# FILED
May 27, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE WESTERN SECT ION A T JA CKSON
THE MIRAGE CA

SINO-HOTEL, ) ) Plaintiff/Appellee, ) Shelby Circuit No. 74546 T.D. ) VS. ) A ppeal No. 02A 01-9608-CV-001 98 ) J. ROGER PEARSA LL, ) ) Defendant/Appellant. )
APPEAL FROM THE CI RCUI T COUR T OF SH ELBY C OUNTY

AT MEMPHIS, TEN NESSEE THE HONORABLE KAY S. ROB ILIO, JUDGE

KEITH V. MOORE Memphis, Tennessee Attorney for Appellant BE N G . S IS SM AN DEBORA H A . BRA NDON FRIEDMAN, SISSMA N AND HEATON, P.C. Memphis, Tennessee Attorneys for Appellee

AF FIRMED

ALAN E. HIGHERS , J.

CONCUR: W. FRA NK CRA

WFORD, P.J., W.S. DAVID R. FA RMER, J. In this actio n to enro ll a foreign judgment, The Mirage Casino-Hotel (“Plaintif f”)2

seeks to enforce a default j udgmententered by t he Distri ct Court of Clark Co unty, Nevada against J. Roger Pe arsall (“Defendant”) for non-p ayment of eight separate ne gotiable instrumentsexecuted by him and made p ayable to the Plaintiff totaling$100,000.00. The tri al co urt granted Plaintiff’s motion to enroll the foreign judg ment of $115,178.00, plus pos t-ju dgmentinterest, ag ainst the Defendant. Defendant appeals the judgment of the court b elow arguin g that the tr ial court er red in enforcingthe default judgment of the NevadaDistric

t Court becaus e enforcement of the judg ment violates public policy of the State of Tennessee . For the reasons stated hereaf ter, we affirm the j udgment of the tri al court.

FACTS

Plai ntiff is the payee and hold er in due course of eight separate ne gotiable instruments(“checks” ) executed by the Defendant, totaling $100, 000.00. Defendant used the $100,000.00 in g ame chips gi ven him in ex change for his eight c hec ks to play the game of Black Jack at Plaintiff ’s hotel. Plaintiff could have exch anged his g ame chips for moneyat any time; however, he chose to use all of his game chips to gam ble at Plaintiff’s casino.

The eight c hecks w ere subsequent ly dishono red by the N ational Bank of Commerce. Despi te Pl aint iff ’s rep eate d att emp ts to have the Defendant make the drafts good, the debt remained u npaid. Plainti ff thereafter sue d the Defendant in th e District Court of Clar k County, Nevada.

On September 19, 1995, t he Distri ct Court of Cl ark County entered a d efaul t judgmentagainst Pear sall in the amount of $100,000.00, plus 15, 000.00 in attorney fees, costs, and accrued and accruing interest at the contract rate of 18 percent per year.

Defendant asserts that full faith and credit should be denied in this case because gambling i s against t he public poli cy of the State of Tennessee.3 LAW

The sole issue before this Cour t is whet her the trial court erred in granting Plaintiff’s motion to enroll the judgment of the Nevada Di strict Co urt.

Defendant contends that the trial court’s enforc ement of the judgment of the Nevada court based upon application of the full fa ith and credit clause was in error. In support of his argument, Defendant cites the foll owing: T.C.A. § 29-19- 101 (1980) (rendering void all contractsfound ed, in who le or in pa rt, on gam bling or wage ring c onsideration) ; T.C.A. § 29-19-102 (1980) (bar ring any action to recover

money or pr

operty won by any species

or mode of gambling) ; T.C.A. § 29-19-103 (1980) (provi ding a qui tam action and monetary pena ltyagainst anyone who institutes an action for m oney or property claimed under a contract founded upon gambling considerati on); and T.C.A. § 29-19-104 (1980) and § 29- 19-105 (1980) (pr

oviding an action for

recover y of money or

property lost upon any

game or wager).

The full faith and credit clause of the United States Con stitution provides as follows: § 1. Full fait h and credit to record s and jud icial proceedings of states. -- Full faith and cred it shall be given in each state to thepublic acts , records, a nd jud icia l procee dings of every

other state. And the congre ss may by general laws prescribe the manner in which such acts, records and p roc eedi ngsshal l be pro ved , and the e ffect thereof. U.S. Const. a rt. IV, § 1.

In addressin g the ef fect of the f ull faith and credit clause, Chief Justice Marshall stated that: [T]he judgment of a stat e court should h ave the same credit ,

valid ity, and effect in every other court in the United States which it had in the state where it was pr o nounced, and that whatever

pleas woul d be good to a s uit thereon in such state, and none others, cou ld be pleaded i n any ot her court in the United States. Hampton v. M ’Connel , 16 U.S. 234 (1818).4

In Christmas v. Russell , 72 U.S. 290 ( 1866), the defendant, a Missis sippi resident, executed a pro miss ory no te in Missis sipp i, whic h was e ndo rsed by the payee t o the plai ntiff, a Kentucky resident. After an action on thi s note had been ba rred by t h e Mississ ippi statut e of lim itati ons, th e defenda nt, hav ing come into Kentucky on a visi t, was there sued on the note. Defendant’ s defense of the Miss issippi st atute of limitati ons was overrule d, and the court ent ered a judgment for the plainti ff. The plaintiff then brought suit upon this Kentucky judgment in the Federal Circuit Court of Mississ ippi, and thedefendant asserted a defense under another Mississ ippi statute, which pr ovided that

no action should be maintained on any judgment rendered against a Mississippi resident by a fo reign court where the cause ofaction wo uld have been ba rred by t he Missis sippi statute of limit ations if suit would have been brought in Mississippi. The defense was overruled, and the court entered a judgment for

the plaintiff. In affirming the judg ment, the United States Suprem e Court held that under the f ull faith and credit clause this Mississip pi st atute was unconstitut ional and void as affecting the right of the plaintiff to en force the Kentucky judgment. Because the jud gment w as valid in Kentucky and conclusiv

e between the pa rties there, the Supreme Court stated that it wa s not competent for any other state t o auth orize its courts

to open the merit s of the action and review the cause or t o enact that such a judg ment sh ould no t rece ive t he same faith and credit that by law it had in the courts of the stat e from which i t was take n. Id

.

In Fauntleroy

v. Lum , 210 U.S. 230 (1908) , residents of Mississ ippi entered i nto a gambling contract inv

olving cotto n futur es. The contract was prohi bited by M ississip pi statutory law, and M ississip pi statutes prevented Mis sissippi courts from gi ving effect to such a contract. The parties t o the contr act submitted their diff erences to arbitration in Mississ ippi, and the party in whose favor the arbitr ation awar

d was made then sued
uns uccessfully in Missi ssippi. The prevailingparty later sued in M issouri and obtained personal service on the defendant Mississippi cit izen in Missouri. The Missouri court rejected the defendant’ s proffered evidenc e as to the il legal and cr iminal nature of the underlyin g transaction under Missi ssippi law , and a judgment was entered for thepla inti ff. Plaintiff’s assignee th en sued on the Mi ssouri judg ment in Mississ ippi, and the defendant5

again argued that the Missouri judgment could not be enforced in Mi ssissippi because the underlyin g transaction was prohi bited by Mis sissippi law. The Mississippi Supreme Court held that enforcement of the Missour i judgment was not requi red under the full faith and credit clause; however, the U nited States Supreme C o urt rever sed the judgment of the Mississ ippi Supreme Court h olding that Mississ ippi coul d not g o beyond the Missouri judgment. In upholding the validi ty of the Mis souri judg ment in Miss issippi, t he Suprem e Court stated t hat:

[T]he judgment of a state court should ha ve the same cr

edit, valid ity, and effect i n ever y other cou rt in the Uni ted States which it had in t he state wher e it was pronounced, and that whatever

pleas woul d be good to a s uit thereon in such state, and none o thers, c ould be pleaded in any other court in the United States. Fauntleroy , 210 U.S . at 236 , quoting Hampton v. M ’Connel , 16 U.S. 234 (1818).

Based upon the foregoingSupreme Court case precedent and its progeny, it is now well established t hat the full faith and credit clause of the federal constitution requires that the judgment of a stat e court, w hich had juri sdiction of the parties an d the subject matt er in suit, be g iven the same credit, validity and effect in the court s of every other state and that such judgment be equally conclusive u pon the meri ts in the cour ts of the enforcing states. Roche v. McDonald , 275 U.S. 449, 451 -52 (1928); Converse v. Hamilt on , 224 U.S. 243, 259 (1912); Tilt v. Kel sey , 207 U.S. 43, 57 ( 1907); Hancock Nati onal Bank v. Farnum , 176 U.S. 640, 643(1900); Cheever v . Wilson , 76 U.S. 108 (1869); D’Arcy v. Ketchum , 52 U.S. 165 (1850); Hampton v. M ’Connel , 16 U.S. 234(1818); Mills v . Duryee , 11 U.S. 481 (1813).
Moreover, in Davis v. Davis , 305 U.S. 32, 40 (1938), the Supreme Court stated that Article IV, § 1 of the United St ates Constitut ion requir es that “not so me but full” faith and credit be give n by states to the judici al decree s of o ther states. In other wo rds, when a decree is rendered in one state, the full faith and credit c lause demands that other states give thedecree the equivalent force and ef fect to which it was entitled in the state where it was r endered. Harding v . Harding , 198 U.S. 317, 341 (1905).6

In refining the requirements under the full faith and credit clause , the Supreme Court in Titus v. W allick , 306 U.S. 282, 291 (1939), state d that:

[T]he constitutiona l mandate requi res credit to be given to a moneyjudgment render ed on a civi l cause ofaction in another state, even though theforum would hav e been under no duty to entertain the suit on wh ich the judg ment was founded. See also , Milwauk

ee County

v. M. E. White Co. , 296 U.S. 268 ( 1935); Roche v. McDonald , 275 U.S. 449 (1928) ; Fauntleroy , 210 U.S. at 236; Christmas v. Russe ll , 72 U.S. 290 (1866).

Thus, where an ac

tion is broug ht on a judgment ren dered by a c ourt of a sister state, the full faith and cr edit clause of the federal constitution prohibits an inquiry into the merits of the original cause of action. In an action on a foreign judg ment, the forum court mayinquire only into questions which would be considered on collateral attack in the state where the judgment

was rendered. Fauntleroy , 210 U.S. at 236; Hampton v. M ’Connel , 16 U.S. 234 (1818) . Th erefore, even t hough a cause of act ion could not be entertained in the for um state because i t had been barred by the appli cable statute of l imitations or because the particul ar action was notrecogniz ed in courts of the forum state, the j udgment thereon obtained in a sister state is entitled to full faith and cr edit. See , Titus v. W allick , 306 U.S.282 (1939) ; Kenney v. Supreme Lodge of the World, Loyal Order of Moose , 252 U.S. 411 , 415-16 (1920) ; Fauntleroy , 210 U.S. 230; Christmas v. Russell , 72 U.S. 290 (1866).

Notwithstanding the foregoing , the United St ates Supreme Cour t has recogniz ed at least threeexce ptions

to the full fai th and c redit claus e. Fi rst, a forum court may not enforce a judgment that is void for la ck of subje ct matter or pe rsonal jur isdiction. See , Flexner v. Farso n , 248 U.S. 289 ( 1919); Western Life Indem. Co. of Illinois v. Rupp , 235 U.S. 261 (1914); G rove r & B aker S. M . Co . v. Rad cli ffe , 137 U.S. 287 ( 1890); Hall v. Lanning , 91 U.S. 160 ( 1875); Four Seasons Gardening & Landsca ping, Inc. v. Crouch , 688 S.W.2d 439 (Tenn. Ct. App. 1984); In Re Riggs , 612 S.W.2d 461, 465 (Tenn. Ct. App. 1980). Second, whe n the judgment of the foreign court was based upon fraud, the for um court may choose not

to enr oll the judgment. See , In Re Riggs , 612 S.W.2d 461, 4657

(Tenn. Ct. App. 1980 ) (stati ng t hat fu ll fa ith and c redi t mus t be g iv en tothe j udg ment of a foreign state unless the ju dgment w as vitiated by a manifest fraud); Lee v. Carroll , 146 So.2d 242, 2 44 (La. Ct. App. 1962). Third, where enf orcement of the judgment would violatethe public pol icy of the forum state, the forum court may ref use t o enforce the judgment of the foreign cour t. See , Four Seasons Ga rdening & Land scaping, Inc . v . Crouch , 688 S.W.2d 439, 445 (Tenn. Ct. App. 1984) (stating that a foreign judgment will not be enforced i f it violat es the “stro ng” public policy of Tennessee); In Re Riggs , 612 S.W.2d 461, 465 (Tenn. Ct. App. 1980) (stati ng that Tennesseecourts are not obliged t o give full faith and credit to a judgment of a fo reign state which is violative Tennesee’s public policy)

.

We note, however, that in Hote l Ra mada of N evad a, Inc. v. Thakkar , No. 03A019103CV00113, 1991 W L 135471 (Tenn. Ct. App. July 25, 1991), this Court addressed the same issue a s in th e case at bar. The plaint iff casino loaned defendant casino chips hav ing an approx imate total value of $19,000.00 . These loans of cas ino chips
were evidenced by

seven neg otiable checks executed by

defendant at vari ous times throughout

August 22 and 23 , 1987. By the end of the day

on August 23, 1987, all of the loaned casino chips

had been lost by defendant in gambling at plaintiff’s casino. Thereafter, plaintiff brought suit in the United States Dist rict Cour t in Nevad a, seeking to
recover the value of its loan of casino ch ips. The Nevada D istrict C ourt granted judgment in favor of the plai ntiff for$19,000.00. In Tenness ee, the trial court held that the judgment
was entitled to full faith and credit , and defenda nt appealed to this Court. In enforcing the judgment of the United States District Court in Nevada, this Court stated as follows:

Our review of the case law

leads us to conclude that enforcement of a debt incurred in the purchas e o f ga mbling chips in a state w here gamblingis per fectly legal does not violate th e strong publ ic policy of this State. Thakkar , 1991 WL 135471, at *3.

Because under Faun tleroy a nd its prog eny, a state court must g ive full faith and credit to a monetary judgment rendered in a co u rt of another stat e, even thoug h the enforcing forum might not recognizethe underly ing cause of act ion, the tria l court did not8

err in enforcing the judgment of the Nevada District Court, giving full faith and credit to th e foreign judg ment.

The judgment of the trial court is here by affirm ed. Costs on ap peal are taxed to Appe llan t fo r which execu tion may is sue i f ne cess ary.

HIGHERS, J.

CONCUR:
CRAWFORD, P.J., W.S.

FARMER, J.