CHAPTER XLV ILLEGAL AGREEMENTS WAGERS, USURY, SUNDAY LAWS One party only need incur risk in a gaming contract.. -..1664a A promised prize for competition by others does not involve gambling 1665 1666 1667 Whether contract between broker and customer may be invalid, though that made on the Exchange is valid..... 1672 Evidence of intention that there shall be no actual delivery. 1673 Sale of the obligation of a third person cannot be usurious.. 1689 Discount of negotiable paper which is subject to a defence.. 1690 Damages for default may be greater than legal interest. 1696 Contracts made, or to be performed on Sunday. 1700 Preliminary negotiations on Sunday do not invalidate a contract.. 1701 Ownership may be transferred by agreement on Sunday.... 1702 1703 Importance of delivery.. Sales of land and choses in action.... Persons ignorant of fact that contract was made on Sunday are not affected by illegality.... Ratification and adoption of contracts made on Sunday.. Application of the principles of adoption.. Works of necessity or charity..... Collateral effects of illegal Sunday agreements.. 1704 1705 1706 1707 1708 1709 1710 § 1664a. One party only need incur risk in a gaming contract. As will appear from the following sections, wagers and gaming contracts are generally illegal. The typical wager is familiar but the essential feature of a wager making it illegal must be understood in order that the various kinds of agreements which come within the inhibition of the law as wagering or gambling agreements may be understood. It is the essence of such an agreement that if its terms are carried out and a promisor is compelled by the happening of the condition of his promise to perform it, on the one hand neither he nor a third person will have received anything of commensurate value, or regarded by the parties as of commensurate value, with the performance which he himself renders, and on the other hand the promisee will have suffered no detriment commensurate or regarded as commensurate with the performance. It is not essential that both parties shall make an aleatory promise. Doubtless such a bilateral chance is essential in what is strictly called a wager or bet; and in a jurisdiction where the illegality of wagering or gaming contracts depends wholly upon statutes, the words of the statute must be considered; 1 but no such narrow limits can be fixed for the prohibitions of public policy in a 1So in England it has been said "If either of the parties may win but cannot lose or may lose, but cannot win, it is not a wagering contract." Hawkins, J., in Carlill v. Carbolic Smoke Ball Co., [1892] 2 Q. B. 484, 491. See also Thacker v. Hardy, 4 Q. B. D. 685, 695; Forget v. Ostigny, [1895] A. C. 318, 326; Quarles v. State, 5 Humph. 561. Cf. the definition of "gambling in Lang v. Merwin, 99 Me. 486, 59 Atl. 1021, 105 Am. St. 293; and see 1 Richards v. Starck [1911] 1 K. B. 296, 302, where Channell, J., said of the English definition that "a state of things has arisen which makes one doubt whether the definition can be treated as exhaustive." In that case although the plaintiff was to receive back, in any event, a deposit which he made, the loss of interest which he suffered if no profit was made was held to bring the transaction within the English Statute. jurisdiction which holds wagering contracts invalid, apart from statute. It is the characteristic of a lottery that one party pays a definite sum in return for a promise of receiving a greater sum or greater value in a certain contingency. Yet "every lottery has the characteristics of a wager or bet although every wager is not a lottery."2 Lotteries though almost universally prohibited by state constitutions and statutes, seem open, apart from legislation, to the same objection as any gambling contract in jurisdictions where the common law denies validity to wagers. Therefore a contract by which a purchaser pays a fixed sum in return for a promise to convey such a one of a number of lots, as may be determined by the drawing of lots, is invalid. A wagering policy of insurance also is invalid, though but one of the parties makes an aleatory promise. 4 3 § 1665. When an aleatory promise involves gambling. Every aleatory promise where the happening of the chance upon which performance of the promise depends involves no service by or disadvantage to the promisee, for which performance of the promise may be regarded as a compensation or an indemnity, is open to the same objection. An ordinary contract of guaranty or of insurance is unobjectionable because the happening of the condition on which performance depends is injurious to the promisee and performance of the promise is in the nature of compensation for the injury. But if the in 2 Wilkinson v. Gill, 74 N. Y. 63, 30 Am. Rep. 264, quoted in Yellowstone Kit v. State, 88 Ala. 196, 16 Am. St. Rep. 38. See also Stone v. Mississippi, 101 U. S. 814, 818, 25 L. Ed. 1079; Grove Mfg. Co. v. Jacobs, 117 Me. 163, 103 Atl. 14; Roselle v. Farmers' Bank, 141 Mo. 36, 42, 39 S. W. 274, 64 Am. St. Rep. 501; Ex parte Kameta, 36 Oreg. 251, 254, 60 Pac. 394, 78 Am. St. Rep. 775. 3 Glennville Investment Co. v. Grace, 134 Ga. 572, 68 S. E. 301, 29 L. R. A. (N. S.) 758; Lynch v. Rosenthal, 144 Ind. 86, 42 N. E. 1103, 31 L. R. A. 835, 55 Am. St. Rep. 168; Guenther 5 v. Dewen, 11 Iowa, 133; Wooden v. Shotwell, 24 N. J. L. 789; Allebach v. Godshalk, 116 Pa. 329, 9 Atl. 444. In these jurisdictions lotteries were forbidden by statute or constitution, and a variety of raffles and gift enterprises are open to the same objection. 4 See the following section. For this reason the contract in Carlill v. Carbolic Smoke Ball Co., [1893] 1 Q. B. 256, -a promise by the seller of "smoke balls" to make a payment to any one who contracted influenza after using themwas unobjectionable. 6 sured has not what is called insurable interest the agreement is invalid, whether the insurance is marine, fire, or life. If the insured will sustain loss from the destruction of the subjectmatter of the insurance, he will ordinarily have an insurable interest. It is of the essence of a gaming agreement that it is performable only upon the happening of a condition. Generally this condition will be a fortuitous event such as that furnished by an election, or a horse race, but this is not necessarily the case. A wager may relate to a trial of skill, or proof of an actual fact where the performance of the condition is or may be within the control of one of the parties. It is true, however, that though the condition may be within the power of one of the parties, this is not admitted by the other at the time of the bargain, and therefore as between the parties is regarded as fortuitous. 10 On the other hand, a contract will not be open to objection because an advantage or disadvantage by the terms of the promise accrues to one of the parties on the happening of a purely fortuitous circumstance, provided that fortuitous circumstance adds to or depreciates the value of the consideration given the promisor; 11 while if the fortuitous cir Moran v. Uzielli, [1905] 2 K. B. 555; Harrison v. Fortlage, 161 U. S. 57, 40 L. Ed. 616; Putnam v. Mercantile Marine Ins. Co., 5 Metc. 386; Riggs v. Commercial Mutual Ins. Co., 125 N. Y. 7, 25 N. E. 1058, 10 L. R. A. 684, 21 Am. St. Rep. 716; International Marine Ins. Co. v. Winsmore, 124 Pa. 61, 16 Atl. 516. 7 Baldwin v. State Ins. Co., 60 Ia. 497, 15 N. W. 300; Fowler v. New York Indemnity Ins. Co., 26 N. Y. 422. Fuller v. Metropolitan Life Ins. Co., 70 Conn. 647, 41 Atl. 4; Loomis v. Eagle Life Ins. Co., 6 Gray, 396; Judson v. Walker, 155 Mo. 166, 55 S. W. 1083; Mechanics' Nat. Bank v. Comins, 72 N. H. 12, 55 Atl. 191, 101 Am. St. Rep. 650; Ruse v. Mutual Benefit Life Ins. Co., 23 N. Y. 516. 'Hampden v. Walsh, 1 Q. B. D. 189. The agreement in this case was that a certain sum was to be paid for proof of the convexity of any railway, canal, or lake, a promise being made in return to pay a like sum in case of failure to make the proof. See also Comer v. Powell (Tex. Civ. App.), 189 S. W. 88. A lottery, however, it seems, must depend on a purely fortuitous event. See Stoddart v. Sagar, [1895] 2 Q. B. 474; People v. Reilly, 50 Mich. 384, 15 N. W. 520, 45 Am. Rep. 47; Reilly v. Gray, 77 Hun, 402, 28 N. Y. S. 811. Cf. State v. Lovell, 39 N. J. L. 458. 10 See supra, § 119. 11 In Ferguson v. Coleman, 3 Rich. L. 99, 45 Am. Dec. 761, the purchaser of land agreed to give a certain price if the market price of cotton advanced to 8 cts. a lb. by a certain day, and a smaller sum if the price did not so advance. The contract was held unobjectionable. It will be seen that the cumstance bears no relation to the value of the consideration the transaction will be a wager. 12 § 1666. A promised prize for competition by others does not involve gambling. Where a prize is offered for competition, the acceptance of the offer by competitors does not constitute a wagering contract if the offeror of the prize does not take part in the competition. 13 And the fact that an entrance fee is required of the contestants has been held not to invalidate the transaction.14 value of the land depended on the price of cotton, and therefore an agreement to pay a larger sum if cotton advanced than if it did not, was merely a method of adjusting the price to the value of the property. Decisions involving the same point are: Newell v. Smith, 53 Conn. 72, 3 Atl. 674; Plumb v. Campbell, 129 Ill. 101, 18 N. E. 790; Wolf v. National Bank, 178 Ill. 85, 52 N. E. 896; Phillips v. Gifford, 104 Iowa, 458, 73 N. W. 1033; Deyo v. Hammond, 102 Mich. 122, 60 N. W. 455, 25 L. R. A. 719; Treacy v. Chinn, 79 Mo. App. 648; Harper v. Crain, 36 Ohio St. 338, 38 Am. Rep. 589; Clyde v. Mohn, 4 Ohio C. C. 537, 2 Ohio Civ. Dec. 694; Kirkpatrick v. Bonsall, 72 Pa. St. 155. See also United States v. Olney, 1 Abb. (U. S.) 275; Lynch v. Rosenthal, 144 Ind. 86, 42 N. E. 1103, 31 L. R. A. 835, 55 Am. St. Rep. 168; Dion v. St. John Baptiste Soc., 82 Me. 319, 19 Atl. 825; Miller v. Eagle, etc., Ins. Co., 2 E. D. Smith, 268; Edson v. Pawlet, 22 Vt. 291; Stevens v. Freund, 169 Wis. 68, 171 N. W. 300; Dunham v. St. Croix Mfg. Co., 34 N. Bruns. 243. But see contra, Burney v. Blanks (Tex. Civ. App.), 136 S. W. 806, and cf. Comer v. Powell (Tex. Civ. App.), 189 S. W. 88. 12 In the following cases promises to pay a price for property made wholly or partly contingent on the election of a certain official were held to be wagers: Givens v. Rogers, 11 Ala. 543; Merchants' Sav., etc., Co. v. Goodrich, 75 Ill. 554; Hizer v. State, 12 Ind. 330; Davis v. Leonard, 69 Ind. 213; Craig v. Andrews, 7 Iowa, 17; Todd v. Coplinger, 4 Bush, 139; Commonwealth v. Shouse, 16 B. Mon. 325, 63 Am. Dec. 551; Bates v. Clifford, 22 Minn. 52; Lucas v. Harper, 24 Ohio St. 328; Harper v. Crain, 36 Oh. St. 338, 38 Am. Rep. 589; Somers v. State, 5 Sneed, 438. 13 Applegarth v. Colley, 10 M. & W. 723; Alvord v. Smith, 63 Ind. 58; Wilkinson v. Stitt, 175 Mass. 581, 56 N. E. 830; Morrison v. Bennett, 20 Mont. 560, 568, 52 Pac. 553, 40 L. R. A. 158; People v. Fallon, 152 N. Y. 12, 46 N. E. 296, 37 L. R. A. 227, 57 Am. St. Rep. 492; Harris v. White, 81 N. Y. 532; State v. De Boy, 117 N. C. 702, 23 S. E. 167; Ballard v. Brown, 67. Vt. 586, 32 Atl. 485. See also Central Trust, etc., Co. v. Respass, 112 Ky. 606, 66 S. W. 421, 56 L. R. A. 479; Moshier v. LaCrosse County Agricultural Soc., 90 Wis. 37, 62 N. W. 932. Similarly a contest where the person receiving most votes of third persons is awarded a prize, is unobjectionable though the voters pay for the privilege of voting. Dion v. St. John Baptiste Soc., 82 Me. 319, 19 Atl. 825. 14 Hankins v. Ottinger, 115 Cal. 454, 47 Pac. 254, 40 L. R. A. 76; Wilson v. Conlin, 3 Ill. App. 517; Molk |