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:—
(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.”
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]
(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.
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.
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]
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.
(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.
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.
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.
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.
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.
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.
(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.
(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.
(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).
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.
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.
(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.
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].
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.
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.
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.