141 A.D.2d 272 | N.Y. App. Div. | 1988
OPINION OF THE COURT
Recovery Consultants, Inc., as assignee of the Sands Hotel, seeks the recovery of $1,000,000 and accrued interest from March 1982 against Marilan Shih-Hsieh and her son, Nelson, who were guests of the hotel at the time the alleged debt was incurred. The original complaint alleged a single cause of action against Marilan, based on 20 checks drawn by her, each in the amount of $50,000, totaling $1,000,000, payable to the Sands Hotel. A second cause of action was asserted against Nelson, based on his execution of a $1,000,000 check, also payable to the Sands Hotel. Their pro se answer alleged that "[t]he cheques (markers) were for the sole purpose of gambling” and that "[g]ambling debts are unenforceable in the State of New York and in the State of Nevada.” The answer also asserted that Nelson was "not [a] principal” in the transaction.
Recovery eventually served an amended complaint, which is at issue here, asserting three causes of action against Marilan and one against Nelson. The first cause of action alleges a $1,000,000 loan to Marilan, while the second is based on the 20 $50,000 counter checks or markers which she signed. The third cause of action alleges breach of contract. The cause of action against Nelson is based on his $1,000,000 check.
Shortly after service of the amended complaint, which was timely answered, Marilan was exhaustively deposed. Although a notice to take his deposition was also served upon Nelson, he refused to appear, complaining to plaintiff’s counsel, prior to the date set for deposition, that as a mere "bystander”, whose sole involvement in the transaction at issue was the gratuitous giving of a personal $1,000,000 check to the Sands Hotel "as a gesture of appreciation,” his testimony would be "wasteful and unnecessary”. As a result of his nonappearance, Nelson’s answer was, over his opposition, stricken and a judgment in the sum of $1,468,672.50, representing principal and interest, entered against him.
After retaining counsel, the Shih-Hsiehs moved to vacate
The court granted the motion only to the extent of reinstating Nelson’s answer and vacating a restraining notice on condition of payment of $5,000 in counsel fees to Recovery. The judgment was to remain as security. In denying summary judgment, the court found the proffered defense of illegality to be "fraught with doubt”. The parties cross-appealed. We find that since the sum sought to be recovered is, as a matter of law, a gambling debt, which was unenforceable under Nevada law at the time incurred, summary judgment should have been granted and the amended complaint dismissed.
As a general rule, the validity of a contract is determined by the law of the jurisdiction where the contract is made. (Russell v Societe Anonyme des Etablissements Aeroxon, 268 NY 173, 181.) If legal there, the contract is enforceable elsewhere. This principle of comity yields, however, to the well-established exception that a court will not enforce a contract, even though valid where made, if its enforcement would contravene the public policy of the forum. (People v Martin, 175 NY 315, 320-321; Straus & Co. v Canadian Pac. Ry. Co., 254 NY 407, 414.)
For more than a century, until a legislative change, effective June 1, 1983, Nevada courts refused to enforce debts incurred as a result of gambling, despite the legality of gambling at authorized licensed casinos in that State. (See,
By legislative enactment, effective June 1, 1983, Nevada’s refusal to enforce gambling debts was changed, but prospectively only, to the extent of providing that a "credit instrument”, defined as "a writing which evidences a gaming debt owed to a person who holds a nonrestricted license”, is "valid and may be enforced by legal process” if accepted "on or after June 1, 1983”. (Nev Rev Stat §§ 463.367, 463.368 [1].) Since the transaction at issue occurred before June 1, 1983, Recovery may not avail itself of the statute.
As a review of this record makes clear, in exchange for counter checks totaling $1,000,000, payable to the Sands Hotel, Marilan received chips, which were all returned to the hotel in the course of her gambling at its casino. That these checks were drawn for the purpose of repaying credit knowingly advanced for gaming, as was Nelson’s $1,000,000 check, is, on this record, beyond dispute. Since the checks are void and unenforceable in Nevada, they are likewise unenforceable in this State. (Russell v Societe Anonyme des Etablissements Aeroxon, supra, 268 NY, at 181.) Thus, there is no policy question to weigh and, in refusing to enforce the debt, we are merely applying Nevada law. (Intercontinental Hotels Corp. v Golden, 15 NY2d 9, 16; see, Engster v Jewett, 28 AD2d 591.)
Citing Craig v Harrah (66 Nev 1, 201 P2d 1081), Recovery argues that Nevada gaming debts are unenforceable only
Recovery also argues that, although the Sands Hotel advanced $1,000,000 to Marilan, it does not hold a gambling license. The Sands Casino does, and, thus Recovery argues, it was the Casino which engaged her in gambling activities. This issue was never raised in the motion court. Factual assertions not properly contained in the record may not be considered by an appellate court. (Bankers Trust Co. v Martin, 51 AD2d 411, 414; Kahn v City of New York, 37 AD2d 520, 521, affd 30 NY2d 690.) Nor, obviously, may a party argue on appeal a theory never presented to the court of original jurisdiction. (Huston v County of Chenango, 253 App Div 56, 60-61, affd 278 NY 646.)
In light of our determination that the debt is unenforceable, we need not reach the Shih-Hsiehs’ argument that Nelson’s bank check is void and unenforceable because it was never presented for payment within a reasonable time.
Accordingly, the order of the Supreme Court, New York County (Beatrice Shainswit, J.), entered on or about February 4, 1988 which, inter alia, denied defendants’ motion for summary judgment, should be reversed, on the law, without costs or disbursements, the motion granted, the default judgment against Nelson Shih-Hsieh vacated and the amended complaint dismissed.
Order, Supreme Court, New York County, entered on February 4, 1988, unanimously reversed, on the law, without costs and without disbursements, the motion granted, the default judgment against Nelson Shih-Hsieh vacated and the amended complaint dismissed.