*1 Tropic MPH COMPANY Industries, Plaintiffs IMAGINEERING, INC., Respondents, Bill R. v. Appellants. Williams, defendants No. 89-279. Dec.
Submitted 1989. May Decided 1990. P.2d 1081. *2 Howard, W. Corbin for defendants and Billings, appellants. Bacheller, Pierre L. Billings, plaintiffs respondents. JUSTICE HUNT delivered the of the Court. Opinion The District, District Court of the Judicial Thirteenth Yellowstone defendant, Inc., found County, liable Imagineering, for breach contract and breach of The warranty. court entered implied judgment in favor of MPH $193,663 in the plaintiff, amount of Company, plus interest. Imagineering We reverse. appeals.
The sole issue raised on is whether appeal contract entered into by was under the laws of Montana and therefore unenforceable. Inc.,
Defendant and is a appellant, Imagineering, Nevada and manufacture of corporation engaged design electronic video machines. Plaintiff and MPH is a Company, venture respondent, joint McDonald, Jr., Paul comprised of Sam and Ronald Pendergrass all Lake Harding, and Joe Goott of Salt Goott is also Billings, City. Industries, president a Utah Tropic corporation. In January, entered into a contract with and Tropic wherein Imagineering and manufacture Imagineering agreed design an electronic Poker All Keno machine. This machine was to be the electronic version of the table Joe game by developed patented detailed Goott. A description of the table found in game can be our State, decision Goott v. 630 P.2d (Mont. St.Rep. Goott, that, we found although some game possessed it was a keno. characteristics variation of poker, essentially Act We held under the Montana Card Games game was -332, remand, (then MCA). codified at secs. On 23-5-301 through District Court declared that the was game -431, (then Raffles Law codified at secs. 23-5-401 MCA. through All Keno The contract that the electronic version Poker specified to be a with a reset stand-up game designed video single-player, credits. to allow the to cash his accumulated key image player on the screen was to the same as that found on the projected a Keno by positioning All table would layout. game on the means of four directional buttons. Once by chip layout separate selection, he a either inserting made his would bet by place bet, coins or the “bet” After his the player button. pushing placing start “start” The start button would button. pushing device, a card a would activate selection which was bowl-shaped a wheel in the bottom and 52 around container with spinning pockets a each different from a card periphery, pocket representing selections the last standard deck of cards. From “pocket” the bowl. The wheel six balls would be into game, dumped spinning bounce balls around until each found randomly would continue switch, would sending As each ball entered a it close pocket, pocket. *3 the the would then display information to computer. computer its on the screen. After the sixth ball found selected betting squares the would the results best compute possible pocket, computer 5 would then hand out of the 6 selected cards. It using display by the the total and the results on screen by calculating winnings meter the credit advancing accordingly. the and variety encountered with machines problems December, the contract on modify
were forced to several occasions. to in was delivered MPH MPH found Billings. prototype in kit for assembly and units form machine ordered acceptable the order to also MPH increased Billings. subsequently kit form. December, contacted Nevada gaming That Imagineering authorities, machine would told be illegal who that company that enabled components it certain Montana because incorporated included devices components to be for These illegal cash. played cleared, credit meters cancel last coin out to credits display with the Nevada switches, consulting known reset After keys. also MPH. authorities, with the problem discussed Imagineering to Montana without to the machines MPH in Imagineering agreed send to but with circuitry designed parts wiring accommodate the should MPH wish to install them itself. components
After sent games, to Montana shipping Imagineering employees of the machines to explain assembly technicians hired MPH. Montana, While in the Imagineering showed the MPH employees technicians how to install the electrical that components Imagineering fact, had refused to install in Nevada. In furnished extra Imagineering parts it purpose, although were available appears parts on the market and general could have been found in Radio Shack any store. March,
The kits were delivered in 1985. They assembled of that April year installed in bars in subsequently Great Billings, Falls and other locations in Montana. The machines in the placed Montana bars were equipped them to be components permitting cash. lab,
Although machines worked in the they not operate in the properly electronically environment of the “dirty” local drinking establishments. other Among problems, unearned frequently registered credits. Fearing would have out more in cash pay than the in, machines were winnings bringing the bar owners asked MPH to remove the games from their establishments. sent several
Imagineering technicians to Montana in an attempt cure the The technicians were problem. unsuccessful in their endeavors, June, and in andMay out of pulled the taverns.
MPH and instituted Tropic suit against and its Imagineering Williams, Bill R. president, breach of alleging breach of fraud and bad faith. warranty, and Williams Imagineering defended on the basis that the contract was and therefore unenforceable. claims were Later, dismissed with
Tropic’s prejudice. remaining to dismissal of all stipulated claims Williams against as well as MPH’s claims of fraud and bad faith against Imagineering. trial,
In lieu of MPH and submitted the case to the Imagineering District Court based on the record and a set of facts. The stipulated that the video parties stipulated machines contained defects design them rendering commercially a breach unacceptable constituting *4 of contract.
The District Court found that the machines were in compliance Montana law at the time the contract was to be and that the performed amended, was and The enforceable. court entered $193,663 in favor of MPH in the amount judgment plus 346 $79,354. funds interest
pre-judgment principal represented MPH in satisfaction of the contract. by expended machines that the electronic All Keno argues Imagineering slot machines because by contemplated parties were intended be and cash. We actually agree played law Montana statutes and case interpretive prohibited type and that the devices for which contracted parties were, best, unlawful machines. at slot The Montana Constitution unless prohibits gambling specifically authorized. lotteries,
“All forms of and are gambling, gift enterprises prohibited unless authorized acts of the or by through by legislature people initiative or referendum.” HI, 9, (1972). sec. Mont. Const.
Art. At the time the entered into and the contract performed or of slot Montana law question, prohibited possession operation 23-5-104, (amended (1983) machines. Section MCA 1989 A in sec. 23-5-153). renumbered sec. slot machine defined 23-5-101(1), (1983) (amended and renumbered sec. MCA 23-5-112(29)), as follows: check, coin, token, machine trade operated by inserting chip,
“[A] he or and from the of which currency therein paper play checks, tokens, or money, obtains obtain chips, paper redeemable in currency money.” 1974, Act, Card ch.
In enacted the Montana Games legislature Law, 293, 1, 727, sec. 1974 Mont. Laws and the and Raffles Bingo 1, Act Mont. Laws 731. The Montana Card Games ch. card Section authorized certain enumerated games, including poker. MCA, 23-5-311, card (1983) (amended 1989). authorized 23-5-302, MCA, (1983) for cash. Sections (repealed could MCA, 1989). (1983) At the time 1989) (amended contract, the Law authorized entered into the Raffles Bingo The law of tangible only. playing bingo personal property other forbade cash or bingo prizes intangible personal expressly (amended (1983) Section property. keno games this Court considered electronic legality Games, Inc. v Law. In Treasure State
under the
and Raffles
State,
we
(1976),
170 Mont.
347 for cash legally played prizes. MPH, 1981, Goott,
In Joe one of the members of brought Court, in the Bow District judgment action Silver declaratory County have the version All to table of Poker Keno declared lawful. seeking The District Court held that the was lawful under Card game reversed, On Games Act. we that All Keno appeal, reasoning was a of “casino-type banking game” that pitted against players other, than house rather each an against that the did activity legislature not it Goott, intend authorize when enacted the Card Act. Games 234, remand, 630 at P.2d at 38 the District St.Rep. 1039. On Court held that Poker All was Law, Keno under the and Raffles legal Bingo which left the to the game subject prohibition against cash prizes. we were following year, presented opportunity determine of live keno In legality Gallatin v. D games. County & R Inc., 409, 412, Music 998, 201 Mont. Vending, 654 P.2d (1982) (Gallatin I), we held that live keno came within statutory definition of game bingo was therefore under the legal and Raffles Law. claims that Gallatin I also authorized of keno for cash because playing of keno stipulated description presented by described the amount of for cash paid winning however, It game. that the appears, whether question game was for cash legally played prizes was not to this Court. presented Rather, the issue in Gallatin /was whether the game keno with the conformed binngo 23-5-402(1) Sec. description (A), (1981) 1989). not, I, MCA we in Because Gallatin (repealed cash, discuss the legality keno for it cannot said that playing fact, case authorized such activity. Gallatin I could not possibly have or other form of cash when legalized playing any for bingo 23-5-412, MCA, Sec. as it stood in 1982 such expressly proscribed activity. that I
Any Gallatin electronic keno for question permitted playing clarified amendment to sec. prizes legislature’s 1985, the same time that Poker All April, Keno machines that form the basis of action this assembled being in bars in Montana. statute was amended read as placed follows: either
“Bingo tangible prizes paid personal property that a must be except prize paid tangible personal property if same on electronic video player-operated ” added). machine. (Emphasis Thus, (enacted
Section MCA while the April for live it games, authorized cash prizes amended statute property continued to prohibit intangible personal electronic versions the game. the contract after the entered into shortly
In February, machines, Keno Court decided the manufacture Poker All Inc., D & R Music and 208 Mont. County Vending, Gallatin v. (1984) (Gallatin II). much the same reasoning 676 P.2d Using Goott, we held that electronic machiunes employed poker We held under the Montana Card Games actt. authorized 5-101, were slot which Sec. 23 electronic (1983), MCA barred. Expressly *6 the Video Draw Poker Machine
In the legislature passed Law, 1649. While this act Control Ch. sec. 1985 Mont. Laws video draw machines and authorized those legalized poker playing cash it did not authorize Poker All Keno machines for prizes, playing Instead, for cash. the law was limited machines expressly offering (1985) (amended 23-5-606(4), the draw MCA of Section game poker. Keno, Poker All which elements possessed repealed keno, was of and the of not draw game poker both the game Thus, (1985). the 23-5-606(4), as was defined in sec. MCA game that Law did not the Draw Poker Machine Control Video passage the electronic version of Poker All Keno. legalize that, It the at the time the is clear from the statutes and case law contract, the law forbade entered into and Montana parties performed the table All Keno for cash Goott prohibited Poker playing prizes. II, of the under the Montana Card Games Act. Gallatin game version holding banned electronic draw poker games, which emphasized Goott, i.e., against that forms of pitted house, mechanical, were permitted whether the live Machine Games Act. the Video Draw Poker Although under Card overruled the in Gallatin II holding by legalizing Control Act machines, the act did not authorize Poker All electronic draw poker Keno machines. All machines were legal that electronic Poker Keno
Assuming Law, not be could still game played and Raffles Bingo /, that electronic keno for Gallatin while holding cash. legitimately prizes, was a lawM did not authorize game, playing statutory so in the face the express nor could it have done Furthermore, amendment activity. such against prohibition versions that electronic provided sec. specifically tangible personal property. only could played prizes discussion, that, of the above we must conclude at the time light entered into and Poker All Keno performed machines for cash were not authorized under either the Act, Montana Card Games the Video Draw Poker Machine Control Law or the and Raffles Law. machines were Consequently, 23-5-101(1), (1983). slot machines as defined in sec. MCA MCA, Section 28-2-701(1), or an act is not provides thing ‘ ’’ lawful if it is to an of law. Slot ‘contrary express provision 23-5-104, MCA (1983), at the time expressly prohibited by Therefore, entered into and the contract. performed machines, All Keno because were slot were unlawful under Montana law. “Where a contract has but a and such single object object ’’
unlawful, whether in whole or in ... the entire contract is void. part, 28-2-603, Section MCA. “The of a contract is the which object thing it is on the agreed part consideration to do or party receiving case, not to do.” Section MCA. In the present object the contract was the and manufacture of Poker All design Keno unlawful, machines. Because the machines were the entire contract was void.
A to an contract not use the party illegal courts of this state to enforce the agreement.
“No of law is better settled than that a to an principle party contract cannot come into a court of law and ask to have his illegal out, carried nor objects can he set a case in which he must up disclose an necessarily of his claim purpose groundwork *7 law, short, .... The will not aid either to an party illegal agreement. It leaves the where it parties them. neither a court finds Therefore it, law nor a court will aid the one in equity or enforcing give it, other, or, a breach damages or set it aside at the suit for when the has been executed in whole or in agreement part payment or the other land its aid to money property, transfer of recover it back.” (Emphasis added.)
Glass v Basin & State Co., 21, 33, 302, Bay 31 Mining Mont. 77 P. Law Lawson, and Procedure (1904) 305 D. Cyclopedia of 9 (quoting Fransen, Accord McPartlin v. 546). 143, 146-47, Mont. 648 P.2d 199 Fulton, 729, McManus v. 170, 182-83, (1982); 730-31 85 Mont. 278 (1929). P. 131
At oral advanced that the argument, theory parties’ modification the contract from an to a changed agreement machines contract. MPH the Poker All Keno because argued not include components did Imagineering to Montana by shipped machines were legal for them to be played enabling Montana law. First, of the two reasons. object this for
We reject argument “[t]he made ....” Section when the contract is must be lawful contract of the contract was the design The object MCA. original be Keno machine that could played a Poker All and manufacture of the contract Therefore, was not lawful when the object cash prizes. was made. machines, it
Second, have lawful may Imagineering shipped although at not that point. the contract was fully performed appears to oversee the assembly,of to Montana sent employees Imagineering how to install parts MPH’s technicians the machines and show These actions for cash. enable the machine to played that would use the machines a common scheme plan constitute of the contracting scheme this state. When general within purposes results, contract unlawful about is to bring parties (3d on Contracts secs. 1752 15 Williston unenforceable. See ed. and design illegal to manufacture originally planned parties Montana. for use within the state of contract even though of the from original object deviate The end this state. product lawful machines into
manufacturer shipped — — for cash that could All Keno machine As the object of the contract. object was also the original machine, slot the contract market an unlawful was to manufacture the District come into The judgment Neither party was illegal. Court is reversed. BARZ, HARRISON, and JUSTICES TURNAGE
CHIEF JUSTICE concur. McDONOUGH and WEBER SHEEHY, dissenting:
JUSTICE
herein there was
times
That at all
1)
three grounds:
I dissent on
of law
as to
confusion,
application
among county attorneys,
even
here for the
machines;
contract
2) The
to video-electronic
3)
any illegality;
is severable from
of the machines
manufacture
here.
recovery
allow
of restitution
Principles
in the Law
Confusion
Games,
(1976), 170 Mont.
Inc. v. State
In Treasure State
keno machines
that electronic
Court held
P.2d
*8
of
in
Law 1974. At
lawful Montana
Raffle
Bingo
23-5-412, MCA,
time,
sec.
provided:
‘
must be in
[including
tangible
‘Bingoprizes
personal property
keno]
cash, stocks, bonds,
in
evidences
only
money,
of
indebtedness, or
and must not
other intangible personal property
value
$100
exceed the
for each individual award ....”
statute,
Under
winners of
granted
this
no CASH
could be
prizes
any
live,
or keno
whether
games,
or electronic.
player-operated
legality
keno came before this Court
in
question
again
County
(1982),
Gallatin
v. D & R Music and
Inc.
201 Mont.
Vending,
409,
(Gallatin I).
From date of Justice Shea’s in December of special 1982, 1985, nothing until done amend the and Raffle Law so that cash would be on as provide paid test, state. Under the 1985 and 1987 sessions of the any objective Montana worst in our state It legislature history. is a among but true is the more Acts it will strange fact that worse legislature pass relating the same subject. legislature (1985), Laws of Montana Ch. passed
which became which now has been statute, That repealed. read as passed follows: either in “Bingo tangible property paid personal that a must prize tangible property except paid personal *9 if the is on a video machine.” player-operated game game (Italics supplied.)
It amendment to is to note the that the 1985 change important former Whereas made with to its version. respect no could be awarded for the cash formerly prizes legally playing amendment, keno), after the could be (and therefore bingo paid Thus, machines. in cash video except only game player-operated establishment, the a keno which was game operated by same ping but video prizes, balls could merit a pong player-operated the same could not award cash legally prizes. machine in premises, Yet, valid video draw making the same 1985 a law legislature passed (which machine”), a machines is “video poker game allowing cash. their winnings of such machines draw players Chapter and keno (1985). of Montana that the draw Laws Except is no real distinction between a are different in there design, or that a video keno matter video game, video and a poker game machines.” are all “video They game. of video keno Was there considerable confusion about legality was. We need certainly at the time of this contract? There Baugh G. Todd look no further than the District finding Judge this case: The finds that the machines were and in compliance
“... court legal and that law at the time the contract was be Montana performed amended, is therefore enforceable.” The manufactured in case feature the machines only upon is which the their decision that machines had hinge majority may for the winners been after manufacture to payment modified provide a which would show the The modification involved print-out cash. was entitled. The credits credits to which the winner number of game the machines for the value goods off the owner of by could paid It was would be without doubt. instead of which cash. that these credits in paid eventual establishments Severability Contract here have made aware is law of which we been There no Inc. machines in manufacturing from prohibited Imagineering, by Utah and them to Montana for acceptance buyer. transporting not any They fact is that the machines could be used for purpose. not or They defective. work. They inoperable legally deficiencies, Inc. illegally. Imagineering, admits as its performance case insofar in this acknowledges concerned, it the contract. breached or incidentally, is obligation indirectly,
“Where an or agreement transaction, it with an will illegal generally connected remotely so that the enforced if it is an consideration by independent supported aid transaction to make out illegal does not of the plaintiff require have in a action been engaged case. Even to an though his law, in se or if the cause transaction either malum prohibited is from the act and action between them is disconnected consideration, and collateral plaintiff founded distinct upon or in order to resort to the transaction obliged agreement suit, formal will not to maintain transaction illegality or bar the to maintain the suit.” impair right 590, 591, Contracts, Am.Jur.2d sec. 219. use of the of the eventual if legality illegality manufactured, been not be an case. If had should issue in this properly on to a customer a hardware store sold credit customer which the gun *10 later used to shoot the hardware store can collect on its somebody, still is no bill was used an The situation though gun illegal purpose. different here. The to the extent that it between these existed was legal. parties,
Restitution of the also busied legislature concerning 1987 session itself 402, MCA, electronic video sec. It amended 23-5 gambling games. machine one winner include a definition of a video keno where the (1987). The could receive cash. Ch. Laws of Montana a sec. defined “keno machine” legislature again by amending 23-5-602, MCA, where the to include electronic video could receive cash winnings. circumstances, here.
In the of restitution principles apply (Second) Restatement Contracts sec. 198 provides: has that he has “A a claim in restitution party performance on return for that is unenforceable rendered or in a promise if: grounds public policy “(a) He was of the facts or ignorant legislation excusably character, would be
minor in the absence of which the provision enforceable, or “ ’’ (b) He was not promisor. (Emphasis equally wrong added.) case testified their machines they thought this The minor character The district
legal. thought they legal. judge that is that the illegality, should be in values of paid rather than personal cash when video keno property machines were used, is obvious when one considers the number of other legal cash, devices or machines which off paid particularly situations, live and including video keno. In sheer numbers of was to award cash public policy prizes.
The minor character of the is further demonstrated that in illegality 1989 the the Video Machine and Control legislature adopted Gaming Law, law, secs. et Under the new video draw seq. described, and keno machines are is made for their provision allowed, cash are licensing, $100 instead of the winnings top per cash limit winnings formerly $800 now is permitted, top machine, for video keno per game must be in cash! payment (Second) Section 198 of the Restatement Contracts is particularly here. The applicable issue of is whether the purported illegality winner worked, if could using or receive the get value in enactments before and goods. Legislative after contract in this case demonstrate the minor character of the difference that relates The investors in case illegality. should not take the hit. We a better ought promote business climate in this state by protecting in-state from entrepreneurs defenses. phony
I would affirm the District Court.