Chapter X: Section 15: of the Act repeals the Statute of Charles II., and so much of (1)

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.

[Sidenote: 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in that they are in no sense declared illegal; and all the penal provisions of the earlier statutes are expressly repealed.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_. [Sidenote: ? 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. [Sidenote: 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.

[Sidenote: 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.

[Sidenote: I.—Contracts by way of gaming.]

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

[Sidenote: _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]

[Sidenote: 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. [Sidenote: 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.)

[Sidenote: 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. [Sidenote: 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.

[Sidenote: 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.

[Sidenote: _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.

[Sidenote: 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.

[Sidenote: 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.

[Sidenote: 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.

[Sidenote: 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. [Sidenote: 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. [Sidenote: 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.

[Sidenote: 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.

[Sidenote: 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_. [Sidenote: 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.”

[Sidenote: 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.

[Sidenote: 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?”

[Sidenote: 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.

[Sidenote: _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, [Sidenote: 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. [Sidenote: 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. [Sidenote: _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]

[Sidenote: 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. [Sidenote: 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]

[Sidenote: 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.

[Sidenote: 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?

[Sidenote: 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. [Sidenote: 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.

[Sidenote: _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.

[Sidenote: 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. [Sidenote: 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.

[Sidenote: What agent must prove.]