TABLE OF CASES.

N.B.—In the more modern cases references are given to all the reports.

PAGE
Adams, Beyer v.[40]
Allport v. Nutt[134]
Anderson v. Hume[197], [198], [200]
Applegarth v. Colley[7], [9], [12], [14], [16], [30], [31], [37], [75], [83]
Atherfold v. Beard[4]
Aubert v. Walsh[52]
Balfe v. West[82]
Barclay v. Pearce[120]
Barjean v. Walmsley[9]
Barry v. Crosskey[94]
Bate v. Cartwright[54]
Batson v. Newson[75]
Batty v. Marriott[69] et seq.
Beeston v. Beeston, 1 Ex. Div. 13; 33 L. T. N. S., 700; 45 L. J. Ex., 230; 24 W. R. 96[18], [42]
Benbow v. Jones[78]
Bentinck v. Connop[7], [37]
Bew v. Harston[204]
Beyer v. Adams[40]
Bingham v. Stanley[23]
Blake v. Beech, 1 Ex. Div. 320; 2 Ex. Div. 335; 45 L. J. M. C., 111; 34 L. T. N. S., 764; 4 J. P., 678[198], [200]
Blaxton v. Pye[7], [33], [83]
Bolton v. Coghlan[23]
Bond v. Evans, 21 Q.B.D., 249; 57 L. J. M. C., 105; 59 L. T. N. S., 411; 36 W. R., 767; 52 J. P. 613[203]
Bongiovanni v. Société Générale[110]
Bosley v. Davies[203]
Bower v. Brampton[10]
Bows v. Fenwick, 36 J. P., 440; L. R., 9; C. P., 339; 43 L. J. M. C., 107; 30 L. T., 524[170] et seq.
Bridger v. Savage, 15 Q. B. D., 363; 54 L. J. Q. B., 464; 33 W. R., 891; 49 J. P., 725; 53 L. T. N. S., 129[42], [52], [163]
Bridges, Fisher v.[143]
Britten v. Cook[53]
Brogden v. Marriott[36]
Brown v. Overbury[70], [74]
Browning v. Morris[144]
Bryan v. Lewis[39], [97]
Bubb v. Yelverton, L. R. 9 Eq., 471; 24 L. T. N. S., 822; 39 L. J. Ch., 428; 18 and 19 W. R.[25], [28], [46]
Byers v. Beattie[100]
Caminada v. Hulton, 60 L. J. M. C., 116; 64 L. T. N. S., 572; 39 W. R., 540; 55 J. P., 727[140], [186]
Cannan v. Bryce[88]
Carlill v. Smoke Ball Company[Appendix C.]
Carr v. Martinson[60], [76], [81]
Charlton v. Hill[62]
Clarke v. Wright[168]
Clayton v. Dilley[25], [46]
Coates v. Pacey[122]
Cohen v. Kittle, 22 Q. B. D., 680; 58 L. J. Q. B., 241; 60 L. T. N. S., 932; 37 W. R., 400; 53 J.P., 469[42]
Coles v. Bristowe[118]
Collins v. Blantern[24]
Coombe v. De la Bere[86]
Coombs v. Dibble[71]
Cooper v. Niel[94]
Cooper v. Osborne[204]
Cowan v. O’Connor[44]
Cox v. Andrews, 12 Q. B. D., 126; 53 L. J. M. C., 34; 32 W. R., 289; 48 J. P., 247[193]
Crockford v. Maidenhead[182]
Crofton v. Colgan[35], [71], [74]
Da Costa v. Jones[2]
Daintree v. Hutchinson[8], [63], [80]
Danford v. Taylor[204]
Davies v. Stephenson, 24 Q. B. D., 529; 59 L. J. M. C., 73; 62 L. T. N. S., 436; 38 W. R., 492; 54 J. P., 565[189]
Diggle v. Higgs, 2 Ex. D., 422; 46 L. J. Ex., 721; 37 L. T. N. S., 27; 25 W. R., 777[37], [58], [72]
Dines v. Wolfe[62], [78], [81]
Ditchburn v. Goldsmith[2]
Doggett v. Catterns[65], [169]
Dowsen v. Scriven[74]
Dyson v. Mason, 22 Q. B. D., 351; 58 L. J. M. C., 55; 60 L. T. N. S., 265; 53 J. P., 262[151], [204], [207]
Eastwood v. Miller, L. R. 9 Q. B., 339; 43 L. J. M. C., 30; L. T. N. S., 716; 22 W. R., 799; 38 J. P., 647[169], [171], [177]
Edmunds v. Grove[23]
Edwards v. Dick[10], [22], [24]
Elliott v. Farmer[164]
Ellis v. Hopper[78]
Eltham v. Kingsman[2]
Emery v. Richards[9], [14], [55]
Evans v. Jones[1]
Evans v. Pratt[80], [83]
Evans v. Sumner[82]
Faikney v. Reynous[88]
Ferrao’s case[44]
Fisher v. Bridges[143]
Fisher v. Waltham[4]
Fitch v. Jones[12], [20], [23], [31]
Foote v. Baker[16], [204]
Foote v. Butler[178]
Fox v. Hill[26]
re Freeston[206]
Galloway v. Maires, 8 Q. B. D., 30; W. R., 151; 51 L. J. M. C., 53; 45 L. T. N. S., 763; 46 J. P., 326[171], [183]
Gatty v. Field[57], [135], [144]
Gilbert v. Sykes[1], [4]
Gilpin v. Clutterbuck[26]
Godefroi, ex parte[46], [114]
Goldsmith v. Martin[59]
Goode v. Elliott[3]
Graham v. Thompson[58]
Grant, ex parte[90], [99]
Grizewood v. Blane[35], [93] et seq.
Greville v. Chapman[81]
Haigh v. Town Council of Sheffield, L. R. 10 Q. B., 44; L. J. M. C., 17; 31 L. T. N. S., 536; 23 W. R., 547; 39 J. P., 230[29], [171], [178], [182]
Hampden v. Walsh, L. R. 1 Q. B. D., 189; 45 L. J. Q. B., 238; 33 L. T. N. S., 852; 24 W. R., 607[57], [58], [61]
Hare v. Osborne[204]
Harvey v. Towers[23]
Hastelow v. Jackson[52], [56]
Hawker v. Hallewell[21], [24], [28]
Hay v. Ayling[25]
Henkin v. Guerss[4]
Henretty v. Hart[174]
Hibblethwaite v. McMorine[38], [90]
Higginson v. Simpson, 46 L. J. C. P., 192; 2 C. P. D., 76; 36 L. T., 17; 25 W. R., 303; 41 J. P., 200 see Appendix A.[16], [35]
Hill v. Fox[33]
Hirst v. Molesbury, L. R. 6 Q. B. 130; 40 L. J. M. C., 76; 19 W. R., 246[184]
Hodson v. Ferrill[52]
Hornsby v. Raggett, 1892, 1 Q. B., 20; 61 L. J. M. C., 24; 66 L. T. N. S., 21; 40 W. R., 111[175], [183]
Howson v. Hancock[54]
Hunt v. Williams[140]
Hussey v. Crickett[2], [80]
Inchbald v. Cotterill[31]
Irwin v. Osborne[63], [70], [75]
Jaques v. Golightly[144]
Jefferys v. Walter[8]
Jenks v. Turpin[158] et seq.
Jessop v. Lutwyche[45]
Johnson v. Lansley[39], [41], [70]
Jones, Fitch, v.[12], [20], [23], [31]
Jones v. Randall[1]
Kearley v. Thomson[144]
King v. Kemp[16], [67], [68]
Kittle v. Cohen, 22 Q. B. D., 680; 58 L. J. Q. B., 241; 60 L. T. N. S., 932; 37 W. R., 400; 53 J. P., 469[42]
Knight v. Chambers[45]
Langrish v. Archer, 10 Q. B. D., 44; 52 L. J. M. C., 47; 31 W. R., 183; 47 J. P., 295; 47 L. T., 548[206]
Lansley, Johnson, v.[18], [41], [70]
Leadbitter, Wood v.[191]
Lee v. Gold[201]
Leroux v. Brown[68]
Lilley v. Rankin[21]
Liston, R. v.[146]
Lorimer v. Smith[39]
Loring v. Davis[123]
Lynal v. Longbottom[8]
Lynch v. Godwin[47]
Lyne v. Siesfield[26], [88], [164]
Lynn v. Bell[27], [28]
Macalister v. Haden[9]
MacElwaine v. Mercer[59]
Mackinnell v. Robinson[4], [16], [86]
MacNee v. Persian Corporation, 44 Ch. D., 306; 59 L. J. Ch., 695; 62 L. T. N. S., 894; 38 W. R., 59[133]
MacRae v. Clark[43]
Manning v. Purcell[38], [60], [64]
Markwich v. Hardingham[61]
Marnham, ex parte[112]
Marten v. Gibbons[39], [48], [102]
Martin v. Hewson[56]
Maryat v. Broderick[55]
Matheson, ex parte[114]
Mearing v. Hellings[54], [132]
Milltown v. Stewart[26]
Mollison v. Noltie[102]
Moon v. Durden[29]
Morley v. Greenhalgh[85], [169]
Moore v. Peachey[44]
Morris v. Blackman[135]
Mortimer v. MacCallan[88], [122], [164]
Mullins v. Collins[203]
Neilson v. James[117] et seq.
Newcomen v. Lynch[80]
Nicholson v. Gooch[88]
O’Connor v. Bradshaw[135]
Oldham v. Ramsden, 44 L. J. C. P., 309; 32 L. T., 825[47], [175]
Onley v. Gee[201]
Oulds v. Harrison[45]
Ovenden v. Raymond[85]
Parr v. Winteringham[78]
Parsons v. Alexander[28], [69], [85]
Partridge v. Mallandaine[191]
Patten v. Rymer[205]
Pearce, Barclay v.[120]
Pearce v. Gray[26]
Perry v. Barnett, 15 Q. B. D., 388; 54 L. J. Q. B., 466; 53 L. T., 585[121]
Phillips, ex parte[111]
Pickard v. Seears[22]
Pugh v. Jenkins[9], [11], [30]
Pyke, ex parte, L. R., 8 Ch. Div., 47; L. J., Bankruptcy, 100; 38 L. T., 923; 26 W. R., 806[15], [16], [31]
Quarrier v. Coulston[14], [67]
Read v. Anderson[31], [48]
Redgate v. Haynes[202]
Reg v. Ashton[86], [151], [204]
Reg v. Buckmaster, 20 Q. B. D., 182; 57 L. J. M. C., 25; 57 L. T. N. S., 720; 36 W. R., 701; 52 J. P., 358[195]
Reg v. Cook[155], [173], [180]
Reg v. Crawshaw[146]
Reg v. Gregory[146]
Reg v. Harris[139]
Reg v. Holmes[206]
Reg v. Hudson[165]
Reg v. Liston[146]
Reg v. Newton[196]
Reg v. O’Connor[165]
Reg v. Preedie[173], [174], [189]
Reg v. Rogiere[150], [160]
Reg v. Tuddenham[146]
Reg v. Steven[64], [102]
Robinson v. Bland[9], [67]
Robinson v. Mearns[54]
Robinson v. Mollett[53]
Rogers, ex parte[98]
Rosewarne v. Billing[45]
Rouguette v. Overmann[67]
Rourke v. Short[35]
Ryder, ex parte[114]
Sadler v. Smith[62], [77]
Savage v. Madder[41], [144]
Seymour v. Bridge[122]
Sharp v. Taylor[17], [162]
Shaw v. Caledonian Railway[95], [103]
Shaw v. Morley, L. R. 3 Ex. 137; 37 L. J. M. C., 105; 19 L. T. N. S., 15; 16 W. R., 763; J. P.[170]
Shillito v. Theed[8], [10]
Sim v. Page, 58 L. J. M. C., 39; 60 L. T. N. S., 602; 53 J. P., 420[205]
Simpson v. Bloss[10], [162]
Slatter v. Bailey[179]
Smart v. Sandars[47]
Smith v. Anderson[17]
Smith v. Bickmore[54]
Smith v. Bond[7], [165]
Smith v. Littledale[80]
Smith, Sadler v., L. R. 4 Q. B., 214; 38 L. J. Q. B., 19; 19 L. T. N. S.; 17 W. R., 371[60], [68], [72]
Snow v. Hill[173], [179]
Somerset v. Hart[175], [203]
Soulby v. Portarlington[21], [26]
Squiers v. Waiskin[4], [8], [85]
Stevens v. Universal Stock Exchange[106]
Sykes v. Beadon[17], [137], [145], [163]
Tatham v. Hasler[19]
Taylor v. Smetten[139], [147]
Tennant v. Elliott[17], [164]
Thacker v. Hardy, 4 Q. B. D., 685; 48 L. J. Q. B., 289; 39 L. T., 595; 27 W. R., 158; 43 J. P., 221[31], [32], [39], [40], [46], [108], [164]
Thorpe v. Coleman[13]
Tollet v. Thomas, L.R. 6 Q.B., 514; 40 L. J. M. C., 209; 19 W.R., 246[205]
Trimble v. Hill, L. R. 5 App. Ca., 342; L. J. P. C., 49; 42, L. T., 103; 28 W. R., 479;[30], [59], [72]
Truman v. Harris[74]
Tuddenham, Reg., v.[145]
Turnbull v. Appleton[206]
Turner, ex parte[112], [115]
Turpin, Jenks v.[158] et seq.
Universal Stock Exchange v. Howat[105]
Universal Stock Exchange v. Stevens[106]
Varney v. Hickman[55] et seq.
Wade, ex parte[114]
Wallingford v. Mutual Society[138]
Walmesley v. Mathews[81]
Watson v. Martin[205]
Webster v. De Tastet[43]
Weller v. Deakin[59], [81]
Wells v. Porter[88]
Whitehurst v. Fincher[173], [175], [179]
Williams v. Trye[88]
Wilson v. Coleman[38]
Wilson v. Strugnell[144]
Wood v. Leadbitter[191]
Wray v. Ellis[198]
Wright v. Clarke[187]
Wynne v. Callander[67]

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.

Rights of agent against principal.

(b.) The next class of cases in which the application of the statute has come in question is where an agent has been employed to enter into wager-contracts on behalf of a principal; the bets are lost; the agent pays, and seeks to recover from the principal.

Upon this matter two distinct questions have arisen.

I. Whether an authority to bet implies an authority to pay the bet if lost.

II. Granted such implied authority, can the principal revoke the authority to pay, after the event has been determined, and before payment has been made?

Does authority to bet imply authority to pay?

I. Upon this question none of the older authorities go very close to the mark. Thus in Oulds v. Harrison[[130]] the defendant employed one Bennett to bet for him, and Bennett laid the bets in his own name on the defendant’s account. The bets were lost, and Bennett, without further authority from defendant, paid them, and drew a bill on defendant for the amounts, which was accepted by the defendant, and indorsed by Bennett to the plaintiff. Plaintiff sued defendant on the bill. For the defendant it was argued that the payment of the debts by Bennett was in his own wrong and not authorised by his agency. But the Court held that defendant by accepting the bill acknowledged that the payments had been made on his account, and that consequently there was a sufficient consideration for the bill. It must be observed that this case did not decide the point, viz., whether an authority to bet included an authority to pay the bets if lost; from a remark of Parke’s, B. (at page 577), “the defendant was not bound in law to repay the drawer,” it would seem that in his view it did not. Jessop v. Lutwyche[[131]] turned on a pleading point: the plaintiff, a broker, sued to recover differences paid by him on the sale of certain stocks and shares on behalf of the plaintiff. Defendant simply pleaded the Statute 8 & 9 Vict., c. 109, and it was held that the plea was bad, as being consistent with the plaintiff’s having paid the money at defendant’s express request. The plea in Knight v. Chambers[[132]] was overruled on the same grounds.

The case of Rosewarne v. Billing[[133]] carried the point no further. This was another action by a broker to recover differences paid for his principal. The defendant pleaded the statute without traversing the averment that the money was paid at defendant’s request. The Court, following the former cases, held the plea bad; but Erle, C. J., in giving judgment, expressed his opinion that an authority to bet implied an authority to pay if the bets are lost; and semble that if a broker be compellable by the usage of the stock market to pay losses himself, the principal could not rescind the authority to pay. The older case of Clayton v. Dilley[[134]] was decided in the Statute of Anne. The plaintiff, the defendant’s betting agent, sought to recover money he had paid for the defendant without express authority to do so. The bets were admittedly illegal by statute. It was held that plaintiff could not recover on the ground that there being no express direction to pay, it could not be implied in an illegal transaction. This case would therefore seem to have little importance at the present day, betting transactions being void and not illegal. The case of ex parte Godfrey[[135]] seems to be the earliest direct decision on the point, where it was held by Bacon, V.C., that money paid by a broker on so-called gaming transactions entered into by him for a principal, was a debt for which a bankruptcy petition might be presented, as the principal knew that the broker was liable under the rules of the Stock Exchange to pay losses, a request to pay on behalf of the principal must be implied. From this decision it would seem that this authority to pay would not be implied unless the principal knew of the liability which the agent was incurring. In Bubb v. Yelverton[[136]] (which is reported very shortly) Lord Romilly laid down in general terms that an authority to bet implied authority to pay; but in that case (in which Lord Charles Ker claimed payment out of the Marquis of Hastings’ estate for money paid on lost bets, he having been the Marquis’ agent to bet for him) there could have been no question as to knowledge on the part of the Marquis of the consequences that would result from the agent’s not paying.

The case of Thacker v. Hardy[[137]] does not afford much assistance on the present point as to the authority to pay being implied from authority to bet, as according to the view taken of the facts by Lindley, L.J., which view was supported by the Court of Appeal, the transaction does not seem to have been in the nature of a wager. The case, however, being an action by an agent for indemnity against his principal, the knowledge of the latter as to the course of business the agent would have to pursue, is made one of the grounds of his liability to his agent.

In Oldham v. Ramsbotham[[138]] the question was slightly touched upon in argument, but not noticed in the judgment.

In Lynch v. Godwin[[139]] plaintiff at defendant’s instructions and in his presence laid £40 on a horse called Vril for the Ascot Stakes. The horse lost and plaintiff paid the bet. The Court of Appeal held that he could recover the money he had paid from the defendant. Per Jessel, M.R., “If you employ an agent to bet for you, you know that he must pay or be subject to unpleasant consequences. If you do not withdraw your request, it must continue; and if he pays, he pays at your request.” Lindley, L.J., also added a more general proposition that an authority to pay was implied in an authority to bet. It is clear that the agent in this case laid the bet in his own name.

From these remarks of the Master of the Rolls it would seem (1) That the implied authority of the agent to pay depends on the knowledge of the principal that the agent was himself liable legally or otherwise, which knowledge would probably be presumed in cases of betting through regular betting agents, as in both such cases it is well known that the agent is bound by usage to incur personal responsibility. |Is authority to pay revocable?| (2) That the principal might withdraw this implied authority to pay any time before the agent had paid the money over to the winner, and so prevent the agent’s paying on his account.

II. The general rule of law is that where an agent is invested with an authority coupled with an interest, that is, where the authority is given to the donee of such authority for a good consideration for the purpose of securing to him some benefit, such authority is irrevocable.[[140]] Now it has of late been a much vexed question whether the express or implied authority of a betting agent to pay a bet if lost, where the agent has made the bet in his own name, can be revoked by the principal, or, in other words, whether such authority is so coupled with an interest as to be irrevocable.

Not long ago the very point came before the Courts, in Read v. Anderson,[[141]] and this was the first occasion on which it underwent serious discussion. There were a few dicta on the subject—that by Earle, C.J., in Rosewarne v. Billing,[[142]] and again the point was mooted in Marten v. Gibbons.[[143]] In this case the defendant had, through the plaintiff, a stock broker, sold a future dividend on railway stock to a firm of jobbers. The dividend was eventually declared at a higher rate than that at which the defendant had sold it. Defendant being called upon to pay the difference refused, and revoked the authority of the plaintiff to pay. Plaintiff paid and sued to recover from defendant. Sales of future dividends were not enforceable by the rules of the Stock Exchange. Defendant contended that the authority of the plaintiff to pay had been revoked, but Blackburn, J., in giving judgment said: “If the contract was binding on the plaintiff it was impossible for the defendant to revoke it. If not enforceable and not revoked they would be liable. If not enforceable and revoked, I am inclined to agree that they would still be liable.” But in this case the plaintiffs had, as brokers, entered into a contract which, although not enforceable against them by expulsion according to the rules of the Stock Exchange, left them, in the opinion of the Court, under a legal liability to the jobbers. In a wagering transaction the case is different, as the agent is under no legal liability.

On the other side the dictum of the Master of the Rolls in Lynch v. Godwin seems to imply that the authority in a betting transaction can be revoked.

Read v. Anderson.

In Read v. Anderson[[144]] the following were the material facts of the case.

The plaintiff was a turf commission agent, and a member of Tattersall’s subscription rooms. The defendant had been in the habit of employing plaintiff to bet for him, paying losses to him and receiving winnings from him. By a well-established usage known to defendant, such commission agent employed to back horses does so in his own name, and becomes responsible for payment if the bet is lost to him. The defendant by telegram instructed the plaintiff to back certain horses for him, which plaintiff did in his own name. The race was fixed for 2 o’clock, and at 3.5 plaintiff handed in at the office a telegram announcing that the horses had lost. Defendant the same evening repudiated the bets, and all liability under them, on the ground that the plaintiff ought to have informed him that he was “on” before the race was run. On the settling day plaintiff paid the bets in question to the winners; had he not done so he would have been liable as a defaulter under Rule 3 of Tattersall’s subscription room to be excluded from it, and also under Rule 50 of the Jockey Club would, on being reported by such committee as a defaulter, have been subject to various disqualifications under Rule 49 of the rules of racing as to entering and running horses. It does not appear from the report of the case that the defendant knew of the specific consequences that would ensue from the plaintiff’s making default in payment of the bets. On behalf of the defendant it was contended (1) That the plaintiff’s authority to bet was subject to an express condition that plaintiff should before the race inform defendant that he was “on.” (2) That anyhow such condition was implied by universal usage. (3) That the bets were wagering contracts that the plaintiff had no authority to pay them, or that if he had such authority was revoked. The judgment of Hawkins, J., proceeded on the following grounds: (1) He found as a fact that there was no such condition, either express or implied, as that contended for by defendant; also that the bets had bonâ fide been made in accordance with the authority. (2) That wagering contracts being only void, and not illegal by 8 & 9 Vict., c. 109, the loser of the bet might lawfully either pay himself, or request somebody else to pay for him. (3) That such request might be express or implied, and he found as a fact that defendant, in giving authority to make the bets, also gave authority to pay them if lost. (4) Found, as a fact, that defendant had not revoked this implied authority to pay. (5) Irrespective of the latter finding such authority was irrecoverable as being an authority which plaintiff had an interest in carrying out; as otherwise he would have incurred serious penalties as a defaulter. (6) That the plaintiff’s case might also be put on the following ground: That if one man employs another to do a legal act, which, in the ordinary course of things will involve the agent in obligations pecuniary or otherwise, a contract on the part of the employer to indemnify his agent is implied by law ... and it signifies nothing that such obligation is not enforceable in a Court of Justice. (7) His lordship distinctly reserved the question as to how far these incidents would apply where the agent bets, not in his own name, but in that of his principal.

Indemnity.

Perhaps the more logical and less artificial way of putting the rights of the agent is the alternative suggested by Hawkins, J.—his right to indemnity. The “authority coupled with an interest” seems rather too wide, seeing that the agent has an interest in making the bet directly the instructions are given; yet the judgments seem to recognise that the authority could have been withdrawn before the bet was made.

The case has lately been decided by the Court of Appeal.[[145]] Bowen and Fry, L.JJ., affirming the decision of Hawkins, J., Brett, M.R., dissenting. The grounds upon which the Master of the Rolls bases his judgment are that, although an authority might imply an authority to pay, yet, as betting contracts were void, and as the only inconvenience to the agent consists in his being barred from pursuing a calling to which the law wholly objects, no promise could be implied that such authority should not be revoked. His lordship considered that as a matter of fact defendant had revoked plantiff’s authority to pay; thus differing on that point from Hawkins, J. Bowen, L.J., treats the whole question as an inference of fact. In his lordship’s opinion, the only inference of fact proper to be drawn was that if the agent carried out his contract, and involved himself in a difficulty, from which he could only escape by paying money, the defendant was to indemnify the plaintiff; further that the plaintiff had paid the bets by virtue of a contract between himself and his principal, that the latter should not revoke the original contract.

His lordship therefore treats the matter somewhat differently from Hawkins, J., for it will be observed that in the Court below, Hawkins, J., treats the implied authority to pay as an inference of fact; which was no doubt amply justified by the previous dealings between the parties, while he deals with the question of revocation of authority as a matter of law.

However, perhaps the result of the authorities may be shortly expressed in the following way:—(1) Authority to pay is implied in authority to bet (a) where the agent lays the bet in his own name, (b) and where to the knowledge of the defendant non-payment of the bet would entail serious inconvenience to the agent.

(2.) That under such circumstances the authority to pay is irrevocable directly the bet has been made.

But it would seem that the cases do not expressly decide how the law would stand in two cases. (1) Where the agent lays the bet, not in his own name, but in that of his principal, thus incurring no personal responsibility. (2) In cases where the principal instructs an agent who is not a professional betting man or not (at any rate to the knowledge of the principal) in any other way connected with the turf so as to incur such penalties for default as the plaintiff in Read v. Anderson would have incurred. Would the risk of mere social obloquy give the agent such an interest in paying the bet, as to make the authority to pay irrevocable? or supposing the agent belonged to a club, a fact which was unknown to the principal, by the rules of which the committee were empowered to expel any of its members who failed to discharge debts of honour. It will be observed that in nearly all the cases alluded to above that the principal’s knowledge, actual or implied, of the agent’s responsibility, was the ground of inferring an authority to pay from the authority bet. |Agent’s authority revocable before bet made.| Of course this question of revocation only arises after the bet has been made, when the responsibility of the agent has attached. There is no doubt, as remarked by Hawkins, J., in Read v. Anderson, that the agent’s authority might have been revoked before the bet was made.

In actions against the agent as in Bridges v. Savage,[[146]] the defence of wagering and gaming is often raised, i.e., that the person to whom the instructions were given had acted not as agent but as a party to the wager. In the former case it was raised by the principal, who was sued for indemnity; in the latter by the agent, who was called upon to account for winnings. To avoid such difficulties in future it would be wise both for persons who employ commission agents, and for the latter who execute commissions, to have the terms of their bargain definitely in writing. “Please back    for me,” “Taken for you,” seem to form a contract of agency on which no such question could arise.

What agent must prove.

Of course the agent must prove that the payment made to the winner of the bet was an authorised payment. In none of the cases as between principal and agent has any dispute arisen either as to whether the bet remained valid to the end, or whether the horse really lost or won. It is however, by no means impossible that such questions might be put in issue. Supposing after the bet was made the nominator of the horse, in respect of which the bet was made, died, so that (at any rate according to the new Rules of Betting) the bet would be off, or supposing defendant had instructed plaintiff to back horse A; horse B is placed first by the judge and A second, but B is disqualified afterwards for reasons which would cause the bets to go with the stakes.[[147]] It is obvious that if the agent paid on this as for losses he could not recover from his principal. The real point of difficulty is on what evidence the Court would act. It is submitted (1) That the employment of an agent to make bets in a betting market implies an authority to bet according to the rules and usages of such market, and that the Court would look at the Rules of Betting or other document proved to regulate such transactions. (2) That in all bets the question whether a horse is the winner or the loser is impliedly to be determined by the Rules and Conditions under which the particular race is run. We shall hereafter, page 74, deal more fully with the term “winner,” but it will be noticed all the cases thereunder were decided on a construction of the Rules and Conditions.[[148]]

Gaming Amendment Act, 1892.

But the law respecting the rights of the agent against his principal has lately been materially altered by the Gaming Amendment Act, 1892, 55 Vict., c. 9. This Act provides that “any promise express or implied to pay any person any sum of money paid by him under, or in respect of any contract or agreement rendered null and void by the Act 8 & 9, Vict., c. 109, or to pay any sum of money by way of commission fee, reward or otherwise in respect of any such contract, or of any services relating thereto or in connection therewith shall be null and void, and no action shall be brought to recover such sum of money.” Of course the cases already dealt with will still apply to transactions which took effect before this statute came into operation. But as to dealings between principal and agent to which the act applies, Read v. Anderson can no longer have any application. As has been pointed out above, the principal’s right of action against his agent to recover winnings remains untouched.

Agent cannot recover from third party.

In Britten v. Cook[[149]] the plaintiff made bets on behalf of his principal with defendant, which bets he won. Plaintiff not having received the money from defendant, settled with his principal for the amount, because he would have been subjected to disagreeable consequences if he did not, and sued the defendant for the amount. Held that there being no express request by defendant to plaintiff to pay on his behalf, and no implied request, seeing plaintiff was not defendant’s agent, the action would not lie.

No action shall be brought, &c.

II. The next class of cases to consider are those which deal with the interpretation of that part of section 18 of the Act in question, which provides that “no action shall be brought or maintained in any Court of Law or Equity, for recovering any sum of money or valuable thing alleged to be won upon any wager, or which shall have been deposited in the hands of any person to abide the event on which any wager shall have been made.”

Right to recover from stakeholder.

Nearly all the questions which have arisen on this part of the section relate to the right of a party to a wager to recover his stakes from a stakeholder with whom both parties have deposited their stakes. Such questions are of course entirely distinct from the right of the winner to recover the whole stakes from the stakeholder, as they usually occur when one party desires to repudiate the wager, and brings his action before the stakeholder has paid over the money to the winner.

Cases before the statute illegal wagers.

Before the statute 8 & 9 Vict., c. 109, some wagers were legal, some illegal. With respect to illegal wagers it seems never to have been questioned, but that one party could at any time before the money was paid over to the winner revoke the authority of the stakeholder, and demand back his stakes. All the cases recognise the distinction between recovering stakes from a stakeholder and recovering on the wager itself.[[150]] And in Hastelow v. Jackson it seems to have been considered that where one of the parties to the wager considering himself to be the winner demanded the whole of the stakes from the stakeholder, whereas the other party had really been decided to be the winner, such demand was a sufficient revocation of the stakeholder’s authority to pay his stake over to the winner. But this decision was doubted in Mearing v. Hellings.[[151]]

Legal wagers.

But with respect to wagers which were legal the decisions were not uniform. Thus in Eltham v. Kingsman[[152]] it was held that where two parties to a wager had deposited two watches to abide the event of a wager, which was for the purposes of the case assumed to be a legal wager, either of the parties could, while the contract was executory, revoke the authority of the stakeholder and recover his watch in trover. The Court compared the authority of a stakeholder to that of an arbitrator which was clearly countermandable before he had given his decision. On the other hand, in the later case of Emery v. Richards,[[153]] where the plaintiff sued a stakeholder to recover his deposit on a legal foot-race (the sum deposited being under £10). Held that as the contract was not illegal under the Statutes of Charles II. and Anne, neither party could retract without the consent of the other.

All such questions as to the right to recover a deposit from a stakeholder have, since the passing of the Statute 8 & 9 Vict., c. 109, turned out on the construction of the words “no action shall be brought,” &c. |Statute only applies to actions by winner.| There is a long series of decisions to the effect that this provision only applies to actions brought by the winner of a wager either against a stakeholder or against the loser to recover his winnings, and does not prevent either party from revoking the authority of the stakeholder before the money is paid over to the winner, and suing to recover his stakes.

In Varney v. Hickman,[[154]] plaintiff and one Isaacs agreed to bet £20 on a race to be run between their respective horses, the stakes being deposited with defendant. Before the race the plaintiff declined the bet and demanded back his deposit. On behalf of defendant it was contended that it was an action within the meaning of the section. Maule, J., in giving judgment, discussed the effect of the part of the section. “The first part of the section,” he says, “declares the contract to be null and void; the second prevents the winner from bringing an action to recover the amount of the bet from the loser; the third prevents the winner from suing the stakeholder. It certainly is true that the second branch is involved in the first, i.e., if the section had stopped at the end of the first branch it would have followed that no action could be brought to enforce a contract so declared to be void. But I apprehend there is nothing unusual in an Act of Parliament stating a legal consequence in this way. Then the third branch of the clause, it is said, will be idle and insensible unless there be given to it the further effect of prohibiting the parties from recovering their deposits from the stakeholder upon the repudiation of the illegal contract.... But I think if the second branch of the clause be looked at, it is more consistent with the whole to treat the third as an exposition only of the first.... Although perhaps the third clause might have been omitted as well as the second, yet, the second being inserted, the third became necessary also. Looking, therefore, at the whole section, critically and grammatically, I am of opinion that it does not apply to an action like this, where a party seeks to recover his deposit from a stakeholder, upon a repudiation of the wager. Upon higher grounds also, I think that is the true construction of the Act. This cannot be considered as an action brought for recovering a sum of money alleged to be won upon a wager; nor do I think it is an action brought to recover a sum deposited in the hands of the defendant to abide the event of a wager. As soon as the defendant received notice from the plaintiff that he declined to abide by the wager, the money ceased to be money deposited in the hands of the former to abide the event, and became money of the plaintiff in his hands without any good reason for detaining it.”

In Martin v. Hewson,[[155]] where money had been deposited to abide the event of a cock-fight, it was held that the words “no action shall be brought,” &c., did not apply where the original object of the deposit has been revoked by the depositor; and that (assuming cock-fighting to be illegal) either depositor could before the event, revoke the stakeholder’s authority and recover his stake.

Notice necessary to determine stakeholder’s authority.

In Gatty v. Field[[156]] it was held that it was necessary to serve the stakeholder with a notice to determine his agency before bringing the action; this would seem to follow from the remarks of Maule, J., in Varney v. Hickman that the effect of the notice was to change the character of the deposit. So in Savage v. Madder,[[157]] to which allusion has been made above on another point; to an action for money had and received the defendant pleaded (inter al.): “That the money was deposited in the hands of the defendant to abide the event on which the wager was made and is claimed by the plaintiff as the winner of the said wager, and the plaintiff did not repudiate the said wager or demand back his said money before the event of the said wager.” The Court were unanimously of opinion that this was a good plea; but from the form the plea assumed the case cannot be said to decide that one depositor can revoke the stakeholder’s authority; indeed an observation of Martin, B. (at p. 180), would seem to imply that section 18 prohibited all actions against the stakeholder at all. It only shows that, at any rate where the wager has not been repudiated, the money retains its character of money deposited to abide the event. The plea, moreover, seems framed upon the assumption that the revocation must take place before the event and not merely before the money is paid over, as was also suggested in Martin v. Hewson.

Relation of stakeholder to depositors.

The great difficulty in these cases seems to have arisen from the want of a proper understanding of the real relation in which a stakeholder stands to persons who deposit money in his hands. This question was much discussed in Hampden v. Walsh.[[158]] Plaintiff and Wallace deposited £500 each with defendant, as stakeholder, on an agreement that if Wallace should by a certain date prove to the satisfaction of the defendant the truth of some scientific proposition, Wallace should receive the two sums deposited. Defendant decided in Wallace’s favor. Plaintiff objected to the decision, and before the money was paid over to Wallace demanded repayment of his deposit from defendant. In spite of this notice defendant paid the whole to Wallace. Cockburn, C. J., in delivering judgment, alludes to this particular point, which had evidently been dealt with in argument: “We cannot concur in what is said in ‘Chitty on Contracts,’ 8th edition, p. 574, that ‘a stakeholder is the agent of both parties, or rather their trustee.’ It may be true that he is the trustee of both parties in a certain sense, so that, if the event comes off and the authority to pay over the money by the depositor be not revoked, he may be bound to pay it over. But primarily he is the agent of the depositor, and can deal with the money deposited so long as his authority subsists. We should look upon the defendant merely as the agent of the plaintiff and as no longer justified in paying over the money when once his authority had been countermanded.” The Court held plaintiff entitled to recover, and the case seems to go one step further than previous cases on the statute in showing that the stakeholder’s authority may be countermanded after, as well as before, the event has came off, as in Hastelow v. Jackson.[[159]]

The same view seems to have been taken of the matter by the Irish Courts.[[160]]

These decisions afterwards were supported, first by the Court of Exchequer Chambers, and next by the Privy Council. In Diggle v. Higgs,[[161]] plaintiff and A agreed to walk a match for £200 a side, that sum to be deposited by each with defendant. A was declared winner; but before the money was paid over plaintiff gave notice to defendant not to pay to A. Defendant disregarded the notice and plaintiff sued to recover his stakes. The Court were unanimous in upholding the authority of the previous decisions. Cockburn, C. J., however, who had in Hampden v. Walsh hinted a doubt as to the correctness of the authorities, here expressly intimates, that if the matter were res integra, he would have thought that the words of the statute precluded an action to recover even a deposit; but that he was unwilling to disturb the law as settled.

Bramwell, L. J., touching on the meaning of the words “no action shall be brought,” thinks that they are wholly superfluous and might have been left out. It will be remembered that Maule, J., in Varney v. Hickman, looked upon them as a statement of legal consequence, not strictly necessary, but intended by way of explanation of the results of the general enactment. It seems, however, not improbable that the words were inserted to prevent any question arising as to the right of the winner to recover from the stakeholder on a count for money received to his use—a point which would have presented more difficulty than an action by the winner against the loser, and which might have been made a means of evading the Act, by doing through the interposition of a stakeholder what could not be done directly. It being thought advisable to provide for the one case, the other more obvious provision would be inserted for the sake of completeness.

It will be unnecessary to refer to Trimble v. Hill,[[162]] further than to say that the same point was decided in the same way.[[163]]

It seems, therefore, to be clearly settled law, subject only to reversal by the House of Lords, that a stakeholder holds each stake as agent for the depositor and that a depositor can recall his stake at any time before it is paid over to the winner, whether before or after the event has been decided. |Qy. Where horse disqualified.| It was, however, held in two cases[[164]] that where the owner entered a horse that was afterwards disqualified he could not recover his stakes on the ground that he would be playing a game of heads I win, tails you lose. But it is very doubtful whether these decisions would be supported at the present day considering the bias of the more recent cases.

His authority may be determined in the same way as that of an ordinary agent—

Determination of stakeholder’s authority.

(1.) By express notice of revocation, as in all the cases quoted above.

(2.) Where the objects for which the deposit was made have, to the knowledge of the stakeholder, become impossible of performance. Thus in Carr v. Martinson[[165]] where stakes had been deposited with defendant to abide the event of a horse-race between the plaintiff and one C, the race to be decided by a person named as judge, C on the day appointed did not appear and A’s horse walked over the course, and was decided by the judge to be the winner. Plaintiff demanded the whole of the stakes from the defendant, which defendant refused to pay except with the consent of C.

Held, that as soon as the race became impossible to the knowledge of the defendant, he held the stake eo instanti as money had and received to the use of the defendant, the defendant’s authority to pay the winner being thereby revoked; and that although plaintiff demanded the whole of the stakes as winner, yet that was a sufficient demand of his own stake, which defendant ought to have handed over. Per Lord Campbell, C. J., a demand was unnecessary in this case at all.

Death of principal.

(3.) Probably by the death of one of the depositors. That is the general rule in ordinary transactions between principal and agent, that the authority of the agent is revoked by the principal’s death. This point occurred, but was not taken in Manning v. Purcell.[[166]] Testator had deposited with two stakeholders a sum of money to abide the result of bets made by himself. It appeared from the evidence that a bet is always “off” on the death of one of the parties. On testator’s death the stakeholders repaid the deposit to his administratrix. One question raised in the case was whether this deposit passed under a gift in the will of all testator’s “money.” The Court held that it did not, as although, according to Varney v. Hickman, testator had power to revoke the stakeholders’ authority, he had not in his lifetime exercised this right: therefore the deposit was in no sense his moneys, though since his death it had become part of his assets. The point was not taken that the principal’s death of itself revoked the stakeholders’ authority, though that result seems to have been arrived at by means of the custom among betting men. But, as Lord Justice Bruce seems to imply, that if testator had before his death given notice to the stakeholders to return the deposit, it might then have been considered his money, it is not easy to see why the same result should not follow from a revocation by operation of law.

It will be remembered that it has been suggested above (p. 36) that the deposit of stakes by the competitors in a race is the same thing legally as the deposit in respect of an ordinary bet. If it be true, therefore, that the death of a depositor revokes the authority of the stakeholder with respect to that particular stake, |Right of executors against stakeholders.| it would seem that where a competitor in a race happens to die between the time of paying his stake or forfeit and the time when the whole is paid to the winner strictly speaking and from a legal point of view the stakeholder should repay them to his representatives, seeing that by Rule 156 of the Rules of Racing stakes and forfeits are part of the fund payable to the winner. The same would apply to entrance money where, according to Rule 160, it is payable to the winner as part of the stakes. But, of course, entrance money would not be part of the stakes where, as is usual, it is paid into the race fund.

Bankruptcy.

(4.) As a general rule the authority of an agent (i.e., a bare authority not coupled with an interest) is revoked by the bankruptcy[[167]] of the principal. Although there seems to be no express decision on the point, it seems probable that the same rule would apply in the case of a stakeholder where either of the depositors became bankrupt before the money was paid over to the winner. As the stakeholder is, according to Hampden v. Walsh,[[168]] merely the agent for each depositor, the safest plan for him to adopt on receiving notice of a depositor’s bankruptcy would be to consider his authority as to that stake revoked, and repay it to the trustee in bankruptcy; or perhaps he would be safe in paying it to the bankrupt himself, if the trustee had not intervened to claim it.

Stakeholder cannot sue for stakes.

As the stakeholder is merely the agent for the depositors, he cannot maintain an action for the stakes. Thus, in Charlton v. Hill[[169]] the Clerk of the Course of a race meeting, who was sued by the plaintiff for the stakes won by him in one race, attempted to set off against that claim a sum due from plaintiff in respect of the stakes of another race. Held, that he could not do so as no action could have been maintained by the defendant seeing that the plaintiff could at any time recover the stakes back again.

Competitors can choose their own stakeholder.

It is, moreover, competent to the competitors to choose their own stakeholder or to select a substitute for the one nominated by the rules of the race. Thus, in Dines v. Wolf[[170]] by the rules of the race the stakes should have been paid to the Treasurer of the Australian Jockey Club, but plaintiff insisted on their being retained by the defendant. Held, therefore, that plaintiff could not make defendant liable as he had acquiesced in the change.

Liability of steward for default of stakeholder.

A question has occasionally been raised whether a steward who nominates a stakeholder can be made liable for the latter’s insolvency or default. It is difficult to see how he could be without express agreement, or perhaps unless he wilfully appointed a man unfit for the post.

Liability of stakeholder.

The stakeholder should be very careful before he pays the stakes to the winner to ascertain that the winner has been so declared by a competent authority, seeing that if he pays and it turns out that the judge, umpire, or stewards have not acted in accordance with his or their authority, he may be liable to the other subscribers. See Smith v. Sadler.[[171]]

When responsible for stakes.

By Rule 28 of the Rules of Racing the clerk of the course, who is generally the stakeholder, is responsible for the stakes if he allows a horse to start in respect of which the stakes have not been paid. This seems to be a liability in the nature of a guarantee of a wager, seeing that the liability for stakes is simply the liability on a wager.

Guarantee of a wager.

There seems no reason why an action should not be maintained in a contract by one person to guarantee the due performance of a wager contract by another. Such a contract could not of itself be void as a wager seeing that the statutes as we have seen only apply to the parties to the wager itself. Probably, it would have to be in writing to satisfy the Statute of Frauds as being a promise to answer for the default of another, but this is by no means certain seeing that it is not a default in paying a legal demand. If the contract be held to be within the Statute of Frauds the stakeholder ought to be required to sign an acceptance of the post, subject to the Rules of Racing, so that he may be subject to the liability provided by Rule 28.

Forfeit or penalty not enforceable.

As no action will lie on a wager, so no action can be brought to enforce a penalty for non-performance of a wager. In Irwin v. Osborne[[172]] the plaintiff and defendant agreed each to nominate a mare for a race, the party or parties nominating the winner to receive from the parties or party nominating the other mare the sum of £100; the party or parties who should make default in nominating a mare to pay a forfeit to the other side of £100. Defendants failed to cause their mare to run and plaintiff sued to recover £100 penalty.

Held, that it could not be recovered, as the agreement was a mere wager. “If the agreement be legal there is no obstacle to prevent the recovery of the penalty for non-performance, but if illegal the penalty can no more be recovered than damages for non-performance.”[[173]]

It has been shewn above, p. 36, that no action will lie to recover stakes from any of the competitors in a horse race, a sweepstakes being on the same footing as any other game for money. This decision would therefore show that what are known as “forfeits” in racing, i.e., sums payable in withdrawing a horse from the race, frequently half the stake (see Rule of Racing 105) are equally irrecoverable.

Deposits on bets.

It may here be convenient to consider the rights of the parties with respect to money deposited by one party with the other on bets made between the two.

In Manning v. Purcell,[[174]] persons who had made wagers with the testator had deposited with him the sums they had staked. Some of these bets were lost to the testator in his life time, and after his death his testatrix paid the winners both the amounts they had deposited and the amounts they had won. Some of the bets were undecided at the time of testator’s death, and in respect of these the executrix repaid the depositors the amount of their deposits.

It was proved that by the custom among betting men bets are off on the death of one of the parties. It was held that in respect of bets decided against testator in his life time, the executrix was not justified in paying either the sum won or the deposit; but that as to the bets which had not been decided, she was justified in repaying the deposits. Knight Bruce, L. J., put the case on the ground that the contract being illegal, the executrix was justified in determining the bets before they came off. It is difficult to justify the first part of this decision relating to the deposits on the bets which had been decided in testator’s life time. A makes a ready money bet with a book maker at 5 to 1, depositing the £1 with him. A’s horse wins; A of course cannot recover the £5, but why not the £1? The truth seems to be that the deposit is made as a security for what A might lose to B on the bet, an event which became impossible. The fallacy seems to be treating the betting contract as illegal; no doubt if A had lost the bet he could not have recovered the deposit (see, however, p. 66).

In Reggio v. Stevens,[[175]] the plaintiff had deposited sums of money with the defendants in respect of stock exchange transactions which he intended to open at the defendant’s office. These transactions being for differences were held by the Court to be wagering contracts (see post on the Chapter on Stock Exchange). The plaintiff, as he was by the agreement entitled to do, gave notice to close the transactions, which showed a balance in his favour, at the same time demanding the winnings and repayment of his deposit.

It was contended under the authority of Manning v. Purcell, that inasmuch as the notice to close the transaction was in effect determined the wager, the deposit could be recovered. The Court held that inasmuch as the money had been deposited in respect, not of one, but of a series of transactions, the case came under the second part of Manning v. Purcell, and that the deposit could be recovered.

By sect. 5 of the Act of 1853: “Any money or valuable thing received by any such person as aforesaid, as a deposit on any bet, or as or for the consideration for any such assurance, undertaking, promise, or agreement as aforesaid, shall be deemed to have been received to or for the use of the person from whom the same was received, |Deposit with keeper of betting house.| and such money or valuable thing or the value thereof may be recovered accordingly with full costs of suit.” It is obvious that the section is hardly intelligible without reference to the other sections of the Act, which will be found set out in the Chapter on Betting Houses. In Doggett v. Catterns,[[176]] the defendant was in the habit of standing by a tree in Hyde Park, making bets with other persons. The plaintiff deposited a sum of money with the defendant in respect of one of these bets, which sum plaintiff now sued to recover. The majority of the Court held that the “person aforesaid,” in section 5, alluded to the persons specified in section 4, i.e., the owner or occupier of the place, &c., or person acting on his behalf, or having the care or management of the business. That the section did not include any “person using the same,” and that as the defendant could not be said to be the owner or occupier of any place in Hyde Park, the section did not apply.

It will, however, be noticed that the section speaks of a deposit (1) on any bet, (2) as or for the consideration for any assurance as aforesaid. Now the assurance spoken of in the previous section refers only to an agreement to pay on the contingency of a horse-race or other sport. It would seem, therefore, that while the penal provisions of section 4 are confined to deposits on bets on horse-races, &c., |Does s. 5 apply to bets in stocks and shares?| the right of action given by section 5 to recover deposits on any bet applies to bets of every kind, and therefore to wagering transactions, &c., on stocks and shares. It is to transactions of the latter kind that this question would have a practical application. In the outside Stock Exchange places, commonly known as “bucket shops,” bargains for differences (which are really wagers) are well known. (See post, the Chapter on Stock Exchange).

Another point which would seem somewhat doubtful under the section is, supposing a deposit be made within the section, i.e., with the owner or occupier, &c., of the place kept for the unlawful purpose, and the bet is determined against the depositor, can he still recover this as a deposit on the bet, |After bet lost to depositor.| even though the money ceases to retain its character as a deposit, and has been appropriated to the payment of a lost bet? It would seem that he could. The Act was passed to discourage and penalize establishments of a specified kind. Besides, it would seem that even before the Act, according to Manning v. Purcell (ubi sup.) money deposited on a bet can in all cases be recovered before the event, so that for this purpose the Act was unnecessary.

At all events, before an action can be brought under this section at all, the following circumstances must combine: (1) Receipt of money on deposit (2) by the owner or occupier (or his agent or manager in the betting business) (3) of a place, etc., kept or used for the purposes mentioned in sections 1 and 3. As to this and “place” and “user,” see the Chapter on Betting Houses; but (4) it is at p. 190 pointed out that the receipt under section 4 need not be in the house or place.

Foreign law.

The insertion of the clause commencing with the words, “no action shall be brought,” may, perhaps, have a practical significance in one case, where an action is brought in England on a wager-contract made in a foreign country where such contracts are enforceable.

It will be sufficient for present purposes to state a few general rules which prevail in a case of what is called a conflict of laws:—

(1.) Where a contract contemplates any particular country as the place of performance, the contract is governed by the law of that country, the lex loci solutionis; e.g., the liability of the acceptor and indorser of a bill of exchange, drawn and accepted in France, but accepted payable in England, must be decided according to the law of England.[[177]]

Robinson v. Bland[[178]] is an example of a bill accepted for gaming debts contracted abroad. Plaintiff sued on an acceptance given in France, payable in England, for money lost at play in France. The acceptor died before action brought. It appeared that the debt could only have been enforced in France by the marshals in a court of honour and not in the ordinary courts, and the only process ultimately available was personal attachment, which in the present case would have been impossible as the debtor was dead. So as the debt could not have been enforced in France, no action would lie here. According to English law the bill was void by the Statute of Anne.

(2.) Where no special place of performance is named, the lex loci contractus prevails, that is, the law of the place where the contract is made; or in the case of an executed contract, where the transaction is carried out; e.g., money advanced in France for the purposes of gaming is a transaction governed by French law.[[179]]

In Quarrier v. Coulston,[[180]] a bill was filed by the personal representative of a deceased person to have an I O U given to defendant by deceased delivered up to be cancelled, on the ground that it was given in respect of money won from deceased at cards, or lent to him for gaming purposes, while travelling on the Continent at Baden-Baden and other places in Germany. Judgment was given for the defendants, on the ground that it did not appear that the games were unlawful by the laws of the country where the money was won.

(3.) The formalities necessary for a contract must be decided by the law of the place where the contract is made.

(4.) Questions of procedure are decided according to the law of the forum where the case is tried.

In Leroux v. Brown,[[181]] it was decided the words in the 4th section of the Statute of Frauds, which provide that “no action shall be brought” upon certain contracts therein specified unless there be some memorandum of them in writing, refer to procedure only, and do not affect the substance of the contract; consequently, where an action was brought in England on a verbal contract entered into in France, where no writing was required, but which by the 4th section of the Statute of Frauds ought to have been in writing in England, it was held that as the Statute of Frauds referred to procedure only, the law of England must prevail where the action was brought, and that the rule above stated as to the formalities did not apply.

Qy. Effect words in 8 & 9 Vict., c. 109.

It may be, therefore, that the same words used in 8 & 9 Vict., c. 109, section 18, would have the same effect, viz., in preventing an action being brought in English Courts on a wager-contract entered into abroad in a country where they are legally enforceable.[[182]] This, of course, would not apply to money lent for gaming purposes,[[183]] which depends on 5 & 6 William IV. and not on 8 & 9 Vict., c. 109. (See ante p. 14.)

The “Proviso.”

III. We now come to the last part of the section, commonly called the “Proviso,” which says that “this enactment shall not be deemed to apply to any subscription or 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, pastime, or exercise.”

There are three series of questions on this proviso.

I. As to what is “a subscription or contribution to a prize”?

II. As to when a person is “the winner” within the statute?

III. What are lawful games, sports, &c.?

Subscription or contribution.

I. What is the meaning of a subscription or contribution to a prize?

In many of the cases the line is very fine between such subscription and a deposit of sweepstakes. In Batty v. Marriott,[[184]] a foot-race was agreed upon between plaintiff and A for £10 a side, and each deposited £10 with the defendant as stakeholder. A was declared winner, but plaintiff disputed the decision and demanded back his stakes. The Court held that the provisions of 16 Car. II. and 9 Anne relating to the question, were repealed by 8 & 9 Vict., c. 109; and that although the contract was in the nature of a wager, still the Act laid down no rule with respect to the number of subscribers necessary to form “a subscription to a prize.” It made no difference between the case of two or fifty. They all intimated that their decision went farther than the Legislature intended to go—consequently, as a foot-race is a lawful game, and as one party who has paid money on a legal contract cannot recall it without the consent of the others, they held that the plaintiff could not recover his stake.

If this case were good law, it would follow that the real test to be applied is, whether or not the money were deposited before the event came off in the hands of a stakeholder.

But the decision was not regarded with much favour in the later case of Parsons v. Alexander.[[185]] Plaintiff sued on an account stated for money which had been won at billiards. Defendant having, to start with, a few shillings in his pocket played the plaintiff for a certain sum and lost. They then played again for “double or quits,” and defendant was again unsuccessful. This was repeated until the defendant lost to the plaintiff about £65, for which he gave an I O U. The Court, while intimating doubts as to the correctness of Batty v. Marriott, distinguished the case before them on the ground that the parties had played entirely on credit, and had not, as in Batty v. Marriott, deposited the stakes before the event came off.

Per Erle, J.: “The distinction is between gaming and cases where a person either pays down a contribution to a stake, or holds himself forth as having contributed.” Per Crampton, J.: “This was an agreement, if you win, I pay you; if you lose, you pay me.”

This distinction suggested by the Court of cases where the money is actually deposited by the parties who play, and cases where it is not, seems also to have occurred to Maule, J., in Johnson v. Lansley:[[186]] “The 18th section seems to treat the money which is in a man’s pocket at the time as the reasonable limit to which he may lawfully gamble.” So, too, under the older statutes of Charles II. and Anne, as interpreted by Applegarth v. Colley, there was no objection to gaming so long as the stakes were prepaid.

Some of the Court said that but for Batty v. Marriott, they would have thought the proviso was confined to subscriptions by outside parties to a prize, and not to deposits by the players themselves. In Brown v. Overbury,[[187]] the plaintiff was a subscriber to a race. The stewards could not agree as to the winner. Plaintiff claimed that his horse had won, and brought an action against the stakeholder to recover the stakes, thereby submitting the decision of the race to the jury. At the trial it was contended that he was, at all events, entitled to recover his own contribution. It was not even argued that this case was within the “proviso” as a contribution to a prize. The Court held that as it had not been shown that it had become impossible to obtain the decision of the stewards, he could not call on the stakeholder to return his contribution.

In Irwin v. Osborne,[[188]] plaintiff agreed with the defendants that a match should be run between a mare, the property of M, and a mare the property of the plaintiff; that the party who nominated the winner should receive from the party or parties nominating the other mare the sum of £100; and that if either party who nominated a mare should make default in causing such mare to run, he or they should pay the other party £100. The defendants made such default, and plaintiff sued for £100. The Court held that this was not within the proviso of the statute; there was “no subscription; no contribution; no deposit. This action has been brought, not for a contribution, but to recover a penalty.... For the amount is not made up by a contribution or money deposited, and the winner had to depend on his good fortune in nominating the successful horse.... The contract depended on an accidental circumstance, not on the running of a race.”

Per Crampton, J.: “If it be an ordinary wager it is unlawful; all betting is disallowed, but an exception is made on what I may call a particular species of wagering, namely, a number of persons making a fund, the whole of which is to become the property of the successful party.”

It is clear that in this case the test of prepayment of stakes was adopted by the Court, following Batty v. Marriott.

In Crofton v. Colgan it seems to have been assumed that a subscription to a race by all the owners of the horses running, and a further sum added by the stewards of the race was within the proviso; but the real dispute in this case was on the meaning of the term “winner,” which will be fully discussed hereafter. So the case is of no great value in laying down any test or principle for determining what amounts to “subscription” or “prize.”

In Coombes v. Dibble,[[189]] plaintiff and defendant agreed to ride a race on their own horses, the winner to keep both horses as his own property. Held that this was not within the proviso, as there was in no sense a contribution to a prize. Neither party could be said to “contribute” their horses if they won. Martin, B., however, suggested that if a horse had been placed in the custody of a stakeholder before the race came off, that might have been in the nature of a contribution to a prize within the statute.

So far the balance of authority seems to have been in favour of the decision in Batty v. Marriott and the test therein suggested, the only dicta to the contrary were the remarks made by some of the judges in Parsons v. Alexander.

But the point has now been decided the other way by the Court of Appeal and by the Judicial Committee of the Privy Council, in two cases to which we have alluded above on another point, viz., Diggle v. Higgs[[190]] and Trimble v. Hill.[[191]] In Diggle v. Higgs, in addition to the point decided above, it was contended for the defendant that the deposits were in the nature of a contribution to a prize; but the Court held—

(1.) That the agreement was a mere wager, in spite of the fact that the money was deposited with a stake holder;

(2.) That the proviso in favour of subscription to a prize was only meant to apply to agreements which were not in the nature of wagers. Per Lord Cairns, L. C.: “It is clear that there may be in scores of forms ‘subscriptions or contributions’ towards a plate or prize without there being any wager, and I cannot read this proviso, which has a natural and intelligible meaning, in a different way, any one which would have the effect of neutralizing the enactment.... I read the proviso thus: ‘Provided that so long as there is a subscription which is not a wager, the second part of the section shall not apply.’”

(3.) That the enactment avoiding wagers apply to all wagers, irrespective of the legality or illegality of the game.

This case was afterwards followed by the Privy Council in Trimble v. Hill.[[192]]

Result of foregoing cases.

The foregoing cases do not leave the matter very clearly settled. They afford a number of illustrations of transactions which are not within the proviso as subscriptions to a prize; and finally Diggle v. Higgs lays down the general rule that the proviso is not intended to apply to any case which is at all in the nature of a wager. But with the exception of the case of Crofton v. Colgan, they do not go far towards showing what is a subscription or contribution to a prize. It is obvious that the exact line of distinction between a wager and a prize is very difficult to draw. Diggle v. Higgs shows that a mere deposit of stakes to be awarded to the winner of a race between two persons is a wager and nothing more; a decision that would seem to apply to the agreements in Sadler v. Smith[[193]] and Dines v. Wolfe.[[194]] In both these cases the parties agreed to race, in one case a horse-race and in the other a sculling race, having previously deposited stakes with the stakeholder to be awarded to the winner, though in the latter cases the point did not arise, as in neither of those actions did the plaintiff show himself to be the winner. Thus the test suggested in Batty v. Marriott is completely rejected, viz., the distinction between cases where money is deposited before the event and cases where it is not. Another test, hinted by the Court in Parsons v. Alexander, was between cases where the winnings are contributed by the competitors themselves, and where they are given by some outside person. If this be the true test, the result would be that many bonâ fide races would be placed simply on the footing of wagers,[[195]] at any rate so far as the right of the winner to recover the stakes is concerned. Where the winnings consist of sums deposited and a sum added, |Distinction between the stakes and a sum added.| the case of Applegarth v. Colley shows that a distinction can be drawn between the two; the deposits might be in the nature of money won at gaming and so not recoverable, while it was held that the “sum added” by some outside person was under any circumstances recoverable by the winner. It seems that that distinction exists under the present state of the law, and that strictly and technically speaking, the stakes deposited previously to a race are not recoverable; though, no doubt, any sum of money contributed by a stranger would be a contribution to a prize within the proviso.

It is some argument in favour of this view that section 6 of the Betting House Act exempts from the penal provisions of the Act any “deposit of stakes.” This would have been unnecessary if a sweepstakes were not in the nature of a wager.

Entries, stakes, forfeit, cups.

If this, as it is submitted, is the true principle, it is not difficult to ascertain how far the different forms of prizes given for races are recoverable, or how far they come within the law of wagers. Thus “a plate,” which, according to the Rules of Racing, is a prize in money not made up by subscription among the competitors, would seem to be on the same footing as “added money” as decided in Applegarth v. Colley. Entrance money would be on the same footing as the stakes in cases where, according to Rule 160, it is payable to the winner.[[196]] As to “forfeits,” they would seem to be, as their name implies, in the nature of small penalties payable for withdrawing a horse from his engagements. By Rule 109 horses coming up in time to start are liable for the whole stake. It has already been pointed out (sup. p. 63), that such a penalty is not recoverable. A “cup” is any prize not consisting of money. If awarded by some outside person it would, no doubt, be within the proviso, a prize to be awarded to the winner. But if it is obtained by subscription among the competitors it would seem to be on the same footing as a money fund made up of stakes, and the subscribers would be joint owners of aliquot shares,[[197]] until they have all assented to its being handed over to the winner, otherwise the statute might be evaded by the parties purchasing a chattel with the stakes.

Meaning of term “winner.”

II. With respect to the term “winner,” some rather curious points have been decided. In Crofton v. Colgan,[[198]] the parties subscribed £3 each in respect of their stakes, the stewards of the race subscribing £30. There were two prizes to be awarded. It was contended that this did not come within the proviso as a prize to be awarded to the winner, on the ground that the horse that came in second could not be considered a “winner,” and, therefore, as the whole sum was not to be awarded to the winner the statute did not apply. |2nd horse may be “winner.”| But the Court held (1) that the term “winner” might apply to a second horse as well as to a first;[[199]] and (2) that, apart from that objection, the mere fact that part of the stakes were not to go to the winner would not take the case out of the statute.

Another point arose in Batson v. Newson,[[200]] where a man called Hawkins wagered with the plaintiff, that his, Hawkins’, horse would trot eighteen miles in one hour. Hawkins and plaintiff deposited £50 each with defendant as stakeholder to abide the event. The referee decided in Hawkins’ favour, but plaintiff, disputing the decision, gave notice to defendant to pay him back his stakes. Defendant disregarded the notice, and paid the whole to Hawkins. Plaintiff sued to recover his deposit. |There must be a “loser.”| Held, that the agreement was a mere wager; there could be no winner in such a case as only one person was to do anything. In such a case there could be no “loser,” and without a loser there can be no winner. It will be remembered that in Applegarth v. Colley the same view was taken as to the meaning of the term “winner of £10” in the Statute of Anne, and the Court there held that a man could not be said to be a winner of £10 within the statute, unless there were a corresponding loser of the same sum. |Winner must be a competitor in the race, &c.| It would seem, too, that a person cannot be called a winner unless he either take some part himself in a competition or be the owner of an animal engaged therein. Thus, in Irvine v. Osborne[[201]] the plaintiff and defendants simply nominated the winner of a race, the person who nominated the successful horse to have the stakes. Plaintiff nominated a horse not belonging to himself. Held, that he could not be a winner of the race, as “the contract depended on some accidental circumstance, not on the winning of a race.”

Breeders’ stakes.

A case that seems to fall within this rule is that of breeders’ stakes, where a certain sum is, by the conditions of the race, to be awarded to the breeder of the winner. It would seem according to the above case that not being the owner of the animal winning, the breeder could not recover under this proviso of the section.

Disputes as to the winner.

It is obvious that any person suing to recover stakes as winner has cast upon him the burthen of proving himself to be such. The determination of such a question will generally depend upon agreement or special conditions by which competitors agree to be bound. Thus, horse-races are generally run either subject to the rules of the Jockey Club, or subject to specially advertised regulations. However, it may be taken that the winner is declared by the judge, all further questions or objections—as to, for instance, qualification—being decided by the stewards.

The judge.

With respect to the authority of the judge to declare the winner, the conditions upon which it is exercisable must be strictly observed, and the same in the case of the arbitrators or umpires of other kinds of races. In the head note to Carr v. Martinson[[202]] it is stated the power of the judge of a horse-race to award the stakes to a winner does not arise until the race has been run! This extraordinary point arose in the following way: the parties agreed on a race between their respective horses, naming both a starter and a judge, and fixing a particular hour on a certain day. The stakes were deposited with the defendant, to be handed over to the winner according to the decision of the judge. The parties made their appearance, but the starter did not turn up. One of the parties refused to run and the plaintiff walked over the course and was declared by the judge to be the winner. But the Court held that the presence of the starter was, by the agreement, a condition precedent to the race, and so to the judge’s authority. There had been no starter, and so no race; consequently, the judge’s authority to declare the plaintiff winner did not arise. The other point decided in this case as to recovering stakes has been noticed above.

N.B.—This case by no means decides that an umpire never has power to award the stakes to a person whose horse has simply walked over the course.

Smith v. Sadler, L.R., 4 Q.B., 214.

A somewhat similar point occurred in Smith v. Sadler.[[203]] The plaintiff and K deposited stakes with the defendant to abide the event of a sculling race between themselves, “to row according to the recognised rules of boat-racing.” The decision of the referee to be final. It was proved in evidence that according to custom in a sculler’s race between watermen the men start themselves, but in the event of either or both making a default in starting, the referee was entitled to interfere. At the time appointed, a great difficulty took place in the men starting themselves. K complained to the referee, who told him to give notice to the plaintiff that if he did not start K was to row over the course without him. K rowed over without giving plaintiff such notice. The referee, without further inquiry, ordered the stakes to be paid to K, which the defendant did. Plaintiff sued to recover his deposit, thus disputing the decision of the referee. For the defendant (i.e., practically in favour of the referee’s decision) it was argued—(1) That the referee was in the position of an arbitrator; that therefore not even misconduct on his part could be pleaded in answer to an action on the award; but the award must first be set aside; (2) that the referee had virtually decided that there had been a proper start and a proper race, and that according to the authorities such decision was binding. The Court, however, held (1) That the cases as to setting aside the award did not apply because the jurisdiction of the referee had never arisen. The order he had given to K was conditional and K had not carried it out; therefore the race had never been rowed and there was nothing for the referee to decide. (2) That although primâ facie it would be implied from the award of the stakes that there had been a proper start and a race, that inference had been rebutted by the evidence given at the trial. Therefore the referee never had authority to declare K the winner, and the plaintiff was entitled to recover his stake from defendant.[[204]]

Decision of stewards.

Whenever it is made part of the conditions of a horse-race that the decision of the stewards shall be final, it is not competent for any party to question their decision, and it seems that they are not in the same position as arbitrators. They are not bound to hear the parties before deciding, they need not give a joint decision, they are not disqualified by having an interest in the race. Thus in the case of Benbow v. Jones[[205]] the plaintiff was the owner of the horse that came in first, but the steward had previously decided, without hearing him, that his horse was disqualified. The Court held that these circumstances did not prevent the decision being final. As Alderson, B., humorously expressed it, the next contention would be that the steward was bound to hear the parties on oath and counsel on both sides. In Parr v. Winteringham[[206]], where the stewards gave separate decisions without consultation, it was held that this was sufficient. In Ellis v. Hopper[[207]] a steward was held not to be disqualified by his having made a bet on the race. In Brown v. Overbury,[[208]] where the stewards could not agree as to the winner, it was held that the exclusive right of the stewards to decide lasted until it had become impossible to obtain their decision.

Again, in Dines v. Wolfe,[[209]] the facts were as follows; Agreement between plaintiff and A for a race between their respective horses for £500 aside, weight for age, to be run under Australian Jockey Club rules; £100 aside deposited with defendant as stakeholder, balance to be paid to defendant fourteen days before the race. According to the rules of the Jockey Club, the stakes ought previously to the race to have been paid over to the Treasurer of the Jockey Club, but plaintiff insisted on their being retained by defendant. A’s horse won; after the race, plaintiff, finding that A’s horse had only been weighted as a four-year-old, objected that he was a five-year-old. He wrote a letter to this effect to the stewards, objecting to A’s horse being declared winner. By the rules of the Jockey Club, when the age or qualification of a horse was objected to, either before or after the running, the stewards should call for such evidence as they might require, and their decision was to be final. The stewards met to consider their decision and the plaintiff produced certificates as to the age of A’s horse; after the meeting had been several times adjourned, the plaintiff demanded another adjournment, which the stewards refused. They finally decided in favour of A’s horse. The defendant paid over the money to A. It does not appear that the plaintiff had previously demanded his stakes back from defendant.

Plaintiff sued defendant for the whole of the stakes as winner of the race. He contended (1) that the rules of the Jockey Club had not been complied with, inasmuch as the stakes had not been deposited with the treasurer of the club; therefore the race had never been run according to agreement; (2) that the stewards had not fairly decided the case, having refused his request for a further adjournment.[[210]]

The jury awarded the plaintiff £500 (the amount of his own stakes) on the ground that the rules of the Jockey Club had not been complied with. The Supreme Court granted a new trial, and from this plaintiff appealed to the Privy Council. The judgment of the Privy Council was delivered by Lord Chelmsford. Plaintiff could not recover the whole of the stakes without a decision of the stewards that he was the winner. He could not recover even his own stakes back unless he had repudiated the agreement before the race was run (i.e., run according to the agreement). The plaintiff could not maintain his objection that the agreement had not been complied with, as he himself had consented to the money remaining in the stakeholder’s hands instead of being paid over to the treasurer; further, that plaintiff in writing to the stewards was really claiming the benefit of the rules, and could not therefore be heard to say that the race was not run under them. Held, also, that the stewards had acted bonâ fide, and that according to the rules there was no appeal from their decision.

Provisional decision.

Again, in Smith v. Littledale,[[211]] where objections were taken to the winner on several grounds, the stewards in the weighing room decided in his favour on one point, subject to the other questions. Subsequently, the winner was disqualified on grounds that were inconsistent with the first decision. Held, that the first decision was provisional only and therefore, ultra vires, that the final decision was binding.

Stewards’ decision on points of construction.

In Newcomen v. Lynch[[212]] it was held, where the rules of a race provide that the decision of the stewards should be final, that applies to questions of construction of the rules of the race, as well as to questions of fact.

Construction of agreement by the Court.

But where the agreement does not contemplate any special method of deciding disputes, the Court will construe it. If necessary, parol evidence will be admitted to explain conventional or sporting terms.

Parol evidence.

Thus, in Hussey v. Crickett,[[213]] evidence was admitted to explain the term “Rump and dozen.” In Evans v. Pratt,[[214]] it was explained that an agreement for a steeplechase “across country” meant a course over all obstructions, and prohibited going through open gates.

In Daintree v. Hutchinson[[215]] there was an agreement between plaintiff and defendant for a dog match to be run on the Wednesday during the Newmarket February Meeting, 1841, P.P. Plaintiff was member of the Newmarket Club, but defendant was not. By the rules of this club, the February Meeting was fixed at the previous November Meeting, for a certain date, weather permitting. On the day of the meeting there was a hard frost, and the club adjourned to another day, weather permitting. The meeting had again to be put off to a subsequent Tuesday. On the Wednesday after that, the plaintiff appeared, ready to run the race, but defendant did not turn up. Defendant contended that the agreement meant the Wednesday in the week originally fixed for the Newmarket Meeting. But the Court held that the rules of the club were admissible to show that the meeting was what Baron Parke called a “moveable feast,” and that the true construction was that the race should come off on the Wednesday in any week in which the meeting should actually take place. Held, also, that parol evidence was admissible to explain that the letters P.P. meant that the parties were either to run the match or forfeit the stakes.

Play or pay.

It may, perhaps, be mentioned here that the term “play or pay” is well known and understood both in racing and betting matters. In most races the conditions provide, that if the owner of a horse nominated withdraws him from the race he pays a smaller sum than the stake, usually half the stake, by way of “forfeit.” In some cases, however, he still remains liable for the whole stake and then it is called a “play or pay” race. So in betting, to say that a bet is “p.p.” means that if the horse backed does not run the backer still has to pay.[[216]]

Gentleman rider.

As to the construction of the term “gentleman rider,” see Walmsley v. Mathews (3 M. & G., 133).

Rules of racing are evidence.

In construing an agreement, the Court will look at the Rules of Racing or other the conditions of the race,[[217]] |Agreement requires stamp.| but it seems that any sporting agreement should be stamped before the Court can look at it.[[218]]

Starter when requisite.

Thus in Carr v. Martinson (sup. p. 76) the Court held on the construction of the agreement that the presence of a starter was necessary before the race could properly be run at all. By the Jockey Club Rules the horses must be started by the official starter or his authorised substitute.

Parties can waive conditions.

The parties can, of course, waive any of the conditions of the race by mutual consent or acquiescence, as was done in Dines v. Woolf;[[219]] or any party can without the consent of the others waive a condition which tells solely for his benefit. In Evans v. Sumner (35 J.P. 761), the plaintiff sued the stakeholder for the stakes. An objection had been lodged against the plaintiff as winner on the ground of his being on the unpaid forfeit list, but the objection was, according both to the local rules and the Newmarket Rules, lodged too late. The plaintiff appeared before the stewards and did not raise the point as to time, and the objection was sustained. Held, that he could not now set up the point, as he waived the benefit of the rule, which under the circumstances told solely in his favour. Quis que renunciare potest, &c., &c.

Qy. in case of a Plate or “added money.”

At least this would appear to be the case so far as regards the authority of the stakeholder to pay over mere stakes to the winner; the waiver of the competitors who have subscribed them would be sufficient. But in the case of a Plate, or where there is “added money” (ante pp. 73 and 74) contributed by an outsider, the consent of such person or persons would be necessary before any of the conditions could be waived. Compare with this suggestion Rule of Racing 143, which provides that in a sweepstakes the competitors may waive a walk over, but in a Plate the consent of the Stewards is necessary.

Stewards’ liability.

A steward, being an unpaid official, is not liable for negligence in not appointing a judge,[[220]] nor, semble, could he be responsible for the default of the stakeholder unless he knowingly appointed an unfit person.

Games and sports within the Act.

III. What are “lawful games, sports, or pastimes or exercises” within the Act?

Horse-racing.

The question can be best answered by showing what games are unlawful either at Common Law or by statute. Some have a history. Thus horse-racing was for a long time subjected to considerable restriction. It will be remembered that by the Statute of Anne, section 5, it was made penal to win any sum over £10 at any one time, by means of gaming. It was always understood that horse-racing, which was expressly mentioned in the Statute of Charles II., was a game within the Statute of Anne, the games in both statutes being the same.[[221]] The result was, as is shown in Evans v. Pratt[[222]], that a horse-race for a prize of over £10 was held to be illegal. Curiously enough, in Applegarth v. Colley, an entirely different construction was put upon those statutes by the Court of Exchequer; it being there held that the statutes did not affect a case (1) where the stakes were deposited with a stakeholder before the race was run, the statutes aiming at gaming on credit and “contracts for the payment of money won at gaming;” (2) where the stakes were made up of subscriptions under the value of £10, the term winner of £10 only contemplating a case where there was a corresponding loser of that sum. However, by the time that this case was decided, all restrictions on horse-racing had been wiped off the statute books: so that this more lenient construction of the earlier prohibitive statutes came rather late.

The immediate result of the statutes was that a large number of races were started for small prizes under £10, so as not to infringe the Act, a practice which tended to deteriorate rather than improve the breed of horses. |13 Geo. II., c. 19.| To remedy this the Statute 13 George II., c. 19, was passed, which prohibited any horse-race being run except at Newmarket or Blackhambleton in Yorkshire, for any prize of less value than £50. It also prescribed some arbitrary regulations as to the weights which horses of certain age should carry. The object, of course, of this statute was to prevent horse-races being run where the prize was not sufficiently remunerative to encourage the improvement of the breed. |18 Geo. II., c. 34.| The Statute 18 George II., c. 34, repealed so much of the previous statute as related to the carrying of weights, but the other provisions of 13 George II., c. 19, which restricted the practice of horse-racing, remained in force until the passing of 3 & 4 Vict., c. 35. |3 & 4 Vict., c. 35.| By this statute all the enactments of 13 George II., c. 19, relating to horse-racing, were repealed. |Evans v. Pratt.| In Evans v. Pratt[[223]] a question was raised as to the exact effect or result of this statute. The plaintiff sued to recover the stakes of a steeplechase “across country,” of which he had been declared winner. The main point was whether such a steeplechase for a prize of more than £10 was within the Statutes of Charles II. and Anne. It was argued on the one hand, that by the repeal of the earlier Statute of George II., without mentioning the statutes of Charles II. and Anne, the law as it existed under the latter was virtually restored, and, therefore, that a race for £10 was illegal. On the other hand, it was contended that the restrictions on horse-racing contained in the Statutes of Charles II. and Anne were repealed by 13 George II., c. 19, which substituted other provisions; and that the repeal of the latter statute had given “a new charter to horse-racing.” |All horse-racing made legal.| The Court held that the Statute 3 and 4 Vict., c. 35, had legalised all horse-racing, and that steeplechases were included in that term.

42 & 43 Vict., c. 18. Horse races near London require a license.

The only restriction in modern times to which horse-racing has been subjected is in the case of races within ten miles of London, the increase of which had been productive of great inconvenience.

By 42 and 43 Vict., c. 18, it is provided—

By section 1, a horse-race is in substance defined to be any competition between horses, or any race against time for any prize or any wager in respect of any such horse, at which more than 20 persons shall be present.

Section 2 makes all horse-races within 10 miles from Charing Cross unlawful unless licensed.

Sections 3 and 4 prescribe the method of obtaining such license.

Section 5 inflicts a penalty of £10 or two months on any person taking part in such unlicensed horse-race.

Section 6 inflicts a penalty of from £5 to £25 on owner or occupier of ground where no such race takes place.

Section 7 makes any horse-race contrary to the Act a common nuisance.

Cock-fighting seems to have been illegal at Common Law. In “Bacon’s Abridgment” it is stated that an information would lie at Common Law for using the game of cock-fighting. In Squiers v. Waiskin, Lord Ellenborough described it “a barbarous diversion not to be encouraged in a Court of Justice. I believe that cruelty to these animals in throwing at them forms part of the dehortatory charge of judges to grand juries.” It was forbidden in the metropolis by 2 & 3 Vict., c. 47, section 47, under a penalty of £5, and by 12 & 13 Vict., c. 92, the same penalty is inflicted for keeping or using any “place” for the purpose of fighting or baiting any bull, bear, badger, dog, cock, or other animal. But these Acts[[224]] only apply to a place kept for the purpose. A case was lately noticed in the newspapers of a cock-fight having taken place on board a ship out at sea, and the question was suggested whether this could be a “place” within the Act. It should be remembered that the Statute 4 George IV., c. 60, defines the word “place” in previous statutes as including places “on land or water.”

Billiards is a perfectly lawful game,[[225]] except that the keeping of public tables is subject to restrictions. By 8 & 9 Vict., c. 109, sections 11 and 13, it is necessary for the keeper of any public house, or any person setting up a public table, to take out a license for the same. It is made penal to allow playing on such table between the hours of 1 a.m. and 8 p.m., or in the case of a licensed victualler’s, at any time when his premises may not be open for the sale of intoxicating liquors. However, a subsequent statute, 37 & 38 Vic., c. 49, section 10, empowered licensed victuallers to sell liquor at any time to persons residing on their premises, but it has been held that that does not authorise the playing of billiards except at the times mentioned in the previous statute; it was, the Court said, a casus omissus in the statute.[[226]] So, of course, games played on public tables at other than the authorised hours are not within section 18 of 8 and 9 Vict., c. 109. This will be more fully discussed in the chapter on gaming houses.

Lotteries are illegal, as will be explained in a future part of this work.

By 12 George II., c. 28, section 2, ace of hearts, pharaoh, bassett and hazard,[[227]] are declared to be illegal games, to which list 13 George II., c. 19, section 19, has added the games of passage and any game with one or more dice or instrument in the nature of dice with one or more figures or numbers thereon, except backgammon.

18 George II., c. 34, provides that no person shall keep any house or place for playing roulet or roly-poly or any game with cards or dice prohibited by law.

33 Henry VIII., c. 9.

A number of games were made unlawful by a statute 33 Henry VIII., c. 9, on the ground that they diverted people’s attention from the pursuit of archery. Among these were bowling, coyting, tennis, when played by artificers and apprentices; and all persons were bound, under penalty of 6s. 8d., to provide themselves with bow and arrow. But these provisions of the statute were repealed by section 1, 8 & 9 Vict., c. 109.

Dominoes has been held to be a lawful game.[[228]]

The subject of unlawful games will be more fully treated in the Chapter on Gaming Houses.[[229]]

Exception in favour of Royal Palaces.

All the statutes against unlawful games contain exceptions in favour of royal palaces during the actual residence of the Sovereign.

As to what constitutes a royal palace see Coombe v. De la Bere (22 Ch. Div. 316) and cases therein quoted.

CHAPTER II.
TRANSACTIONS ON THE STOCK EXCHANGE.

It has been deemed advisable to treat of transactions on the Stock Exchange under a separate heading: not that they are, in the main, subject to different statutory provisions; but as the facts in these cases are of a very special character, and to a great extent stand on common ground, it will probably facilitate reference if they are all grouped together instead of being scattered over the rest of the work. This Chapter is not intended to give an exposition of Stock Exchange transactions generally, but only so far as it has been sought to apply the gambling statutes thereto.[[230]]

It will be remembered that wagering transactions of this description were not touched by the earlier statutes of Charles II. and Anne, which applied solely to games and pastimes. So that until the passing of the statute we are about to mention, time-bargains, as they have been called, were not only lawful but were enforceable by action.

The chief statute on this subject was 7 George II., c. 8, commonly called Barnard’s Act, which provided—“That |7 Geo. II., c. 8.| all contracts or agreements upon which any premium should be paid for liberty to put upon, or to deliver, receive, accept, or refuse any public or joint-stock or public securities whatsoever ... and all wagers and contracts in the nature of wagers, and all contracts in the nature of puts and refusals relating to the then present or future value of any such stock or securities as aforesaid, shall be null and void.” The statute also inflicted penalties both for entering into such contracts and for making payments in respect thereof.

Section 8 made invalid all sales of stock not in the vendor’s possession.

Statute only applied to public English stocks.

The statute only applied to English public stocks, and not to foreign stocks nor to shares in companies.[[231]]

It also made the contracts and compounding for differences not merely void but illegal. Thus in Cannan v. Bryce[[232]] it was held that money lent for the purpose of compounding such differences could not be recovered. But in Faikney v. Reynous,[[233]] where a bond was given to repay money advanced by plaintiff to settle for differences, it was held that the bond was good.

Nicholson v. Gooch, 5 E. & B., 999.

The case of Nicholson v. Gooch[[234]] was an important case under this statute, and also seems to have some bearing on Stock Exchange transactions at the present day.

The bankrupt Lodge was a member of the Stock Exchange and the defendant was the official assignee of that body. By the rules of the Stock Exchange every member unable to fulfil his engagements was declared a defaulter, and all members indebted to him in respect of Stock Exchange transactions were to pay their debts to official assignees appointed by the Stock Exchange, whose duty it was to distribute the money received rateably among his Stock Exchange creditors. On 11th November, Lodge wrote to the secretary to say he could not meet his engagements, and large sums were paid to defendant by members who were his debtors. On 23rd November a petition in bankruptcy was presented against Lodge; on the 31st, Lodge was adjudicated bankrupt. The plaintiffs were Lodge’s assignees in bankruptcy. It seemed from the evidence that according to the customary way of dealing, speculative transactions and genuine sales were so mixed up, that it was impossible to separate the two; but the jury found that the majority of the transactions were speculative and the parties merely intended to settle differences. It seemed that the method of settling these differences was for the members on the account day to set off the amount of stock which they had respectively agreed to buy and sell, and by a fictitious bargain for the sale at the price of the day of as much stock as would cover the balance, and then settle by paying the difference in the price. The plaintiff sued defendant for the moneys they had received from Lodge’s debtors. The Court drew an inference of fact that they were all contract for differences only. Held, that the settling of differences without actual delivery of stock was, so far as the public stock was concerned, illegal by section 5 of Barnard’s Act. That money paid to defendant in pursuance of this illegal arrangement, and forming the fund sought to be recovered, could not be recovered, as it could not form part of Lodge’s estate.[[235]] Therefore the assignees had no title to it.

It had been attempted on the plaintiff’s behalf to apply the doctrine of Tennant v. Elliott, and so prevent the defendant from setting up the illegality against them.[[236]] But the Court held that this did not apply because defendant received the money, not as agent for Lodge or for his use, |Position of Official Assignee of Stock Exchange.| but on an implied mandate to distribute it according to the rules of the Stock Exchange.

Crampton, J., distinguished the receipt of money for differences on public stock which was illegal, and on ordinary shares which were not within the statute. In the latter case the doctrine of Tennant v. Elliott might have applied if defendant had received the money as Lodge’s agent, and subject to his disposal. But the receipt seems to have been under an adverse claim by virtue of the stock Exchange rules rather than as agent of the bankrupt.

Of course to a great extent the importance of this case was diminished by the Statute 23 & 24 Vict., c. 28 by which Barnard’s Act was repealed. |Repeal of Barnard’s Act.| At the same time it seems still of importance as showing the position of the official assignee of the Stock Exchange, i.e., the agent of the Stock Exchange, to distribute the money according to their rules; the defaulter, as a member of that body, binding himself to authorise the money in the event of his default to be paid to the Stock Exchange or their agent.

Ex parte Grant. 15 Ch. D.

A late case bearing on this topic, and to a great extent confirming the views of Crampton, J., in Nicholson v. Gooch, is that of ex parte Grant re Plumbly.[[237]] Plumbly declared himself a defaulter and on the same day presented his petition in bankruptcy. By virtue of his being a defaulter the official assignee, as stated above, became entitled to receive money due to him for differences. An injunction was obtained in bankruptcy against the official assignee against receiving and collecting such debts, and an order to pay all sums that he had received to the trustee in bankruptcy. Against this order the official assignee appealed.

The evidence chiefly consisted of affidavits filed by leading members of the Stock Exchange. Some points in these affidavits call for special notice.

(1.) That contracts on the Stock Exchange are never for payment of differences, but are real transactions for cash ... contemplating transfer or delivery of the stocks, &c. The transfer and payment can only be rendered unnecessary by a new and equally real bargain, on the one part to accept and pay for on the same day, and on the other part to transfer or deliver, an equivalent amount of the same stocks, &c.

(2.) Members having bargains open in stocks and shares which the defaulter has contracted either to take or deliver, but which contracts he breaks by his default, pay to the official assignee the difference in value of stocks, &c., as determined by the prices fixed by the official assignee, at the time of such default, when the change in price is against such members; and on the other hand become entitled to claim against the fund so created in the hands of the official assignee for any such differences when in their favour.

(3.) The defaulter cannot claim differences on damages in respect of contracts which he has broken by his default, nor can he claim the moneys payable as differences under the rules to the official assignee.

(4.) Had Plumbly not become a defaulter nor a liquidating debtor, and had all the contracts been duly performed by him, none of the differences received by the official assignee would have found their way into Plumbly’s possession. In payment of differences, bank notes and cash do not pass and cannot be demanded. All payments on account of differences must be by crossed cheques on a clearing house banker, and the whole of the differences which a member is entitled to pay or liable to receive on each account day must all pass through the Clearing House together. If the balance is in his favour, he receives only the difference; otherwise, the general balance of all his dealings goes to his debit through the operation of the bankers’ clearing. The credit differences of each member are thus directly hypothecated for the payment of his debit differences.

The reader is referred generally to the affidavits in the case, which are set out in extenso in the report; but the above will be sufficient to render the judgment intelligible. Held (1) that the official assignee received the moneys by a title adverse to the trustee, who on that account could not claim them as received to his use. (2) The fund claimed was an entirely artificial fund, created by the rules of the Stock Exchange: if the contracts were winning ones, the trustee could not have enforced them at law, as the defaulter had shown his incapacity to perform the contracts himself: so that the differences could never have been payable to the trustee who was now claiming them. (3) That the trustee could not take advantage of those rules, to which alone the fund owed its existence, and claim the moneys, without also complying with them with respect to the distribution; i.e., he could not claim for distribution among the general body of creditors. James, L.J., put the case on a more general ground. If A owes money which is claimed by B and C, and he pays B, C cannot sue B; but payment does not discharge A, if wrongful.

The case shortly seems to come to this:—“Differences” are payable simply by the rules of the Stock Exchange, and not as a matter of contract between two parties; being payable to the official assignee by virtue of those rules, the fund thereby created in his hands must be subject to the same rules. That the official assignee receives these differences in his own right and not to the use of the defaulter’s trustee in bankruptcy.

It seems, then, that even if bargains for “differences” were known on the Stock Exchange (which it appears they are not), the rights of the official assignee with respect to them as against the trustee in bankruptcy would be governed by the above case, as he could only receive them under the rules, and not as a legal debt. |Nicholson v. Gooch and ex parte Grant compared.| The two cases seem to a great extent to stand on a common ground, though the former was not cited in argument in the latter. In both it was held that the title of the official assignee was adverse to that of the trustee in bankruptcy, so that the former could in no sense be considered his agent. In both the ratio of the decision was that the fund was entirely artificial and owed its existence to the Stock Exchange rules, as the moneys which formed the funds were irrecoverable at law. They were irrecoverable in Nicholson v. Gooch on the ground that the payments were in pursuance of illegal or void contracts; and in Plumbly’s case there was the additional reason pointed out that as he by his default was incapable of performing his part of the contract, he could not enforce it himself.

8 & 9 Vict., c. 109.

The next statutory provision concerning this class of cases is contained in the statute we have discussed above, declaring all wager-contracts to be void. The question of the application of this statute to Stock Exchange transactions, depends upon how far such transactions are in the nature of wagers.

Contracts for payment of differences.

The Courts have more than once been called upon to adjudicate upon what have been supposed to be contracts for the payment of “differences,” that is the difference between the present and the future price of stock. Contracts of this sort have been called “time-bargains”; a phrase we shall avoid, as it seems to be used in more senses than one. An instance of such a contract, or rather of a contract which the jury found to be of this nature, is to be found in Grizewood v. Blane.[[238]] It will be seen that the bargain as the jury found the facts took the form of two collateral bargains, the result of which was that differences only passed between the parties.

Grizewood v. Blane, 11 C. B., 526.

The bargain was that plaintiff should purchase of defendant, and defendant should sell to plaintiff a certain number of shares in certain companies at a specified price. The said shares rose in price. The parties then entered into a second agreement to rescind the former one, and that defendant should buy of plaintiff the same number of similar shares at such increased prices, and that defendant should merely pay the plaintiff the difference between the two prices.

Defendant pleaded generally that the contracts were void under the statute, which plea was held bad, for not stating the facts which brought the case within the statute.

The case went to trial on issues of facts raised in the pleadings—that the contract was by way of wagering on the price of the shares, and was merely colourable; that it never was intended that the said shares should be bought and sold, but was a mere wager.

The plaintiff was a stock jobber; and the defendant had dealt with plaintiff through his broker. Evidence was given to show the former course of dealing between parties, that no shares ever passed, but the parties merely settled differences.

Test of a gaming transaction.

Jervis, C.J., directed the jury that if at the time of making the first contract the intention of the parties, as understood by both of them, was neither to purchase nor sell the shares, but only to settle differences, then the transaction was void under the statute.

The Court held that this ruling was right. The jury found that it was a mere gambling transaction—i.e., that it was the intention of the parties at the time that there should be no actual acceptance or delivery of the shares.

This finding of the jury upon the facts of this case have been questioned in later cases, probably through the Courts being in possession of more complete information as to the true nature of transactions on the Stock Exchange. Thus Bramwell, L.J., in Marten v. Gibbons,[[239]] and Brett, L.J., in Thacker v. Hardy,[[240]] both express their doubts as to the correctness of the view the jury took of the facts. The case had one peculiar feature, viz., that it was an action by a jobber against the principal on transactions affected through a broker, and as evidence was given of a long course of dealing between the parties, there may have been special circumstances in the case. It is remarkable that in Cooper v. Niel[[241]] the jury there found that the contract was simply for the payment of differences; but again Brett, L.J., in Thacker v. Hardy,[[242]] says he could see no evidence of it.

In the former case the broker became insolvent, and his trustee sued the defendant for indemnity in respect of the claims of the jobbers. But as the jury found that the contracts were mere wagers, the jobbers could not claim in respect thereof against the estate of the broker, and, being insolvent, payment could not be enforced against him by the rules of the Stock Exchange.

Suggested test of a difference bargain.

It seems that the test adopted in some of the cases, viz:—the intention of the parties to deliver or not is unless properly qualified and understood likely to be misleading. A sells to B. A may be a “bear” or speculative seller of what he does not possess; and B may be a “bull” or speculative buyer. Both parties may hope or intend to secure a difference in their favour, the one by re-purchasing, the other by a resale. Each party may suppose that the other may be willing at any time to close the bargain and settle by payment of differences, yet the bargain as stated in this simple way is in no sense a wager. The real test seems to be, what is the primary bargain between the two parties, to ascertain whether each of the parties could be called upon by the other in any contingency, under the terms of the contract, to deliver, or to take delivery and make payment. The subsequent arrangements which the parties may make, i.e., to close or settle by payment of differences even if carried out through a long series of transactions and even though in contemplation of the parties at the time of the contract, do not affect the question if it was not part of the original agreement that the bargain should be settled in this way, and if not the contract could not be a wager. The expectation of the parties might be upset by such a contingency as the winding up of the Company; and it is the strict rights of the parties to the bargain that must be regarded. This view of the matter is confirmed by a passage in the judgment of Lindley, L.J., in Thacker v. Hardy, 4 Q.B.D., at p. 689.

“What are called time bargains are in effect the result of two distinct and perfectly legal bargains, viz: (1) a bargain to buy or sell; (2) a subsequent bargain that the 1st shall not be carried through, and it is only when the first is entered into upon the understanding that it is not to be carried out, that you get a time bargain in the sense of an unenforceable bargain.” In a more recent case in the Court of Sessions, Scotland, Shaw v. The Caledonian Railway Company, a passage in Lord Shand’s[[243]] judgment requires attention. “If it appears clearly that the contracts and the dealings between the parties were for differences only and were not intended in any sense to be real transactions, and were not in effect real transactions, then they must be regarded as gambling transactions. If it appears that any writings which passed between the parties in the form of sale notes or otherwise were a mere form intended by both parties, to give form to the transaction, and to have no legal effect of any kind, then I do not think that writings under such circumstances would take the case out of the rule I have mentioned. But if contracts for the sale of shares or goods are entered into so as to create mutual obligations upon the parties, on the one hand to give and the other to take delivery, if the obligation is such as can be enforced if either of the parties think fit to do so, then I think we get out of the region of arrangements of mere differences of the nature of betting or gambling.

“If either one or both of the parties may, as and when he thinks fit demand or give delivery of stock and ask payment of the price under the contract, if that be so as to one of the parties, then I think the transaction has the mark or stamp of a real transaction and is inconsistent with the notion of transaction for mere differences.”

The passage in the judgment down to “betting or gambling” seems entirely to confirm the view above expressed, that a real transaction of purchase and sale must create “mutual obligations” to deliver and accept. A can call on B to complete and B can call on A. But the passage which follows seems to contain a somewhat different proposition: “If either one or both the parties may demand,” etc. This would cover a case where A can demand delivery from B, but B cannot from A. We shall have occasion again to allude to this seeming discrepancy when we come to deal with the case of Shaw v. Caledonian Railway again.

From the cases to which we are about to refer it would appear that in point of fact transactions on the Stock Exchange never do take the form of contracts for the mere payment of differences. |Contracts for differences not really known on Stock Exchange. Thacker v. Hardy, 4 Q. B. D.| Thus in Thacker v. Hardy,[[244]] from a remark in Lindley, J.’s judgment at (p. 689), it seems to have been stated by witnesses that time-bargains are unknown on the Stock Exchange. The real nature of the agreement in that case was found by Lindley, J., to have been as follows:—(1) That defendant was a speculator and employed plaintiff, a stock broker, to speculate for him on the Stock Exchange. (2) Defendant knew that in order to do so plaintiff would have to enter into contracts to buy or sell stocks, &c., and, to protect himself, to make other contracts to sell or buy respectively. (3) Plaintiff knew, as was the fact, that defendant never intended to accept or make actual delivery of the stocks, &c., bought or sold for him. (4) That defendant took the risk of having to accept or deliver, &c., hoping that plaintiff would be able so to arrange matters that nothing but differences would be payable to or by defendant. (5) That otherwise defendant would be unable to pay for what was bought or deliver what was sold.

Plaintiff brought an action for indemnity for what he had been called upon to pay in respect of these transactions.

A case between broker and principal.

This was a case it will be noticed turning on dealings between a broker and a member of the outside public, and so differed from Grizewood v. Blane. The judgment of Lindley, J., decided the following points:—

(1.) That agreements between buyers and sellers of stock to pay differences are gaming contracts within 8 & 9 Vict., c. 109, s. 18.

(2.) That that section of the statute only affects the contract which constitutes the wager. In this case plaintiff was bound to enter into the contract himself as principal. The contract between himself and the real principal was not a wager-contract, but an implied contract of indemnity.

(3.) That an agent is entitled to be indemnified against all liabilities incurred on behalf of his principal, unless such were illegal.

(4.) That the statute made gaming transactions void, and not illegal.

(5.) It had been argued that such gambling transactions were illegal at Common Law on the ground of public policy, relying on Lord Tenterden’s opinion in Bryan v. Lewis. But this was overruled in Hibblethwaite v. M‘Morrine.[[245]] Besides, it had required a special Act of Parliament to make gambling in the funds illegal, and that Act was repealed by 23 & 24 Vict., c. 28.

(6.) He did not infer as a fact that this contract was a contract for differences. The real nature of the transaction is stated above.

It will be seen, therefore, that the judgment treats of the case from two points of view: first, granted the main contract were in the nature of a wager. Held, in this case, that according to previous authorities, the right of an agent to be indemnified, was not affected. Second, that as a matter of fact, there was no wagering in the transaction at all, so that 8 & 9 Vict., c. 109, did not affect the question.

The case was taken up to the Court of Appeal, where the view taken by Lindley, J., as to the facts was confirmed; consequently it became unnecessary to consider the application of the statute to the case.

Bramwell, L.J., said he would assume that the broker might by the terms of the bargain be called upon to resell the stock, so that the principal would only have had to pay differences. That would not infringe the statute as a gaming contract, for the principal might at any time elect to take the stock and hold it as an investment ... also the broker might be unable to sell, if, for instance he had bought shares in an insolvent bank. There is no wagering in a transaction of that kind—the broker has no interest in the stock—it does not matter to him whether the market rises or falls; but when a transaction comes within the statute against gambling and wagering, the result of it does affect both parties.

Ex parte Rogers.

In ex parte Rogers[[246]] the facts seem to have been substantially the same. A stockbroker named Evans issued a debtor’s summons against Rogers in respect of money due to Evans on the purchase and sale of stocks and shares on Rogers’ behalf, and for commission, and for money paid by Evans for carrying over[[247]] a portion of the said stocks and shares. The contracts were made by Evans, subject to the rules of the Stock Exchange, according to which Evans had to deal as principal between himself and the jobbers. It was understood between Evans and Rogers that the latter was only buying for the rise and never intended to accept delivery, but meant to sell them again before the next account day and receive or pay differences. Evans admitted that sometimes in buying the same kind of stock for two clients he bought the whole amount in one from the jobber, and then resold to the clients, but he could not say whether that had been done in respect of any transactions for Rogers. There was also evidence to show that Rogers had met Evans in his office, and authorised him to borrow money and pay the jobbers. It was sought on behalf of the debtor to distinguish the case from Thacker v. Hardy, on the ground that the broker had acted as a principal and not as an agent, having purchased for himself and resold to his clients, and that the transaction being in the nature of a wager was illegal (? void). But the Court held that there was sufficient evidence that the broker had paid money at the debtor’s request, therefore the case was within Thacker v. Hardy.

Ex parte Grant, 13 Ch. Div. Dealings between members of the House.

The case of ex parte Grant,[[248]] to which we have alluded above, is important on the present subject, chiefly from the evidence given in the case as to the course of dealing on the Stock Exchange, which seems to confirm the finding of Lindley, J., and the Court of Appeal, as to the facts of the case in Thacker v. Hardy. At p. 671 it is stated: “Contracts on the Stock Exchange are never for payment or receipt of differences. All contracts, &c., are real transactions for cash or for a day named, contemplating the actual transfer or delivery ... and which transfer or delivery can only be rendered unnecessary by a new and equally real bargain on the one part to accept and pay for on the same day, and on the other part to transfer or deliver an equivalent amount of the same stock.” It is then further stated that if a member having, say, bought stock which he was unable or unwilling to take up, he balances the transaction by selling a similar amount of (but not the identical) stock for the same settling day for which the bargain was originally made, so as to enable that particular transaction to be written off and balanced. “The whole amount of stock or shares to be taken and delivered balances itself at all times, |Differences, how adjusted.| but the amount of stock to be accepted from or delivered to the several persons with whom any member has dealings, is liable to vary with every new transaction entered into.” “When the settling day arrives each member only transfers or delivers and accepts and pays for the then balance of each particular description of stocks or shares contracted for with each person with whom he has dealt.”

The affidavits in this case should be carefully perused, as they afford a great deal of information as to the method of doing business on the Stock Exchange. It seems clear that the transactions there described can in no sense be in the nature of wagers—they consist of an original purchase or sale and a sub-sale or sub-purchase, the latter being probably to a person who was not a party to the original contract. Possibly if the sub-sale or sub-purchase were made between the original parties and were contemporaneous with the first contract, this might, according to the case of Grizewood v. Blane, amount to a wager, but this method of dealing seems to be unknown on the Stock Exchange.

No doubt the transactions which go on may be made a means of reckless gambling; but it is necessary to bear in mind Lindley, J.’s warning in Thacker v. Hardy against being misled by an epithet.

Qy. Byers v. Beattie.

There is, however, an Irish case,[[249]] which certainly seems open to question, in which the agreement was that the plaintiffs, as stockbrokers, should buy and sell for the defendant such stocks, &c., as the defendant might require on the terms that if a profit should result from the sale the plaintiffs should account to the defendant for such profit, deducting commission; if a loss, then the defendant was to pay the amount of such loss to the plaintiff, plus commission. Held that this was a wagering contract, as involving an agreement for the payment in receipt of losses or profits, and that the result would have been the same even if the plaintiffs had shown themselves liable to third parties and had sued on an implied contract of indemnity. The answer to this decision seems to be that even if there were a wager at all it was not a wager between plaintiffs and defendant.

It seems probable, therefore, in view of the facts laid before the Court as to the customary course of dealing on the Stock Exchange, and particularly having regard to the decision in Thacker v. Hardy, that the statute will have but little application to Stock Exchange transactions. |Effect of 8 & 9 Vict., c. 109, likely to be very small on the Stock Exchange.| Bargains may no doubt in many cases be mere speculations on the part of one party, but it is clearly stated by many witnesses before the Stock Exchange Commissioners in 1878, that a man’s intentions as to holding or reselling his purchases is not known to the other party, so that it cannot be a wager as between the two.

That this is the real state of the case is shown by the evidence given by Mr. Pyemont before the Stock Exchange Committee in 1878 (see p. 315). “With regard to wagering and gaming, I may say that it was in consequence of the remarks of the Lord Chief Justice which appeared in the Times the other day, that I was led to tender my evidence; I was sorry to see, in so high a quarter, such a total misapprehension of the action of the Stock Exchange. We have no such transaction on the Stock Exchange as wagering and gaming. The only possible approach to anything of the kind was dealing in dividends, which was always reprobated by the Committee. The accounts were never recognised if there were failures; and finding that not recognising them did not stop the practice, the Committee then made it penal to do so, but with that exception I have never known such a thing as a wager. Every £1,000 of stock which is sold on the Stock Exchange must be delivered per se or per alium. It must be delivered (whether demanded or not) and for this reason: If the buyer does not pass me a name on the name day, I sell it out through the secretary of the Stock Exchange for a name to complete the bargain. There is no such thing as a bargain left uncompleted. What I mean by per se or per alium is that if I have sold £1,000 stock to B, if I am not prepared to deliver it, I get D to deliver it to B on my account, and pay him for doing so. If B does not want it, he must find somebody who does. There is no such thing as fiction in regard to any part of a Stock Exchange bargain.”

Time-bargains.

It does not seem that a Time-bargain in the proper sense of the term, i.e., a contract for the future delivery of something the amount or value of which cannot be ascertained, is in the nature of a wager. Thus, as put by Bramwell and Cotton, L.JJ.,[[250]] the sale of next year’s apple crop would be a good contract.

So when a person enters into a speculative sale of stock on behalf of himself and another not having the stock in possession, it was held in the Court of Session that it was not a wagering transaction either as between the joint adventurers, or as between the buyer and seller. Mollison v. Noltie.[[251]]

A contract for “differences” on the Stock Exchanges though sometimes called a time bargain, is not such according to Bramwell, L.J., in the ordinary sense of the word. |Sale of prospective dividends.| So in Marten v. Gibbon[[252]] a question arose as to the validity of the sale of a prospective dividend. Defendant employed plaintiffs, who were stockbrokers, to sell for him the next dividend on £50,000 of South Eastern Railway A Deferred Stock, and plaintiffs sold it to a firm of dealers on the Stock Exchange. The dividends declared were in excess of the price at which the plaintiffs had sold them; so plaintiffs requested defendant to authorise them to pay the difference to the dealer. On defendant’s refusal plaintiffs paid the amount and sued defendant for indemnity.

It appeared that by Rule 61 of the Stock Exchange, the Committee did not recognise bargains in prospective dividends. There was no evidence as to whether the defendant was at the time of the contract in possession of the £50,000 of Stock.

It was argued for the defendant (1) That this was a transaction within 8 & 9 Vict., c. 109. (2) That as this was not a contract which the Stock Exchange would enforce, no authority to pay the difference could be implied, and there was no evidence of an express authority. (3) Defendant had revoked the plaintiff’s authority to pay.

But the Court held (1) That it must be assumed, in the absence of evidence to the contrary, that the defendant had the £50,000 of Stock in his possession at the time of the contract. Therefore, although an agreement of this kind would have been within Barnard’s Act, it was not within 8 & 9 Vict., c. 109, any more (as was put by Blackburn, J.) than the purchase from a fisherman for the next haul of his net at a fixed sum. Even if it were a wager as between the principal and the broker, it could not be assumed that the jobber knew that it was. (2) That the meaning of Rule 61 was, only that the Committee would not enforce such a contract by expulsion, but the contract was otherwise left good between the parties. The broker therefore, having at defendant’s request entered into a contract on which he was personally liable, the defendant could not revoke plaintiff’s authority.

New rule.

Since this case was decided, the rule of the Stock Exchange (No. 61) on this subject has been changed into one of a prohibitive character, it being there provided “That no member shall enter into bargains in prospective dividends in shares or stock of railway or other companies.” So that while this rule continues in force, no question is likely to arise as to the rights or liabilities of members of the Stock Exchange in bargains of this description.

Sale of dividends of stock not in possession.

The case, it will be seen, leaves quite unsettled what the result of a bargain for the sale of dividends of Stock not in vendor’s possession. It is submitted that the result of such a bargain would be that the jury would, on the facts, find that such were only in the nature of a wager, and that the question would be left to them as one of fact.[[253]]

So much for differences on the Stock Exchange. It must not, however, be assumed that transactions in stocks and shares or indeed any kind of goods are never bargains for differences only, and so equal to wagers. Those dealings in outside Stock Exchange places, |Bucket shops.| commonly known as “bucket shops,” sometimes take that form, see, for instance, Reggio v. Steven,[[254]] where the terms of defendant’s prospectus, on the footing of which dealings had taken place, stipulated that all bargains should be settled by payment of differences. These bargains were held to be wager contracts. In Shaw v. Caledonian Railway Company[[255]] to which allusion has already been made, the real issues in the action were between the plaintiff Shaw and “R,” a customer. Plaintiff carried on business as a stock and share dealer, not a member of the Stock Exchange. The terms on which the dealings were conducted were as follows: the parties dealt as principals not as principal and agent. “R” bought or sold of Shaw, but in the main he bought. He deposited cover with Shaw to the extent of 1 per cent. on the stocks he had opened. If the price of the stock dealt in went against “R” to the extent of 1 per cent., it was Shaw’s duty to close the transaction. Prices were regulated by the tape. If “R” bought of Shaw at 100 and the stock fell to 99 (middle figure) it would be Shaw’s duty to close that stock by re-purchasing from “R” at the lower price, so that “R’s” loss was to be limited to the extent of 1 per cent., unless before the closing “R” should deposit more cover.

It appears from the judgment of Lord Shand, at p. 477, though it does not appear from the report of the evidence given in the case, that all these dealings were for the next Stock Exchange account day, but that subject to Shaw’s duty to close, “R” had the right of carrying over to the subsequent account, (see post as to this transaction, p. 108) but so long as the stock did not go against “R” to the extent of the cover, “R” had the right of (1) keeping the bargain open, of (2) closing by resale or repurchase from Shaw, (3) calling on Shaw to deliver the stocks and paying for them. On some occasions “R” was on the account day credited with dividends on the stocks he had opened, and with a premium on new stocks issued in right of old, also on one occasion he was credited with a contango. (N.B.—This must have been on a “bear” transaction, see post as to this, p. 113.) All the transactions between the two were completed by payment of differences, but it was otherwise with some of the customers of Shaw. It appears that if “R” sold, Shaw had a right to call for delivery (see the evidence of Willis and Lord Shand’s judgment, at p. 477),[[256]] but this seems to be the only option that Shaw had, and the transactions out of which these proceedings arose were nearly all purchases by “R.” The Court held that these were real transactions of purchase and sale, and not difference bargains. (1) The crediting him with the dividends, &c. showed him to be absolutely the owner of the stocks, (2) because “R” could at any time have gone and demanded delivery.

It is, however, submitted that this decision is untenable. In the first place “R” had an option in all cases where he purchased of either completing by taking delivery or of settling by the payment of differences; Shaw being the seller, was not by the contract entitled to call on “R” to take delivery and pay. It seems that when “R” elected (as he was entitled to do by the contract) to treat it as a difference bargain, the exercising of this option related back to the time of the contract and gave the transaction the character of a difference bargain from the first. The facts do not fulfil the requirements suggested by Lord Shand for making a real bargain, the “mutual obligations” to take and deliver, see ante p. 95, seeing that Shaw had no option in the matter at all events until the cover was run off, and then the contract was that the settlement was to take place by payment of differences. The fact of the dividends, the premium, and the contango, being credited to “R” seems to give very little weight one way or the other, and are quite consistent with a special arrangement in connection with a difference bargain. See per Turner, L.J., in ex parte Marnham.[[257]]

It has above, at p. 96, been suggested that the judgment of Lord Shand seems to contain two conflicting tests of a “real bargain;” on the one hand he suggests “mutual obligations,” on the other, it is said to be sufficient if either party can compel completion. No doubt “R” had the right of calling for completion, and had he done so then the transaction would have been a genuine purchase. But where one of the parties has the option of electing which form the bargain shall ultimately take, purchase or difference bargain, it is submitted that the legal attributes of the transaction must be determined by the form which it ultimately assumes in fact.

A later Scotch case, The Liquidator of the Universal Stock Exchange v. Howat, is open to the same criticism. The terms on which the plaintiff company dealt with the defendant were of a somewhat similar character to those proved in Shaw v. The Caledonian Railway. The conditions endorsed in the bought and sold note stated that the Company acted as principal in all sales and purchases and not as broker, being in all cases prepared to deliver or take up. Clients might, if it suited their convenience, repurchase or resell from or to the Company any stocks which they might have sold or bought to or from the Company, but the Company could not compel them to do so. Some of the defendant’s instructions to the Company to sell to him contained instructions to repurchase from him (or close) at a certain profit. The action was brought to recover differences on stocks which defendant had purchased and which had been closed by plaintiffs on defendant’s instructions. The Court held that these were real transactions of purchase and sale.

Per the Lord President, at p. 135: “It is much more likely that the arrangement was, that the transactions should be as was expressed in the writings, that the legal rights of both parties should stand as so expressed; but that the attention of both parties should be directed towards escaping from the unpleasant consequences ... if contrary to the interests of both, delivery were demanded and given.”

It is, however, submitted that the effect of the conditions quoted above, gave the customer an absolute right or option to close his stocks and pay or receive differences; and that when he exercised this option it gave the transaction the character of a difference bargain. These being the rights of the defendant, it is difficult to see how the rights of the Company were in respect of real transactions.[[258]]

There is another kind of transaction on the Stock Exchange, as to which there may some day be a question how far it is a gaming contract within the statute. These are called “Options.” |Options.| Options are described by a witness giving evidence before the Stock Exchange Commission of 1878,[[259]] as the purchase of the right to buy or sell particular stock on a particular day at a fixed price, e.g., the price of Russian Stock is 83 to-day, and a person wishes to acquire the right to buy that stock on some future day, |Calls.| believing that the price will then be higher, and is desirous of not risking more than a certain sum of money in a transaction, say 2 per cent. He would probably be obliged to give 85 for the stock for the end of March, upon the condition, that if he did not wish to take up the stock, he must pay 2 per cent., the difference between the day’s price and the price at which he bought: that is in effect paying 2 per cent. for the right of saying at the end of March whether he will or will not buy the stock at 83. If he does not buy he loses 2 per cent., and the stock must rise 3 per cent. by the time before he can make 1 per cent. profit. |Puts.| Then there is the converse case of a put, which is payment of a premium for the right to sell, or call upon a man to take delivery of, so much stock at a fixed price. This is akin to a Bear transaction, and of course the option will only be exercised in the event of a fall in the price. The person who would accept this obligation would be an intending purchaser, who is willing to give a price equal to the price of the day, minus the premium. Suppose the price of stock be at 90, A is desirous of purchasing, but does not wish to give more than 88. B, believing they are about to fall, wishes to “bear” them without incurring the risk of heavy loss. So B gives A 2 per cent. for the right on a future day of calling on A to take delivery of so much, at the price of the day—90. If they fall to 87, B will exercise the option and make 1 per cent. profit, while A has got the stock virtually for 88, which he was willing to give. If B does not exercise the option, A secures his 2 per cent.

Double options.

There are also double options, which give the right of either buying or selling at a fixed time, that is to call it if it goes up, to put it if it goes down, for which a double premium is charged.

Are options in the nature of wagers.

It has been suggested that these transactions would be held void at law, as being in the nature of wagers. It was remarked by the Chairman of the Stock Exchange Commission, that they were very much in the nature of a “bet.”[[260]] It will be remembered, moreover, that Barnard’s Act places all agreements for “puts and refusals” in the same category as wager-contracts, which are all made illegal thereby. It is, however, submitted that in all bargains for opinions the great element of a wager is wanting. It does not seem to be the essence of the bargain, to use the words of Cotton, L.J., in Thacker v. Hardy, “that one party should win and the other should lose.”

Suppose A gives B £2 for the option to buy of him so much stock at a future date, at, say £80, the market price of the day. The result to be must be the same in all cases. He secures his £2. So far as this transaction goes, it is immaterial to him whether the stock rises or falls in price; he will in neither case be a loser as between himself and A. Of course if the price rises 3 per cent., in which event A will exercise the option, B may be called a loser in the sense that he might have sold his stock at the increased price instead of the price stipulated for, or that he may have to give increased price for it in the market; but this seems to be only an indirect loss, not a loss on the actual agreement with A. He is in no event called on to make a payment to A. He is only a loser in the sense as suggested by Cotton, L.J., in Thacker v. Hardy,[[261]] that any party to an ordinary contract of sale may be so described according as the bargain turns out in his favour or the reverse. No doubt, as stated by the witnesses before the Stock Exchange Commission, in many cases these options are purchased without the slightest intention on the purchaser’s part of holding the stock; but still, as in the case of an ordinary sale of stock, it is impossible for the vendor to know what the purchaser’s ultimate intentions are, which, according to cases cited above, takes the case out of the category of a wager.

Continuations.

There is a class of transaction very common upon the Stock Exchange called in general “Continuations,” which, it seems, may be made a mere cover for wagering. But here the operation of the buyer and the seller must again be distinguished. Suppose a buyer has purchased, for the next account day, more stock than he can take up, he has to arrange for the bargain being continued or carried over to the next account day. If he be an outsider and not a member of the Stock Exchange, he must of course get it arranged through his broker. Application is then made to a dealer who has money to lend, and perhaps, wants the stock. This dealer may be the same person as the original vendor, or he may not. In either case, the form of the transaction is a purchase of the stock (in the former case it will of course be a repurchase by the dealer); the price of this purchase or repurchase is fixed by the clerk of the house, by the instructions of the committee, as the price at which the continuation is to be effected, and is called “the making-up price.” The stock is then, by a collateral agreement, repurchased from the dealer at the same price, only with an addition as premium for the accommodation. |Contango.| This premium is called a “Contango;” and in cases where the bargain is arranged with the original vendor of the stock, it is simply the consideration for the vendor’s agreeing to postpone delivery of the stock until the next account day; but where it is done with another dealer, it is in substance an advance of money on the security of the stock, and is called “taking in” by way of continuation. It may be, however, that this “bull” or speculative purchaser, may be in a position to demand a “backwardation” (see post) instead of having to pay a “contango,” that is, if the market is largely oversold and the demand for the particular stock is greater than the demand for money.

Where the price has fallen so that the making-up price is less than the original price, the purchaser in effect pays the difference. Suppose A has bought £1,000 Railway Stock at par for the current account, when the settling day arrives he does not want to take it; he then agrees with his vendor to carry it over to the next account. Say the price has fallen to 98, and that is the making-up price. The jobber repurchases of him at 98 for the current account, thus leaving a difference of 2 per cent. payable by the original purchaser to the vendor, and this difference is payable on the current account day. By a collateral agreement, the jobber resells to him for the ensuing account at 98, plus the contango; so that in the result he pays the original price, viz., par, plus the contango as the price of the continuation. It comes to the same thing if the purchaser gets another jobber to “take in” the stock for him. He pays £100 to his vendor, receiving £98, the “making-up price,” from the other jobber, which is in effect an immediate payment out of his pocket of 2 per cent. If, on the other hand, the price has risen 2 per cent., so that the making-up price is £102, he would receive £2 from his Vendor on the current account day, but on the ensuing account he would have to pay £102, the making-up price, plus contango. Sometimes these continuations are effected over several accounts, the purchaser paying or receiving differences according as the price falls or rises. Such a transaction seems something like a loan of money on the security of stock, the amount of the loan being by the payment of the differences from time to time kept just equal to the market price of the security.

“Taking in” distinguished from loans.

The “taking in” of stock by way of continuation must be distinguished from a mere loan or deposit of stock. In the former case it is, pro tempore, an absolute sale of the stock to the jobber—the property passes to him—he can deal with it as his own. He is, no doubt, obliged to deliver the same amount of stock on the ensuing account day, but not the identical stock. But in the case of a loan, he is not allowed to sell it or place it beyond his own control, but may be called upon to restore the identical securities. (See Rule 70.)[[262]]

It seems that continuations are effected in the case of loans where the stock is merely lent or deposited as security, and not “taken in,” as in the transaction described above in which case, as has just been said, the stock is merely pledged, and the lender cannot part with the control of it. |? Whether continuations ever in nature of a wager.| It would, of course, be quite possible that parties might enter into gaming transactions, or bargains for the payment of differences, under guise of an agreement for the continuation of a loan, the parties on either side paying or receiving a difference according to the rise or fall in price, as before described. The following cases will show by what test real and fictitious bargains are to be distinguished.

Case of loan fluctuating according to value of security.

In ex parte Phillips,[[263]] it appeared that it was an ordinary dealing for one member of the Stock Exchange to make advances of money on the security of shares, &c., belonging to the borrower, or on the deposit of certificates or other evidence of title, and that such deposits often amounted to the full value of the security; and that the lender was entitled, if the advance were not repaid on the day agreed upon, either to dispose of such security, or to retain it at the market price of the day, and either to claim the deficiency or repay the surplus. If the borrower were declared a defaulter and the securities were not realised within three days of such declaration, the lender must take them at a price to be named by the official assignee. In November, 1858, Phillips lent the bankrupt £775 at 6 per cent., on deposit of some securities, till the next settling day. The loan was renewed on several successive settling days upon the same terms, except that when the value of the securities fell part of the loan was paid off: but as the value rose the lender made further advances, thus equalising from time to time the amount of the loan and the value of the security. On 30th April, 1859, a sum of £625 was in this way due to Phillips, but the bankrupt had two days previously been declared a defaulter, and the petitioner had retained the shares at the market price of the day, they having fallen in value. According to the custom of the Stock Exchange, it was optional on each settling day for either party to renew the loan, the amount being increased or diminished according to the then value of the security. In July the debtor was adjudicated bankrupt, and the petitioner tendered a proof for the amount due, as above. The commissioner rejected the proof, on the ground that the debt was due on a gambling transaction.

Difference between real and fictitious loan.

On appeal, this decision was reversed. Turner, L.J., pointed out that it was not as though there was no real advance of money, and a payment by one side or the other according to the rise or fall of the stocks. Here there was a bonâ fide advance, and the creditor was, in any event, to receive the amount with interest, no more and no less.

Ex parte Marnham.

So in the contemporaneous case of ex parte Marnham,[[264]] there was an alleged sale of shares to the bankrupt at a certain price. The differences were paid on each settling day by the bankrupt to the petitioner, and by the petitioner to the bankrupt, as in Phillips’ case, and the account was finally settled by the petitioner taking the shares at their value, leaving a balance in favour of the petitioner, for which he claimed to prove. There was no real delivery of the shares.

Turner, L.J., said that if the case had rested there, it would have been necessary to have the case further investigated before a jury; but it appeared that the dividends on the shares were accounted for to the bankrupt, and, further, the petitioner repurchased some of the shares from the bankrupt and accounted to him for the value. The former fact, perhaps, would not have been inconsistent with a mere cover for the payment of differences; but the repurchase of the shares and payment for them, stamped the transaction with the character of reality.

Such are the criteria for testing the legality of such transactions; as cases have been before the Courts it is necessary to mention them. At the same time, we must not forget the positive statement of the witnesses before the Stock Exchange Commissioners, that, in point of actual practice, there is no such thing as wagering or fiction in dealings on the Stock Exchange.[[265]]

The seller.

But, now, to take the converse case of the seller, who has sold more stock than he can deliver. He has to apply to a dealer who will advance him the stock. The operation here effected is, the purchase of the stock for the current account at the “making-up price,” and its resale for the ensuing account. This resale may be at a lower price than the purchase, and the difference between the two prices being the premium paid to the dealer for the loan of the stock. It may, on the other hand, be effected at the same price, if the state of the market is such that the payment of the money is of itself an accommodation to the dealer sufficient to induce him to make arrangements, or if there is a large “bull” account open, he may be entitled to receive a “contango.” The premium, if any, received by the lender of the stock is called a “Backwardation.” But, as explained by a witness before the Stock Exchange Commissioners,[[266]] the payment of contango or backwardation depends upon whether the particular stock is overbought or oversold. If an enormous amount of stock is thrown upon the market more than it can take, there is a heavy contango; if, on the contrary, an enormous amount of stock is taken off the market, there is no contango, but a backwardation.

It is submitted that the following conclusions result from the foregoing cases:—

Results of the foregoing cases.

(1.) Bargains for mere differences are wagers within 8 & 9 Vict., c. 109, though contracts on the Stock Exchange never take that form.

(2.) That mere bargains for the future delivery of things not in possession and the value of which is uncertain at the time of the contract are not wagers.

(3.) That in determining whether a bargain be in the nature of a wager or not the substance of the agreement as understood by both parties at the time must be looked at.

(4.) That the question as to what were the real elements of the agreement is a question of fact for the jury, but that it is for the Court to decide on the nature of the agreement on the facts so found. Both these positions seem clear from the case of Grizewood v. Blane and the remarks of Turner, L.J., in ex parte Marnham.

(5.) That the absence, in fact, of a material element of the professed transaction is material as showing that the bargain was a mere cover for a wager, e.g., non-delivery of stocks or shares, as in Grizewood v. Blane ex parte Marnham.

(6.) That, as between the jobber and the broker’s principal, it is quite immaterial that the arrangement between broker and principal is for a wagering contract, unless the jobber is aware of it and so knowingly engages in a wagering transaction. This clearly appears from the remarks of the judges in Thacker v. Hardy[[267]] and Marten v. Gibbons.[[268]]

(7.) That where as between principal and jobber the contract be a wager, the contract between principal and broker to carry out the main contract is not one of wagering, but gives rise to an implied contract right of indemnity. This appears from Thacker v. Hardy and ex parte Godefroi.[[269]]

It is only necessary to mention very shortly a subsequent statutory provision with respect to gaming and wagering contracts.

12 & 13 Vict.

By the Bankruptcy Act of 1849, section 201, it is enacted that no bankrupt should be entitled to his certificate of discharge who should have lost by any sort of gaming or wagering £20 in one day or £200 within twelve months previously; nor who should have lost within the preceding twelve months £200 by the purchase or sale of any stock where such stock should not be actually transferred or delivered in pursuance of the contract, or where the stock was not to be transferred within one week after the contract.

It will be observed that this enactment attaches penal consequences to two classes of transaction: wagering contracts and “speculations” on the Stock Exchange, using the term in its wider sense, and not merely as equivalent to bargains for differences. The principal points decided on this section were:[[270]]—

(1.) That speculations on the Stock Exchange (to which the phrase “time-bargains” was more than once applied by the judges) were not wagers within the first part of the section, as they were expressly dealt with in the latter part. It seems, however, to have been admitted that they were or might be wagers within 8 & 9 Vict., c. 109.

(2.) That stock (and? shares) in railway companies was within the Act, which did not, like Barnard’s Act, apply only to public stock. In ex parte Wade a question was raised as to whether Turkish scrip were within the Act, but the point was not decided. However, it appeared from the evidence of a stockbroker that scrip was not considered as equivalent to stock.

(3.) It would seem from the above cases that where the purchase was for an account day more than a week distant, or where delivery was postponed on a “continuation,” this would bring the bankrupt within the Act.[[271]]

(4.) The practice of the Court was, where any question of doubt arose, not to decide it, but to grant the certificate subject to its being avoided for the reasons given in the statute.

These provisions with respect to the discharge of bankrupts have not been repeated in subsequent Bankruptcy Acts; though under the new Act it is still discretionary with the Court whether the bankrupt shall have his discharge, regard being had to his conduct in all cases of rash speculation.[[272]]

It would seem, from the foregoing history of the legislation in respect of betting contracts, that the tendency of the Legislature has been to abstain from active interference with the subject’s liberty, and to give negative discouragement to the practice, by observing a neutral attitude as between the parties, rather than to endeavour to stamp it out by penal enactments. Thus within the last half century three penal statutes on the subject have been repealed. The Act of 1845 repealed the penal provisions of the Statute of Anne. The penal provisions of the Bankruptcy Act of 1849 have not been renewed. Barnard’s Act, which it seems, had for a long time been a dead letter, was repealed in 1860. There is, however, one statute in a contrary direction, 30 & 31 Vict., c. 29, known as Leeman’s Act, |Leeman’s Act, 30 & 31 Vict., c. 29. History of legislation.| which enacts that all contracts for the sale or transfer of any shares, stock or joint interest in any joint stock banking company in the United Kingdom of Great Britain and Ireland constituted or regulated by the provisions of any Act of Parliament, Royal Charter or letters patent, issuing shares or stock transferable by any deed or written instrument, shall be null and void to all intents and purposes whatsoever unless such contract, &c., shall set forth and designate in writing such shares, stock or interest by the respective numbers by which they are distinguished at the making of such contract, &c., on the register or books of such banking company as aforesaid, or, where there is no such register of stock, by distinguishing numbers, then unless such contract, &c., shall set forth the person or persons in whose name or names such shares, stock or interest shall at the time of such contract stand as the registered proprietor in the books of such banking company. It is further made a misdemeanour to insert in any contract a false entry of any such number or names.

Effect of Leeman’s Act.

The purport and effect of this statute is obvious; it is intended to prevent speculative sales and purchases of bank shares, and to annul such transactions in cases where the vendor has not the shares in his possession at the time of the contract: in the same way as Barnard’s Act prohibited the sale of public stocks not in the possession of the vendor. Leeman’s Act, however, only makes the contract void, whereas Barnard’s Act made it illegal.

The circumstances which gave rise to the passing of the Act are well known. From 1864 to 1866 there was a large amount of speculation in bank shares, which caused great fluctuation in their prices, and led to serious consequences. From the evidence given by some of the witnesses before the Stock Exchange Committee of 1878, it would seem that the real origin of the panic is to be looked for, not in the “bear” or selling movement, but in the previous rush to buy, which was in some cases started by combinations of persons who were supplied with means by the directors of the banks. This “bull” movement produced the desired result of raising the prices of the shares above their real value. The shares then having reached a price which neither the dividends nor the internal condition of the banks justified, speculators took the opposite course; the “bear” operations which followed caused a rapid fall in prices. Not only shareholders, but depositors became alarmed, the sudden rush to withdraw deposits was more than some banks could meet; but those that did stop payment had long been hastening their own ruin by unsound internal management and investment in rotten securities. Others, whose condition was more stable, suffered a temporary depreciation in the value of their shares, but ultimately survived the panic. There were many reasons why banks and bank shares should be protected in future from such onslaughts and the disastrous results consequent thereon, so Leeman’s Act was passed avoiding all contracts for the sale of shares which at the time of the contract could not be specifically identified: contracts which the vendor could only perform by going and purchasing in the market himself.

Act not observed on the Stock Exchange.

In practice, however, the Act has on the Stock Exchange been a dead letter, owing to the impossibility of transacting business in the ordinary way if its provisions were observed. But a recent case shows that although as between members of the Stock Exchange it may be the practice to disregard the Act, yet such practice does not bind the outside public, and that if a broker, through not complying with the Act, fails to carry out his client’s instructions, he may become liable in damages.

Liability of broker.

In Neilson v. James[[273]] the plaintiff employed the defendant to sell for him some shares in the West of England Bank in the Bristol Stock Exchange. The shares were not numbered, but registered in the name of their owner. Defendant sold them on the 4th of December to a firm of jobbers on the Bristol Stock Exchange, but the bought and sold notes which passed between the defendant and the jobbers on that date did not disclose the name of the owner of the shares. The 13th December was the “name day” (i.e. the day on which the jobbers were bound either to accept delivery of the shares themselves or furnish the name of a sub-purchaser to stand in their place,[[274]]) and the jobbers then furnished the name of one J. R. Gould as the purchaser to take delivery, who thereupon became liable (under ordinary circumstances) to accept and pay for the shares. But previously to this date, on the 7th of December, the bank had stopped payment and soon after was wound up, and Gould repudiated his purchase on the ground that the name of the owner of the shares did not appear on the Contract, which was therefore void under Leeman’s Act. The consequence was that the plaintiff remained owner of the shares and lost the price he would have obtained if the sale had been validly carried out. Plaintiff sued to recover the price of the shares as stated in the sold note.

For the defendant it was argued—(1) That the agreement of the 4th December was only inchoate and not the completed contract, consequently there was no breach of duty on the defendant’s part on that day. (2) That the real contract was not completed till the 13th, and then performance was impossible as the bank had then stopped payment and was in the course of winding up; at any rate the damages should be only nominal according to the value of the shares on the 13th. (3) That the defendant was employed by the plaintiff to effect the sale subject to the customs of the Bristol Stock Exchange; that one of those customs was to disregard the provisions of Leeman’s Act in the sale of bank shares.

The Court decided—(1) That according to Coles v. Bristowe[[274]] the contract was complete on the 4th, subject only to the right of the jobbers to furnish the name of a sub-purchaser as a substitute for themselves on the “name day.” (2) There is no undertaking on the part of the vendor of shares that the company shall be a going concern on the day of transfer; consequently, as plaintiff would have been entitled to the full price, that price must be the measure of damages. “It is said,” remarked Brett, L. J., “on the part of the defendant, that the plaintiff can only recover nominal damages, because if the contract had been in due form, the jobbers would not have been bound to have taken the shares, as the plaintiff could not on the account day, when the bank was being wound up, have given a valid transfer which the bank could have registered. But it seems to me that all the seller was required to do was to deliver shares on the account day, which, if the bank had remained solvent would have entitled the purchaser to have had them transferred into his name, and that the seller does not undertake that banking company shall be a going concern up to the account day. The plaintiff was therefore ready to do all that he was bound to do, and if the jobbers had accepted the shares on that day, they would have been bound to have paid the agreed price; and as the defendant failed to do that which would have compelled them to have taken the shares, the plaintiff lost such price by reason of such failure.” (3) That the custom was bad as being unreasonable and illegal. Per Brett, L. J.: “He does not say the plaintiff knew of the custom, but he says that because plaintiff employed him to sell the shares on that Stock Exchange and according to its rules, he is bound by that custom. I think, however, that the plaintiff is only bound by such a custom as is both reasonable and legal, for to that extent only can a person who is ignorant of a custom be assumed to acquiesce in and be bound by it.”

N.B.—These remarks seem to assume that if plaintiff had known and acquiesced in the custom he could not have been heard to say the custom was unreasonable. This would probably have been the case if the defendant had previously done similar transactions for plaintiff without his taking any objection.

So the broker was held liable to his client for negligence, in not conforming to the requirements of the statute, and thereby depriving his client of the benefit of the sale of his shares.

It will be seen that the law as it stands is somewhat in favour of an unscrupulous purchaser. The Act having made the contracts void, and not illegal or punishable, there is nothing to prevent members of the Stock Exchange from disregarding it, except a possible liability to a client; while on the other hand, the inconvenience entailed by complying with the Act is sufficient to induce dealers and brokers to incur whatever risk there may be, so as to facilitate business. It is probably only a member of the outside public that would over take advantage of the Act, and repudiate a bargain on the ground of non-compliance with it provisions. Besides, there can be no doubt it affords a safeguard to banks against undue fluctuation in the price of their shares.

From a late case before the Court of Appeal, it seems that in the case of the purchase of bank shares through a broker, if the principal have notice (e.g. by the receipt of the bought note) that the contract effected by the broker does not comply with Leeman’s Act, and if he does not repudiate it, the broker will be justified in paying the purchase-money on his principal’s behalf. |Barclay v. Pearce.| At least this seems to be the effect of the case of Barclay v. Pearce.[[275]] Defendant instructed plaintiff, who was a stockbroker, to purchase shares in the Oriental Bank. The usual bought note was sent to the defendant, but neither this nor the contract with the jobber contained the numbers of the shares purchased, nor the name of the registered owner, as required by the Act. The “name day” was the 29th, on which day the name of the defendant as the purchaser was handed to the jobber. The transfer was duly executed.

By the rules of the Stock Exchange the plaintiff was personally responsible to the jobber for the payment of the purchase-money. It is customary in dealings in bank shares to disregard Leeman’s Act. The plaintiff paid the purchase-money and sued to recover from defendant. There was no proof that defendant had revoked the plaintiff’s authority to pay. The Court held that the plaintiff having at defendant’s request entered into a contract on which he was personally responsible, though it was void at law, was entitled to recover for money paid to defendant’s use. It was also intimated that until Read v. Anderson was reversed by the House of Lords, it would be immaterial whether the authority to pay had been revoked or not.

It is, however, submitted that it would have been competent for the defendant to have repudiated the transaction before the transfer was executed when he discovered that the statute had not been complied with, and that in that case the plaintiff’s authority would have been revoked. According to Neilson v. James, the usage of the Stock Exchange to disregard the Act would not bind the principal, at any rate unless he acquiesced in it. The distinction between this case and Read v. Anderson seems to be that in the latter case the agent was employed to carry out a contract necessarily void as being a wager. In this case the contract might have been carried out so as to be legally binding, and there would probably be no presumption that the instructions were to make other than a legal agreement.

This view of the matter has lately been confirmed by the Court of Appeal in Perry v. Barnett.[[276]] The facts of this case arose out of the Oriental Bank. The plaintiffs, stockbrokers, had at defendant’s request bought for him 100 shares in that Bank on the London Stock Exchange. The bought note did not comply with Leeman’s Act, and next day the bank closed its doors and defendant refused to complete the purchase. The plaintiffs were really Bristol stockbrokers, but as the shares could not be obtained in the Bristol market, they, with defendant’s knowledge, instructed their London agent to purchase them in London. Grove, J., decided in favour of the defendant on the ground that he was not shown to have known or acquiesced in the custom to disregard Leeman’s Act. On appeal it was thought to distinguish the case from Neilson v. James on the ground that in that case the broker was instructed to sell shares which the plaintiff had in his possession, and so he might without inconvenience have complied with the Act. By Rule 68 of the London Stock Exchange no bargain on the Stock Exchange will be annulled by the committee except on the ground of fraud. The Court affirmed the decision of Grove, J., in favour of the defendant. (1) Adopting the principles on which Neilson v. James was decided, the custom or practice to disregard the Act was unreasonable, and so could not bind persons who were ignorant of it. Per Bowen, J., “It is as regards outsiders only who are ignorant of the custom that such an usage can be called unreasonable.” (2) Rule 68 is unreasonable, so not binding to persons who have not consented to be bound by it.

Seymour v. Bridge.

This case must not be taken as overruling another of the same kind decided by Mr. Justice Mathew about the same time, Seymour v. Bridge.[[277]] His lordship decided in favour of the plaintiff, on the ground that the defendant knew of the customary course of dealing in bank shares, though he was ignorant of Leeman’s Act.

However, in a late case before the Court of Appeal, Coates v. Pacey[[278]] which was another action by a broker against a client for indemnity in respect of a purchase of bank shares, the Court threw out serious doubts whether the same right of indemnity which had been established in favour of an agent employed to make bets for his principal existed in the case of a broker even when authorised to deal in bank shares in contravention of Leeman’s Act.

Actual transfer not affected.

It seems clear that the Act only avoids the contract for purchase and sale, it does not affect a transfer executed in pursuance of such contract. In Mortimer v. MacCallan[[279]] the action was brought for the price of government stocks, sold and actually transferred to defendant in pursuance of a contract void under s. 8 of Barnard’s Act, 7 Geo. II., c. 8, the plaintiff not having the stocks in his possession at the time of the contract. It was held that the action was maintainable, as it was based on the transfer and not on the contract: at p. 640 “it was not a contract to sell, but a sale; not a contract to transfer, but a transfer:” at page 643, “Although the original contract of sale should be illegal on the part of the seller, yet the transfer is a legal act for a legal purpose ... a promise to pay in consideration of a transfer actually made, is neither prohibited by the words nor within the intent of the statute.” As suggested above, this is probably the real explanation of Barclay v. Pearce, p. 120.

Indemnity for calls.

In Loring v. Davis[[280]] a question arose as to the right of the plaintiff, as vendor of bank shares, to indemnity against calls. It was found by Chitty, J., as a fact, that the defendant, while knowing of his right to repudiate the transaction under Leeman’s Act, authorised his brokers to complete it on settling day; that the brokers in accepting the transfers from the plaintiff’s brokers thereby made the defendant equitable owner of the shares, and therefore liable to indemnify the plaintiff.