it cannot be a wager as between the two.
That this is the real state of the case is shown by the evidence given
by Mr. Pyemont before the Stock Exchange Committee in 1878 (_see_ p.
315). “With regard to wagering and gaming, I may say that it was in
consequence of the remarks of the Lord Chief Justice which appeared in
the _Times_ the other day, that I was led to tender my evidence; I was
sorry to see, in so high a quarter, such a total misapprehension of the
action of the Stock Exchange. We have no such transaction on the Stock
Exchange as wagering and gaming. The only possible approach to anything
of the kind was dealing in dividends, which was always reprobated by the
Committee. The accounts were never recognised if there were failures;
and finding that not recognising them did not stop the practice, the
Committee then made it penal to do so, but with that exception I have
never known such a thing as a wager. Every £1,000 of stock which is sold
on the Stock Exchange must be delivered _per se_ or _per alium_. It must
be delivered (whether demanded or not) and for this reason: If the buyer
does not pass me a name on the name day, I sell it out through the
secretary of the Stock Exchange for a name to complete the bargain.
There is no such thing as a bargain left uncompleted. What I mean by
_per se_ or _per alium_ is that if I have sold £1,000 stock to B, if I
am not prepared to deliver it, I get D to deliver it to B on my account,
and pay him for doing so. If B does not want it, he must find somebody
who does. There is no such thing as fiction in regard to any part of a
Stock Exchange bargain.”
[Sidenote: Time-bargains.]
It does not seem that a Time-bargain in the proper sense of the term,
_i.e._, a contract for the future delivery of something the amount or
value of which cannot be ascertained, is in the nature of a wager. Thus,
as put by BRAMWELL and COTTON, L.JJ.,[250] the sale of next year’s apple
crop would be a good contract.
So when a person enters into a speculative sale of stock on behalf of
himself and another not having the stock in possession, it was held in
the Court of Session that it was not a wagering transaction either as
between the joint adventurers, or as between the buyer and seller.
_Mollison_ v. _Noltie_.[251]
A contract for “differences” on the Stock Exchanges though sometimes
called a time bargain, is not such according to BRAMWELL, L.J., in the
ordinary sense of the word. [Sidenote: Sale of prospective dividends.]
So in _Marten_ v. _Gibbon_[252] a question arose as to the validity of
the sale of a prospective dividend. Defendant employed plaintiffs, who
were stockbrokers, to sell for him the next dividend on £50,000 of South
Eastern Railway A Deferred Stock, and plaintiffs sold it to a firm of
dealers on the Stock Exchange. The dividends declared were in excess of
the price at which the plaintiffs had sold them; so plaintiffs requested
defendant to authorise them to pay the difference to the dealer. On
defendant’s refusal plaintiffs paid the amount and sued defendant for
indemnity.
It appeared that by Rule 61 of the Stock Exchange, the Committee did not
recognise bargains in prospective dividends. There was no evidence as to
whether the defendant was at the time of the contract in possession of
the £50,000 of Stock.
It was argued for the defendant (1) That this was a transaction within 8
& 9 Vict., c. 109. (2) That as this was not a contract which the Stock
Exchange would enforce, no authority to pay the difference could be
implied, and there was no evidence of an express authority. (3)
Defendant had revoked the plaintiff’s authority to pay.
But the Court held (1) That it must be assumed, in the absence of
evidence to the contrary, that the defendant had the £50,000 of Stock in
his possession at the time of the contract. Therefore, although an
agreement of this kind would have been within Barnard’s Act, it was not
within 8 & 9 Vict., c. 109, any more (as was put by BLACKBURN, J.) than
the purchase from a fisherman for the next haul of his net at a fixed
sum. Even if it were a wager as between the principal and the broker, it
could not be assumed that the jobber knew that it was. (2) That the
meaning of Rule 61 was, only that the Committee would not enforce such a
contract by expulsion, but the contract was otherwise left good between
the parties. The broker therefore, having at defendant’s request entered
into a contract on which he was personally liable, the defendant could
not revoke plaintiff’s authority.
[Sidenote: New rule.]
Since this case was decided, the rule of the Stock Exchange (No. 61) on
this subject has been changed into one of a prohibitive character, it
being there provided “That no member shall enter into bargains in
prospective dividends in shares or stock of railway or other companies.”
So that while this rule continues in force, no question is likely to
arise as to the rights or liabilities of members of the Stock Exchange
in bargains of this description.
[Sidenote: Sale of dividends of stock not in possession.]
The case, it will be seen, leaves quite unsettled what the result of a
bargain for the sale of dividends of Stock _not_ in vendor’s possession.
It is submitted that the result of such a bargain would be that the jury
would, on the facts, find that such were only in the nature of a wager,
and that the question would be left to them as one of fact.[253]
So much for differences on the Stock Exchange. It must not, however, be
assumed that transactions in stocks and shares or indeed any kind of
goods are never bargains for differences only, and so equal to wagers.
Those dealings in outside Stock Exchange places, [Sidenote: Bucket
shops.] commonly known as “bucket shops,” sometimes take that form, see,
for instance, _Reggio_ v. _Steven_,[254] where the terms of defendant’s
prospectus, on the footing of which dealings had taken place, stipulated
that all bargains should be settled by payment of differences. These
bargains were held to be wager contracts. In _Shaw_ v. _Caledonian
Railway Company_[255] to which allusion has already been made, the real
issues in the action were between the plaintiff Shaw and “R,” a
customer. Plaintiff carried on business as a stock and share dealer, not
a member of the Stock Exchange. The terms on which the dealings were
conducted were as follows: the parties dealt as principals not as
principal and agent. “R” bought or sold of Shaw, but in the main he
bought. He deposited cover with Shaw to the extent of 1 per cent. on the
stocks he had opened. If the price of the stock dealt in went against
“R” to the extent of 1 per cent., it was Shaw’s duty to close the
transaction. Prices were regulated by the tape. If “R” bought of Shaw at
100 and the stock fell to 99 (middle figure) it would be Shaw’s duty to
close that stock by re-purchasing from “R” at the lower price, so that
“R’s” loss was to be limited to the extent of 1 per cent., unless before
the closing “R” should deposit more cover.
It appears from the judgment of Lord SHAND, at p. 477, though it does
not appear from the report of the evidence given in the case, that all
these dealings were for the next Stock Exchange account day, but that
subject to Shaw’s duty to close, “R” had the right of carrying over to
the subsequent account, (see _post_ as to this transaction, p. 108) but
so long as the stock did not go against “R” to the extent of the cover,
“R” had the right of (1) keeping the bargain open, of (2) closing by
resale or repurchase from Shaw, (3) calling on Shaw to deliver the
stocks and paying for them. On some occasions “R” was on the account day
credited with dividends on the stocks he had opened, and with a premium
on new stocks issued in right of old, also on one occasion he was
credited with a contango. (N.B.—This must have been on a “bear”
transaction, see _post_ as to this, p. 113.) All the transactions
between the two were completed by payment of differences, but it was
otherwise with some of the customers of Shaw. It appears that if “R”
sold, Shaw had a right to call for delivery (see the evidence of Willis
and Lord SHAND’S judgment, at p. 477),[256] but this seems to be the
only option that Shaw had, and the transactions out of which these
proceedings arose were nearly all purchases by “R.” The Court held that
these were real transactions of purchase and sale, and not difference
bargains. (1) The crediting him with the dividends, &c. showed him to be
absolutely the owner of the stocks, (2) because “R” could at any time
have gone and demanded delivery.
It is, however, submitted that this decision is untenable. In the first
place “R” had an option in all cases where he purchased of either
completing by taking delivery or of settling by the payment of
differences; Shaw being the seller, was not by the contract entitled to
call on “R” to take delivery and pay. It seems that when “R” elected (as
he was entitled to do by the contract) to treat it as a difference
bargain, the exercising of this option related back to the time of the
contract and gave the transaction the character of a difference bargain
from the first. The facts do not fulfil the requirements suggested by
Lord SHAND for making a real bargain, the “mutual obligations” to take
and deliver, see _ante_ p. 95, seeing that Shaw had no option in the
matter at all events until the cover was run off, and then the contract
was that the settlement was to take place by payment of differences. The
fact of the dividends, the premium, and the contango, being credited to
“R” seems to give very little weight one way or the other, and are quite
consistent with a special arrangement in connection with a difference
bargain. See per TURNER, L.J., in _ex parte Marnham_.[257]
It has above, at p. 96, been suggested that the judgment of Lord SHAND
seems to contain two conflicting tests of a “real bargain;” on the one
hand he suggests “mutual obligations,” on the other, it is said to be
sufficient if _either_ party can compel completion. No doubt “R” had the
right of calling for completion, and had he done so then the transaction
would have been a genuine purchase. But where one of the parties has the
option of electing which form the bargain shall ultimately take,
purchase or difference bargain, it is submitted that the legal
attributes of the transaction must be determined by the form which it
ultimately assumes in fact.
A later Scotch case, _The Liquidator of the Universal Stock Exchange_ v.
_Howat_, is open to the same criticism. The terms on which the plaintiff
company dealt with the defendant were of a somewhat similar character to
those proved in _Shaw_ v. _The Caledonian Railway_. The conditions
endorsed in the bought and sold note stated that the Company acted as
principal in all sales and purchases and not as broker, being in all
cases prepared to deliver or take up. Clients might, if it suited their
convenience, repurchase or resell from or to the Company any stocks
which they might have sold or bought to or from the Company, but the
Company could not compel them to do so. Some of the defendant’s
instructions to the Company to sell to him contained instructions to
repurchase from him (or _close_) at a certain profit. The action was
brought to recover differences on stocks which defendant had purchased
and which had been closed by plaintiffs on defendant’s instructions. The
Court held that these were real transactions of purchase and sale.
Per the Lord President, at p. 135: “It is much more likely that the
arrangement was, that the transactions should be as was expressed in the
writings, that the legal rights of both parties should stand as so
expressed; but that the attention of both parties should be directed
towards escaping from the unpleasant consequences ... if contrary to the
interests of both, delivery were demanded and given.”
It is, however, submitted that the effect of the conditions quoted
above, gave the customer an absolute right or option to close his stocks
and pay or receive differences; and that when he exercised this option
it gave the transaction the character of a difference bargain. These
being the rights of the defendant, it is difficult to see how the rights
of the Company were in respect of real transactions.[258]
There is another kind of transaction on the Stock Exchange, as to which
there may some day be a question how far it is a gaming contract within
the statute. These are called “Options.” [Sidenote: Options.] Options
are described by a witness giving evidence before the Stock Exchange
Commission of 1878,[259] as the purchase of the right to buy or sell
particular stock on a particular day at a fixed price, _e.g._, the price
of Russian Stock is 83 to-day, and a person wishes to acquire the right
to buy that stock on some future day, [Sidenote: Calls.] believing that
the price will then be higher, and is desirous of not risking more than
a certain sum of money in a transaction, say 2 per cent. He would
probably be obliged to give 85 for the stock for the end of March, upon
the condition, that if he did not wish to take up the stock, he must pay
2 per cent., the difference between the day’s price and the price at
which he bought: that is in effect paying 2 per cent. for the right of
saying at the end of March whether he will or will not buy the stock at
83. If he does not buy he loses 2 per cent., and the stock must rise 3
per cent. by the time before he can make 1 per cent. profit. [Sidenote:
Puts.] Then there is the converse case of a put, which is payment of a
premium for the right to sell, or call upon a man to take delivery of,
so much stock at a fixed price. This is akin to a Bear transaction, and
of course the option will only be exercised in the event of a fall in
the price. The person who would accept this obligation would be an
intending purchaser, who is willing to give a price equal to the price
of the day, minus the premium. Suppose the price of stock be at 90, A is
desirous of purchasing, but does not wish to give more than 88. B,
believing they are about to fall, wishes to “bear” them without
incurring the risk of heavy loss. So B gives A 2 per cent. for the right
on a future day of calling on A to take delivery of so much, at the
price of the day—90. If they fall to 87, B will exercise the option and
make 1 per cent. profit, while A has got the stock virtually for 88,
which he was willing to give. If B does not exercise the option, A
secures his 2 per cent.
[Sidenote: Double options.]
There are also double options, which give the right of either buying or
selling at a fixed time, that is to call it if it goes up, to put it if
it goes down, for which a double premium is charged.
[Sidenote: Are options in the nature of wagers.]
It has been suggested that these transactions would be held void at law,
as being in the nature of wagers. It was remarked by the Chairman of the
Stock Exchange Commission, that they were very much in the nature of a
“bet.”[260] It will be remembered, moreover, that Barnard’s Act places
all agreements for “puts and refusals” in the same category as
wager-contracts, which are all made illegal thereby. It is, however,
submitted that in all bargains for opinions the great element of a wager
is wanting. It does not seem to be the essence of the bargain, to use
the words of COTTON, L.J., in _Thacker_ v. _Hardy_, “that one party
should win and the other should lose.”
Suppose A gives B £2 for the option to buy of him so much stock at a
future date, at, say £80, the market price of the day. The result to be
must be the same in all cases. He secures his £2. So far as this
transaction goes, it is immaterial to him whether the stock rises or
falls in price; he will in neither case be a loser as between himself
and A. Of course if the price rises 3 per cent., in which event A will
exercise the option, B may be called a loser in the sense that he might
have sold his stock at the increased price instead of the price
stipulated for, or that he may have to give increased price for it in
the market; but this seems to be only an indirect loss, not a loss on
the actual agreement with A. He is in no event called on to make a
payment to A. He is only a loser in the sense as suggested by COTTON,
L.J., in _Thacker_ v. _Hardy_,[261] that any party to an ordinary
contract of sale may be so described according as the bargain turns out
in his favour or the reverse. No doubt, as stated by the witnesses
before the Stock Exchange Commission, in many cases these options are
purchased without the slightest intention on the purchaser’s part of
holding the stock; but still, as in the case of an ordinary sale of
stock, it is impossible for the vendor to know what the purchaser’s
ultimate intentions are, which, according to cases cited above, takes
the case out of the category of a wager.
[Sidenote: Continuations.]
There is a class of transaction very common upon the Stock Exchange
called in general “Continuations,” which, it seems, may be made a mere
cover for wagering. But here the operation of the buyer and the seller
must again be distinguished. Suppose a buyer has purchased, for the next
account day, more stock than he can take up, he has to arrange for the
bargain being continued or carried over to the next account day. If he
be an outsider and not a member of the Stock Exchange, he must of course
get it arranged through his broker. Application is then made to a dealer
who has money to lend, and perhaps, wants the stock. This dealer may be
the same person as the original vendor, or he may not. In either case,
the form of the transaction is a purchase of the stock (in the former
case it will of course be a repurchase by the dealer); the price of this
purchase or repurchase is fixed by the clerk of the house, by the
instructions of the committee, as the price at which the continuation is
to be effected, and is called “the making-up price.” The stock is then,
by a collateral agreement, repurchased from the dealer at the same
price, only with an addition as premium for the accommodation.
[Sidenote: Contango.] This premium is called a “Contango;” and in cases
where the bargain is arranged with the original vendor of the stock, it
is simply the consideration for the vendor’s agreeing to postpone
delivery of the stock until the next account day; but where it is done
with another dealer, it is in substance an advance of money on the
security of the stock, and is called “taking in” by way of continuation.
It may be, however, that this “bull” or speculative purchaser, may be in
a position to demand a “backwardation” (see _post_) instead of having to
pay a “contango,” that is, if the market is largely oversold and the
demand for the particular stock is greater than the demand for money.
Where the price has fallen so that the making-up price is less than the
original price, the purchaser in effect pays the difference. Suppose A
has bought £1,000 Railway Stock at par for the current account, when the
settling day arrives he does not want to take it; he then agrees with
his vendor to carry it over to the next account. Say the price has
fallen to 98, and that is the making-up price. The jobber repurchases of
him at 98 for the current account, thus leaving a difference of 2 per
cent. payable by the original purchaser to the vendor, and this
difference is payable on the current account day. By a collateral
agreement, the jobber resells to him for the ensuing account at 98, plus
the contango; so that in the result he pays the original price, viz.,
par, plus the contango as the price of the continuation. It comes to the
same thing if the purchaser gets another jobber to “take in” the stock
for him. He pays £100 to his vendor, receiving £98, the “making-up
price,” from the other jobber, which is in effect an immediate payment
out of his pocket of 2 per cent. If, on the other hand, the price has
risen 2 per cent., so that the making-up price is £102, he would receive
£2 from his Vendor on the current account day, but on the ensuing
account he would have to pay £102, the making-up price, plus contango.
Sometimes these continuations are effected over several accounts, the
purchaser paying or receiving differences according as the price falls
or rises. Such a transaction seems something like a loan of money on the
security of stock, the amount of the loan being by the payment of the
differences from time to time kept just equal to the market price of the
security.
[Sidenote: “Taking in” distinguished from loans.]
The “taking in” of stock by way of continuation must be distinguished
from a mere loan or deposit of stock. In the former case it is, _pro
tempore_, an absolute sale of the stock to the jobber—the property
passes to him—he can deal with it as his own. He is, no doubt, obliged
to deliver the same amount of stock on the ensuing account day, but not
the identical stock. But in the case of a loan, he is not allowed to
sell it or place it beyond his own control, but may be called upon to
restore the identical securities. (See Rule 70.)[262]
It seems that continuations are effected in the case of loans where the
stock is merely lent or deposited as security, and not “taken in,” as in
the transaction described above in which case, as has just been said,
the stock is merely pledged, and the lender cannot part with the control
of it. [Sidenote: ? Whether continuations ever in nature of a wager.] It
would, of course, be quite possible that parties might enter into gaming
transactions, or bargains for the payment of differences, under guise of
an agreement for the continuation of a loan, the parties on either side
paying or receiving a difference according to the rise or fall in price,
as before described. The following cases will show by what test real and
fictitious bargains are to be distinguished.
[Sidenote: Case of loan fluctuating according to value of security.]
In _ex parte Phillips_,[263] it appeared that it was an ordinary dealing
for one member of the Stock Exchange to make advances of money on the
security of shares, &c., belonging to the borrower, or on the deposit of
certificates or other evidence of title, and that such deposits often
amounted to the full value of the security; and that the lender was
entitled, if the advance were not repaid on the day agreed upon, either
to dispose of such security, or to retain it at the market price of the
day, and either to claim the deficiency or repay the surplus. If the
borrower were declared a defaulter and the securities were not realised
within three days of such declaration, the lender must take them at a
price to be named by the official assignee. In November, 1858, Phillips
lent the bankrupt £775 at 6 per cent., on deposit of some securities,
till the next settling day. The loan was renewed on several successive
settling days upon the same terms, except that when the value of the
securities fell part of the loan was paid off: but as the value rose the
lender made further advances, thus equalising from time to time the
amount of the loan and the value of the security. On 30th April, 1859, a
sum of £625 was in this way due to Phillips, but the bankrupt had two
days previously been declared a defaulter, and the petitioner had
retained the shares at the market price of the day, they having fallen
in value. According to the custom of the Stock Exchange, it was optional
on each settling day for either party to renew the loan, the amount
being increased or diminished according to the then value of the
security. In July the debtor was adjudicated bankrupt, and the
petitioner tendered a proof for the amount due, as above. The
commissioner rejected the proof, on the ground that the debt was due on
a gambling transaction.
[Sidenote: Difference between real and fictitious loan.]
On appeal, this decision was reversed. TURNER, L.J., pointed out that it
was not as though there was no real advance of money, and a payment by
one side or the other according to the rise or fall of the stocks. Here
there was a _bonâ fide_ advance, and the creditor was, in any event, to
receive the amount with interest, no more and no less.
[Sidenote: _Ex parte Marnham._]
So in the contemporaneous case of _ex parte Marnham_,[264] there was an
alleged sale of shares to the bankrupt at a certain price. The
differences were paid on each settling day by the bankrupt to the
petitioner, and by the petitioner to the bankrupt, as in Phillips’ case,
and the account was finally settled by the petitioner taking the shares
at their value, leaving a balance in favour of the petitioner, for which
he claimed to prove. There was no real delivery of the shares.
TURNER, L.J., said that if the case had rested there, it would have been
necessary to have the case further investigated before a jury; but it
appeared that the dividends on the shares were accounted for to the
bankrupt, and, further, the petitioner repurchased some of the shares
from the bankrupt and accounted to him for the value. The former fact,
perhaps, would not have been inconsistent with a mere cover for the
payment of differences; but the repurchase of the shares and payment for
them, stamped the transaction with the character of reality.
Such are the criteria for testing the legality of such transactions; as
cases have been before the Courts it is necessary to mention them. At
the same time, we must not forget the positive statement of the
witnesses before the Stock Exchange Commissioners, that, in point of
actual practice, there is no such thing as wagering or fiction in
dealings on the Stock Exchange.[265]
[Sidenote: The seller.]
But, now, to take the converse case of the seller, who has sold more
stock than he can deliver. He has to apply to a dealer who will advance
him the stock. The operation here effected is, the purchase of the stock
for the current account at the “making-up price,” and its resale for the
ensuing account. This resale may be at a lower price than the purchase,
and the difference between the two prices being the premium paid to the
dealer for the loan of the stock. It may, on the other hand, be effected
at the same price, if the state of the market is such that the payment
of the money is of itself an accommodation to the dealer sufficient to
induce him to make arrangements, or if there is a large “bull” account
open, he may be entitled to receive a “contango.” The premium, if any,
received by the lender of the stock is called a “Backwardation.” But, as
explained by a witness before the Stock Exchange Commissioners,[266] the
payment of contango or backwardation depends upon whether the particular
stock is overbought or oversold. If an enormous amount of stock is
thrown upon the market more than it can take, there is a heavy contango;
if, on the contrary, an enormous amount of stock is taken off the
market, there is no contango, but a backwardation.
It is submitted that the following conclusions result from the foregoing
cases:—
[Sidenote: Results of the foregoing cases.]
(1.) Bargains for mere differences are wagers within 8 & 9 Vict., c.
109, though contracts on the Stock Exchange never take that form.
(2.) That mere bargains for the future delivery of things not in
possession and the value of which is uncertain at the time of the
contract are not wagers.
(3.) That in determining whether a bargain be in the nature of a wager
or not the substance of the agreement as understood by both parties at
the time must be looked at.
(4.) That the question as to what were the real elements of the
agreement is a question of fact for the jury, but that it is for the
Court to decide on the nature of the agreement on the facts so found.
Both these positions seem clear from the case of _Grizewood_ v. _Blane_
and the remarks of TURNER, L.J., in _ex parte Marnham_.
(5.) That the absence, in fact, of a material element of the professed
transaction is material as showing that the bargain was a mere cover for
a wager, _e.g._, non-delivery of stocks or shares, as in _Grizewood_ v.
_Blane ex parte Marnham_.
(6.) That, as between the jobber and the broker’s principal, it is quite
immaterial that the arrangement between broker and principal is for a
wagering contract, unless the jobber is aware of it and so knowingly
engages in a wagering transaction. This clearly appears from the remarks
of the judges in _Thacker_ v. _Hardy_[267] and _Marten_ v.
_Gibbons_.[268]
(7.) That where as between principal and jobber the contract be a wager,
the contract between principal and broker to carry out the main contract
is not one of wagering, but gives rise to an implied contract right of
indemnity. This appears from _Thacker_ v. _Hardy_ and _ex parte
Godefroi_.[269]
It is only necessary to mention very shortly a subsequent statutory
provision with respect to gaming and wagering contracts.
[Sidenote: 12 & 13 Vict.]
By the Bankruptcy Act of 1849, section 201, it is enacted that no
bankrupt should be entitled to his certificate of discharge who should
have lost by any sort of gaming or wagering £20 in one day or £200
within twelve months previously; nor who should have lost within the
preceding twelve months £200 by the purchase or sale of any stock where
such stock should not be actually transferred or delivered in pursuance
of the contract, or where the stock was not to be transferred within one
week after the contract.
It will be observed that this enactment attaches penal consequences to
two classes of transaction: wagering contracts and “speculations” on the
Stock Exchange, using the term in its wider sense, and not merely as
equivalent to bargains for differences. The principal points decided on
this section were:[270]—
(1.) That speculations on the Stock Exchange (to which the phrase
“time-bargains” was more than once applied by the judges) were not
wagers within the first part of the section, as they were expressly
dealt with in the latter part. It seems, however, to have been admitted
that they were or might be wagers within 8 & 9 Vict., c. 109.
(2.) That stock (and? shares) in railway companies was within the Act,
which did not, like Barnard’s Act, apply only to public stock. In _ex
parte Wade_ a question was raised as to whether Turkish scrip were
within the Act, but the point was not decided. However, it appeared from
the evidence of a stockbroker that scrip was not considered as
equivalent to stock.
(3.) It would seem from the above cases that where the purchase was for
an account day more than a week distant, or where delivery was postponed
on a “continuation,” this would bring the bankrupt within the Act.[271]
(4.) The practice of the Court was, where any question of doubt arose,
not to decide it, but to grant the certificate subject to its being
avoided for the reasons given in the statute.
These provisions with respect to the discharge of bankrupts have not
been repeated in subsequent Bankruptcy Acts; though under the new Act it
is still discretionary with the Court whether the bankrupt shall have
his discharge, regard being had to his conduct in all cases of rash
speculation.[272]
It would seem, from the foregoing history of the legislation in respect
of betting contracts, that the tendency of the Legislature has been to
abstain from active interference with the subject’s liberty, and to give
negative discouragement to the practice, by observing a neutral attitude
as between the parties, rather than to endeavour to stamp it out by
penal enactments. Thus within the last half century three penal statutes
on the subject have been repealed. The Act of 1845 repealed the penal
provisions of the Statute of Anne. The penal provisions of the
Bankruptcy Act of 1849 have not been renewed. Barnard’s Act, which it
seems, had for a long time been a dead letter, was repealed in 1860.
There is, however, one statute in a contrary direction, 30 & 31 Vict.,
c. 29, known as Leeman’s Act, [Sidenote: Leeman’s Act, 30 & 31 Vict., c.
29. History of legislation.] which enacts that all contracts for the
sale or transfer of any shares, stock or joint interest in any joint
stock banking company in the United Kingdom of Great Britain and Ireland
constituted or regulated by the provisions of any Act of Parliament,
Royal Charter or letters patent, issuing shares or stock transferable by
any deed or written instrument, shall be null and void to all intents
and purposes whatsoever unless such contract, &c., shall set forth and
designate in writing such shares, stock or interest by the respective
numbers by which they are distinguished at the making of such contract,
&c., on the register or books of such banking company as aforesaid, or,
where there is no such register of stock, by distinguishing numbers,
then unless such contract, &c., shall set forth the person or persons in
whose name or names such shares, stock or interest shall at the time of
such contract stand as the registered proprietor in the books of such
banking company. It is further made a misdemeanour to insert in any
contract a false entry of any such number or names.
[Sidenote: Effect of Leeman’s Act.]
The purport and effect of this statute is obvious; it is intended to
prevent speculative sales and purchases of bank shares, and to annul
such transactions in cases where the vendor has not the shares in his
possession at the time of the contract: in the same way as Barnard’s Act
prohibited the sale of public stocks not in the possession of the
vendor. Leeman’s Act, however, only makes the contract void, whereas
Barnard’s Act made it illegal.
The circumstances which gave rise to the passing of the Act are well
known. From 1864 to 1866 there was a large amount of speculation in bank
shares, which caused great fluctuation in their prices, and led to
serious consequences. From the evidence given by some of the witnesses
before the Stock Exchange Committee of 1878, it would seem that the real
origin of the panic is to be looked for, not in the “bear” or selling
movement, but in the previous rush to buy, which was in some cases
started by combinations of persons who were supplied with means by the
directors of the banks. This “bull” movement produced the desired result
of raising the prices of the shares above their real value. The shares
then having reached a price which neither the dividends nor the internal
condition of the banks justified, speculators took the opposite course;
the “bear” operations which followed caused a rapid fall in prices. Not
only shareholders, but depositors became alarmed, the sudden rush to
withdraw deposits was more than some banks could meet; but those that
did stop payment had long been hastening their own ruin by unsound
internal management and investment in rotten securities. Others, whose
condition was more stable, suffered a temporary depreciation in the
value of their shares, but ultimately survived the panic. There were
many reasons why banks and bank shares should be protected in future
from such onslaughts and the disastrous results consequent thereon, so
Leeman’s Act was passed avoiding all contracts for the sale of shares
which at the time of the contract could not be specifically identified:
contracts which the vendor could only perform by going and purchasing in
the market himself.
[Sidenote: Act not observed on the Stock Exchange.]
In practice, however, the Act has on the Stock Exchange been a dead
letter, owing to the impossibility of transacting business in the
ordinary way if its provisions were observed. But a recent case shows
that although as between members of the Stock Exchange it may be the
practice to disregard the Act, yet such practice does not bind the
outside public, and that if a broker, through not complying with the
Act, fails to carry out his client’s instructions, he may become liable
in damages.
[Sidenote: Liability of broker.]
In _Neilson_ v. _James_[273] the plaintiff employed the defendant to
sell for him some shares in the West of England Bank in the Bristol
Stock Exchange. The shares were not numbered, but registered in the name
of their owner. Defendant sold them on the 4th of December to a firm of
jobbers on the Bristol Stock Exchange, but the bought and sold notes
which passed between the defendant and the jobbers on that date did not
disclose the name of the owner of the shares. The 13th December was the
“name day” (_i.e._ the day on which the jobbers were bound either to
accept delivery of the shares themselves or furnish the name of a
sub-purchaser to stand in their place,[274]) and the jobbers then
furnished the name of one J. R. Gould as the purchaser to take delivery,
who thereupon became liable (under ordinary circumstances) to accept and
pay for the shares. But previously to this date, on the 7th of December,
the bank had stopped payment and soon after was wound up, and Gould
repudiated his purchase on the ground that the name of the owner of the
shares did not appear on the Contract, which was therefore void under
Leeman’s Act. The consequence was that the plaintiff remained owner of
the shares and lost the price he would have obtained if the sale had
been validly carried out. Plaintiff sued to recover the price of the
shares as stated in the sold note.
For the defendant it was argued—(1) That the agreement of the 4th
December was only inchoate and not the completed contract, consequently
there was no breach of duty on the defendant’s part on that day. (2)
That the real contract was not completed till the 13th, and then
performance was impossible as the bank had then stopped payment and was
in the course of winding up; at any rate the damages should be only
nominal according to the value of the shares on the 13th. (3) That the
defendant was employed by the plaintiff to effect the sale subject to
the customs of the Bristol Stock Exchange; that one of those customs was
to disregard the provisions of Leeman’s Act in the sale of bank shares.
The Court decided—(1) That according to _Coles_ v. _Bristowe_[274] the
contract was complete on the 4th, subject only to the right of the
jobbers to furnish the name of a sub-purchaser as a substitute for
themselves on the “name day.” (2) There is no undertaking on the part of
the vendor of shares that the company shall be a going concern on the
day of transfer; consequently, as plaintiff would have been entitled to
the full price, that price must be the measure of damages. “It is said,”
remarked BRETT, L. J., “on the part of the defendant, that the plaintiff
can only recover nominal damages, because if the contract had been in
due form, the jobbers would not have been bound to have taken the
shares, as the plaintiff could not on the account day, when the bank was
being wound up, have given a valid transfer which the bank could have
registered. But it seems to me that all the seller was required to do
was to deliver shares on the account day, which, if the bank had
remained solvent would have entitled the purchaser to have had them
transferred into his name, and that the seller does not undertake that
banking company shall be a going concern up to the account day. The
plaintiff was therefore ready to do all that he was bound to do, and if
the jobbers had accepted the shares on that day, they would have been
bound to have paid the agreed price; and as the defendant failed to do
that which would have compelled them to have taken the shares, the
plaintiff lost such price by reason of such failure.” (3) That the
custom was bad as being unreasonable and illegal. Per BRETT, L. J.: “He
does not say the plaintiff knew of the custom, but he says that because
plaintiff employed him to sell the shares on that Stock Exchange and
according to its rules, he is bound by that custom. I think, however,
that the plaintiff is only bound by such a custom as is both reasonable
and legal, for to that extent only can a person who is ignorant of a
custom be assumed to acquiesce in and be bound by it.”
N.B.—These remarks seem to assume that if plaintiff had known and
acquiesced in the custom he could not have been heard to say the custom
was unreasonable. This would probably have been the case if the
defendant had previously done similar transactions for plaintiff without
his taking any objection.
So the broker was held liable to his client for negligence, in not
conforming to the requirements of the statute, and thereby depriving his
client of the benefit of the sale of his shares.
It will be seen that the law as it stands is somewhat in favour of an
unscrupulous purchaser. The Act having made the contracts void, and not
illegal or punishable, there is nothing to prevent members of the Stock
Exchange from disregarding it, except a possible liability to a client;
while on the other hand, the inconvenience entailed by complying with
the Act is sufficient to induce dealers and brokers to incur whatever
risk there may be, so as to facilitate business. It is probably only a
member of the outside public that would over take advantage of the Act,
and repudiate a bargain on the ground of non-compliance with it
provisions. Besides, there can be no doubt it affords a safeguard to
banks against undue fluctuation in the price of their shares.
From a late case before the Court of Appeal, it seems that in the case
of the purchase of bank shares through a broker, if the principal have
notice (_e.g._ by the receipt of the bought note) that the contract
effected by the broker does not comply with Leeman’s Act, and if he does
not repudiate it, the broker will be justified in paying the
purchase-money on his principal’s behalf. [Sidenote: _Barclay_ v.
_Pearce_.] At least this seems to be the effect of the case of _Barclay_
v. _Pearce_.[275] Defendant instructed plaintiff, who was a stockbroker,
to purchase shares in the Oriental Bank. The usual bought note was sent
to the defendant, but neither this nor the contract with the jobber
contained the numbers of the shares purchased, nor the name of the
registered owner, as required by the Act. The “name day” was the 29th,
on which day the name of the defendant as the purchaser was handed to
the jobber. The transfer was duly executed.
By the rules of the Stock Exchange the plaintiff was personally
responsible to the jobber for the payment of the purchase-money. It is
customary in dealings in bank shares to disregard Leeman’s Act. The
plaintiff paid the purchase-money and sued to recover from defendant.
There was no proof that defendant had revoked the plaintiff’s authority
to pay. The Court held that the plaintiff having at defendant’s request
entered into a contract on which he was personally responsible, though
it was void at law, was entitled to recover for money paid to
defendant’s use. It was also intimated that until _Read_ v. _Anderson_
was reversed by the House of Lords, it would be immaterial whether the
authority to pay had been revoked or not.
It is, however, submitted that it would have been competent for the
defendant to have repudiated the transaction before the transfer was
executed when he discovered that the statute had not been complied with,
and that in that case the plaintiff’s authority would have been revoked.
According to _Neilson_ v. _James_, the usage of the Stock Exchange to
disregard the Act would not bind the principal, at any rate unless he
acquiesced in it. The distinction between this case and _Read_ v.
_Anderson_ seems to be that in the latter case the agent was employed to
carry out a contract necessarily void as being a wager. In this case the
contract might have been carried out so as to be legally binding, and
there would probably be no presumption that the instructions were to
make other than a legal agreement.
This view of the matter has lately been confirmed by the Court of Appeal
in _Perry_ v. _Barnett_.[276] The facts of this case arose out of the
Oriental Bank. The plaintiffs, stockbrokers, had at defendant’s request
bought for him 100 shares in that Bank on the London Stock Exchange. The
bought note did not comply with Leeman’s Act, and next day the bank
closed its doors and defendant refused to complete the purchase. The
plaintiffs were really Bristol stockbrokers, but as the shares could not
be obtained in the Bristol market, they, with defendant’s knowledge,
instructed their London agent to purchase them in London. GROVE, J.,
decided in favour of the defendant on the ground that he was not shown
to have known or acquiesced in the custom to disregard Leeman’s Act. On
appeal it was thought to distinguish the case from _Neilson_ v. _James_
on the ground that in that case the broker was instructed to sell shares
which the plaintiff had in his possession, and so he might without
inconvenience have complied with the Act. By Rule 68 of the London Stock
Exchange no bargain on the Stock Exchange will be annulled by the
committee except on the ground of fraud. The Court affirmed the decision
of GROVE, J., in favour of the defendant. (1) Adopting the principles on
which _Neilson_ v. _James_ was decided, the custom or practice to
disregard the Act was unreasonable, and so could not bind persons who
were ignorant of it. Per BOWEN, J., “It is as regards outsiders only who
are ignorant of the custom that such an usage can be called
unreasonable.” (2) Rule 68 is unreasonable, so not binding to persons
who have not consented to be bound by it.
[Sidenote: _Seymour_ v. _Bridge_.]
This case must not be taken as overruling another of the same kind
decided by Mr. Justice MATHEW about the same time, _Seymour_ v.
_Bridge_.[277] His lordship decided in favour of the plaintiff, on the
ground that the defendant knew of the customary course of dealing in
bank shares, though he was ignorant of Leeman’s Act.
However, in a late case before the Court of Appeal, _Coates_ v.
_Pacey_[278] which was another action by a broker against a client for
indemnity in respect of a purchase of bank shares, the Court threw out
serious doubts whether the same right of indemnity which had been
established in favour of an agent employed to make bets for his
principal existed in the case of a broker even when authorised to deal
in bank shares in contravention of Leeman’s Act.
[Sidenote: Actual transfer not affected.]
It seems clear that the Act only avoids the contract for purchase and
sale, it does not affect a transfer executed in pursuance of such
contract. In _Mortimer_ v. _MacCallan_[279] the action was brought for
the price of government stocks, sold and actually transferred to
defendant in pursuance of a contract void under s. 8 of Barnard’s Act, 7
Geo. II., c. 8, the plaintiff not having the stocks in his possession at
the time of the contract. It was _held_ that the action was
maintainable, as it was based on the transfer and not on the contract:
at p. 640 “it was not a contract to sell, but a sale; not a contract to
transfer, but a transfer:” at page 643, “Although the original contract
of sale should be illegal on the part of the seller, yet the transfer is
a legal act for a legal purpose ... a promise to pay in consideration of
a transfer actually made, is neither prohibited by the words nor within
the intent of the statute.” As suggested above, this is probably the
real explanation of _Barclay_ v. _Pearce_, p. 120.
[Sidenote: Indemnity for calls.]
In _Loring_ v. _Davis_[280] a question arose as to the right of the
plaintiff, as vendor of bank shares, to indemnity against calls. It was
found by CHITTY, J., as a fact, that the defendant, while knowing of his
right to repudiate the transaction under Leeman’s Act, authorised his
brokers to complete it on settling day; that the brokers in accepting
the transfers from the plaintiff’s brokers thereby made the defendant
equitable owner of the shares, and therefore liable to indemnify the
plaintiff.
REVIEW OF THE LAW RELATING TO WAGER-CONTRACTS.
The present seems a favourable opportunity for a short review of the
state of our law on the subject of wagering.
There are several ways in which the matter may be treated by the
Legislature. It may declare the practice illegal in the sense of
punishable, and endeavour to stamp it out by the machinery of the
criminal law. This was the course adopted by the Statute of Anne, which
made it penal to win more than £10 at one time or sitting by betting or
gaming. Again, Barnard’s Act made it a criminal act to gamble in the
funds, or even to settle differences on transactions of that nature.
This species of legislation seems open to objection. Such a law must be
uncertain in operation, as the offence is difficult to prove; and what
is, perhaps, worse, it is still more difficult to disprove, and so
capable of being turned into an instrument of extortion or revenge. But
there are alternatives of a less violent character. It is possible to
make wagering transactions illegal, not in the sense of criminal, but as
contrary to public policy; the result of which would be, as it has been
endeavoured to explain in an earlier part of this work, not only that
the contracts themselves would be unenforceable, but that they would
vitiate, at any rate as between the parties to the wager, every
instrument or security, whether under seal or not; they would taint
every contract or transaction arising out of or connected with the
original wager. Thus the turf commission agent would not be able to
recover what he had paid on his principal’s behalf if he allowed himself
to be employed in a transaction contrary to the policy or the law.
In the Statute of Anne, and in Barnard’s Act, another means was resorted
to of restricting the practice, viz., they gave the person who had lost
and paid over a certain sum, a right of action to recover it within a
given period. This might be a more efficacious method of repression than
any other, as it is difficult to see how bookmakers could conduct a
successful business, if in addition to the chances of never being paid,
they could not call the money they had in their pockets their own. But
the wisdom of such a species of legislation seems very questionable; as
being in favour of dishonest persons it eventually operates to the
disadvantage of persons who are ready to discharge their debts of
honour. Besides, it hits the practice of betting in its least
objectionable point. The payment of a bet implies that a man has not
“plunged” beyond his means, particularly where the contract cannot be
enforced against him. The object of the law is to discourage excessive
gaming on credit, whereby persons might incur liabilities which their
means can never enable them to meet.
There is yet another alternative course, which is summed up in the
attitude which our law, in its present condition, assumes towards
betting. In technical language, it declares wager-contracts void without
making them illegal; it regards them as things not to be encouraged, but
not absolutely forbidden, maintaining a neutral position as between the
parties without being positively hostile. It will probably have become
evident from the foregoing pages that the English law on the subject is
in a somewhat peculiar state. In the first place its condition is
decidedly piecemeal. To know the law in full it is necessary to refer to
four different statutes, the dates of which, from first to last, extend
over a period of about two hundred years. The Statutes of Charles II.
and Anne must be studied before the effect and meaning of the Statute of
William IV. can be made intelligible. But the latter statute, at any
rate in its present application, deals only with cheques and securities
given for betting debts, and that, too, only where the bet is made on a
horse race, or some other game or pastime. Such securities it declares
to be given for an illegal consideration. The contracts themselves are
the subject matter of another statute passed a few years afterwards,
which by a broad and sweeping enactment, very little in the style of
English statute law, makes all wagers, of any sort whatever, not
illegal, but void and unenforceable. It seems an anomaly that while all
bets of themselves are simply void, yet when once a cheque is given in
discharge or payment thereof, we are compelled to distinguish between
bets on games and bets not on games; the former, directly the cheque is
signed, becomes illegal, while a similar transformation is not effected
in the case of the latter. The law at any rate seems capable of greater
uniformity in this respect.
Another peculiarity of the law lies in this—that while wagers themselves
cannot be made the subject of an action, yet in many cases they can be
practically enforced by the joint exercise of legal and non-legal
sanctions. This is specially the case with regard to betting on the
turf, a large quantity of which is carried on, not directly between
principals, but through the medium of betting agents. The agent makes
the bet in his own name, and, so far as the other party is concerned, is
the principal. If the bet is lost, the agent is, of course, under no
legal obligation to pay. But these turf agents are members of what may
be called a profession, and the dealings between the members are
regulated by the strictest etiquette, a breach of which might entail
serious consequences. It is well known that where an agent makes a bet,
it is he who, by the rules of the turf, is responsible for payment. Some
of the consequences of default were dwelt upon in the case of _Read_ v.
_Anderson_; but suffice it to say that a defaulter is practically turned
out of his profession. So that payment is enforced against the agent
just as effectually as it could be made the ground of an action at law.
He must, if he can, obtain indemnity from his principal.
It is at this stage that the law steps in. When an agent has paid money
on behalf of his principal the law gives the agent a right of indemnity.
If the agent has been employed in a betting transaction, this right,
says the law, arises not out of a wager but out of an implied promise by
the principal to save the agent harmless from all the consequences of
his performing his instructions. The principal knows that if the bet is
lost the agent must pay; consequently the doctrine of an implied promise
of indemnity applies equally where the transaction effected by the agent
was void as being in the nature of a wager.[281] So eventually a
transaction which, as between principals, the law would not recognise,
is practically enforced by a circuitous process when effected through
the medium of an agent.
But the inconsistency is seeming rather than real. The contract between
the principal and the agent is not in the nature of a wager. It is more
in the nature of a contract of loan. A promise by A that he will make B
a present of £5 gives B no ground of action against A; it is simply
void. But A employs C to go and pay the money on his behalf. C can, of
course, recover what he has paid, from A. So a wager is nothing more
than void, like the promise of a gift; it is not illegal. And this is
the real explanation of the matter. The law does not forbid people to
bet, so that in compelling the principal to indemnify his agent it is
not enforcing any transaction contrary to its own policy.
Further, be it remembered, the law in its present state is not open to
the charge of one-sidedness: the rights of the principal and the agent
are reciprocal. The agent has the same hold over the bookmaker that the
latter has over him; he could visit him with the ordinary penalties of
default. But the agent who has received “winnings” on a bet, can no more
refuse to account to his principal, than can a principal refuse to
reimburse the agent who has paid losses. So eventually, in cases where
the commission agent intervenes, fair dealing is enforced as between all
parties. It is also worthy of consideration that actions in which
betting transactions are involved, but which come before the Courts on a
question as between principal and agent, are not open to the same
objection as the actions which were allowed to be brought directly on
the wager itself, and which necessitated the trial of absurd and
frivolous issues. The interposition of an agent occurs, of course,
almost exclusively in betting on the turf; and it may be taken that
actions between principal and agent with respect to wagers will in all
cases be concerned with wagers on horse-races. But in all such races
there is a regularly established process for deciding as to the winner,
and it is not likely that a man who was sued by a turf commission agent
for reimbursements would be allowed to raise any question as to the
correctness of the decision of the judge or the stewards of the race. In
these cases, therefore, the time of the Courts is never taken up with
disputes as to the event on which the bet was made—an inconvenience
which in former times drove the judges to the extreme measure of putting
all wager actions at the bottom of the cause list.
Of course it must not be forgotten that the law as settled in _Read_ v.
_Anderson_ is yet subject to reversal by the House of Lords, a
contingency which would materially affect the interests of turf
commission agents; but so long as the decision of the Court of Appeal
remains undisturbed, the law is that the agent who has made a bet in his
own name has an irrevocable authority to pay the bet, if lost, on his
principal’s behalf; and can recover the amount from him.
_N.B._—Since these observations were written the Gaming Amendment Act,
1892, has, as has been pointed out above,[282] made some modifications
in the law. The agent can no longer sue, though he can be sued.
CHAPTER III.
LOTTERIES.
A lottery has been defined to be “a distribution of prizes by lot or
chance,” a definition which was accepted as correct by the Court in
_Taylor_ v. _Smetten_,[283] but which seems somewhat incomplete
considering the complexity of the subject, see _post_ p. 140 as to the
tests of a lottery.
The setting up of lotteries has been declared illegal and penal by a
long series of statutes commencing in the reign of William III. The full
text of these statutes will be found in Chitty’s Statutes (title
“Gaming”). It will be sufficient to summarise them for the purpose of
the present work.
[Sidenote: 10 & 11 Wm. III., c. 17.]
The Statute 10 & 11 William III., ch. 17, reciting that persons had of
late fraudulently obtained great sums of money from the children and
servants of merchants and traders by colour of patents or grants under
the Great Seal, [Sidenote: Lotteries declared nuisances.] enacts by
Section 1 that all such lotteries are common and public nuisances and
all patents and licence for the same void.
[Sidenote: Penalty of £500 for keeping a lottery.]
(2.) That no person should after the 29th of December, 1699, publicly or
privately exercise, keep open, show or expose to be played at, drawn at
or thrown at, any kind of lottery by dice, lots, cards, balls, under
penalty of £500.
[Sidenote: £20 for playing at such lotteries.]
(3.) All persons playing, throwing or drawing at such lotteries, or any
other lotteries are liable to a penalty of £20.
[Sidenote: 9 Geo. I., c. 19. Foreign lotteries.]
By 9 George I., c. 19, a penalty of £200 is inflicted for setting up any
lottery by virtue of a grant from any foreign prince or issuing any
advertisement for the same; also for selling tickets within the kingdom
for any foreign lottery.
[Sidenote: 6 Geo. II., c. 35. £200 penalty for selling chances in
foreign lotteries.]
It seems that the latter statute was evaded by persons issuing tickets
for numbers in foreign lotteries and setting up duplicates of such
lotteries in this kingdom. So by 6 George II., c. 35, a penalty of £200
is imposed for selling or procuring any ticket, receipt, chance, or
number in any foreign lottery, or in or belonging to any class, part, or
division of such lottery, or any ticket for any duplicate of any foreign
lottery.
[Sidenote: 12 Geo. II., c. 28. £200 penalty for setting up sales by
lotteries.]
12 George II., c. 28, inflicts a penalty of £200 for setting up any
office or place under the denomination of “a sale of houses, land,
advowson, presentations, plate, jewels, ships’ goods, or other things by
way of lottery,” [Sidenote: Advertising for advances to be distributed
by way of lottery.] or for advertising for advances of sums of money
amounting in the whole to large sums to be divided among the subscribers
by chances of the prizes in some lottery allowed by Act of Parliament,
or for exposing for sale any of the above things by any game, method or
device whatsoever to be determined by any lot or drawing.
By section 2 the games of ace of hearts, pharaoh, bassett and hazard are
declared to be games or lotteries within the meaning of the recited Act,
with the same penalties for setting up the same.
[Sidenote: Sec. 3. Persons playing at games mentioned in the Act liable
to £20 penalty.]
By section 3 players or adventurers in any of the games mentioned in the
Act, viz., ace of hearts, pharaoh, bassett and hazard, are liable to a
penalty of £20; the same penalty is inflicted on persons taking part in
any such lottery or sale.
[Sidenote: All sales by lotteries declared void.]
Section 4 makes all sales by lotteries void, and the subject matter of
the lottery is forfeited to the person who shall sue for the same.
[Sidenote: Division among joint tenants by lot lawful.]
Section 11 provides that it shall be lawful for joint tenants and
tenants in common to make partition of their several interests by lot as
though the Act had not been passed.[284]
[Sidenote: 13 Geo. II., c. 19, passage and games with dice.]
By 13 George II., c. 19, sec. 9, passage and all other games with dice,
backgammon excepted, are declared to be lotteries within the last Act,
with similar penalties on persons who “maintain, set up or keep, any
office, table or place,” for such games, and on persons who “play, set
at, stake or adventure” in the said games.
[Sidenote: 18 Geo. II., c. 34, Roly-Poly.]
By 18 George II., c. 34, secs. 1 and 2 impose similar penalties in
respect of setting up a house or place for or allowing roly-poly, or
playing thereat.[285]
[Sidenote: 42 Geo. III., c. 119, Littlegoes declared to be lotteries.]
By 42 George III., c. 119, section 1, all games or lotteries called
“Littlegoes” are declared to be public nuisances.
[Sidenote: Penalty £500 for keeping a lottery.]
By section 2 any person keeping any office or place to exercise, show,
or expose, to be drawn or thrown at by dice lots, cards, balls, numbers,
or figures, or any other contrivance, any lottery called a littlego or
any other lottery, or any person suffering the same to be carried on in
his or her house, is made liable to a penalty of £500.
Section 3. Persons not proceeded against for such penalties may be
convicted as rogues and vagabonds within the meaning of 17 and 27 George
II.
Section 4. Power is given to any justice of the peace upon information
on oath to issue a warrant authorising any person (but if by night then
in the presence of a constable) to break open and enter any house or
place where they have information of any offence being committed within
this Act, [Sidenote: Persons aiding and abetting in lotteries.] and to
apprehend all offenders and all persons aiding and abetting in any such
offence. The latter are punishable as rogues and vagabonds.
The section also provides that persons obstructing any such officer in
the execution of his duty shall be liable to be “fined, imprisoned, and
publicly whipped.”
Section 4. Persons employing others in carrying on such lotteries to be
deemed rogues and vagabonds.
Section 5. No person is to agree to pay money or to deliver goods on any
event or contingency relative to the drawing of any tickets, lots, or
numbers in any such lottery under penalty of £100.
[Sidenote: Place.]
By 4 George IV., c. 60, s. 60, the word “place” is declared to extend to
any place in or out of an enclosed building, whether on land or water.
By section 31 any person selling tickets in any lottery authorised by
any foreign potentate, or to be drawn in any country, or any lottery not
authorised by Act of Parliament, or publishing any scheme for the sale
of tickets, is liable to a fine of £50, and to be dealt with as a rogue
and vagabond.
[Sidenote: Tickets.]
4 George IV., c. 60, s. 41, provides that any person selling tickets in
any lottery or publishing any scheme for the sale of tickets, shall be
punished as a rogue and vagabond.
[Sidenote: 46 Geo. III. c. 148. All proceedings to be taken in the
Attorney-General’s name.]
By 46 George III., c. 148, it is provided that all penalties under the
former Act, or any act concerning lotteries, are to go to the Crown, and
to be sued for only in the Attorney-General’s name.[286]
[Sidenote: 6 & 7 Wm. IV., c. 66. £50 penalty for advertising any lottery
or ticket.]
By 6 and 7 William IV., c. 66, a penalty of £50 is imposed on any person
who prints or publishes any advertisement or other notice relating to
the drawing of any foreign or other lottery not authorised by Act of
Parliament, half the penalty to go to the informer, half to the Crown.
The same penalty is imposed for printing advertisements of the sale of
tickets or chances in any lottery.
[Sidenote: 8 & 6 Vict., c. 74. Penalties to go to Crown.]
By 8 and 9 Vict., c. 74, to save newspaper proprietors the annoyance of
being sued for inadvertently advertising lotteries contrary to the Act,
it is enacted that all penalties shall go to the Crown, and proceedings
only instituted in the Attorney-General’s name.
[Sidenote: Indian law.]
By the Indian Penal Code, 294A, it is made an offence to keep any
“office or place” for drawing any lottery not authorised by Government,
also to publish any proposal to pay money or deliver goods on an event
to be determined by drawing, &c.
The English cases will in most cases be applicable to the construction
of the term “lottery” in the Indian law. And as to what constitutes “a
place,” reference should be made to a subsequent part of this work on
betting houses.
[Sidenote: Private house or club.]
Of course a lottery is equally illegal when carried on in a private
house or club as in a public place. The words of section 2, of 42 George
III., put this beyond doubt. Thus, in _Mearing_ v. _Helling_,[287] which
was the case of an ordinary Derby sweep in a club, it was held that the
drawer of the winner could not recover the stakes, the transaction being
illegal.
[Sidenote: Summary of the Statutes.]
To sum up the provisions of the statutes, the following seem to be
offences constituted:—
[Sidenote: Keeping a lottery.]
(1.) Setting up a lottery. This, obviously directed against anyone
presiding over a gambling establishment in the same way as subsequent
Acts, makes it illegal to keep a bank in a gaming house, or a betting
table, as against all comers.
[Sidenote: Players or punters.]
In all the Acts, it will be noticed that this is the first offence
specified.
(2.) The next offence is playing at any of the unlawful games[288]; in
which matter the Lottery Acts differ from the Acts against gaming and
betting houses. The leading provision in this matter is section 3 of the
Act of William III., which is perfectly general in its terms. First it
speaks of playing, &c., at “the said lotteries.”
If the Act had stopped there, it might have been contended that the
players were only liable where the lottery was of the kind mentioned in
section 2 of that Act; _i.e._, where there was somebody, as it were,
holding the bank as against the rest; but the Act further goes on to
say, “or other lotteries.” These words seem quite wide enough to include
the common case of members of a club combining together to make a Derby
sweep, which is quite a distinct case from a man getting up a lottery
and inviting others to gamble with him; and so it seems to have been
held in _Mearing_ v. _Helling_.[287] See 12 George II., c. 28, s. 3.
However, it is not very likely that the law would be enforced in such a
case; as we have seen above, the penalties could only be recovered at
the suit of the Attorney-General. It seems clear also that the term
“common nuisance,” “rogue and vagabond,” only applies to the case of a
man who sets up a lottery; it does not apply to the adventurers.
(3.) Advertising lotteries at home or abroad.
[Sidenote: Tickets.]
(4.) Issuing or selling tickets at home or abroad.
[Sidenote: Agent or stakeholder.]
(5.) It is clear that any one acting as agent for another in a lottery
is equally guilty of “maintaining,” “setting-up,” or “exposing;”
probably a stakeholder could be made liable as “aiding and abetting”
within section 4 of 42 George III., c. 119.
[Sidenote: Foreign lotteries.]
(6.) With regard to foreign lotteries, the offences constituted are:
(_a_) Setting up, or selling tickets for, lotteries by virtue of a grant
from any foreign power. 9 Geo. I., c. 19. (_b_) Issuing tickets for
numbers in foreign lotteries, and setting up duplicates of such
lotteries. 6 Geo. II., c. 35. (_c_) Selling tickets for any lottery
authorised by any foreign power, or in any lottery unless authorised by
Act of Parliament, and publishing scheme for the sale of such tickets. 4
Geo. IV., c. 60, s. 41. (_d_) Publishing any advertisement relating to
the drawing of any foreign lottery, or to the sale of tickets therein. 6
& 7 Wm. IV., c. 66.
In _MacNee_ v. _Persian Investment Corporation_[289] the defendant
company was formed for the purpose (_inter alia_) of carrying into
effect an agreement, whereby the defendant company were to secure a
monopoly of all operations in Persia relating to loans redeemable by
drawings with bonuses and to lotteries, the promotion of lottery
companies, and the sale of lottery tickets. The defendants’ prospectus
stated the main object of the company to be to promote lottery loans on
the lines in vogue on the Continent, and that five issues would be made
annually in Persia. _Held_ that the agreement was not illegal within 9
Geo. I., c. 19, which statute (_semble_ except as to the sale of
tickets) only applied to lotteries in this country. Nor was it within 6
& 7 Wm. IV., c. 66, seeing that it was a mere general intimation as to
future lotteries, not an announcement of any particular lottery. It
should be observed that it was consistent with the agreement and the
prospectus that all the operations of the company should be conducted in
Persia.
[Sidenote: What amounts to a lottery. _Allport_ v. _Nutt_ Sweepstakes.]
The following cases show what will constitute a lottery within the
meaning of the Acts:—
In _Allport_ v. _Nutt_[290] plaintiff sued for £100, having subscribed
£1 to an adventure on the terms that a certain race being about to be
run, the name of each of the horses entered for the running should be
put on a separate card, and that all should be mixed up in a box; and
the same with the names of the subscribers, which were put into another
box; that one card should be drawn out of the horse box, and then one
card out of the other. The person whose name should be drawn out after
the horse which should afterwards win the race should win £100.
Defendant pleaded that the transaction amounted to a lottery, or, in the
alternative, to a wager under the Statute of Anne. In answer to this,
plaintiff urged that the Lottery Acts only contemplated cases where
unfair advantage was taken, relying for this argument on the recitals
contained in the Statute of William III.
[Sidenote: Suggested distinction between lotteries and sweepstakes.]
It was further argued that this transaction was a sweepstakes, and not a
lottery. “The difference” (argued Serjeant Byles) “between a lottery and
a sweepstakes is this: in a lottery, the party getting it up receives
from the purchasers of tickets more than the value of the prizes;
whereas in a sweepstakes all the money obtained from the subscribers is
paid over to the winners; the party to whom the subscriptions are paid
is a mere stakeholder.”
[Sidenote: Argument that lotteries for legal horse-race not illegal.]
It was also contended that a lottery to be determined by the event of a
legal horse-race was not prohibited; that “all the Lottery Acts
contemplate a scheme whereby the actor is attempting to enrich himself
at the expense of the community. The transaction in this case is nothing
more than betting on a legal horse-race, no single individual staking
more than £1.”[291] But the Court overruled all these arguments.
The words “all other lotteries,” and “any other lottery whatsoever,”
used in the statutes, were wide enough to take in the present case, thus
embracing what are commonly known as sweepstakes. “The mischief,” says
CRESSWELL, J., “intended to be remedied is, the introduction of a spirit
of speculation and gambling, tending to the ruin and impoverishment of
families, and not, as suggested, the gain acquired by the individual.
Suppose a horse were sold by tickets amounting in the aggregate to the
true value, would not that be a lottery?”
[Sidenote: _Gatty_ v. _Field_]
This case was followed in _Gatty_ v. _Field_,[292] where sums of 15s.
were deposited by subscribers with a secretary previous to a horse-race.
The name of each horse entered for the running was put on a separate
card; these cards were mixed up in a box; the names of the subscribers
were then written on other cards, and mixed up in another box. Cards
were drawn alternately out of the horse box and out of the other box,
just in the same way as in _Allport_ v. _Nutt_; the winner being also
determined in the same way. _Held_ that this was illegal as a lottery.
[Sidenote: Distribution of presents at entertainment.]
In _Morris_ v. _Blackman_,[293] an attempt was made to evade the law by
setting up a lottery under the guise of distributing presents
gratuitously and capriciously among the audience. Defendant kept a shop
in the King’s Road, Brighton; in the window of which watches, pieces of
plate, and other articles were exhibited, with a placard: “These
presents, with others, will be given away by W. Morris at the conclusion
of his entertainment at N. Rooms, Brighton, to-night and every evening
during the week.” There was also a notice that tickets could be had
within. A witness purchased of Jeffs, Morris’ assistant, who was a
co-defendant, a ticket for a seat, and received a programme, in which it
was stated, “at the conclusion of the entertainment Mr. Morris will
distribute amongst his audience a shower of gold and silver treasure on
a scale without parallel; besides a shower of smaller presents, which
will be impartially divided amongst the audience and given away.” At the
close of the entertainment, a quantity of these “presents” were placed
on a table. Morris took up a butter-cooler, and awarded it to the
occupier of seat 345. Other “presents” were distributed in the same way,
the number of a seat being sometimes called out which had no occupier.
_Held_ that as a question of fact the magistrates had rightly decided
that this was a mere contrivance to conceal what was really a game or
lottery within 42 George III., c. 119. Per POLLOCK, C.B.: “I have no
doubt that not one of the audience had the least notion that the
proprietor was to give the articles to any person he pleased: but that
every one thought he had a chance of winning.”
[Sidenote: Companies distributing benefits by lot.]
In some of the cases, it has been sought to impeach the schemes of
companies which contemplate the distribution of dividends or other
benefits by lot.
Thus in _O’Connor_ v. _Bradshaw_,[294] the objects of the Company were
to raise subscriptions in small sums, to purchase land, erect dwellings
thereon and allot them to its members on such terms as should enable
them to become freeholders and obtain other privileges according to the
number of shares for which they subscribed. Their right to obtain these
privileges was not absolute, but depended on the result of a ballot
according to which a small number only of the subscribers could obtain
present possession of houses, &c., and the proportion of those who had
obtained them during five years was very small.
The Lord Chief Baron was of opinion that this scheme constituted a
lottery.
Baron PARKE was of another opinion, thinking that the case came within
section 11 of 12 George II., c. 28. He also put another illustration:
“Suppose a number of persons were to buy a large collection of pictures
some of which far exceeded others in value, might it not be decided by
lot who should have the first choice?” But as the company was illegal on
another ground, this point was not decided.
[Sidenote: _Sykes_ v _Beadon_.]
The next case of this kind is _Sykes_ v. _Beadon_.[295] The association
was formed on the principle of investing the subscriptions of the
members and dividing the capital fund and profits among themselves by
means of certificates convertible by annual drawings by lot into
preference dividend bonds bearing interest with a bonus.
[Sidenote: Building societies distinguished.]
The Master of the Rolls without deciding the point finally, said (p.
185), “I have grave doubts whether this association is not illegal, as
being within the Lottery Acts. Building societies are in a different
position—they are loan societies. In an association such as this, it is
not a case of loans to be returned, but of subscriptions to be divided.
The subscriptions are to be divided among the subscribers by drawings by
lot, and the prize is a bond with a bonus.” (At p. 190) “The holders of
certificates are persons who subscribe money to be invested in funds
which are to be divided among them by lot and divided unequally. That is
the persons who get the benefit of the drawings get a bond bearing
interest and a bonus which gives them different advantages from the
persons whose certificates are not drawn, and it depends upon chance
which gets the lesser or the greater advantage. It is, therefore, a
subscription by a number of persons to a fund for the purpose of
dividing that fund between them by chance and unequally.
“If that is not a lottery it is very difficult, at all events to my
mind, to understand what a lottery is. It is called a division by lot,
which means lottery. It says that the selections of certificates shall
be by lot, and that is to be done in the ordinary way, by chance, and
the benefits, as I said before, are unequal.”
The next company which it was sought to bring within the Lottery Acts
was the Mutual Society—a sort of building society.[296] [Sidenote:
_Wallingford_ v. _Mutual Society_.] The objects of this society were to
accumulate capital by means of monthly subscriptions from members to
advance capital to the members in rotation, to secure payment of such
advances, and to divide profits among the members. The mode of operation
was to obtain subscriptions from members, to advance them money, at
interest, upon certificates of appropriation. Such certificates should
be given to every member on joining the society, and should certify his
right to receive advances and a share of profits. Holders of life
certificates were entitled to tontine bonuses. An “appropriation” or
advance was to be made according to the number of certificates held by
the member successful in obtaining the appropriation.
Appropriations were to be allotted in two ways, the first and every
fourth one thereafter by drawing, free of any premium or interest, while
those intermediate appropriations were allotted to the member or members
tendering the highest premium for the same respectively. Appropriations
were to be repaid by quarterly instalments.
It was urged that the constitution of this society was illegal under the
Lottery Acts, as the benefits of the society were to be given to the
members by drawings.
The Court were unanimous in holding that the society was not within the
Lottery Acts. Per Lord SELBORNE: “One of those Acts plainly, on the face
of its recitals (the enacting part not departing from the recitals) had
reference to gambling transactions only; and in my judgment this was not
a gambling transaction within the meaning of that Act.” The other had
reference to persons who kept lottery offices at which the public were
invited to pay for lottery tickets; and that Act could have no
application to this case.
Per Lord HATHERLEY: “If this were held to be a lottery, nearly every
building society and a great many other societies framed upon a similar
footing might be found to fall within the enactments against lotteries.”
[Sidenote: Conflict between the two cases.]
It does not seem easy to reconcile the dicta of the Master of the Rolls
with the decision of the House of Lords in the above case. It is true
the Master of the Rolls draws the distinction in the case of building
societies that in them it is a case of loans to be returned and not of
subscriptions to be divided. At the same time in both the cases seem to
stand on this common ground—that certain unequal benefits of the society
were to be distributed by lot or chance. Since this decision of the
House of Lords it must be taken that there is nothing illegal in a
company or partnership distributing dividends or profits by drawing
lots. In _Smith_ v. _Anderson_ 15 Ch. D., 247, it was admitted that
_Sykes_ v. _Beadon_ was overruled by the Wallingford case (but see
_post_ for the suggested text of a lottery).
[Sidenote: No defence that all present get some benefit.]
In two cases it was contended that no scheme could amount to a lottery
in which the holders of the tickets all get some value for their money,
the amount or value being uncertain; but in both it was held that the
element of uncertainty was sufficient to bring them within the Acts.
[Sidenote: _R._ v. _Harris_.]
In _Reg._ v. _Harris_[297] defendant announced a bazaar to be conducted
according to the principles of the Art Union. 5,000 tickets of 1s. each
were to be sold; bonuses to the amount of £250 were to be distributed by
lot. Every holder of a ticket got some bonus, but some bonuses were more
valuable than others. _Held_ by M. SMITH, J., that the fact that every
body got some bonus did not make it the less a lottery.
[Sidenote: _Taylor_ v. _Smetten_.]
So in _Taylor_ v. _Smetten_.[298] Defendant erected a tent, in which he
sold packets containing 1 lb. of tea each. In each packet was a coupon
entitling the purchaser to a prize, and this was publicly stated by the
defendant before the sale. The purchasers were told to come next morning
for their prizes, the nature of which were unknown to them. It is not
stated in the report whether the prizes were drawn by lot, or whether
they were awarded at the caprice of defendant. _Held_ that this
constituted a lottery. HAWKINS, J., says: “If the coupon alone sealed up
had been offered for sale, the purchaser taking his chance whether it
represented a pen or a silver pencil case, or if a number written on a
slip of paper were sold entitling the purchaser to some article the name
of which was written against a corresponding number in an undisclosed
list, could any one doubt these would have been lotteries? To use it is
utterly immaterial whether a specific article was or was not conjoined
with the chance.”
[Sidenote: Advertisement not necessary.]
Nor is it essential that the nature of the prizes distributable should
be publicly announced or advertised if the scheme itself is in the
nature of a lottery. _Hunt_ v. _Williams_.[299]
[Sidenote: Racing coupons.]
In _Caminada_ v. _Hulton_[300] the legality of the racing coupons came
before the Court. The case was of the ordinary kind, the defendant, to
increase the sale of his paper, appended to each copy a coupon which the
purchaser might, if he chose, fill up with the names of horses he
thought likely to win one or more races, according to the conditions,
and those persons who should be successful in selecting a given number
of winners were to be entitled to a prize. It was held that this was not
a lottery seeing that the competitors selected their own horses; there
was no distribution by lot. This case will be noticed again in the
chapter on Betting Houses.
[Sidenote: Suggested test of a lottery.]
It is suggested, not without some diffidence, that the following
considerations form the test of whether a transaction is or is not a
lottery. There must be an agreement or scheme contemplating that in
consideration of subscriptions paid by the adventurers certain property
(be it the fund subscribed or otherwise) is to be allotted to some one
or more exclusively of the other adventurers, or distributed unequally
among them; such allotment or distribution to be determined by lot. But
it would seem material to notice:—
(1.) The agreement may be amongst the subscribers themselves, as in the
case of a sweepstakes, see _Allport_ v. _Nutt_,[301] or by the
subscribers with a person who is getting the lottery up, perhaps for his
own profit.
(2.) It must be part of the scheme that some of the adventurers should
win and others should lose, as Lord SELBORNE observed in _Wallingford_
v. _The Mutual Society_, that the statutes have reference to gambling
transactions only. This is as in wagers, _vide sup._ p. 32.
(3.) The distribution of the prizes must be by lot or chance, herein
differing from a wager.
(4.) The distribution of the prizes must be in consideration of property
subscribed by the adventurers out of property belonging to them
individually. There would appear to be nothing contrary to the Lottery
Acts in joint owners dividing their property by lot. Sec. 11 of 12
George II., c. 28, specially exempts partition by lot among joint owners
of land. But this is quite a different idea from making a contribution
for the purpose of a division by lot.
(5.) The distribution of the prizes by lot must be the main substantial
part of the scheme to which the adventurers subscribe. This may serve as
the true explanation why companies whose regulations provide for a
distribution of profits by lot are not within the Lottery Acts. In these
cases we have commercial undertakings, whose main and primary object is
to make money in a legitimate way, whether by profitable investment, as
in _Sykes_ v. _Beadon_, or trade enterprise. The distribution of these
profits is, though important, purely secondary. It does not seem to be,
as suggested by the Master of the Rolls in that case, a case merely “of
subscriptions to be divided”; the profits had to be earned first. No
doubt the line between the cases may sometimes be very fine. Several
people agree to subscribe to buy a mare and then to raffle for it. This
would seem clearly to be a lottery,[302] though _secus_ if the agreement
to raffle were made after the purchase. But suppose the agreement were
to buy several mares for the purpose of breeding from them and to raffle
for the offspring; this case would seem to stand on the same footing as
the case of the companies; the primary object is the breeding of horses.
[Sidenote: Bazaars]
The question never seems to have been raised whether bazaars conducted
on the now somewhat common system of selling things by drawing of lots
do not infringe the Lottery Acts. Such bazaars are usually held for the
purpose of raising money for a charity. The method of operation in many
cases is for a certain number of subscribers to pay down a specified sum
of money each, and then articles of a different value are distributed
among those subscribers, by drawing of lots, some of the articles being
of greater value than others, every subscriber getting something for his
ticket. It is clear from the authorities above quoted, that the latter
circumstance does not take the case out of the Lottery Acts. [Sidenote:
“Fish ponds.”] So also articles are sold at these bazaars by raffle, or
by a more modern institution called a “fish pond,” in which a quantity
of articles of unequal value, and all under cover, are placed together;
and the subscribers, with a sort of fishing rod and line and a hook
attached at the end, endeavour to fish up some article, the value of
which of course is uncertain until taken out of its cover. It seems
difficult to avoid the conclusion that if such bazaars are conducted on
any of the systems above alluded to they infringe the provisions of 12
George II., c. 28, section 1., which prohibits the sale or exposing for
sale of goods, &c., by any method or device to be determined by lot or
drawing, thus prohibiting any lottery being carried on under the guise
of a sale. Section 3 of the same Act seems to apply to any person buying
at any such sales—it inflicts a penalty of £20 on any adventurer in the
games forbidden by the Act, and on any person taking part in such
lottery or sale. Whether it would be wise or tolerable that the law
should be enforced in every case in all its strictness is another
question, but it would be wise for persons who get up these bazaars,
even with the most charitable motives, and ladies who take stalls
therein, to consider the Lottery Acts.
[Sidenote: Lotteries illegal, not merely void as agreements.]
Of course as the statutes have imposed penalties for setting up
lotteries it follows that an agreement which has for its object any
transaction which amounts to a lottery or of which such transaction
forms any part is tainted with illegality. [Sidenote: Results of
illegality.] The chief results of a contract being illegal have been
noted above in treating of bills and securities given for an illegal
consideration. In some few cases the application of these rules to
lottery transactions is illustrated.
[Sidenote: Whole transaction tainted.]
In _Fisher_ v. _Bridges_[303] defendant agreed to sell to plaintiff a
piece of land at a certain price, for the purpose, as plaintiff well
knew, that the land should be exposed for sale by lottery contrary to
the statute.[304] Defendant having paid only a part of the purchase
money after the sale was over, entered into a covenant with plaintiff to
pay the balance. The defendant pleaded that the deed was given for an
illegal consideration, viz., the sale by lottery.
The Court of Queen’s Bench held that as the deed was made after the
illegal transaction was over, and did not appear by the plea to have
been entered into in pursuance of the previous illegal agreement, it was
not affected with the illegality; the grounds of their decision being
that the purchase money and the sum secured by the bond were not
necessarily identified.
But the Court of Exchequer Chamber reversed this judgment on the ground
that “the covenant was given to secure the payment of a part of the
purchase or consideration money for the lands the subject of the
agreement, and no action could have been brought to recover the purchase
money of the lands. The covenant springs from, and is a creation of, the
legal agreement; and as the law would not enforce the original illegal
contract, so neither will it allow the parties to enforce a security for
the purchase money, which by the original bargain was tainted with
illegality.
[Sidenote: Money paid in respect of a lottery.]
Another consequence of lotteries being illegal is seen in the right of
the person who has paid money in respect of it to recover it back. Where
the money has been deposited with a _stakeholder_, the series of cases
ending with _Diggle_ v. _Higgs_,[305] given under “Wager Contracts,”
show that notice can in any case be given by the depositor to recall the
money before it has been paid over by the stakeholder.
But where the deposit has in the first place been made with a person who
sets up the lottery different considerations prevail. The general rule
is that where money has been paid to a person in order to effect an
illegal purpose with it the person making the payment may recover the
money back before the purpose is effected. But where the illegal purpose
has been fully or partially executed it cannot be recovered by the
person who paid it, the rule “in pari delicto, etc.,” has been held to
apply.[306] Therefore under the first part of the rule above stated it
is clear that the depositor can always recover his money before the
lottery comes off.
It seems however in a lottery to be the same as in the case of a wager,
a depositor cannot sue the stakeholder without previously giving notice
to him that his authority to pay the money over to the winner is
determined.[307]
So in _Gatty_ v. _Field_[308] where the plaintiff had deposited 15s. as
subscriber to a lottery and sued the stakeholder as winner. [Sidenote:
Demand necessary.] It was held that to entitle him to recover his own
subscription it was necessary for him previously to demand it back from
the stakeholder and so put an end to the illegal transaction.
But now to consider the case of the lottery having come off. The rule of
“in pari delicto, etc.” does not of course apply where the delictum is
not par.[309] Thus, in _Browning_ v. _Morris_,[310] it was held that
money paid by way of premium for the insurance of lottery tickets to the
keeper of a lottery office was recoverable on the ground that the
various statutes (at least so it would seem[311]) authorising the
raising of money by State lotteries forbade the keeping of offices for
the insurance of tickets, but imposed no penalty on the insurer—the
statute had “marked the criminal.” It seems, however, that in the middle
of the judgment it transpired that the plaintiff himself was a lottery
office keeper, and therefore himself “in pari delicto”; consequently a
non-suit was entered.
It would seem, therefore, that where a person sets up or maintains a
lottery, receiving money on deposit in respect thereof the subscribers
can at any time recover what they have paid. It is true that section 3
of the Act of William III. and section 3 of 12 Geo. II., c. 28 impose
penalties on the adventurers. Still the statutes were passed for the
protection of the latter, and the heavier penalty is imposed on the
maintainer. In the case, however, of a sweepstakes, which is simply an
agreement between the adventurers,[312] the same considerations do not
seem to apply.
It is also clear both upon principle and on the authority of _Allport_
v. _Nutt_[313] that no action will lie to recover money alleged to be
due as the winnings of a lottery. [Sidenote: Illegal partnership or
society.] In the case of _Sykes_ v. _Beadon_,[314] the Master of the
Rolls held a society to be illegal partly as infringing the Companies’
Acts and partly as infringing the Lottery Acts. His lordship distinctly
opposed the dicta of Lord COTTENHAM in _Sharp_ v. _Taylor_[315] to the
effect that a suit could be maintained by a member of a firm formed for
an illegal object for an account of profits realised by such illegal
business on the ground that the Courts by affording such remedy in no
way facilitated the illegal object, which had already been accomplished.
The Master of the Rolls thought it made no difference that the illegal
transaction was closed. “It is no part of the duty of a Court of Justice
to aid either party in carrying out an illegal contract, or in dividing
the proceeds arising from an illegal contract.”
On the other hand it will be remembered that in _Beeston_ v.
_Beeston_[316] the principle of _Sharp_ v. _Taylor_ was spoken of with
approval: still the exact question under discussion was not then raised,
and it is submitted that the remarks of JESSEL, M.P., suggest the true
principle. We shall deal with this subject in greater detail when we
come to discuss partnership in Gaming Houses. See p. 162.
[Sidenote: Proceedings in lottery cases.]
There are three different ways in which offenders against the Lottery
Acts can be proceeded against:—
[Sidenote: Indictment for a nuisance.]
(1.) By indictment for a nuisance, the keeping of lotteries being
declared to be a nuisance both by the Statutes of William IV. and 42
Geo. III., c. 119.
In _Reg._ v. _Crawshaw_[317] defendant was indicted under 10 & 11
William III., c. 17, section 1, and also under 42 Geo. III., c. 119,
section 1, for a common nuisance in keeping a house lottery called a
littlego. The evidence showed that the defendant advertised drawings and
sold tickets for a lottery, in respect of which prizes were drawn and
awarded to the winners. It was argued for the defendant that an
indictment for a nuisance under section 1 of the Act would not lie,
because by section 2 of both Acts, a specific penalty had been
prescribed for setting up lotteries after the dates mentioned therein,
whereby the remedy for a nuisance had been abrogated. But the Court held
on the authority of _Reg._ v. _Gregory_[318] that whenever Parliament
has declared an act to be a nuisance, the party may be indicted, and
that this form of proceeding had not been abrogated by the provisions in
section 2 of each of the Acts.
[Sidenote: Penalty of £500. Jurisdiction of justices taken away.]
(2.) By section 2 of 42 Geo. III., a penalty of £500 is imposed for
keeping any office or place to exercise any kind of lottery.
By statute 27 Geo. III., c. 1, the jurisdiction of justices of the peace
in the matter of lotteries was curtailed, but in the case of _Reg._ v.
_Liston_[319] it was held that their jurisdiction was only taken away in
the case of State lotteries.
But in _Reg._ v. _Tuddenham_,[320] it was held that whatever may have
been the effect of 27 Geo. III., c. 1, on which _Reg._ v. _Liston_ was
decided, at any rate, [Sidenote: 46 Geo. III., c. 48.] since 46 George
III., c. 48, s. 59, all proceedings for the recovery of penalties under
42 George III., c. 119, must be taken in the name of the
Attorney-General and not before magistrates, whether in the case of a
State lottery or otherwise.
[Sidenote: Newspaper proprietors.]
By 8 and 9 Vict., c. 74, all proceedings against newspaper proprietors,
&c., for publishing advertisements relating to lotteries, must also be
taken in the name of the Attorney-General.
[Sidenote: Rogue and vagabond.]
(3.) The third alternative, which, perhaps, is the proceeding most
likely to be adopted in ordinary cases as being the least cumbrous, is
to prosecute the offender as a rogue and vagabond under 42 George III.,
c. 119, s. 2.
By the Summary Jurisdiction Act, 1879, it is within the discretion of
magistrates to inflict a fine in lieu of imprisonment on persons
convicted as rogues and vagabonds. In _Taylor_ v. _Smetten_,[321] where
the magistrates had convicted the defendant and fined him 20s., the
Court intimated a doubt as to whether the conviction was properly made.
“The form of the conviction is not before us. If the appellant was
convicted as a rogue and vagabond, and the justices imposed a fine of
20s. in lieu of imprisonment, as they are entitled to do under 42 and 43
Vict., c. 49, s. 4, then we think the conviction was right. If, however,
without convicting him as a rogue and vagabond, they simply convicted
him of keeping a lottery, and fined him 20s. for so doing, under 42
George III., c. 119, s. 2, then we think the Statute 46 George III., c.
148, s. 59 (3), applies, and the conviction could not be upheld.” _Reg._
v. _Tuddenham_.
This proceeding, however could not be applicable as against the
adventurers in a lottery: it is only available against persons setting
up or keeping the lottery, employing others to do so, or aiding and
abetting (42 Geo. III., c. 119, s. 4) others in doing so.
The powers conferred by section 4 on justices to grant warrants, etc.,
have already been set out.
Section 6. Offenders may be apprehended on the spot by any person and
carried before a justice of the peace.
[Sidenote: Art Unions]
A special exception has been made by statute in favour of art unions, or
associations formed for distributing works of art by lot, a method of
proceeding which would be probably held to infringe the Lottery Acts
were it not for the fact that they are legalised by 9 & 10 Vict., c. 48.
This Act provides that all voluntary associations constituted for the
distribution of works of art by lot are to be deemed lawful
associations, and the members and subscribers freed from all penalties
under the Lottery Acts. Provided that Royal Charter be first obtained
for the incorporation of such association, and the instrument
constituting such association, together with its rules and regulations,
be approved by the Privy Council.
By 18 Geo. II., c. 34, s. 7, no privilege of Parliament can be pleaded
to a charge of infringing the Lottery Acts.
CHAPTER IV.
GAMING HOUSES.
In Bacon’s Abridgment (title “Gaming”) it is stated “that by the Common
Law the playing at cards, dice, etc., when innocently practised, and as
a recreation the better to fit a person for business, is not at all
unlawful; yet if a person be guilty of cheating, as by playing with
false cards, dice, &c., he may be indicted for it at Common Law and
fined and imprisoned. So, also a common player at hazard and using false
dice may be indicted for it at Common Law and set in the pillory. An
information against a person using the game of cock-fighting may be at
Common Law. Also all common gaming houses are nuisances in the eye of
the law; not only because they are great temptations to idleness, but
also because they are apt to draw together great numbers of disorderly
persons, which cannot but be very inconvenient to the neighbourhood.”
Instances are then given of cases in which the Courts have relieved
against liabilities incurred by excessive gaming.
In Hawkins’ Pleas of the Crown, Book I., cap. 75, section 6, it is said:
“all common gaming houses are nuisances in the eye of the law; not only
because they are great temptations to idleness, but because they draw
together great numbers of disorderly persons.”
Blackstone (vol. iv.) who classifies gamblers as (1) those who are led
into it by passion, (2) those who play from a greed of gain, (3) those
who are drawn into it by their surrounding, states the legal objections
to gambling as tending to promote idleness and debauchery among the
lower classes and among the upper classes frequently attended with ruin
and desolation.
It is clear from this statement that the essence of illegality at Common
Law was fraud and excess, and that all establishments which were kept
for gaming purposes necessarily led to excess. This being so, it would
seem that in point of principle, the Statutes 16 Charles II. and Anne
and 18 Geo. II., of which mention has been made in Chapter I. of this
work was only declaratory of the Common Law, seeing that they only dealt
with fraudulent and excessive gaming, though no doubt they laid down
particular tests which did not exist before, as to what should
constitute excessive gaming.
[Sidenote: Gaming houses illegal at Common Law.]
In _Reg._ v. _Rogiere_[322] defendants were indicted “for that they did
unlawfully keep and maintain a certain gaming house, and in the said
common gaming house did cause and procure divers idle and ill-disposed
persons to frequent and come to play together at a certain unlawful game
called _Rouge et Noir_, for divers large and excessive sums of money.”
The Court held that the keeping a house of this description was an
offence at Common Law—HOLROYD, J., adding that in his opinion it would
have been sufficient merely to have alleged that the defendants kept a
common gaming house, [Sidenote: 25 Geo. II., c. 36, sec. 5.] The Statute
25 George II., c. 36, s. 5, confirmed this view of the Common Law; for
after reciting the prevalence of disorderly houses, enacts, that to
encourage prosecutions against persons keeping gaming houses, &c., it
should be lawful for any constable, upon information from two
inhabitants of the district, to take proceedings as therein specified.
[Sidenote: 2 & 3 Vict., c. 47, sec. 48.] Finally, in 2 & 3 Vict., c. 47,
s. 48, we find an enactment that the Commissioners of Police in the
Metropolis may authorise constables to enter houses suspected of being
used as common gaming houses and arrest persons found therein.
_Provided_ that nothing should prevent the prosecution by indictment of
any person having the care or management of any gaming house.
Both these statutes clearly regard the keeping a gaming house as an
indictable offence; both prescribe certain methods of procedure; one
even goes so far as expressly to preserve the Common Law remedy. It is,
however, remarkable that in none of the writers or cases is any
definition of a common gaming house attempted.
[Sidenote: Test of a gaming house.]
It seems, however, clear from the dicta of text writers just quoted and
also from late authorities that any house where a number of people
habitually congregate for gaming purposes where the play was excessive,
either in the sense of being ruinous, or as tending to become a sole
absorbing interest to the players and to distract them from the ordinary
business of life, or where the gaming led to turbulence and disorder,
such house, even if in form a mere ordinary social club, would be a
common gaming house.
[Sidenote: Gaming.]
It seems now to be settled that to constitute gaming at all there must
be either playing some unlawful game or playing a game, whether of skill
or chance, for money. _Reg._ v. _Ashton_, 1 E. and B. 286, _Dyson_ v.
_Mason_, 22 Q. B. D. 351.
[Sidenote: Houses for unlawful games.]
There is also a series of statutes dealing with houses kept for playing
unlawful games.[323]
Thus, 33 Henry VIII., c. 9, prohibited the keeping of any common house
or place of dicing table or carding, or any other manner of game then
prohibited or thereafter to be invented. 13 George II., c. 19, s. 9,
inflicts penalties on any person keeping any office, table, or place for
the games of passage or games with dice, except backgammon. 18 George
II., c. 34, prohibits the keeping of any house, room, or playing roulet,
or roly-poly, or any game with cards or dice already prohibited by law.
It is stated in Hawkins (Pleas of the Crown, I. 725) that these statutes
did not aim at occasional gaming for recreation at an inn which was not
kept for the purpose. The games, too, were only unlawful _sub modo_, and
were not prohibited in a man’s private grounds. Finally, there are the
provisions against keeping houses for lotteries, the principal statute
on this subject being 42 George III., c. 119, which, as has been shown
above, makes it penal to keep any “office or place” for “Littlegoes.”
[Sidenote: Unlawful games.]
In some few cases particular games have been declared unlawful.
Thus the Statute 12 Richard II., c. 6, made tennis, football, quoits,
dice, unlawful when played by artificers and labourers. But this Statute
was repealed by Statute 21 Jas. I. Section 16, of 33 Henry VIII.,
prohibited the same games with the addition of cards, dice, talles, and
bowls, to labourers and mariners or any serving man.
[Sidenote: 18 Geo. II., c. 34.]
By 2 George II., c. 28, power is given to justices to commit all persons
to prison found playing at any unlawful game.
12 George II., c. 28, s. 2, made the games of faro, ace of hearts,
basket and hazard, illegal as lotteries, inflicted the same penalties as
for setting up a lottery, and £50 on the players.
The Statutes 13 George II., c. 19, and 18 George II., c. 34, in adding
other games to the list, [Sidenote: Players.] expressly imposed the same
penalties on the players or adventurers in the games prohibited.[324] As
has been suggested above, in dealing with these matters under the head
of lotteries, to which they more properly belong, it is difficult to
escape the conclusion that persons playing a friendly game of roulette
in a private house or a club would be liable under these statutes,
although by 46 George III., c. 148, proceedings must be taken in the
name of the Attorney-General. From the recent decision in the case of
_Turpin_ v. _Jenks_,[325] that any which is a game of chance or of
chance and skill combined is now an unlawful game, if not in the sense
of being penal, at any rate so as to make it unlawful to keep a house
for the purpose of such games. There would then seem to be three legal
consequences of a game being unlawful;
(1) Where the statute inflicts a penalty;
(2) A house kept for the purpose is constructively a common gaming house
or _primâ facie_ evidence of it.
(3) No prize to be awarded to the winner can be recovered, as we saw
when we were discussing section 18 of 8 & 9 Vict., c. 109.
All these three subjects, keeping gaming houses, keeping houses for
unlawful games, and playing at unlawful games, [Sidenote: 8 & 9 Vict.,
c. 109.] were in some measure dealt with by the important Statute 8 & 9
Vict., c. 109, by s. 18 of which, it will be remembered, all wagers were
declared void. This statute now forms the basis of the modern
legislation on the subject of gaming houses.
Section 1 of this Act repeals so much of the Statute of Henry VIII. as
declared any game of mere skill to be an unlawful game.[326]
With respect to gaming houses, &c., it deprives noblemen of the power of
granting licenses to their servants for keeping a common gaming house or
playing any unlawful games. With respect to the distinction which seemed
to exist between keeping a common gaming house and keeping a house for
unlawful games, it is clear that the two offences are by this statute
brought under one category. [Sidenote: Sec. 2. Evidence of a gaming
house.] For section 2, after reciting that doubts had been expressed
whether houses open to subscribers only were common gaming houses,
enacts that in default of other evidence proving any house to be a
common gaming house, it shall be sufficient in support of any indictment
or information to prove: (1) That the house or place is kept or used for
playing therein any unlawful game. (2) That a bank is kept there by some
of the players exclusively of the others. (3) That the chances of any
game played therein are not alike favourable to all the players.
So that by this enactment a house kept or used for playing unlawful
games is placed on the same footing as a common gaming house, and the
owner or manager punishable accordingly.
By section 4 of the Act a penalty of £100 or six months’ imprisonment is
inflicted on the owner or keeper of every common gaming house, or the
person having the care or management thereof, and also every banker,
croupier, and other person conducting the business of any common gaming
house.
Sections 10 to 13 relate to the granting of billiard licenses—it having
always been doubtful whether billiards were within the Statute of Henry
VIII.
[Sidenote: 17 & 18 Vict., c. 38.]
The Statute 17 & 18 Vict., c. 38, is the next statute on the subject of
gaming houses, and in addition to some stringent provisions designed to
prevent the Act 1845 being evaded or rendered a nullity, it introduces
an offence termed “keeping a house for unlawful gaming,” for which a
penalty of £500 is inflicted.
After reciting the powers given to justices out of the Metropolis, and
to the Commissioners of Police within the Metropolitan District by 8 & 9
Vict., c. 109, and reciting that keepers of gaming houses contrive by
fortifying the entrances to keep officers out of the houses until the
instruments of gaming have been removed, provides:—
Section 1, that any person who shall obstruct any officer authorised by
the Act 8 & 9 Vict., c. 109, to enter a gaming house, or who, by any
bolt, bar, or chain, or other contrivance shall secure any external door
or internal door of, or means of access to any house, room or place, so
authorised to be entered, or shall by any other contrivance obstruct the
entry authorised as aforesaid to, of any constable or officer, shall be
liable to a penalty of £100, or in the discretion of the Court to be
imprisoned with or without hard labour for six months.
Section 3 imposes a penalty of £50 or three months’ imprisonment, on any
person found in gaming houses by officers entering as aforesaid, and
refusing to give his name and address, or giving a false name and
address.
Section 4. Any person being the owner or occupier of any house, room, or
place, or having the use of the same, who shall open, keep or use the
same for the purpose of unlawful gaming being carried on therein; and
any person being the owner or occupier of any house or room, shall
knowingly and wilfully permit the same to be opened, kept, or used by
any other person for the purpose aforesaid, and any person having the
care or management of, or in any manner assisting in conducting the
business of any house, room or place kept or used for the purposes
aforesaid, and any person who shall advance or furnish money for the
purpose of gaming with persons resorting thereto, is liable to a penalty
of £500 or twelve months’ imprisonment.
The following is a summary of the different offences respecting _Gaming
Homes_:—
[Sidenote: Offences under the Gaming House Acts.]
(1.) Being the owner or keeper of a common gaming house or permitting a
house to be so used.
(2.) Having the care or management or conducting the business of the
same as to what comes under this provision.
Section 4 of the earlier Act expressly mentions the banker or croupier
of such a house. It is presumed that the decision in _Rex_ v.
_Cook_,[327] which arose under the Betting House Act (see _post_), would
apply to this section, viz., that the law only extends to persons taking
a share in the illegal part of the business.
In _Turpin_ v. _Jenks_ the committee in whom, by the Rules of the Club,
the management of the club was vested, were held liable as managers.
(3.) Obstructing officers authorised to enter a house under the
provisions of section 3 or section 6 of 8 & 9 Vict., c. 109—penalty £100
or six months’ imprisonment, section 1 of 17 & 18 Vict., c. 38.
(4.) Any person found in a gaming house by officers entering under the
above power, and giving a false name and address or refusing to give his
name and address, is liable to a penalty of £50 or three months.
[Sidenote: What constitutes a gaming house.]
It is now necessary to inquire what constitutes a common gaming house
within these Acts. It must, however, be remembered that persons may be
brought within the above provisions concerning resisting officers and
giving false names and addresses, even though it may turn out that a
particular house be not eventually proved to come within the Acts. The
officer’s justification for entry is the magistrate’s warrant, or in the
metropolis the direction of the commissioners. So that the owners of a
house could not justify any resistance to constables who enter by virtue
of the Act, by proving that the house is not a gaming house.[328]
The question as to the evidence necessary to prove that a house is a
gaming house, is partly answered by the statutes.
[Sidenote: Evidence.]
Thus, section 2 of 8 & 9 Vict., c. 109, after reciting that doubts had
arisen whether houses open to subscribers only were common gaming
houses, provides that in default of other evidence it shall be
sufficient to prove—(1) That the house or place is kept or used for the
purpose of playing therein any unlawful game. The subject, Unlawful
Games, has been treated above, page 152. (2) That a bank is kept there
by some of the players exclusively of the others. (3) That the chances
of any game played therein are not alike favourable to all the players.
By section 8, where any cards, dice, balls, counters, tables, or other
instruments of gaming used in playing any unlawful game shall be found
in any house, room, or place suspected to be used for a common gaming
house, and entered under a warrant or order issued under the provisions
of this Act,[329] or about the persons of those who shall be found
therein, it shall be evidence until the contrary appears, that such
house, room or place is used as a common gaming house, _and_ that the
persons found therein were playing therein.
By 17 & 18 Vict., c. 38, s. 2, where any constable authorised under 8 &
9 Vict. to enter any house, &c., is wilfully prevented, or obstructed,
or delayed in entering in the manner specified, or where any external or
internal door of or access to any such house, &c., is found fitted or
provided with any bolt, bar, chain, or other means of contrivance for
the purpose of obstructing such officers, or for giving an alarm in case
of such entry, or if such house is found provided with any means or
contrivance for unlawful gaming, or for concealing, removing, or
destroying any instrument of gaming, it shall be evidence, until the
contrary be made to appear, that such house is used as a common gaming
house.[330]
[Sidenote: Private houses.]
It must be remembered that a club or private house may equally be a
common gaming house as a public place of resort. This is clear from the
recitals of section 2 just quoted. The matter is also put beyond all
doubt by the late case of _Turpin_ v. _Jenks_,[331] where Mr. Justice
HAWKINS says that to hold otherwise would lead to evasion by placing a
wide limit on the numbers.
It would appear, also, from the same case that a house or club might
still be a common gaming house, if it were kept for the double purpose
of social pursuits and gaming, if gaming were one of the objects for
which the club was formed, or a house kept open. [Sidenote: Excessive
gaming evidence.] It is also expressly laid down that excessive gaming
is evidence that a house is a common gaming house. Mr. Justice SMITH
considering that excessive gaming was unlawful in itself, in spite of
the repeal of the provisions of the Act of Anne, and section 8 of 18
George II.
[Sidenote: Keeping a house for public billiards.]
By section 11 of 8 & 9 Vict., c. 109, any person keeping a house or
place for public billiards without a license, or without a victualler’s
license for the house, and without the words “licensed for billiards”
written outside, is liable to be proceeded against as the keeper of a
common gaming house.
In section 4 of the Act of 1854 we find, if not a new offence, at any
rate a new phraseology. [Sidenote: Keeping a house for unlawful gaming.]
The offence there spoken of is not keeping a common gaming house but
keeping a house “for unlawful gaming.” What unlawful gaming consists in
is not defined: the Legislature evidently supposing that the terms had
already received judicial interpretation. The Act of 1845 and the
previous sections of the statutes seemed to refer to common gaming
houses; and it will be remembered that section 2 of the earlier Act made
the playing of any unlawful game in a house evidence that the house was
a common gaming house. It will be seen that the term “unlawful gaming”
has just received a construction which places it on the footing of a
generalization; embracing the two species of offence, viz., playing an
unlawful game and keeping a gambling house. The effect and meaning of
the term “keeping a house for unlawful gaming,” has of late been
thoroughly discussed in the case of _Turpin_ v. _Jenks and others_,[332]
commonly known as the Park Club case. Jenks, the defendant in the Court
below, was the proprietor of a club house in Park Place, St. James’,
managed by a committee of four members, by whom the other members were
elected. The subscribers were 270 in number, each paying a yearly
subscription. By the rules of the club hazard and games with dice were
forbidden, and points at whist were not to exceed £1. All games were to
be played for ready money. It was proved by the night steward of the
club that a game called baccarat was played nightly among the members.
That play commenced at 4.30 p.m., and continued until 7.30, and began
again at 10.30 and lasted till 3 or even 8 a.m. Baccarat is a fair game
among the players, the chances being equal; it is a game both of skill
and chance, but chiefly of chance, and there are no advantages to be
derived except from skill or luck. It is played with three packs of
cards, and banks are formed varying in amount from £50 to £1,000, the
whole of which might be lost or won in about twenty minutes. It was from
these banks that the profits of the proprietor, calculated to amount to
at least £10,000 a year, were derived. There were no other profits made
in the club except the banks; cigars and wine were sold at cost price;
the kitchen was carried on at a loss; the subscriptions were barely
enough to meet the club expenses. The number of members was limited to
500. The proprietor, the members of the committee, and some of the
players were summoned before Sir JAMES INGHAM, at the Bow Street Police
Court[333] for keeping a house for unlawful gaming, and were all
convicted in penalties of varying amounts.
These convictions were affirmed in the Divisional Court, except in the
case of the players. HAWKINS, J., in giving judgment, said that the real
question was whether this house was kept for the purpose of unlawful
gaming. There could be no question that gaming was the chief object of
the club. The social arrangements were quite ancillary to the gaming
purposes. The club rules against gambling, though admirable on the face
of them, were really intended to conceal the real objects of the club.
Even if it had been a _bonâ fide_ social club, for the double purpose of
society and gaming, it would still be within the statute as a house
opened and kept for unlawful gaming, provided the gaming that took place
were unlawful. The Statute 17 & 18 Vict., c. 38, is not directed against
a person who merely keeps a gaming house; it imposes penalties on
persons who open or keep a house for the purpose of unlawful gaming, and
those who assist in it.
The question then really is whether the gaming for which the house was
opened was unlawful.
The magistrate put the matter on too narrow a footing in treating it
solely as a question whether the games themselves were unlawful; whereas
the statute is directed against unlawful gaming, and not merely against
unlawful games. Gaming may be unlawful (1) by reason of the place
wherein it is played; (2) by reason of the unlawfulness of the game
itself. Now, cards are not unlawful, either at Common Law or by
statute;[334] but it is illegal to keep a common gaming house, and if
cards were played therein that gaming would be unlawful.
Two questions therefore arise: (1) Was this a common gambling house? (2)
Is baccarat an unlawful game?
(1.) There could be no doubt that this was a common gaming house, and
its practices were of the pernicious tendency alluded to by the
different law writers and by the judges in _Reg._ v. _Rogiere_.
[Sidenote: Club.] It is immaterial that the numbers of the club were
limited; all gaming houses are; and if you allow a limit of 500, why not
of 5,000? (2) As to the illegality of the game, the statutes, with very
few exceptions, do not declare any games to be unlawful except when
played by particular persons or in particular places. The earliest of
the statutes was 33 Henry VIII., which prohibited any common house or
alley being kept for the purpose of cards, or dicing, or any unlawful
game then known or thereafter to be invented.[335] Some of the
provisions of this statute, so far as they affected “games of skill,”
were repealed. The test, therefore, seems to be whether a game be one
purely of skill or not. Baccarat, therefore, being a game both of chance
and skill, must be held to be an unlawful game.[336]
The Statutes of Anne and 18 George II., section 8, which laid down tests
as to what was excessive gaming (by the former the loss or gain of £10
at one time or sitting, by the latter £10 at one time and £20 within
twenty-four hours) were repealed by 8 & 9 Vict., c. 109, section 15,
consequently excessive playing is no longer the test of illegality, but
it may be some evidence of a house being used as a common gaming house.
[Sidenote: The Committee.] His lordship held that the committee were
liable for taking part in the management of the club.
[Sidenote: The players.]
The conviction against the players could not be sustained, though they
might have been convicted of playing at unlawful games, but his lordship
reserved this question. The words of the statute, “use the same for the
purpose of unlawful gaming being carried on there,” only applies to a
licensee to carry on the business.
A. L. Smith, J., delivered a judgment to the same effect, differing from
Hawkins, J., only in one point, viz., as to excessiveness making a game
unlawful. He considered that the dicta in Bacon and _R._ v. _Rogiere_
were still good law, although the particular statutory limits of
legality had been repealed.
It would seem that if the decision in this case were pushed to its
utmost limits the law might be enforced in cases where games, though
technically “unlawful,” were merely made the means of innocent
recreation. It is not difficult to suppose cases in which a club, though
it could not possibly be called a common gaming house, might still be,
according to the strict letter of the law, a house kept for unlawful
gaming, if a game, not being a game exclusively of skill—say, for
example, whist—were one of the objects for which a club was formed. But
this is only one out of many applications of the saying, “_Summum jus,
summa injuria_.” The case of gaming houses presents no greater absurdity
than the law of larceny, according to which the housemaid who abstracts
a pin from her mistress’s pincushion is liable to the same punishment as
a clerk who robs his master’s till. In the same way any person who gets
up an ordinary sweepstakes for the Derby at a club brings himself in
strictness within the Lottery Acts; but probably no magistrate would
convict such person as a rogue and vagabond, as he might do under the
statutes.
[Sidenote: Players.]
With respect to the players either in gaming houses or at unlawful
games, the penal or restrictive provisions of the statutes are neither
numerous nor stringent. 12 Rich. II., c. 6, forbad servants, labourers,
apprentices, and artificers to play football or dice, but this was
repealed by 21 James I., c. 28. 33 Henry VIII., c. 9, s. 16, forbad
artificers and labourers to play at the tables, tennis, dice or bowls
out of Christmas under a penalty of 20s. This section does not appear to
have been totally repealed, except by 8 & 9 Vict., c. 109, s. 1, so far
as games of skill are concerned.
The above provisions seem to have been directed against _particular
classes_ of persons. With respect to _persons found playing_ in gaming
houses, 33 Henry VIII., c. 9, s. 12, imposed a penalty of 6s. 8d. upon
them, and s. 14 empowered justices to enter such houses to arrest the
persons “there haunting, resorting, and playing,” and bind them over in
recognisances with or without sureties. By 2 George II., c. 88, s. 9,
this jurisdiction is extended to cases proved by two credible witnesses.
As to _excessive gaming_, the penal provisions contained in 16 Car. II.,
c. 7, 9 Anne, c. 14, and 18 George II., c. 34, s. 8, imposing penalties
for winning over a specified sum within a given time, are repealed by 8
& 9 Vict., c. 109, s. 15. In _Turpin_ v. _Jenks_,[337] it was held that
the players could not be convicted for assisting in the management or
business of the house (see _ante_ p. 160.)
In some cases _particular games_ have been prohibited under penalties;
see _ante_ at the commencement of the chapter on Lotteries, where these
provisions are summarised. It will be observed that the particular game
is always specified, there is no general prohibition against games of
cards or chance; and the game is in each case prohibited _as a lottery_.
[Sidenote: Lending money for gaming purposes.]
It is only necessary to mention very shortly another offence constituted
by section 4 of the same Act, viz., advancing or furnishing money for
the purposes of such unlawful gaming, which is visited with the same
penalty of £500. Of course the money so advanced cannot be recovered
(see _ante_ p. 16.)
[Sidenote: Illegal partnerships.]
With respect to partnership in gaming houses, it would seem to be clear
on principle that one partner cannot sue another, nor can a principal
sue an agent for an account of moneys won in an illegal adventure. The
test adopted in _Simpson_ v. _Bloss_[338] seems to make this clear,
viz., does the plaintiff require any aid from the illegal bargain to
establish his case?
In case of the partnership in a gaming house, the contract which would
have to be proved contemplates the establishment of an illegal gaming
house. The case of _Sharpe_ v. _Taylor_[339] seems rather to conflict
with this view. It was an action by one co-owner of a vessel against the
other to recover a share of the profits earned by the vessel. The vessel
was registered in the name of “A,” an American citizen, which seems to
have been a breach either of the laws of the United States or of the
English navigation laws, as carrying on trade between the two countries,
without the real owners of the vessel being registered as such.
Lord COTTENHAM held that the plea of illegality of the adventure was no
answer. Some of the dicta of his lordship’s judgment, pp. 817, 818, seem
to countenance the view that a partner or an agent cannot set up
illegality as a defence to the claim of a co-partner or principal, so
long as the illegal part of the transaction is closed. Possibly,
however, the decision can be supported on the ground that the object of
the adventure was perfectly legal, viz., the importation of American
produce in an English ship, though incidentally the provisions of the
English navigation laws were not complied with.
It must be admitted that in _Bridger_ v. _Savage_[340] the Court quoted
the dicta of Lord Cottenham with approval concerning the plea of
illegality, but that case cannot be considered an authority on the
point, as the transaction had relation to betting, and not to any
illegal contract. In _Sykes_ v. _Beadon_[341] JESSEL, M.R. refers to
Lord Cottenham’s dicta with disapproval. At p. 195, “The notion that
because a transaction which is illegal is closed, that therefore a Court
of Equity is to interfere in dividing the proceeds of the illegal
transaction, is not only opposed to principle but to authority; to
authority in the well-known case of the highwaymen, where a robbery had
been committed and one of the highwaymen unsuccessfully sued the other
for a division of the proceeds of the robbery.” At p. 196: “It is not
sufficient to say that the transaction is concluded as a reason for the
interference of the Court. If that were the reason it would be lending
the aid of the Court to assert the rights of the parties in carrying out
and completing an illegal contract. If the contract is for the purpose
of smuggling, that is an illegal contract, and the Court cannot maintain
it, and the Court will not lend its aid to it at all. In my own practice
a case occurred in which one of the partners in a gaming house sued the
other partner for an account of profits. It did not come on for hearing,
because the plaintiff thought better of it, and I am satisfied the bill
could not have been maintained; still the assertion of the bill was that
the gaming house had been closed, and the plaintiff asked for an account
on that footing.”
The dicta of the Master of the Rolls have the support of a judgment of
Lord DENMAN in _Mortimer_ v. _MacCallan_,[342] where _Simpson_ v.
_Bloss_ was quoted with approval. “This was in fact a partnership in the
profits of an illegal adventure; if the plaintiff had received the whole
the defendant could not have recovered his share.”
[Sidenote: Illegality cannot be set up by third party.]
At the same time a person who has received money payable under an
illegal contract, not himself being a party to the contract, cannot
plead the illegality. _Tennant_ v. _Elliott_[343] and _Russell_ v.
_Farmer_[344] were both cases of this kind. This was the view taken of
them by Jessel, M. R., in _Sykes_ v. _Beadon_,[345] and by Crampton, J.,
in _Nicholson_ v. _Gooch_.[346] Therefore if the partners in a gaming
house kept a banking account, it is clear that the banker could be sued
for the money.
[Sidenote: Agent or Manager.]
The same, it is submitted, applies to the case of an agent or manager of
such an establishment: he certainly could not sue his principal for
reimbursement or salary, _Thacker_ v. _Hardy_,[347] so it is difficult
to see why the principal should have a right to an account against his
agent for profits. Nearly all cases where _Sharp_ v. _Taylor_ has been
approved the real question did not arise, as they were in many cases
like _Johnson_ v. _Lansley_,[348] adventures in betting transactions
which are not illegal: this matter is dealt with _post_ p. 191.
[Sidenote: Cheating at play.]
Another offence besides keeping a gaming house dealt with by this
statute is cheating at play. By section 17, “Every person who shall by
any fraud or unlawful device or ill practice in playing at or with
cards, dice, tables, or other game, or in bearing a part in the stakes,
wagers or adventures, or in betting on the sides or hands of them that
do play, or in wagering on the event of any game, sport, or pastime, win
from any other person to himself or any other or others any sum of money
or valuable thing, shall be deemed guilty of obtaining such money, &c.,
by a false pretence, and punished accordingly.” In _Regina_ v.
_O’Connor_[349] it was held that where persons fraudulently won from
another certain property by tossing with coins, that was a “pastime”
within the Act if it was not a “game.”
As to conspiracy to defraud by the means mentioned in this section, see
_Regina_ v. _Hudson_.[350]
[Sidenote: Games.]
There can be no doubt that horse-racing is a “game” within the meaning
of this section as it was within the Statute of Anne (_sup._ Cap. I.,
Part I). It would seem that the offence of winning is complete directly
the event is declared in favour of the person who is guilty of the
fraud, before the money is actually paid over.[351]
[Sidenote: Privilege of Parliament.]
By 18 Geo. II., c. 34, s. 7, no privilege of Parliament can be pleaded
to a charge of keeping a gaming house.
BETTING HOUSES.
[Sidenote: 16 & 17 Vict., c. 119.]
16 & 17 Vict., c. 119, after reciting that numerous establishments had
been set up for betting houses and for taking money in advance on
promises to pay on the events of horse-races. Section 1 enacts: “That no
office, house, room, or other place shall be opened, kept, or used for
the purpose of the owner, occupier, or keeper thereof, or any person
using the same, or any person procured or employed by or acting for or
on behalf of such owner, occupier, or keeper or person using the same,
or if any person having the care or management or in any manner
conducting the business thereof, betting with persons resorting thereto:
or for the purpose of any money or valuable thing being received by or
on behalf of such owner, occupier, keeper, or person as aforesaid as or
for the consideration for any assurance, undertaking, promise, or
agreement, express or implied, to pay or give thereafter any money or
valuable thing on any event or contingency of or relating to any
horse-race or race, fight, game, sport, or exercise, or on the
consideration for securing the payment or giving by some other person of
any money or valuable thing on such events as aforesaid.” Every such
house, &c., is declared to be a common nuisance.
Section 2. All such houses, &c., are declared common gaming houses
within 8 & 9 Vict., c. 109.
Section 3. Any person who, being the owner or occupier of any office,
house, room or other place, or a person using the same, shall open, keep
or use the same for the purposes hereinbefore mentioned or either of
them, _or_ being the owner or occupier shall permit the same to be so
used, _and_ any person having the care or management of or in any manner
assisting in conducting any such house or place kept for the purposes
aforesaid, is liable to a penalty of £100 or six months’ imprisonment
with or without hard labour.
[Sidenote: Section 4. Receiving money on deposit for a bet.]
By Section 4 any person being the owner or occupier of any office,
house, room or place opened, kept or used for the purpose aforesaid or
either of them, _or_ any person acting on behalf of such owner or
occupier, _or_ any person having the care or management or in any manner
assisting or conducting the business thereof, who shall receive directly
or indirectly any money or valuable thing or a deposit on any bet on
condition of paying any sum of money or other valuable thing on the
happening of any event or contingency of or relating to a horse-race or
any other race, or any fight, game, sport, or exercise, or as the
consideration for any agreement to give any money or valuable thing on
such event, and any person giving any acknowledgment, note or security
on the receipt of any such deposit is liable to a penalty of £50 or
three months’ imprisonment.
By Section 5 any money or valuable thing received by any such person as
aforesaid as a deposit in any bet or as or for the consideration for any
such assurance, &c., as aforesaid, shall be deemed to have been received
to and for the use of the person from whom the same was received, and
such money or valuable thing or the value thereof may be recovered
accordingly. See _ante_ p. 65, where this section is fully considered.
[Sidenote: Exception in favour of a prize to the winner of a race.]
Section 6. Nothing in this Act is to extend to any person receiving any
money or valuable thing by way of stakes or deposit to be paid to the
winner of any race, sport or exercise, or to the owner of any horse
engaged in any race—an exception which seems very analogous to the
proviso of section 18 of 8 & 9 Vict., c. 109, exempting “contributions
to a prize” from the general law with respect to wagers, which has been
discussed above.
[Sidenote: Betting houses.]
With respect to this statute against betting houses the following are
the offences specified:—
[Sidenote: Summary of offences.]
(1.) Being the owner or occupier of a house or place kept or used (_a_)
for the purpose of betting with persons resorting thereto (_b_) for the
purpose of receiving money on deposit in respect of bets.
(2.) Using any such house for such purposes or either of them or
permitting such user.
(3.) Having the care and management or assisting in the business of any
such house.
The above persons are each liable to a penalty of £100 or six months’
imprisonment. They are, in addition, liable to be indicted for a
nuisance, seeing that such houses are declared to be, by section 1,
common nuisances; by section 2, gaming houses within 8 & 9 Vict., c.
109.
[Sidenote: Receiving deposits.]
(4.) By section 4, all the above persons (_i.e._, the owner or occupier
of such house or place, or any person acting on his behalf, or any
person having the care or management or assisting in conducting the
business) are liable to a penalty of £50 or three months for receiving
money or other valuable thing as a deposit on a bet[352] and by section
5 the depositor may recover the money deposited as money paid to his
use. [Sidenote: Exception in favour of prize.] But section 6 contains an
exception in favour of any stakes or deposit to be paid to a winner of a
race, or the owner of a horse that is running. It is not very easy to
see what the practical effect is of providing that betting houses shall
come within the meaning of common gaming houses in 8 & 9 Vict., c. 109;
[Sidenote: ? Effect of sec. 2.] the enactments in section 2 of the
latter Act, are such as could not apply to a house merely kept for
betting purposes, while 16 & 17 Vict. itself declares betting houses to
be common nuisances, inflicts a specific penalty for keeping them, and
contains provisions for entering and searching them.
(5.) Another species of offence prohibited by this Act is advertising
houses or places as being opened or used for the particular kind of
betting prohibited by the Act. This is by virtue of section 7, the
provisions of which, as will appear more fully hereafter, are
supplemented by a later statute, 37 Vict., c. 15.
[Sidenote: Cases under the Betting House Act. Secs. 1 and 3.]
The questions and cases which have arisen and been decided under the Act
of 1853, may be grouped under the following heads:—
I. What is a “place”?
II. Persons liable.
III. What kind of betting is within the Act.
[Sidenote: What is a “place”?]
I. The meaning of the term “place,” which is used in the Acts directed
against gaming and betting houses, as in fact it is in all the previous
statutes on the subject of houses and “places” kept for the purposes of
gaming or playing unlawful games, has undergone a great deal of
discussion. It will be remembered that the Statute 4, George IV., c. 60,
declared the term “place” as used in previous statutes, particularly the
Lottery Acts, to mean “a place in or out of enclosed premises, whether
on land or water.” Even if this statute cannot be regarded strictly as
interpretative of all statutes, it may at any rate be a guide to the
meaning of the term in other statutes.
In _Doggett_ v. _Catterns_[353] the action was brought to recover money
deposited with the defendant on a bet, under s. 5 of the Act (given in
full above). The defendant was in the habit of resorting to Hyde Park
and keeping a betting table. _Held_, that though it was not necessary
that a “place” should be under cover, still a spot in a public park
which could not have an owner or occupier, would not come within the
section. Per POLLOCK, C. B., on the ground that a place to be within the
Act must be capable of having an owner or occupier. Per BRAMWELL, on the
ground that it was not an ascertained place. Per LUSH, J., in _Eastwood_
v. _Miller_,[354] “the person there was not an occupier of the place,
and he had no business to use it for that purpose.” In the course of the
arguments, a remark was made by BRAMWELL, B., that the table occupied by
the defendant could not be a common gaming house within section 2. This
seems to suggest that nothing could be a place within the Act unless it
could by a fair construction be considered a gaming house.
The case of _Morley_ v. _Greenhalge_[355] was quoted in LUSH, J., in
_Eastwood_ v. _Miller_,[356] as depending on the same principles as
_Doggett_ v. _Catterns_. It was held that a person could not be
convicted of keeping, using, or acting in the management of any place
for the purpose of cock-fighting, or of suffering or permitting it to be
so used (contrary to 12 & 13 Vict., c. 92, section 3) who resorted to a
quarry of which he was not the owner or occupier, for the purpose of
aiding in a cock-fight. The owner of the quarry had nothing to do with
the men being there, and they had no business there. It seems that in
_Eastwood_ v. _Miller_ the Court took a different view of the ratio of
the decision in _Doggett_ v. _Catterns_ to that taken by the judges in
_Bows_ v. _Fenwick_,[357] the former looked upon it as decided on the
ground that it was a public place, and the defendant had no business to
use it for betting purposes. The latter, rejecting the argument based on
the fact that a man “might be ordered to move on,” distinguished
_Doggett_ v. _Catterns_, as will be seen, on the ground that no fixed
place was used.
In _Shaw_ v. _Morley_[358] there was a space railed off near the
enclosure of a racecourse, about 44 yards by 2. It was let out to a
tenant who paid rent for it, and by him divided into partitions; in each
partition there was a wooden structure, 5 feet in height, fronting both
ways, in which betting transactions were conducted, but which had no
roof. [Sidenote: Betting out of towns.] It was contended for the
defendant that these structures were not offices or places within the
Act, which was directed against betting in towns, and the words “house”
or “place” must be _ejusdem generis_ with the words “house” or “room.”
_Held_, that the Act was wide enough to cover betting out of towns; that
this was a place and an office within the Acts; and that defendant was
conducting a business within section 3. Per KELLY, C.B.: “It is no
matter whether there is a roof or none, or whether the structure is
moveable or fastened to the earth.” Per MARTIN, B.: “The structure
described was both an office and a place. [Sidenote: Moveable offices.]
What it most resembles is those moveable offices on wheels, in which
merchants conduct their business of lading and unlading ships in the
docks of Liverpool, and I have no doubt that such a structure would be
an office or a place within the meaning of the Act. But this was more,
it was a fixed place.”
This case decides three points—(1) That the Act is wide enough to reach
betting in rural places; (2) That an uncovered as well as a covered spot
may be a place within the Acts; (3) Any locomotive structure may also be
a place. But the judgment of Grove, J., in _Galloway_ v. _Maries_
(_post_) should be compared with this.
[Sidenote: An umbrella may be a “place.”]
In _Bows_ v. _Fenwick_[359] an umbrella was held to be within the Act.
Defendant was on a racecourse, standing on a stool which was covered by
a large umbrella capable of covering several persons, the stock being
made in joints like that of a sweep’s brush, so as to be taken in
pieces. On the umbrella were written the defendant’s name and address.
There was also a card exhibited on which were the words, “We pay all
bets first past the post.” The umbrella was kept up whether the weather
was wet or dry. Numerous bets were made by the defendant. It was argued
that this case was like _Doggett_ v. _Catterns_, the place which
defendant occupied being public, and that no erection could constitute a
place within the Act from which defendant could be ordered to move on.
The Court held that this was a place within the Act. They considered it
more like _Shaw_ v. _Morley_ than _Doggett_ v. _Catterns_. In the latter
case there was no fixed place within the park at which defendant was
stationed. Here, the card and the umbrella with the inscription clearly
indicated a fixed and ascertained place where the defendant carried on a
prohibited business.
[Sidenote: Enclosures.]
In _Eastwood_ v. _Miller_[360] the defendant was in occupation of a
large enclosure of more than three acres, where a pigeon-shooting match
was going on. The Court held that the fact of its being a large
enclosure did not affect the question; and that it was a place in spite
of the fact that there was no structure erected therein.
But the case is more important on the question of “user.” The same
remark also applies to _Haigh_ v. _Sheffield_,[361] which was another
case of an enclosure used as a cricket ground. It was again argued
unsuccessfully, that “place” meant something of the same nature as
“office” or “house.” But it may now be taken as settled that any kind of
enclosure, whether covered or not, with or without an erection, may come
within the Acts.
[Sidenote: A bookmaker on a stool in the grand stand.]
Finally, we come to the case of _Galloway_ v. _Maries_,[362] in which
the Court went a step further in curtailing the bookmaker’s liberty of
action on a racecourse.
A race meeting was held in Four Oaks Park, belonging to a company,
admission being by payment. Defendant and another man A obtained
entrance to a railed enclosure called the ring, attached to the grand
stand. A stood on a wooden box not attached to the ground, and both he
and defendant offered to make bets with people about, A receiving the
money, and defendant entering the bets in his book. They remained in one
place the whole time. The Court held that this was “a place” within the
Act. The justices had submitted for their consideration—
[Sidenote: Questions submitted to Court.]
(1.) Whether the enclosure was “a place.”
(2.) Whether the box was “a place.”
GROVE, J., said the questions were not well framed. “The box, which is a
moveable thing, cannot of itself be a place, and perhaps the enclosure
might not of itself be a place within the Act. The real question is
whether the facts in the case constituted a ‘place.’” After referring to
the previous cases, continued: “I am inclined to think that the more
important consideration is the fixity of the place, not, indeed, the
absolute fixity as in the case of fixtures, but in the sense of the
place being and remaining the same for a considerable time, long enough
for the betting public to know where persons willing and offering to bet
might be found. I do not say whether a person standing on a carriage
step or in a circle where the turf was cut away would be within the Act,
but I am far from saying he would not be so.”
Upon this case it may be observed—
(1.) That from the remarks of Grove, J., about the frame of the
questions, the real issue is not whether a particular structure or spot
is “a place” or not, but whether, coupled with all the facts, the use to
which it has been put, &c., a place has not been constituted by the act
of the person.
(2.) That the remark of Grove, J., as to the box not being a place as
being moveable, is in contradiction to the views of Kelly, C.B., and
Martin, B., in _Shaw_ v. _Morley_ (_vide supra_). In the latter case it
was the certainty rather than the fixity of the place that was taken as
the test.
(3.) It was the fact that the defendant occupied one spot the whole of
the time which formed the grounds of the judgment. “There must be,” said
GROVE, J., at p. 211, “a fixed, ascertained place occupied or used so
far permanently that people may know that there is a person who stands
in a particular spot, indicated by a certain definite mark, with whom
they may bet.” This case seems to show that in order for a person to be
within the Act, it is not sufficient that he should be in an enclosure,
say the grand stand, at a racecourse and betting with people there,
unless he occupies one spot within the enclosure for the whole time.
_Snow_ v. _Hill_[363] the defendant was convicted by the magistrates of
an offence under the Act, it having been proved that he was in a
reserved part of the ground, and was walking about making bets with
people therein. The Court held that the defendant was not within the
Act. It is, however, difficult to say from the judgment in this case
whether the decision was rested on the fact that he was walking about
and did not occupy one spot, or whether sufficient user for the purpose
of betting was not proved. The judgments in _Whitehurst_ v.
_Fincher_[364] and of Hawkins, J., in _Reg._ v. _Preedie_ (see next page
note) seem to suggest that the latter was the real ground of the case.
It is submitted that, after the case of _Eastwood_ v. _Miller_ and
_Hague_ v. _Sheffield_, an enclosure of the kind is such a place within
the Act as is capable of being used for the purpose of betting. In the
two latter cases it is true the owners were convicted of permitting the
places to be so used. They were not prosecutions of the men using them.
It would seem, however, to be clear that the owner cannot be liable for
permitting such user unless the user itself is illegal under the Act.
The conclusion would therefore seem to be that the owner cannot be
liable unless the person using the same is liable also, and in neither
of these cases does it appear that fixed spots were occupied and it was
the whole enclosure and not definite spots therein that were alleged to
have been so used. The observations of Hawkins, J., _Reg._ v.
_Cook_[365] seem to support this view. His lordship evidently considers
the ordinary operations of betting men in such enclosures illegal,
irrespective of their doing business on a stool or under an umbrella.
“Here was ample evidence that the betting men were using these grounds
for the purpose of betting with all persons resorting thereto, but no
proceedings seem to have been taken against them.” But no doubt the
place alleged to be used must be so far limited in area as not to be too
large for the operations of the person using it. A man could not be said
to use Hyde Park for betting purposes, though he might use a particular
part of it.
In _Reg._ v. _Preedie_,[366] HAWKINS, J., in a judgment delivered at the
Central Criminal Court, which contains an elaborate survey of the
statute and the cases thereon, thus expresses his views on this topic
(after referring to _Galloway_ v. _Maries_ and _Snow_ v. _Hill_): “I can
hardly think that the learned judges intended to lay down as law that
nothing would satisfy the term ‘place’ unless it was some particular
spot in which a person stood, or which was appropriated by him
exclusively for his own use.... The place must not be unlimited. On the
contrary, I am of opinion that though it may be bounded by no definite
line, it must nevertheless be limited in extent to the area occupied by
the persons congregating together and resorting to it: so that any
person carrying on his business there as a betting man might fairly and
reasonably be said to be doing so in the immediate presence of those
congregated together.” The Scotch case of _Heuretty_ v. _Hart_[367] is
quite in accord with this view; it was there held that a racecourse of
about twenty acres in extent, though enclosed, could not of itself be a
place.
In the above state of the authorities, bookmakers in the ring, say in
the grand stand at a race meeting, must not assume that they are outside
the Act however much their operations may be winked at by the
authorities.
[Sidenote: A room.]
But where a room has been used no difficulty has been felt. _Reg._ v.
_Preedie_ (_ubi sup._) was the case of the user of a tap room of a
public house. It was held that the fact that the house or place was not
primarily addicted to betting purposes was immaterial; that actual user
of the place was sufficient.
_Whitehurst_ v. _Fincher_[368] was a case of the user of a room, but the
Court did not think there was any evidence of sufficient user for the
illegal purpose, the person using it was not a bookmaker. In the late
case of _Hornsby_ v. _Raggett_[369] the Court held that user of the room
for the illegal purpose was one of the offences specified in the Act,
and it was not necessary that the person using it should confine himself
to any one spot therein.
II. Persons liable.
[Sidenote: Persons liable.]
(1.) The owner, keeper or occupier (A), using the premises for the
purpose of illegal betting, such as is described hereafter [Sidenote:
Permitting.] (B), Permitting them to be so used; that is, if he connives
at what he knows will result in illegal practices; as was said by Lord
BLACKBURN in _Haigh_ v. _Sheffield_.[370]... “It is clear that the
magistrate came to the conclusion that the appellant knew that people
resorted to the enclosure for the purpose of betting, and permitted
foot-racing to go on and these betting men to come in, knowing the
betting to be an ordinary consequence. The magistrate was right,
therefore, in saying the appellant did permit the place to be used for
betting, on the principle that a man must be taken impliedly to be
answerable for what he knows to be the ordinary consequence of what he
permits.”... At the same time, the case of _Somerset_ v. _Hart_[371]
shows that if actual knowledge be not proved, it must be shown that
defendant wilfully shut his eyes, or connived at what was going on.
[Sidenote: Person using.]
(2.) Persons using the same for illegal betting.
Two questions arise here:
(_a._) What amounts to “user”?
(_b._) Who is the “person using.”
[Sidenote: User.]
(_a._) As to what amounts to user, the following cases seem to show that
it is not necessary to show that a place is habitually used for illegal
betting; and that one or two instances proved will be enough to enable
the case to be decided as a question of fact by the magistrates or the
jury.
[Sidenote: A club.]
Thus the case of _Oldham_ v. _Ramsden_[372] goes to show how far a club
at which betting is extensively practised, and in which there was a
separate room kept for betting purposes, comes within the Act. Plaintiff
was commission agent, and in the habit of making bets for other persons:
he was also a member of a club at Manchester called “the Ellesmere,”
which consisted of over 1,400 members. It had one room in which betting
took place, and in the others were refreshments and cards. In the
betting room the bets were only made between members, and no money was
paid by way of deposit. The defendant, who was not a member, employed
the plaintiff to back certain horses at certain races. The plaintiff did
so by taking the odds against these horses with members of the club, and
he informed the defendant of the bets having been so made. The horses
lost, and plaintiff having paid the losses sought to recover from
defendant. The defendant pleaded that the plaintiff paid the money to
and it was received by the owner, occupier or keeper of a certain house,
office, room or other place opened, kept and used for the purpose of
money being received upon an undertaking to pay money on the event of
horse-races by the owner, &c., as the plaintiff well knew, and that the
money was paid by the plaintiff to such owner, &c., for the purposes of
betting, or on a deposit on a bet. This plea was evidently framed in the
provisions of section 1 of the Act.
The only point really decided was whether this club was a place used and
kept by the owner or occupier for the purposes of betting.
For the plaintiff (supporting, of course, the legality of the
establishment), it was argued that it was not shown that any money was
paid to the owner or occupier in respect of these bets. The plaintiff
was not owner; it was only one member betting with another.
For the defendant, on the other hand, that it was sufficient that money
was received by “persons using the same,” which words did not mean
persons acting on behalf of the proprietor. Also that the members were
“occupiers” of the club within the Act, so that the receipt by one
member from another in respect of a bet would bring the case within the
Act.
One member gave evidence that he made a bet with plaintiff, and was paid
by him at the club.
The Court held that there was no evidence that this was a place kept or
used for the purposes of betting.
It will be observed that this was a very concrete decision and did not
go far towards explaining what cases are and what cases are not within
the Act.
[Sidenote: Enclosures.]
An enclosed ground may be “used for purposes of betting” if betting men
are allowed to enter and bet indiscriminately with those resorting
thereto. [Sidenote: _Eastwood_ v. _Miller_.] Thus in _Eastwood_ v.
_Miller_[373] an officer went to the borough park ground at Dewsbury,
which was (it was admitted) in the occupation of the defendant. A
pigeon-shooting match was about to take place. There were two bookmakers
on the ground shouting out 20 to 2 on the match. Two persons went up to
one of the bookmakers and made a bet, receiving tickets in exchange.
Defendant was within hearing of the bookmakers, but did not take any
part or say anything. After the pigeon-shooting match a foot-race took
place at which bets were made as before on the pigeon-shooting.
It was objected that there was no evidence that the grounds were kept or
used for the purposes of betting, as only one bet was proved to have
been made. But the Court held that there was sufficient evidence to
justify the magistrates in coming to the conclusion that the premises
were used for betting as well as pigeon-shooting, and that the two
objects were combined. Defendant knew that persons going there would bet
upon the matches, and they were allowed to bet there.
[Sidenote: _Haigh_ v. _Sheffield_]
In _Haigh_ v. _Town Council of Sheffield_[374] defendant occupied a
house, and an enclosed piece of ground adjoining, used for cricket,
foot-races, &c. Within the grounds, but outside the space reserved for
the runners, and amongst the spectators, some fifteen or twenty persons,
being clearly professional betters (George Trickett being one of them),
stood on chairs and stools in different spots, with books in their
hands, calling out the odds on the different runners and betting with
different persons. Numerous bets were made by the visitors to the
grounds, such persons each depositing one shilling and receiving a
ticket. It was admitted that the defendant knew what was going on, and
took no steps to prevent it. Upon the question whether defendant could
be convicted of keeping or using the place for the purpose of betting,
BLACKBURN, J., said: “The appellant keeps the grounds for both purposes
(foot-racing and betting); and it is immaterial which purpose is
ancillary to the other. Then it was said the place was not shown to have
been ‘habitually’ used for betting: the word does not occur in the
statutes; but I think, if it were necessary to show it, there was ample
evidence from which the conclusion might be drawn, that it was
habitually used; and, moreover, I am of opinion, though the magistrate
would not probably have found that the place was ‘used’ for betting if
only one instance of betting had been proved, still, if the occupier of
the place, knowing that betting was going on in this way, though only
once, allowed it to be carried on, he would be guilty of permitting the
place to be used for betting within the statute.”
To the same effect is _Foote_ v. _Buttler_,[375] where the landlord of
an inn was proved only to have made occasional bets with other people,
the Court held that there was sufficient evidence in which the
magistrates might find, as a fact, that it was used as a betting house.
On the other hand, in _Whitehurst_ v. _Fincher_,[376] the defendant was
proved on some few occasions to have gone to the bar of a public house,
and to have made bets with persons there[376]; but it did not appear
that he was a professional bookmaker. The Court held that the mere
making of bets was not “user” within the Act, as it did not appear that
he made a business of betting with persons who resorted there.
[Sidenote: Person using.]
(_b._) As to who is included in the term “person using the same,” the
question was raised in _Oldham_ v. _Ramsden_,[377] as to whether it did
not mean “using as owner or occupier.” COLERIDGE, C.J., rather suggested
that that was so. The same view seems to have been argued in the case of
_Snow_ v. _Hill_,[378] and if correct would have the effect of limiting
the application of the Act to persons who use a place by virtue of a
tenancy or legal right. It is, however, submitted, that the wording of
the statute precludes such a construction, which would reduce the words
“person using the same” to mere surplusage[379]. It is significant that
the words are omitted from the offence of “permitting, &c.,” and also
from section 4, of which further mention will be made hereafter. But
while it would seem to be clear that “the person using the same” may be
a person who is a mere trespasser, it is equally clear that he must be a
person who is using it for the illegal businesses specified: the
“persons resorting thereto” for the purpose of betting are not within
the Act, as was pointed out by A. L. SMITH, J., in _Snow_ v.
_Hill_,[380] see, too, _Jenks_ v. _Turpin_,[381] where the same learned
judge put a like construction on somewhat similar words in the Gaming
House Act, 17 & 18 Vict., c. 38, s. 4.
[Sidenote: Manager.]
(3.) The next person whom the statute makes liable is the manager or
person assisting in the conduct of the illegal business.
In _Slatter_ v. _Bailey_[382] the house was kept by T and his two sons
for the purpose of betting on horse-races. One day T and one son sat at
one table in a room receiving bets, and in another room defendant and
another son of T sat at another table also receiving bets, the betting
being called out aloud. On the defendant, when apprehended, were found
numerous entries relating to past and future races. _Held_, that as
defendant was proved to have been assisting the principal in the
business, that was evidence that he was using the house, and was taking
part in the management within the Act.
[Sidenote: Club Committee.]
It will be remembered that in _Turpin_ v. _Jenks_,[383] the committee of
a club was held liable as having the management of the business.
[Sidenote: _Reg._ v. _Cook_.]
In the late case of _Reg._ v. _Cook_,[384] before HAWKINS and A. L.
SMITH, JJ., defendant was convicted by justices for that he unlawfully
had the care and management of a certain cricket ground opened and kept
for the purpose of persons betting thereon, on certain events and
contingencies relating to a bicycle race. He was merely the manager
employed by the directors of a company. At a bicycle race betting men
were in the grounds among 20,000 people, and they took down bets, and
the odds were called out in a loud voice. Cook acted as judge of the
race, and stood about twenty yards off from where the betting went on.
Boards were put up that no betting would be allowed. The appellant knew
there was betting though not taking part in it, but he could not have
wholly prevented it, though with the aid of some constables he might
have to some extent done so.
[Sidenote: Form of conviction.]
HAWKINS, J., said, in giving judgment, that the conviction itself
disclosed no offence at law. Defendant was convicted of having had the
care and management of a certain place used for the purpose of other
persons betting therein. This would include ordinary betting, which was
not interfered with by the statute, as his lordship in the course of his
judgment explains. Dealing then with the facts proved in the case, his
lordship said that they did not bring the case within the statute.
Before the Act of 1853 there existed in London and elsewhere a number of
offices and houses in which a regular betting business was carried on,
sometimes conducted by the owners and occupiers, sometimes entrusted to
the care and management of clerks and servants. The method of business
was to keep long lists of races about to take place, with the current
odds placarded in the office, and the owner or manager received ready
money from all sorts of persons to abide the event. This was what the
Legislature designed to prevent. So much for betting houses, which are
declared to be a common nuisance.
Section 3, however, is directed against certain individuals—owners,
occupiers, and persons using the premises for the purposes
mentioned—persons permitting them to be so used, and managers of the
premises so used. In this case the management by the defendant was
perfectly lawful. The Act only contemplates a taking a part or share in
the management of an unlawful part of the business. His lordship was far
from saying that no offence was committed on the grounds. There were
clearly men on the grounds for both of the illegal purposes of betting
mentioned in section 1. If these men went down to this place for the
purpose of betting with persons resorting thereto, or even if they
limited their operations to receiving money on deposit, they could be
made responsible; there is ample evidence that those men used the
grounds for both these purposes. Defendant did nothing but manage the
lawful part of the business; and the mere knowledge that betting of an
illegal character did take place in some part of the grounds, shows no
offence within the statute.
Mr. Justice A. L. SMITH said that if the manager of the grounds were
held liable, it would be difficult to see how any man employed to sweep
the paths at Lillie Bridge could escape responsibility if betting were
proved to go on there.
III. What kind of betting is within the Act?
[Sidenote: Illegal betting.]
The Act prohibits two kinds of transactions:—
(1.) Betting with persons resorting thereto;
(2.) Receiving money on deposit or ready money betting.
(1.) With respect to the kind of betting that is within the Act
considerable uncertainty has always been felt owing to the lack of
decisions on the subject. In the above case of _Haigh_ v. _Sheffield_ it
was observed by LUSH, J., that the statute was intended to deal, not
with the ordinary practice of betting or wagering, but with a more
degenerate form of gambling, and one of a more demoralizing tendency.
[Sidenote: Betting with persons resorting thereto.] At the same time his
lordship does not explain exactly what kind of betting is affected by
the statute. [Sidenote: _Oldham_ v. _Ramsden_.] A case which really does
throw some light on the matter is _Oldham_ v. _Ramsden_,[385] though the
grounds of the decision are not very clear. But it was there held that a
club where the members habitually bet with one another is not within the
Act.
It is very common to hear the question asked, why is Tattersall’s, &c.,
tolerated when the betting houses are suppressed? Two suggestions which
have been made are worthy of notice:—
(_a._) That the Act does not apply to _bonâ fide_ clubs limited in
numbers where the members are selected in the usual way. [Sidenote:
Private clubs.] It would seem, however, that since the decision in
_Jenks_ v. _Turpin_, that a club or private house may be a common
gaming house that this distinction is not sound, and that the
suggestions in _Crockford_ v. _Maidenhead_[386] must be considered as
overrated.
(_b._) The other and most general impression is that the Act does not
apply except to ready money betting. The principal judicial dictum
which gives colour to this view is that of Mr. Justice BLACKBURN in
_Haigh_ v. _Sheffield_,[387] where he expressly leaves the question
open whether the place must not, to be within the Act, be kept for the
purpose of the particular kind of betting mentioned in the preamble to
the Act, viz., receiving money on deposit.[388] Anyhow, in this case,
as in _Bows_ v. _Fenwick_ and _Eastwood_ v. _Miller_, there was
evidence of deposits having been paid. “It may well be,” said his
lordship “that the Legislature intended to confine it to that kind of
betting, leaving it to future legislation to extend the enactment if
necessary.”
[Sidenote: Act not confined to ready money betting.]
It is, however, submitted that this is not the correct view of the
matter. The Act speaks not only of receiving money on deposit but of
“betting with persons resorting thereto.” The real meaning of these
words is betting indiscriminately with all comers, that is to say, where
in any place, house, or club one or a limited number of persons are the
centre of every betting transaction that takes place, or, so to speak
“hold the hat” against all the rest, that is a species of betting that
the law prohibits, whether money passes at the time of making the bet or
not. That this was the intention of the Act was clear from the speech of
Sir Alexander Cockburn in bringing the Bill before the House of
Commons.[389] [Sidenote: Tattersall’s not within the Act.] It was not,
he said, intended to interfere with Tattersall’s and such like places,
where persons met and _bet amongst one another_—where anyone is free to
bet with anyone else.
It is remarkable that this question has never been practically dealt
with in a Court of Law; nobody has ever yet tested the legality of
Tattersall’s or similar clubs. There are, however, several dicta which
give support to the view here suggested. Thus in _Bows_ v. _Fenwick_,
L.R., 9 C.P., at p. 344, COLERIDGE, C. J., observes: “It was an
ascertained spot where the appellant carried on the business of betting
with all persons who might resort there for that purpose.” BRETT, J., at
p. 346, says: “It was a fixed place selected and fixed upon by the
appellant for persons who desired to deal with him.” In _Galloway_ v.
_Maries_, 8 Q.B.D., at p. 281, GROVE, J., says: “There must be a fixed
ascertained place occupied or used so far permanently that people may
know that there is a person who stands in a particular spot indicated by
a definite mark with whom they may bet;” and again, at p. 282: “The
object of this Act was to prevent persons having fixed localities to
which other persons may resort for the purpose of betting.” In _Hornsby_
v. _Raggett_, 1891 2 Q.B.D., at p. 24, SMITH, J., says: “The Act was
intended to suppress the operations of those persons who keep what may
be described as “banks” for the purpose of inducing other people to make
bets with them.”[390] It seems a fact that in the clubs, the frequenters
are all on the same footing. In the illegal houses they are divided into
two classifications: (1) the persons who form the market for betting;
(2) those who go there to bet with them.
A point may arise which has not yet been decided, whether the Act in
speaking of betting relates only to betting on horse races, &c., or
whether it also includes betting of every kind, such as betting on the
price of stocks as has been pointed out in the chapter on the Stock
Exchange.
[Sidenote: Bucket shops.]
Proceedings of this kind for what are called difference bargains are not
infrequent in the “bucket shops”; does then the Act apply to these
“bucket shops”[391] where difference bargains are the course of
business?
The draftsmanship of the Act is curious, it speaks of two illegal
purposes, thereby following the preamble: (1) betting with persons
resorting thereto seemingly without limiting the betting to horse races;
(2) receiving money on deposit on the event of horse races, &c., so that
as far as ready money betting goes, the “bucket shops” are clearly not
within the Act. It is submitted that in speaking of betting the Act
cannot be held to limit it to betting on horse races, and that such
limitation is confined to the case dealt with in the second clause of
the section, viz., the ready money bet.
[Sidenote: Betting by correspondence.]
A further point arises on the wording of this very difficult statute
within the first clause of the section, that is betting generally as
distinguished from ready money betting. The words of the Act require
that there should be: (_a_) Persons who resort thereto; (_b_) definite
betting with them by the persons specified. Suppose, then, a bookmaker
does business with his clients by correspondence, does he come within
the Act? Can his correspondents be said to resort thereto? And the same
question arises where betting is done by telephone. It is submitted that
these persons cannot be said to resort thereto. To hold that they do,
would be an artificial and strained construction of the Act. This clause
of the section differs from the second relating to ready money betting,
in which “persons resorting thereto” are not mentioned. It might well be
that the framers of the Act desired, to put down, not betting generally,
but establishments which form the nucleus of a crowd of disorderly
persons, which in the language of Bacon’s Abridgment “cannot be but very
inconvenient to the neighbourhood.” The prohibitions against ready money
betting are more general as being productive of a greater amount of
criminality amongst clerks and servants.
The true view seems to be that the bet must be made with the person as
and when he physically resorts thereto. If a man sent his agent to the
place no doubt the agent would resort thereto, but it would seem that
this would not bring the bookmaker within the Act, unless the agent were
authorized to conclude the bet. In the case of betting by
correspondence, not only does the man send no agent there, but the bet
is certainly not made on the premises.
It must be admitted that this view makes the prohibitions of the Betting
House Act far less stringent than is usually supposed, and this is the
more especially so since the decision in _Davis_ v. _Stephenson_ (this
is dealt with _post_ in the observations as to ready money betting)
which seems to make it clear that by opening a banking account where
persons can deposit money in respect of bets which they contemplate
making, a bookmaker would not infringe the second clause of the section.
_Post_ p. 190.
Perhaps the greater part of the betting in this country is carried on
through commission agents who belong to Tattersall’s or some other
betting club, [Sidenote: Commission agents not within the Act.] and do
commissions thereat for their clients. This transaction clearly does not
come within the Act (that is, unless, as we shall show afterwards, he
takes money in advance) as he does not bet himself. Of course, if he
were really the principal, and did all the bets himself, he would be
liable.
[Sidenote: Coupons.]
A question has more than once been suggested to the writer as to the
legality of a practice now very common among the sporting papers of
attaching coupons on which are to be written, say, the winners of any
three coming events, a prize being awarded to the successful person or
persons. Is this a bet? If it is, then probably the proprietors of the
newspapers would lay themselves open to be prosecuted for keeping an
office for the purpose of betting with persons resorting thereto. But it
is submitted that such a transaction is not in the nature of a bet at
all. Even supposing the purchaser of a newspaper get it at the office,
the 1d. or 2d. he pays is to buy the paper. Of course the case might be
different if a separate deposit was required when the coupon is sent in.
But the difficulty is all the greater when, as is generally the case,
the paper has been purchased at an ordinary shop. There is then no
privity between the purchaser and the newspaper proprietors. We have
above (p. 32 _et seq._) suggested some of the characteristics of a
wager: the coupon system does not seem to contain any of them.
The above observations have, since they were written, been confirmed by
the decision of the Divisional Court in _Caminada_ v. _Hulton_[392]. The
scheme in this case was of the ordinary character. The defendant
published “The Sporting Chronicle Handicap Book” as a weekly companion
to a daily paper, “The Sporting Chronicle.” Attached to the book, which
was a sort of racing guide, was a coupon, with the titles of six races
printed on it. The book was sold for 1d., and the purchaser of the book
was invited to fill up the coupon with the names of the horses he might
select as the winners of the six races; and prizes of various gradations
were offered to the competitors, according to the number of winners each
might select. It was held that the 1d. being paid for the purchase of
the book, the scheme was not a wager, but only a device for increasing
the sale: nor was it a deposit of money on an agreement specified in
section 3 of the Betting House Act.
This case leaves the point suggested above untouched, viz., whether if a
separate payment were made in respect of each coupon sent in, it would
not amount to a wager.
Competitions have in modern times assumed very various forms; but the
racing coupon is the only one which has evoked a decision. Each must be
judged according to its own scheme. Apart from fraud, the objections
which could be taken to them would be as infringements of the Betting
House Act in the Lottery Acts. In the earlier parts of this work some
tests and criteria of a “wager” and a “lottery” are suggested. (See the
Index under these headings.)
[Sidenote: Ready money betting.]
(2.) Receiving money on deposit. A house, &c., kept for this purpose is
also illegal. No doubt all the cases cited above as to evidence of a
house being kept for the purpose of the offence first mentioned in this
section and of permitting it to be so used are applicable to this case.
The following case shows that a man brings himself within the statute by
doing business in this way by correspondence, even though he profess to
be a mere agent for doing commissions. It has already been suggested
that betting by correspondence is not within the first clause of the
section.
In _Wright_ v. _Clarke_[393] Wright was charged under section 3 of 16 &
17 Vict., c. 119, with keeping a house and office near Covent Garden for
the purpose of receiving money on an undertaking to pay money on events
and contingencies relative to horse races. Advertisements were inserted
in the different papers to the effect that he would execute commissions
on all races at the best prices, instructions to be sent to his offices
in York Street; that he did not lay bets himself, but only acted as
agent in the matter. “The money sent for investment will be taken into
the best market, and laid out the best advantage for clients. All
communications must be sent through post, and the replies can only be
forwarded in the same manner. Commissions executed to any amount on
receipt of the cash. All bets paid the day after the race (less 5 per
cent. on winnings), provided the vouchers are sent at the same time.”
Two or three police officers acting on instructions, gave instructions
to Wright by post to back certain horses for some of the Ascot races,
enclosing P.O.O.’s, and they received letters of acknowledgment from
Wright, saying that their instructions had been carried out. In one case
an officer received a cheque from Wright for winnings minus 5 per cent.,
Wright’s commission. A warrant being issued under section 11 of the Act,
Wright and some clerks engaged in filling up papers and forms relating
to his betting business were arrested. A large number of documents and
books relating to betting were found upon the premises, and also 56,000
vouchers. There was in one of Wright’s books an entry of his transaction
with one of the officers. Being convicted and fined £100, a special case
was stated for the Court of Queen’s Bench.
For Wright it was contended: (1.) That he was not within the Act, seeing
that persons did not resort to his office, the whole was conducted by
correspondence; besides, he was simply an agent and not a principal.
(2.) That the vouchers did not amount to an agreement to pay money on a
bet, but only contained advice as to the mode of applying for payment.
(3.) If they did amount to such an agreement the money deposited with
him by P.O.O. was not the consideration for such agreement. The real
consideration was the 5 per cent. of the winnings retained. (4.) That
Wright could not be said to have used the house for the purpose of
receiving the P.O.O.’s.
The Court held that Wright came within the second part of section 1. The
office was kept open and there was a promise, express or implied, to pay
the money in the event of a horse race, though nobody entered the house.
There could be no doubt Wright was the principal and intended to be
responsible for the payment of the bet. An implied promise would suffice
to bring the case within the statute.
This case seems to make it clear that the receipt of money by way of
deposit on bets even through the post is an unlawful purpose within the
second clause of sections 1 and 3, which do not speak of receiving money
from “persons resorting thereto.” It has already been suggested that
these words in the first clause seem to exclude making bets on credit
through the post. In the judgment of HAWKINS, J., in _Reg._ v. _Preedie_
(see note, p. 174), his lordship says: “That the Act is directed against
carrying on the business of betting with, or receiving deposits from,
persons resorting thereto.” It is with the greatest deference suggested,
and for the reasons given above, that this is not quite accurate.
[Sidenote: Taking cover in “bucket shops.”]
It has been suggested above that “bucket shops” would be illegal under
clause 1 of sections 1 and 3, if difference bargains which have been
held to be wager contracts, are the course of business carried on
therein. But as far as the second clause goes relating to ready money
betting, it is clear that the bucket shops are not included, seeing that
these clauses are confined to ready money betting on horse races, &c.,
consequently they would not be liable under these clauses for taking
securities from their clients to secure the differences they may have to
pay, commonly known as “cover.”
[Sidenote: Receipt must be in house.]
It has been held that in order to constitute a receipt within sections 1
and 3, the actual receipt of the money in respect of the bets must be in
the house alleged to be used for the unlawful purpose. In _Davis_ v.
_Stephenson_[394] the bookmaker used an alley, not part of the licensed
premises, of which the defendant was landlord, as a resort for persons
to bet with him, where he received sums of money on deposit.
This money was afterwards taken into the defendant’s house, and the
house was it appeared used for the purpose of settling. It was contended
in support of the conviction that this amounted to a continuous receipt
by the bookmaker, and that the defendant permitted the use of the tavern
as a betting office. [Sidenote: Banker not liable.] The Court held that
the actual receipt must be within the place alleged to be so used. It is
clear from this case that a banker could without liability open an
account for the receipt of deposits paid in by a bookmakers’ customers
in respect of bets which they contemplated making with the bookmaker
elsewhere, seeing that the bank would not be used for an illegal betting
purpose by any of the persons specified. The effect of this decision on
the latitude allowed to bookmakers has been pointed out above, p. 185.
[Sidenote: Section 4.]