18 A.D.2d 45 | N.Y. App. Div. | 1963
Lead Opinion
The question in this case is whether the courts of New York will sanction recovery by plaintiff of the amount of credit extended by its gambling casino in the Commonwealth of Puerto Rico to a patron to permit him to continue gambling.
Defendant was a guest at plaintiff’s Intercontinental Hotel in Puerto Rico from December 8 through December 14,1960. During his stay there, in an attempt to turn chance into fortune, he played—on credit generously furnished by plaintiff—at the dice tables in the casino conducted by the hotel, lost and, when he ascertained the extent of his indebtedness, reneged. Following the loss of $6,000 in cash which defendant allegedly brought
Strangely enough, no appellate court in this State has ruled on the question of whether there can be recovery in New York on a professional gambling debt incurred in a jurisdiction where gambling is legalized.
Subdivision 1 of section 9 of article I of the New York State Constitution provides that “ no lottery or the sale of lottery tickets, pool selling, book-making, or any other kind of gambling, except pari-mutuel betting on horse races * * * shall hereafter be authorized or allowed within this state. ’ ’ The exception as to pari-mutuel betting was incorporated by amendment in 1939; and, by an amendment in 1957, subdivision 2 was added to section 9 to authorize, upon a local option basis, the conduct of games of chance commonly known as bingo and lotto. More particular reference to these amendments will be made hereinafter.
The constitutional prohibition on all kinds of gambling has existed since 1894. Article 88 of the Penal Law contains numerous provisions making different types of gambling criminal offenses. In People v. Lambrix (204 N. Y. 261, 264-265) Cullen, C. J., in referring to the Penal Law provisions on gambling said: ‘ ‘ while all gambling has for a long time been illegal in this state, professional gambling and the maintenance of gambling resorts alone have been subjected to the penalties of the criminal law.”
So, too, in Watts v. Malatesta (262 N. Y. 80, 82) the court said: "The evil which the law chiefly condemns (N. Y. Const., art. I, § 9) and makes criminal (Penal Law, art. 88) is betting and gambling organized and carried on as a systematic business."
The courts of New York will generally enforce contracts made in other jurisdictions. The validity of such contracts is deter
In section 612 of the Restatement, Conflict of Laws the rule is stated as follows: “No action can be maintained upon a cause of action created in another state the enforcement of which is contrary to the strong public policy of the forum.”
As an illustration of the rule, the Restatement gives this example: “1. By the law of state X, gambling debts may be recovered; by the law of state Y, to allow recovery on such debts would be against public policy. A sues B in Y on a gambling debt incurred in X. Judgment for B.”
In the volume of New York Annotations of the Restatement on Conflict of Laws it is noted that section 612 of the Restatement “ is in accord with the law of New York ” (p. 386). (See, also, Leñar, Conflict of Laws [1959], § 48, pp. 80-83.)
The “ public policy ” limitation of the operation of the choice of law has been the subject of much comment in the recent literature of the law. (See Paulsen and Sovern, “Public Policy” in the Conflict of Laws [1956], 56 Col. L. Rev. 969; Ehrenzweig, Contracts in the Conflicts of Laws [1959], 59 Col. L. Rev. 973; Lorenzen, Territoriality, Public Policy and the Conflict of Laws [1924], 33 Yale L. J. 736; Beach, Uniform Interstate Enforcement of Vested Rights [1918], 27 Yale L. J. 656; 2 Rabel, Conflict of Laws: A Comparative Study, ch. 33, pp. 551-591.)
There is no undeviating and precise definition of such a general term as “ strong public policy.” In People v. Hawkins (157 N. Y. 1, 12) it was stated: “ Therefore, when we speak of the public policy of the state, we mean the law of the state, whether found in the Constitution, the statutes or judicial records ’ ’. (See, also, Building Serv. Union v. Gazzam, 339 U. S. 532, 537.)
The anti-gambling clause of the State Constitution is of the same venerable vintage as. the wrongful death action provision and has also been included in all later revisions of the Constitution. Thus the prohibition against gambling represents, not just a temporary fancy, but a deep-rooted policy to which courts ' should give constructive effect. That long-standing policy regards gambling as a tainted transaction and there is no hint either in the Constitution or the Penal Law that the courts should purge the taint and ignore the policy when an out-of-State transaction is involved.
In Watts v. Malatesta (262 N. Y. 80, supra) where in an action by one to recover losses from a professional gambler the court refused to permit the defendant to set off the plaintiff’s winnings, the court (p. 83) characterized the professional gambler in the following language: "whatever his shape may be, he is an outlaw.” The same conclusion was reached in Hofferman v. Simmons (290 N. Y. 449, 456). It would indeed be a perversion of public policy to permit recovery in a court of law by one whom the courts consider an “ outlaw” solely because the gambling occurred beyond the State line. The constitutional command should not be so obliquely nullified or disregarded and its clear public policy ignored. What is presented in the instant case is not merely a difference in laws between New York and Puerto Rico but a deep-rooted inconsistency between our domestic principles and those of jurisdictions where public gambling may be permitted.
The precise question posed herein has been considered by the lower courts in this State. In Nielsen v. Donnelly (110 Misc. 266) the court refused to enforce a gambling agreement made in Louisiana, where such agreements were valid. In Tropicales, S. A. v. Milora (7 Misc 2d 281) and Tropicales, S. A. v. Drinkhouse (15 Misc 2d 425) it was concluded that gambling debts incurred in Cuba, where the transactions were valid, were subject to action in New York. While the Tropicales cases could be distinguished,
We believe the Nielsen case reached the correct result. There is a conflict of authority on the general question among the courts of the various States. (11 Am. Jur., Conflict of Laws, § 136; Anno. 173 A. L. R. 695.) In the 173 A. L. R. annotation to the case of Ciampittiello v. Campitello (134 Conn. 51) it is stated (p. 696): “ The prevailing view seems to be to regard statutes declaring gambling contracts and transactions illegal or void, as embodying a distinctive public policy, which requires the court of the state or country in which they are enacted to refuse to recognize or enforce any contract or transaction in violation of their terms, even though such contract or transaction may have had its situs outside the forum, and therefore does not come within the direct operation of the statutes.”
We hold that the clear public policy of this State will not permit suit in our courts to recover on a gambling debt which arose in a professional gambling house even though the gambling was legal where the debt allegedly arose.
Trial Term evidently considered that the legalizing of parimutuel betting and the operation of bingo games in this State had somehow weakened the force of our public policy against gambling. The carving out of the exceptions to the constitutional prohibition against gambling was for limited and restrictive purposes. In the case of pari-mutuel betting the purpose was to provide revenue for the support of the government and in the bingo and lotto amendment the aim was to aid charitable organizations to raise funds. The operations of these two types of activities are hedged in by strict legislative requirements.
In the light of the history and purpose of the amendments permitting pari-mutuel betting and bingo, it cannot be inferred that when the amendments were adopted, and the other provisions of subdivision 1 of section 9 of article I of the Constitution were left unchanged, that there was any intent to displace the prohibition against gambling beyond those specified. The enact
In view of our conclusion that plaintiff may not recover in our courts upon the gambling debt herein, it becomes unnecessary to discuss the collateral question of whether in any event, there could be recovery on that portion of the action based on the $3,000 check. Since the check was payable in New York, the cause of action arose in this State (Gonzales v. Industrial Bank [of Cuba], 12 N Y 2d 33, supra; Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367) and, under New York law, there could be no recovery on the check (Thuna v. Wolf, 132 Misc. 56, supra).
The judgment should therefore be reversed, on the law, and the complaint dismissed, with costs to appellant.
The paucity of decisions may, perhaps, be explained by the fact that the payment of gambling debts is considered by many as a point of honor; by the success of extrajudicial collection methods or by a tacit realization of the reluctance of appellate courts to enforce such obligations.
The Brinkhouse ease does not discuss the question of public policy and in effect relies on the decision in Milora. In the Milora case, it was ruled that it was not established that the check was issued in payment of a gambling debt. Hence, the opinion, insofar as it deals with the conflict of laws problem, is dictum. Since in both Milora and Brinkhouse, the actions were on checks payable in New York, the causes of action arose in New York (Gonzalez v. Industrial Bank [of Cuba], 12 N Y 2d 33) and there could not properly be any recovery on checks founded upon a consideration that was illegal in the place of performance (Thuna v. Wolf, 132 Misc. 56).
Dissenting Opinion
Plaintiff sued here for the recovery of the total sum of $12,000. The first cause of action to recover the sum of $3,000 was based upon a check made and delivered by defendant in Puerto Rico to the plaintiff. The other causes of action were to recover the total sum of $9,000 which defendant had lost at gaming in the plaintiff’s establishment in Puerto Rico. Defendant had established a credit before the losses, which he asserted was limited to $7,000. The money was given directly to defendant as he requested it while gambling. It is not disputed that the $12,000 represented a loss at gaming, and that gaming is legal in Puerto Rico. Thus the consideration for the contract was good according to lex loci.
On this appeal by defendant from a judgment for plaintiff, defendant-appellant asserts gambling is a heinous offense, repulsive to New York’s concept of morality, contrary to its public policy and is unenforcible here.
The single question is whether the general principle that a contract will be upheld whenever possible (sometimes referred to as the Rule of Validation) applies here, or whether enforcement must be denied for some or all of the reasons advanced by appellant. Should New York, as a matter of comity, recognize the obligation?
‘ ‘ At common law gambling was neither illegal nor considered immoral. This may account for the fact that prohibiting legislation has usually been held not sufficiently expressive of forum policy to invalidate gambling agreements entered into outside the forum. In England, and in the majority of American jurisdictions, the Rule of Validation has prevailed.” (Ehrenzweig, Conflict of Laws, p. 482.) ‘ ‘ Cases in which a strong forum policy is given effect to invalidate a contract valid under a pertinent foreign law, are becoming increasingly rare and may be virtually limited to contracts concluded outside the forum for the very purpose of evading the forum’s law.” (Ehrenzweig, Conflict of Laws, p. 474.) No contention is advanced here that the contract was entered in order to evade the laws of New York.
It can hardly be argued with any degree of validity that enforcement of the contract here involved would tend to disturb the peace, require the production of indecent evidence to support it, be in sharp and substantial conflict with the morals of the age
The doctrine of Nielson v. Donnelly (110 Misc. 266 [1920]) upon which appellant places great stress, is of doubtful validity in the present state of our law. (See Thuna v. Wolf, 132 Misc. 56 [1928], where the Appellate Term, in reversing Thuna v. Wolf, 130 Misc. 306, in which recovery had been allowed upon a check given in Florida in payment of a gambling debt, said the check was an executory contract and governed by the laws of New York.) The court referred to the fact that it was not a family or friendly game, and a contention had been advanced that there was cheating. Since it was given for an illegal consideration it would not be enforced. The court said: “ [h]ad plaintiff sued on the contract rather than on the check, it might perhaps have been presumed that such a gambling debt is valid in Florida and an argument might be made that it could be enforced in the courts of this State. (* * * Thatcher v. Morris, 11 N. Y. 437 ”) (p. 57); see, also, Tropicales, 8. A. v. Drinhhouse, 15 Mise 2d 425 (1959), recovery allowed upon a check given for a gambling debt; cf. Tropicales, S. A. v. Milora, 7 Misc 2d 281.
As to judgments of a sister State, the general view is that such judgment is entitled to full faith and credit even ‘ ‘ though the cause of action upon which the judgment was based is against the law and public policy of the state or territory in which enforcement is sought” (Goodrich, Conflict of Laws [3d ed.], pp. 620-621; Fauntleroy v. Lum, 210 U. S. 230). “ The result ”, says Goodrich, “ while not comforting to local prejudices, seems an extremely desirable one from the broader point of view” (p. 621).
It is recognized, in the instant case, the claim was not reduced to judgment when plaintiff sought to utilize our judicial facilities. But if the general principle is applicable, redress should not be denied. “Indeed, in these days [one] cannot afford to be too pious about this matter of gambling [and] to be shocked or to prate of public morals or public policy when confronted with an application for relief upon a contract lawful at the place of its performance ” (Ehrenzweig, Conflict of Laws, § 181, p. 482, citing Nevcal Enterprises v. Cal-Neva Lodge, 194 Cal. App. 2d 177). The observation quoted is of especial pertinency when the forum, as here, recognizes gambling in divers forms, though not cards or dice, as is here involved. Whether the reason assigned for the
The constitutional prohibition, and permissive exceptions (N. Y. Const., art. I, § 9) are guidelines of conduct for, and limitations on, activity of the citizenry of New York within the territorial borders of the State. Such prohibition and exceptions do not, and were never intended to, proscribe the citizens’ activity without the confines of this State. New York does not hold, as an absolute, that gambling is injurious to the interests of the State, or contrary to the public good, for the revenue derived from pari-mutuel betting is to be used for the support of government. To condemn by implication, or nonrecognition of the validity of the contract, the laws of another State which has merely gone a step further in its permitted exceptions, is to erect a standard of dubious value.
The judgment appealed from should be affirmed, though there may be some doubt as to the $3,000 represented by the check which is an executory contract.
Rabin and Noonan, JJ., concur with Valente, J.; Stevens, J., dissents in opinion in which Beeitel, J. P., concurs.
Judgment reversed, on the law, and the complaint dismissed, with costs to appellant.
