Transcriber’s Note:

New original cover art included with this eBook is granted to the public domain.

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.

THE LAW OF BETTING.

CHAPTER I.
WAGER-CONTRACTS.

PART I.

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:—

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.”

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]]

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.

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.

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]]

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.

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.

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.

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.

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. |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. |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.

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 |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.

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.

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.

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.

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 |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).

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.

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.

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.

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]].

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.

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.

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.

Law as to illegal consideration.

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]] |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 |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. |45 & 46 Vict., c. 61.| The new Bill of Exchange Act[^[58]] leaves the law practically unchanged, excepting in phraseology. |“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).

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]]

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.

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.

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. |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.

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. |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 |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.

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]]

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.

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]]

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.

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.

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.

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]] |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. |Contract divisible.| On the other hand, as an instance of a divisible contract, |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.

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, |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.

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. |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.

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.

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. |? 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. |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.

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.

I.—Contracts by way of gaming.

I.—Under this heading the following topics are of importance.

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]]

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. |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.)

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. |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.

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.

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.

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.

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.

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.

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. |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. |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.

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.

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. |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.”

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.

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?”

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.

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, |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. |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. |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]]

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. |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]]

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.