Intercontinental Hotels Corp. v. Golden
1964 N.Y. LEXIS 831
NY
1964
Check Treatment

Lead Opinion

Burke, J.

On this appeal by the plaintiff from a judgment dismissing the complaint, the only issue is whether the courts of this State must deny access to a party seeking to enforce obligations validly entered into in the Commonwealth of Puerto Rico and enforcible under Puerto Rican law.

Plaintiff, the owner and operator of a government-licensed gambling casino in Puerto Rico, seeks to recover the sum of *13$12,000 evidenced by defendant’s check and I. 0. IT.s given in payment of gambling debts incurred in Puerto Rico.

Once again we are faced with the question of when our courts may refuse to enforce a foreign right, though valid where acquired, on the ground that its “ enforcement is contrary to [the public] policy of the forum ” (Straus & Co. v. Canadian Pacific Ry. Co., 254 N. Y. 407, 414).

Since these gambling debts were validly contracted in Puerto Rico and the Puerto Rican law provides a remedy for their enforcement (United Hotels of Puerto Rico v. Willig, Puerto Rico Bar Assn., No. 172 [Oct. 9, 1963]), аbsent a clear showing that the enforcement of the causes of action here would “ offend our sense of justice or menace the public welfare ’ ’ (Loucks v. Standard Oil Co., 224 N. Y. 99, 110), we may not withhold aid. We do not think that public policy forbids us to enforce these contracts.

Substantially all of the commеntators agree that foreign-based rights should be enforced unless the judicial enforcement of such a contract would be the approval of a transaction which is inherently vicious, wicked or immoral, and shocking to the prevailing moral sense. (Beach, Uniform Interstate Enforcement of Vested Rights, 27 Yale L. J. 656, 662; Goodrich, Conflict of Laws [3d ed., 1949], 305; 2 Rabel, Conflict of Laws: A Comparative Study [1947], 555-575; Paulsen and Sovern, “Public Policy ” in the Conflict of Laws, 56 Col. L. Rev. 969; 3 Beale, Conflict of Laws [1935], 1649.)

Applying this test we find decisions in this State involving gambling transactions which put this reasoning into practice. Over 100 years agо this court held in Thatcher v. Morris (11 N. Y. 437 [1854]) that a contract involving lottery tickets if legal and valid without the State would be upheld though illegal in New York. In Harris v. White (81 N. Y. 532 [1880]) suit was permitted for wages earned in out-of-State horse races ‍​​​‌‌​‌‌‌​‌‌‌​​‌‌‌‌​‌​‌​‌‌‌​‌​‌‌‌‌‌​‌​​‌​‌‌​‌​​​‍at a time when horse racing was illegal in the State of New York. In Ormes v. Dauchy (82 N. Y. 443 [1880]) suit was upheld for commissions earned by рlacing extrastate lottery advertisements in out-of-State newspapers. Thus, aware of the common-law rule which barred the enforcement of gambling contracts and conscious that they were illegal and void in almost all the States of this country, the courts of this State took the *14рosition, even in Victorian times, that there was no strong public policy to prevent the enforcement of such contracts according to the law of the place of performance. There is nothing suggested by the respondent which should persuade us that Judge Cardozo was wrong when he said in Loucks v. Standard Oil Co. (224 N. Y. 99, 111 [1918], supra): “The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors unless help would violate some * * * prevalent conception of good morаls ”.

It has, however, been urged that suits on gambling debts contracted validly elsewhere are contrary to two public policies of this State, i.e,, in this jurisdiction gamblers are outlaws, and all gambling contracts made with them are void. Worthy though such considerations be, they apply only to transactiоns governed by our domestic law. This court gave thought to such arguments recently and rejected them as an insufficient basis for projecting domestic philosophies of law to decision making in actions based on transactions governed by the law of another State (see Rubin v. Irving Trust Co., 305 N. Y. 288, 304 [1953] [dictum]; Matter of May, 305 N. Y. 486 [“ incestuous ” marriage] ; Zwirn v. Galento, 288 N. Y. 428; Benton v. Safe Deposit Bank, 255 N. Y. 260, 267; see, also, Palmer Nat. Bank v. Van Doren, 260 Mich. 310 [1932]; International Harvester Co. v. McAdam, 142 Wis. 114 [1910]; Milliken v. Pratt, 125 Mass. 374 [1878]; Biewend v. Biewend, 17 Cal. 2d 108 [1941]; Restatemеnt, Conflict of Laws, New York Annotations, § 612, p. 389).

Public policy is not determinable by mere reference to the laws of the forum alone. Strong public policy is found in prevailing social and moral attitudes of the community. In this sophisticated season the enforcement of the rights of the plaintiff in view of the weight of authority would not be considered repugnant to the “public policy of this State”. It seems to us that, if we are to apply the strong public policy test to the enforcement of the plaintiff’s rights under the gambling laws of the Commonwealth of Puerto Rico, we should measure them by the prevailing social and moral attitudes of the community which is reflected not only in the decisions of our courts in the Victorian era but sharply illustrated in the changing attitudes of the People of the State of New York. *15The legalization of pari-mutuel betting and the operation of bingo gаmes, as well as a strong movement for legalized offtrack betting, indicate that the New York public does not consider authorized gambling a violation of “ some prevalent conception of good morals, [or] some deep-rooted tradition of the common weal.” (Loucks v. Standard Oil Co., supra, p. 111.)

The trend in New York State demonstrates an acceptance of licensed gambling trаnsactions as a morally acceptable activity, not objectionable under the prevailing standards of lawful and approved social conduct in a community. Our newspapers quote the odds on horse races, football games, basketball games and print the names оf the winners of the Irish Sweepstakes and the New Hampshire lottery. Informed public sentiment in New York is only against unlicensed gambling, which is unsupervised, unregulated by law and which affords no protection to customers and no assurance of fairness or honesty in the operation of the gambling devicеs.

In the present case there is no indication that the evils of gambling, which New York prohibits and Puerto Rico has licensed, will spill over into our community if these debts are enforced in New York courts. The New York constitutional provisions were adopted with a view toward protecting the family man of meager resources from his own imprudence at the gaming tables. (See Carter and Stone, Proceedings and Debates of the Convention, 567 [Hosford, 1821].)

Puerto Rico has made provision for this kind of imprudence by allowing the court to reduce gambling obligations or even decline tо enforce them altogether, if the court in its discretion finds that the losses are “ [in an] amount [which] may exceed the customs ‍​​​‌‌​‌‌‌​‌‌‌​​‌‌‌‌​‌​‌​‌‌‌​‌​‌‌‌‌‌​‌​​‌​‌‌​‌​​​‍of a good father of a family. ’ ’ (Laws of Puerto Rico Ann., tit. 31, § 4774.) This regulation is consistent with New York policy and would be properly considered in any case before a New York court which may be asked to enforce a Puerto Rican gambling debt.

There is nothing Immoral per se in the contract before us, but injustice would result if citizens of this State were allowed to retain the benefits of the winnings in a State where such gambling is legal, but to renege if they were losers.

The cases relied on by the respondent miss the mark.

*16In the case of Mertz v. Mertz (271 N. Y. 466 [1936]) Judgе Lehman, writing for the court, said that “ a disability to sue attached by our law to the person of a wife becomes an anomaly if another State can confer upon a wife, even though residing here, capacity to sue in our courts upon a cause of action arising there” (p. 474; emphasis added). As distinguished from the present case, in Mertz the court was faced with this State’s interest in the marital status situated here. As a practical matter, all the significant contacts of the case were with New York and the language of the opinion indicates that the court was in reality there making a choice of law deсision of the kind that this court today follows under the nominal heading of the “ contacts ” doctrine.

In Flegenheimer v. Brogan (284 N. Y. 268 [1940]) the court nominally invoked the public policy doctrine, but was only concerned with the operation of the liquor control laws in this State. The court did not find the policy of other States so unjust оr antisocial as to oblige the courts of our State to deny access to litigants seeking to enforce rights validly created there.

This court refused to enforce a tax claim asserted here by the plaintiff municipality in City of Philadelphia [Pa.] v. Cohen (11 N Y 2d 401 [1962], cert. den. 371 U. S. 934 [1963]) but in doing so relied heavily upon the specific terms of our stаtute which calls for the enforcement of such tax claims arising in other States if such other State will reciprocate on a New York tax claim. Pennsylvania, unlike most States, has no such reciprocity provision. Watts v. Malatesta (262 N. Y. 80 [1933]) was concerned with a New York statute ‍​​​‌‌​‌‌‌​‌‌‌​​‌‌‌‌​‌​‌​‌‌‌​‌​‌‌‌‌‌​‌​​‌​‌‌​‌​​​‍and a situation involving betting in this State that was clearly unlawful under the statute.

Since a gambling debt is unenforeible when made in Nevada, courts in other States have no public policy issue to pass upon, and refusals elsewhere to enforce these claims are a mere application of Nevada law. (Hamilton v. Abadjian, 30 Cal. 2d 49 [1947] and the Nevada cases cited therein.) Nevаda courts refuse to enforce gambling debts since the statutes of that State, while specifically authorizing licensed gambling casinos (as an exception to the policy there that gambling generally is illegal), make no provision for their enforcement. (West Indies v. First Nat. Bank of Nevada, 67 Nev. 13.) In Puerto Eico the situation is different. There is specific statutory provision *17for the enforcement of legal gambling debts there (Laws of Puerto Rico Ann., tit. 31, § 4774) and the Supreme Court of Puerto Rico has upheld the enforcement of such claims. (United Hotels of Puerto Rico v. Willig, Puerto Rico Bar Assn., No. 172 [Oct. 9, 1963], supra.) The refusal of courts to enforce Nevada gambling debts has no appliсation to the case before us.

We think, therefore, that this ease falls within the consistent practice of enforcing rights validly created by the laws of a sister State which do not tend to disturb our local laws or corrupt the public.

Accordingly, the judgment of the Appellate Division should be rеversed and the judgment of the Supreme Court, New York County, reinstated, with costs in this court and in the Appellate Division.





Dissenting Opinion

Chief Judge Desmond (dissenting).

The court is holding that there is no public policy against the use of a New York court as a collection agency by a gambling house proprietor who is guilty of the social wrоng of letting his customers gamble on a charge account basis. This comes as a surprise in a State where the professional gambler has always been treated as an outlaw and a gambling house considered as a criminal nuisance (People ex rel. Collins v. McLaughlin, 128 App. Div. 599, app. dsmd. 194 N. Y. 556; People v. Stedeker, 175 N. Y. 57, 62; Watts v. Malatesta, 262 N. Y. 80, 82). Such has been the public policy of New Yоrk since colonial days and we are not informed as to when or how it was changed.

Plaintiff, a Delaware corporation and operator of a Comm on - wealth-licensed gambling room or casino in its hotel in Puerto Rico, sued defendant, a New York resident, on a $3,000 check аnd 13 “I. O. U.s ” totaling $9,000. The $12,000 total covered defendant’s gambling losses at plaintiff’s casino where defendant had been allowed to gamble on credit. The trial court sitting without a jury gave judgment for plaintiff but the Appellate Division, reversing, held that such a loan is not collectible in the courts of New York.

The issue: are our courts open to suits by gambling house proprietors who let their customers run up debts; or do such transactions so offend our concept ‍​​​‌‌​‌‌‌​‌‌‌​​‌‌‌‌​‌​‌​‌‌‌​‌​‌‌‌‌‌​‌​​‌​‌‌​‌​​​‍of good morals that our settled public policy prompts us to reject the suit? Closing our doors to such a lawsuit is in principle and undеr our *18decisions and statutes the only possible course. It is not a matter of choice of law as between the Puerto Rican and domestic brands. We refuse the suit not because Puerto Rico’s law differs from ours but because we cannot in good conscience use our judicial processes to recognize the gamester’s claim by giving him a judgment (Mertz v. Mertz, 271 N. Y. 466; Flegenheimer v. Brogan, 284 N. Y. 268; Hollis v. Drew Theol. Seminary, 95 N. Y. 166; Cross v. United States Trust Co., 131 N. Y. 330, 343). “It is an attribute of our State’s sovereignty that it may determine for itself whether under its concepts of comity a particular foreign law should or should not be enforced ” (City of Philadelphia v. Cohen, 11 N Y 2d 401, 406, cert. den. 371 U. S. 934).

We are here asked to enforce a gambling contract, unenforcible at common law (Ruckman v. Pitcher, 1 N. Y. 392; Meech v. Stoner, 19 N. Y. 26; Irwin v. Williar, 110 U. S. 499, 510) and made void and illegal in our State (and almost every other State, see Irwin v. Williar, supra) under specific statutes (Penal Law, §§ 991-996). In truth, not one but two public policies of ours are offended when we give judgment for plaintiff. First, operating a gambling business (as distinguished from cаsual betting between individuals) was an indictable public nuisance at common law, has always been held criminal conduct in New York State, and professional gamblers are “ outlaws ” in New York (People v. Stedeker, 175 N. Y. 57, 62, supra; People v. Bright, 203 N. Y. 73; Watts v. Malatesta, 262 N. Y. 80, supra; Bamman v. Erickson, 288 N. Y. 133; People v. Goldstein, 295 N. Y. 61; Hofferman v. Simmons, 290 N. Y. 449). Second, from earliest times in this State all gambling contracts and loans for gambling have been void and denied enforcement by the professional gambler even to the extent that the bettor-customer may sue for the amount he lost (Penal Law, § 994; Watts v. Malatesta, supra). As this court said in the Watts case in 1933 (p. 82): “ The reason seems obvious. Curb the professional with his constant offer of temptation coupled with ready opportunity, and you have to а large extent controlled the evil.” It denies both history and logic to hold that despite all these showings of public policy our courts must give this plaintiff judgment.

*19The conclusion that settled New York policy bars suit on a claim like this one is not disproved by pointing to our legalization of bingo games аnd pari-mutuel betting on horse races (N. Y. Const., art. I, § 9). The people of the State in amending their Constitution and the legislators in adopting and revising the statutes have found and acted on important differences between those two forms of gambling and the operation of gambling houses. That these differences are widely recognized elsewhere is evident from the fact that while pari-mutuel betting is lawful in 24 States and bingo is legalized in 11 States (lottery in one) nevertheless only one State (Nevada) licenses gambling rooms and even in Nevada gambling-house debts are not suable in court (Nevada Tax Comm. v. Hicks, 73 Nev. 115). Califоrnia courts will not recognize Nevada gambling contracts (Hamilton v. Abadjian, 30 Cal. 2d 49). The only New York State appellate decision cited contra is Thatcher v. Morris (11 N. Y. 437) which discussed an out-of-State lottery conducted not as a business ‍​​​‌‌​‌‌‌​‌‌‌​​‌‌‌‌​‌​‌​‌‌‌​‌​‌‌‌‌‌​‌​​‌​‌‌​‌​​​‍but for educational, religious and benevolent purposes.

Some of our citizens fail to appreciate these differences and believe that all kinds of gambling should be licit or all forms condemned. But the preference of the majority (who make public policy in a government like ours) has been expressed at the voting booths and in the Legislature with the result that now, as during the State’s whole history, the operation of a gambling casino is a criminal offense and loans by the operator to his customer or bets made on credit are uncollectible. This is our historical and settled State policy and it is totally inconsistent with that policy to say that the courts provided by and for our citizens must nonetheless give judgment on any gaming house owner’s claim against his customer.

The judgment should be affirmed, with costs.

Judges Dye, Fuld, Scileppi and Bergan concur with Judge Burke; Chief Judge Desmond dissents in an opinion in which Judge Van Voorhis concurs.

Judgment of Appellate Division reversed and that of the Supreme Court, New York County, reinstated, with costs in this court and in the Appellate Division.