HAMILTON v. ABADJIAN (1946)

This action was brought by A. K. Hamilton, as assignee of Hotel Securities Co., owner and operator of the Hotel El Rancho Vegas at Las Vegas, Nevada, to recover the sum of $11,450 which was advanced by the hotel when it honored six bank checks presented by the defendant O. Abadjian for encashment while a guest at the hotel over the weekend of August 12, 1944. Admittedly, plaintiff is not a holder in due course.

From a judgment on the verdict in favor of the plaintiff for $5,000, defendant O. Abadjian prosecutes this appeal.

It appears from the record herein that on the weekend in question, appellant arrived on Friday and left on Sunday night; that continuously during that period he was playing ‘Blackjack’ or ‘Twenty-One’ and in connection therewith he presented to the hotel through its cashiers the six checks, five for $2,000 each, and one for $1,450, which were introduced in evidence as Plaintiff's Exhibits Nos. 2, 3, 4, 5, 6 and 7, respectively.

It was stipulated that the checks were signed by the appellant given to the hotel and that they were not paid because payment of them was stopped.

With respect to checks 3, 4 and 5, respondent's witnesses could not recall whether cash was given to appellant for these checks or not, but appellant testified that he received chips with which to continue his game. However, it is obvious that the jury gave no recovery on these three checks.

As to checks 2, 6 and 7, they total $5,450. The trial court instructed the jury as a matter of law that the plaintiff could not recover $450, that portion of check 7 which was admittedly in payment of a pre-existing gambling debt; hence, the $5,000 verdict represents a recovery of $2,000 each on checks 2 and 6, and $1,000 on check 7. Both respondent's witnesses and appellant gave direct testimony as to the circumstances surrounding the presentment and encashment of checks 2, 6 and 7, respondent's witnesses testifying that they paid cash for them, and appellant testifying that he received chips. Appellant admits, however, that the ‘evidence as to the nature of the transaction is in direct conflict and indulging all inferences favorable to plaintiff, as we must, it will not be argued that the evidence is insufficient to support the verdict and the judgment insofar as it runs to check No. 7.’

Appellant urges that the verdict and judgment as to checks 2 and 6 are wholly unsupported by the evidence and directly violate the law of the case. In this connection, he asserts that the trial court ably instructed the jury as to the law of the case as follows: ‘You are instructed that it is immaterial whether or not the plaintiff's assignor gave the defendant money or chips in exchange for the checks herein involved, if you find that the plaintiff's assignor knew or had reasonable ground to believe or know that the money so given to defendant O. Abadjian was to be used for gambling purposes in its gambling casino. It is against the policy of the law and violates good public morals to allow or encourage the practice of gambling. For this Court to enforce payment of checks given by a loser to a winner or lender in a gambling transaction where the person advancing the moneys knew or reasonably should have known that such moneys were to be used for gambling in his gambling casino would be to encourage such vice and be contrary to the public policy of this state. Hence, this Court, and the laws of this state, will lend no aid to plaintiff or plaintiff's assignor to collect payment of checks given for such a gambling loss. Thus if you find that plaintiff's assignor knew or had reasonable cause to believe that the money advanced by them to defendant O. Abadjian was to be used in connection with gambling activities in its gambling casino, then you will return your verdict for the defendant O. Abadjian and against the plaintiff.’

With respect to check 2, the witness Val Sneed testified that he was an assistant manager of the hotel; that occasionally he dealt cards in gambling games; that the first night appellant arrived, the witness dealt cards to him; that according to his best recollection check 2 was written at the gambling table; that all of that check except the signature was in the witness' handwriting; that his name was on the check, he having okayed the same; that appellant received cash for check 2; that the witness could not recall whether he took chips to the table for this first $2,000; that when appellant left the gambling casino Friday night, he had lost all the chips purchased with said $2,000, and that the witness was at the blackjack table when appellant lost this first $2,000.

The witness Charles W. Cole, an assistant manager of the Hotel El Rancho Vegas at the time in question, testified that he was present when check 2 was cashed; that appellant received cash therefor in the casino; that Mr. Val Sneed got the money from the casino cage and delivered it to appellant; that the witness saw the money taken to appellant who was then seated at the gambling table.

As to check 6, the witness Sneed testified that he could identify it; that it first came to his attention when the game started on Sunday between 11:00 and 12:00 noon; that appellant was at the gaming table when he wrote that check; that appellant received $100 bills in exchange for it and the witness was present when appellant so received them; that the witness himself brought the money to appellant at the table and that the gambling propably started immediately; that although he could not recall whether appellant started to play or not, he was quite sure that appellant played because he cashed the check for him.

With respect to check 6, the witness Cole testified that he was present when it was cashed and that Mr. Sneed took the money to appellant who was then seated at the gambling table.

Appellant urges that the evidence adduced with regard to these two checks, 2 and 6, is subject to no inference other than that respondent advanced the sum represented thereby for the purpose of inducing gambling and with the intent that the sum be so used; that it was so used; that respondent's participation in the illegal transaction is acknowledged, and therefore, the entire transaction, ‘being bound up in the illegality, no verdict for recovery can be upheld.’

Respondent argues that ‘the real point is not whether * * * the person securing the money did use the money for gambling purposes, but whether he could have used it for some other purpose if he had so desired. In other words, if money be advanced upon the sole condition that it be used for gambling, the transaction is void, but if it be advanced with the mere knowledge that it may be used for gambling, although the person to whom it is advanced may use it for other purposes, the person to advancing the money may thereafter recover the same.’

In accordance with such theory, respondent's witnesses testified that no restrictions were ever placed by the hotel on the use of the money derived from the cashing of a check by its cashiers, nor was a customer of the hotel required to promise that he would gamble with the proceeds of any check cashed. No questions were asked respecting what the customer intended to do with the money, and so far as the hotel was concerned, a customer could use the proceeds of a check cashed by the hotel for any purpose that he desired, i. e., gambling, any of the other facilities of the hotel, or ‘take the money and go home.’ The witness Sneed also testified that in a conversation with appellant the latter admitted to him that he had lost $2500 in another gambling establishment in Las Vegas during the weekend in question. Said witness also testified that appellant received $1,000 in cash from the hotel in return for check 7, after he had finished gambling and just before his departure from the hotel on Sunday night.

There is not the slightest doubt that the money represented by the checks here in question was lost at the gaming table with the exception of the $1,000 which the evidence discloses was received by appellant after he had completed his gambling operations and was departing from the hotel. The game of ‘blackjack’ or ‘twenty-one’ is specifically prohibited by section 330 of the Penal Code, and as stated in Union Collection Co. v. Buckman, 150 Cal. 159, 164, 88 P. 708, 710, 9 L.R.A.,N.S., 568, 119 Am.St.Rep. 164, 11 Ann.Cas. 609, an action to recover on promissory notes given to evidence an alleged indebtedness for money lost by the payor to the payee at a gambling game in a gambling house; ‘There is no better settled rule of law than the one to the effect that the courts will not entertain any action in affirmance of an illegal contract. As was said in Hill v. Kidd, 43 Cal. 615: ‘It is equally well settled that no action in affirmance of an illegal contract can be maintained. When parties make such contracts they must rely upon the good faith of those with whom they deal for their performance, and that failing they are denied all redress.’ See note to Chateau v. Single, 114 Cal. 91 [45 P. 1015, 33 L.R.A. 750], 55 Am.St.Rep. [63] 66. This universally acknowledged rule is not based upon any consideration for the party against whom the relief is sought, and who will be benefited by the refusal of the court to grant the same, but upon considerations of sound public policy. As said in Kreamer v. Earl, 91 Cal. 112, 118, 27 P. 735, ‘it is not for the sake of the party who is benefited by the intervention, but for the sake of the law itself,’ that a court refuses to allow the law and the machinery of the court to be made use of for the enforcement of illegal contracts, and leaves the parties precisely where it finds them, under the rule expressed in the maxim, ‘ex turpi causa non oritur actio.’ It is, therefore, settled that the failure of the party against whom such relief is sought to make objection upon the ground of illegality, or the waiver of such objection by him, or even his express consent that the court may enforce such illegal contract, will not justify a court in enforcing the same. The illegality appearing, the court will sua sponte withhold all relief.'

In the recent case of Wallace v. Opinham, Cal.App., 165 P.2d 709, 711, it was stated: ‘The California cases are uniform in holding that where money or property is lost in a transaction between the parties which is prohibited by law, neither of the parties has standing in a court of law or equity to recover his losses. People v. Rosen, 11 Cal.2d 147, 150, 78 P.2d 727, 116 A.L.R. 991; Johnston v. Russell, 37 Cal. 670; Union Collection Co. v. Buckman, 150 Cal. 159, 164, 88 P. 708, 9 L.R.A.,N.S., 568, 119 Am.St.Rep. 164, 11 Ann.Cas. 609; Bank of Orland v. Harlan, 188 Cal. 413, 421, 206 P. 75; Schur v. Johnson, 2 Cal.App.2d 680, 683, 38 P.2d 844; Brooks v. Brooks, 63 Cal.App.2d 671, 676, 147 P.2d 417; Asher v. Johnson, 26 Cal.App.2d 403, 411, 79 P.2d 457.’

In the same case at page 710 appears the following: ‘No California statute authorizes a party to an illegal transaction which is prohibited by law to recover gambling losses, regardless of the fact that one of them may have been the victim of fraud or deceit with respect to some incident of that illegal transaction. It has been frequently decided that courts will not become arbiters of incidental acts of participants in gambling games which are prohibited by law. All persons who are concerned in or who aid or abet the commission of either a crime or a misdemeanor, are deemed to be principals therein. Penal Code, § 31. Public policy prompts courts to decline to distinguish between degrees of turpitude of parties who engage in outlawed transactions. Otherwise courts might be compelled to decide which party cheated the most.’

For the reasons stated, the judgment is reversed with directions to the trial court to enter a judgment for $1,000 in favor of respondent; appellant to recover costs.

YORK, Presiding Justice.

DORAN and WHITE, JJ., concur.