Baron Parke was of another opinion, thinking that the case came within section 11 of 12 George II., c. 28. He also put another illustration: “Suppose a number of persons were to buy a large collection of pictures some of which far exceeded others in value, might it not be decided by lot who should have the first choice?” But as the company was illegal on another ground, this point was not decided.
Sykes v Beadon.
The next case of this kind is Sykes v. Beadon.[[295]] The association was formed on the principle of investing the subscriptions of the members and dividing the capital fund and profits among themselves by means of certificates convertible by annual drawings by lot into preference dividend bonds bearing interest with a bonus.
Building societies distinguished.
The Master of the Rolls without deciding the point finally, said (p. 185), “I have grave doubts whether this association is not illegal, as being within the Lottery Acts. Building societies are in a different position—they are loan societies. In an association such as this, it is not a case of loans to be returned, but of subscriptions to be divided. The subscriptions are to be divided among the subscribers by drawings by lot, and the prize is a bond with a bonus.” (At p. 190) “The holders of certificates are persons who subscribe money to be invested in funds which are to be divided among them by lot and divided unequally. That is the persons who get the benefit of the drawings get a bond bearing interest and a bonus which gives them different advantages from the persons whose certificates are not drawn, and it depends upon chance which gets the lesser or the greater advantage. It is, therefore, a subscription by a number of persons to a fund for the purpose of dividing that fund between them by chance and unequally.
“If that is not a lottery it is very difficult, at all events to my mind, to understand what a lottery is. It is called a division by lot, which means lottery. It says that the selections of certificates shall be by lot, and that is to be done in the ordinary way, by chance, and the benefits, as I said before, are unequal.”
The next company which it was sought to bring within the Lottery Acts was the Mutual Society—a sort of building society.[[296]] |Wallingford v. Mutual Society.| The objects of this society were to accumulate capital by means of monthly subscriptions from members to advance capital to the members in rotation, to secure payment of such advances, and to divide profits among the members. The mode of operation was to obtain subscriptions from members, to advance them money, at interest, upon certificates of appropriation. Such certificates should be given to every member on joining the society, and should certify his right to receive advances and a share of profits. Holders of life certificates were entitled to tontine bonuses. An “appropriation” or advance was to be made according to the number of certificates held by the member successful in obtaining the appropriation.
Appropriations were to be allotted in two ways, the first and every fourth one thereafter by drawing, free of any premium or interest, while those intermediate appropriations were allotted to the member or members tendering the highest premium for the same respectively. Appropriations were to be repaid by quarterly instalments.
It was urged that the constitution of this society was illegal under the Lottery Acts, as the benefits of the society were to be given to the members by drawings.
The Court were unanimous in holding that the society was not within the Lottery Acts. Per Lord Selborne: “One of those Acts plainly, on the face of its recitals (the enacting part not departing from the recitals) had reference to gambling transactions only; and in my judgment this was not a gambling transaction within the meaning of that Act.” The other had reference to persons who kept lottery offices at which the public were invited to pay for lottery tickets; and that Act could have no application to this case.