No. 89-279 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

MPH COMPANY AND TROPIC INDUSTRIES, Plaintiffs and Respondents,-vsIMAGINEERING, INC., and BILL R. WILLIAMS, Defendants and Appellants.

APPEAL FROM: District Court of theThirteenth Judicial District, In and for the County of Yellowstone, The Honorable G. Todd Baugh, Judge presiding.

COUNSEL OF RECORD: For Appellant: W. 

### orbi in Howard, ~illings, Montana For Respondent: Pierre L. Bacheller, Billings, Montana

Filed: Submitted: December 12, 1989 Decided: MaY 16, 1990played by positioning a chip on the layout by means of four separate directionalbuttons. Once theplayermade his selection, hewould place abet by either inserting coins orpushing the llbetll button. After placing his bet, theplayer would start the game by pushing the llstartll button. The start buttonwould activatea card selection device,whichwas abowl-shaped container with a spinning wheel in the bottom and 52 pockets around the periphery, each pocket representingadifferentcard froma standarddeck of cards. From the llpockettl selections of the last game, six balls would be dumped into the bowl. The spinning wheel would continue to randomly bounce the balls around until each found a pocket. As each ball entered a pocket, it would close a switch, sending information to the computer. The computer would then display the selectedbetting squares on the screen. After the sixthball found its pocket, the computer would compute the results of the best possible poker hand by using 5 out of the 6 selected cards. It would then display the results on the screen by calculating the total winnings and advancing the credit meter accordingly. The parties encountered a variety of problems with the machines and were forced to modify the contract on several occasions. InDecember, 1984,aprototype was delivered toMPH in Billings. MPH found the machine acceptable and ordered 20 units in kit form for assembly in Billings. MPH subsequently increased the order to 24 machines, also in kit form. That December, Imagineering contacted the Nevada gaming authorities,who told thecompanythatthemachine would be illegal inMontana because it incorporated certain componentsthat enabled the game tobe played for cash. These illegal components included devices to display the last credits cleared, coin out meters and cancel credit switches,also knownasreset keys. After consulting with the Nevada authorities, Imagineering discussed the problem with MPH. Imagineering agreed to send the machines to MPH in Montana without the illegal parts but with wiring and circuitry designed to accommodate the components should MPH wish to install them itself.JusticeWilliam E. Hunt,Sr.,delivered theOpinion of theCourt.

The District Court of the Thirteenth Judicial District, Yellowstone County, found defendant, Imagineering, Inc., liable for breach of contract and breach of implied warranty. The court entered judgment in favor of plaintiff, MPH Company, in the amount of $193,663 plus interest. Imagineering appeals. We reverse. The sole issue raised on appeal is whether the contract entered into by the parties was illegal under the laws of Montana and thereforeunenforceable. Defendant and appellant, Imagineering, Inc., is a Nevada corporation engaged in the design and manufacture of electronic video machines. Plaintiff and respondent, MPH Company, is a joint venture comprised of SamMcDonald,Jr.,Paul Pendergrassand Ronald Harding, all of Billings, and Joe Goott of Salt Lake City. Goott is also the president of Tropic Industries, a Utah corporation. InJanuary, 1984,MPH and Tropic entered into a contractwith Imagineering wherein Imagineering agreed to designandmanufacture an electronic PokerAll Keno machine. Thismachine was to be the electronic version of the table game developed and patented by Joe Goott. A detailed description of the table game can be found in our decision Goott v. State, 630 P.2d 232, 38 St.Rep. 1037 (Mont. 1981). In Goott, we found that, although the game possessed some of the characteristicsof poker, itwas essentially avariation of keno. We held that the game was illegal under the Montana Card Games Act (then codified at 33 23-5-301 through -332, MCA)

# . On remand, the District Court declared that the game was legal under the Bingo and Raffles Law (then codified at 33 23-5-401 through -431,MCA. The contract specified that the electronic version of Poker All Keno was to be a single-player, stand-up video game designed with a reset key to allow the player to cash in his accumulated credits. The image projected on the screenwas to be the same as that found on the PokerAll Keno table layout. The game would beAfter shipping the games, Imagineering sent employees to Montana to explain the assembly of the machines to technicians hired by MPH. While inMontana, the Imagineering employees showed the MPH technicians how to install the electrical components that Imagineering had refused to install in Nevada. In fact, Imagineering furnished extra parts for this purpose, although it appears that the parts were available on the general market and could have been found in any Radio Shack store. The kitswere delivered inMarch, 1985. They were assembled in April of that year and subsequently installed in bars in Billings, GreatFallsand other locations in Montana. Themachines placed intheMontanabarswere equippedwith componentspermitting them to be played for cash. Although themachinesworked in the lab, they did not operate properly in the electronically l1dirtyl1 environment of the local drinking establishments. Among other problems, the machines frequently registered unearned credits. Fearing that they would have to pay out more in cash winnings than the machines were bringing in, the bar owners asked MPH to remove the games from their establishments. Imagineeringsentseveral technicianstoMontana inanattempt to cure the problem. The technicians were unsuccessful in their endeavors, and in May and June, 1985,MPH pulled the games out of the taverns. MPH and Tropic instituted suit against Imagineering and its president, Bill R. Williams, alleging breach of contract, breach of warranty, fraud and bad faith. Imagineering and Williams defended on the basis that the contract was illegal and therefore unenforceable. Tropic s claims were dismissed with prejudice. Later, the remaining parties stipulated to dismissal of all claims against Williams as well as MPH1sclaims of fraud and bad faith against Imagineering. In lieu of trial,MPH and Imagineering submitted the case to the District Court based on the record and a set of stipulatedfacts. The parties stipulated that the video machines contained design defects rendering them commercially unacceptable and constituting a breach of contract. The District Court found that themachines were in compliance with Montana law at the time the contractwas to be performed and that the contract, as amended, was legal and enforceable. The court entered judgment in favor of MPH in the amount of $193,663 plus pre-judgment interest of $79,354. The principal represented funds expended by MPH in satisfaction of the contract. Imagineering argues that the electronic Poker All Keno machines contemplated by the parties were illegal slot machines because they were intended to be and actuallywereplayed for cash. We agree thatMontana statutesand interpretive case lawprohibited the type of gambling devices for which the parties contracted and that themachines were, at best, unlawful slotmachines. The Montana Constitution prohibits gambling unless specifically authorized. All forms of gambling, lotteries, and gift enterprises are prohibited unless authorized by acts of the legislature or by the people through initiative or referendum. Art. 111, 5 9,Mont. Const. (1972). At the time the parties entered into and performed the contract in question, Montana law prohibited the possession or operation of slotmachines. Section 23-5-104,MCA (1983)(amended 1989 and renumbered 

### 5 23-5-153). A slot machine was defined in 

### 5 23-5-101(1), MCA (1983) (amended 1989 and renumbered 5 23-5- 112(29) )

## , as follows:

[A] machine operated by inserting a coin, token, chip,trade check,orpaper currency thereinby the player and from theplay of which he obtains ormay obtain money, checks, chips, tokens, or paper currency redeemable in money. In 1974, the legislature enacted the Montana Card Games Act,ch. 293, 5 1, 1974 Mont. Laws 727,and the Bingo and Raffles Law, ch. 294, 5 1, 1974 Mont. Laws 731. The Montana Card Games Act authorized certainenumerated cardgames, including poker. Section 23-5-311, MCA, (1983) (amended 1989). The authorized card games couldbe played for cash. Sections 23-5-302,MCA, (1983)(repealed 1989) and 23-5-312, MCA, (1983)(amended 1989). At the time the parties entered into the contract, the Bingo and Raffles Law authorizedplaying bingo for prizes of tangible personal property only. The law expressly forbade bingo prizes of cash or other intangible personal property. Section 23-5-412, MCA, (1983) (amended 1985 and 1989). In 1976,this Court consideredthe legalityof electronic keno games under the Bingo and Raffles Law. In Treasure State Games, Inc. v. State, 170Mont. 189, 551 P.2d 1008 (1976),we upheld the legality of electronic keno under these laws, concluding that electronic kenomachines were merely the mechanical simulation of the lawful game of bingo. We did not consider whether such machines could be legally played for cash prizes. In 1981, Joe Goott, one of the members of MPH, brought a declaratory judgment action in the Silver Bow County District Court,seeking tohave the table version of PokerAll Keno declared lawful. TheDistrictCourtheld that thegame was lawful under the Card GamesAct. On appeal,we reversed, reasoning that Poker All Keno was a "casino-type of banking game" that pitted players against thehouse rather than against each other,an activity that the legislature did not intend to authorize when it enacted theCard Games Act. Goott, 630 P.2d at 234, 38 St.Rep at 1039. On remand,theDistrict Courtheld that PokerAll Kenowas legalunder the Bingo and Raffles Law, which left the game subject to the prohibition against cash prizes. The followingyear, wewere presented with the opportunity to determine the legality of live keno games. In Gallatin County v. D & R Music and Vending, Inc., 201 Mont. 409, 412, 654 P.2d 998, 1000 (1982) (Gallatin I), we held that live keno came within the statutory definition of the game of bingo and was therefore legal under the Bingo and Raffles Law. MPH claims that Gallatin 

### I also authorized the playing of keno for cash because the stipulated description of keno presented by the parties described the amount of cash paid for winning the game. It appears, however, that the question of whether thegame was legally played for cash prizeswas not presented to this Court. Rather, the issue in Gallatin Iwas whether the game of keno conformed with the legal description of bingo under 5 23-5-402(1)(a)

## ,MCA (1981) (repealed 1989)

# . Because

we did not, inGallatin I,discussthe legality ofplaying keno for cash, it cannot be said that the case authorized such activity. In fact,Gallatin Icould not possiblyhave legalized playing keno

or any other form of bingo for cash when 5 23-5-412, MCA, as it stood in 1982 expressly proscribed such activity. Any questionthatGallatin Ipermitted playing electronic keno for cash prizes was clarified by the legislature's amendment to 

### 5 23-5-412, MCA, in April, 1985, the same time that the Poker All Keno machines that form the basis of this action were beingassembled and placed in bars inMontana. The statutewas amended to read as follows: Bingo prizes may be paid in either tangible personal property or cash, except that aprizemust be paid in tanqible personal property if the qame is played on a player-operated electronic video qame machine. (Emphasisadded.) Section 23-5-412, MCA (enacted April 12, 1985)

# . Thus, while the amended statute authorized cash prizes for live bingo games, it continued to prohibit prizes of intangible personal property for electronic versions of the game. In February, 1984, shortly after theparties entered into the contract for themanufactureof PokerAll Keno machines, thisCourt decided GallatinCountyv. D & RMusic andVending, Inc., 208Mont. 138, 676 P.2d 779 (1984) (Gallatin 11). Using much the same reasoning asthat employed in Goott,we held that electronicpoker machines were not authorized under theMontana Card GamesAct. We held that electronicpokermachineswere slotmachines, which 23- 5-101, MCA (1983), expressly barred. In 1985, the legislature passed theVideo Draw PokerMachine Control Law, Ch. 720, 5 1, 1985 Mont. Laws 1649. While this act legalized video draw poker machines and authorized playing those machines for cash prizes, it did not authorize playing Poker All Keno for cash. Instead,the lawwas expressly limited tomachines offering the game of draw poker. Section 23-5-606(4), MCA (1985)(amended 1987 and repealed 1989). Poker All Keno, which possessed elements of both the game of poker and the game of keno, was not draw poker as that game was defined in S 23-5-606(4), MCA(1985). Thus,thepassage of theVideo Draw Poker Machine Control Law did not legalize the electronic version of PokerAll Keno. It is clear from the statutes and the case law that, at the time the parties entered into and performed the contract,Montana law forbade playing Poker All Keno for cash prizes. Goott prohibited the table version of the game under the Montana Card GamesAct. Gallatin 11,which banned electronic draw poker games, emphasized theholding in Goott, i.e., that forms of gambling that pitted a player against the house, whether the games were live or mechanical,werenotpermitted under theCard GamesAct. Although theVideo Draw PokerMachine Control Act overruled the holding in Gallatin I1 by legalizing electronic draw poker machin'es,the act did not authorize PokerAll Keno machines. Assuming that electronic Poker All Keno machines were legal under theBingo and Raffles Law,thegame could stillnot beplayed legitimately for cash. Gallatin I,while holding that electronic keno was a lawful game,did not authorize playing thegame for cash prizes, nor could it have done so in the face of the express statutory prohibition againstsuch activity. Furthermore,the 1985 amendment of 5 23-5-412, MCA, specifically provided thatelectronic versions of bingo could be played only for prizes of tangible personal property. In light of the above discussion, we must conclude that, at thetime theparties entered intoandperformed the contract,Poker All Keno machinesplayed for cashprizeswere not authorized under either the Montana Card Games Act, the Video Draw Poker MachineControl Law or the Bingo and Raffles Law. Consequently, the machines were slot machines as defined in 5 23-5-101(1), MCA

Section 28-2-701(1), MCA, provides that a thing or an act is not lawful if it is I1contraryto an express provision of 1aw.I' Slotmachines were expressly prohibitedby 5 23-5-104,MCA (1983), at the time the parties entered into and performed the contract. Therefore, Poker All Keno machines, because they were slot machines, were unlawful under Montana law. "Where a contracthas but a single object and such object is unlawful,whether in whole or in part, 

# . . . the entire contract isvoid.I1 Section 28-2-603,MCA. "Theobject of a contract is the thing which it is agreed on the part of the party receiving the considerationto do ornot todo." Section 28-2-601,MCA. In the present case, the object of the contract was the design and manufacture of PokerAll Kenomachines. Because themachines were unlawful, the entire contractwas void. A party to an illegal contractmay not use the courts of this state to enforce the agreement. No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out, nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim 

# . .

# . . The law, in short, will not aid either party to an illegal agreement. It leaves the parties where it finds them. Therefore neither a court of law nor a court of equity will aid the one in enforcinq it, or qive damases for a breach of it, or set it aside at the suit of the other, or,when the asreementhas been executed in whole or in part by the payment of money or the transfer of other property, lend itsaid to recover it back. (Emphasisadded.) Glassv. Basin & Bay StateMining Co., 31Mont. 21, 33, 77 P. 302, 305 (1904) (quoting 9 D. Lawson, Cyclopedia of Law and Procedure 546)

# . AccordMcPartlinv. Fransen, 199Mont. 143, 146-47, 648P.2d 729, 730-31 (1982);McManus v. Fulton, 85 Mont. 170, 182-83, 278 P. 126, 131 (1929). At oral argument, MPH advanced the theory that the parties1 modification of the contract changed the agreement from an illegal to a legal contract. MPH argued that because the Poker All Keno machines shipped to Montana by Imagineering did not include the components enabling them to be played for cash, the machines were legal under Montana law. We rejectthisargument fortworeasons. First, 'I[t] he object of the contractmust be lawful when the contract is made 

# . 

# . . .I1 Section 28-2-602, MCA. The original object of the contract was the design and manufacture of a PokerAll Keno machine that could be played for cash prizes. Therefore, the object was not lawful when the contractwas made. Second, although Imagineering may have shipped lawful machines, it appears that the contract was not fully performed at thatpoint. Imagineering sent employees toMontana to oversee the assembly of the machines and to show MPH1stechnicians how to install the parts that would enable the machine to be played for cash. These actions constitute a common scheme or plan to use the machines for illegal purposes within this state. When thegeneral scheme of the contracting parties is to bring about unlawfulresults, the contract is unenforceable. See 15 Williston on Contracts 88 1752 and 1755 (3d ed. 1972). The parties originally planned to manufacture and design illegal gambling machines for use within the state of Montana. The parties did not deviate from the original object of the contract even though themanufacturer shipped lawfulmachines into this state. The end product--a PokerAll Keno machine that could be played for cash prizes--was also the original object of the contract. As the object of the parties was to manufacture and market anunlawful slot machine,thecontract was illegal. Neither party may come into our courts seeking damages for breach of that agreement. The judgment of the District Court is reversed.

We Concur: .-aJustice John C. Sheehy, dissenting:

I dissent on three grounds: 1) That at all times herein there was confusion, even among county attorneys, as to the application of law to video-electronic keno machines; 2) The contracthere forthemanufacture of themachines is severable from any illegality; and 3) Principles of restitution allow recovery here. Confusion in the Law InTreasure StateGames, Inc. v. State (1976), 170Mont. 189, 551 P.2d 1008, this Court held that electronic bingo and keno machines were lawful inMontana under the Bingo and Raffle Law of 1974. At that time, 5 23-5-412,MCA, provided: Bingo prizes [including keno] must be in tangible personal property only and not in money, cash, stocks, bonds, evidences of indebtedness, or other intangible personal property and must not exceed the value of $100 for each individual award.. 

# . . Under this statute, no cash prizes could be granted winners of any bingo or keno games, whether live, player-operated or electronic. The question of the legality of keno came before this Court again in Gallatin County v. D & R Music and Vending, Inc. (1982), 201Mont. 409, 654 P.2d 998 (GallatinI). There this Court upheld the validity of keno as it is operated in most of the Montana establishments at the present time. The numbers are selected at random from numbered ping pong balls blown into a tube. ThisCourt said that such a device was in accord with the Bingo and Raffle Law of 1974and issuedmandamus requiring the appropriate officers to issue licenses for the kenomachines. Noteworthy in that case, however, is the opinion of Justice Daniel J. Shea,who, specially concurring,noted that it was common knowledge in the state that such keno is played with the expectation that a player would receivemoney ifhewon. Justice Sheapointed out that even though § 23-5-412, as above quoted, was in effect, the county attorneysdid notprosecute any establishment forpaying cash to thewinners as a matter of general policy. This was the state of the law when in early 1985, the plaintiff MPH Company contracted with Bill R. Williams and Imagineering,Inc. forthemanufacture ofvideokenomachines. The only theoretical difference between the machines contracted for and the usual version of keno is that the proposed machines would be operatedby a single player and the numberswould be flashed on a video screen. The contract was entered into and was to be performed in the early months of 1985. From the date of Justice Shea's special concurrence, in December of 1982, until 1985, nothing was done to amend the Bingo and Raffle Law so as to provide that cash would be paid on keno games in this state. Under any objective test, the 1985 and 1987 sessions of the Montana legislature were among the worst in our state history. It is a strange but true fact that the worse a legislature is the more Acts it will pass relating to the same subject

# . In 1985, the legislature passed Ch. 465, Laws of Montana (1985), which became 5 23-5-412, MCA, and which has now been repealed. That statute, aspassed in 1985, read as follows: Bingo prizes may be paid either in tangible personal property or cash, except that a prize must be paid in tansible personal property if the same is 

### laved on a player-operated video samemachine. (Italics supplied.) It is important to note the change that the 1985 amendment to 5 23-5-412, MCA, made with respect to its formerversion. Whereas formerly no cash prizes could be legally awarded for the playing of bingo (and therefore keno), after the amendment, prizes could be paid in cash except only for player-operated video game machines. Thus, in the same establishment, a keno game which was operatedby ping pong balls couldmerit cash prizes,but a player-operatedvideo kenomachine inthe samepremises,could not legally award cash prizes. Yet, the same 1985 legislature passed a lawmaking valid video drawpoker machines (whichis a flvideo gamemachineff), and allowing the players of such machines to draw their winnings in cash. Chapter 720, Laws of Montana (1985). Except that the draw poker and keno games are different in design, there is no real gambling distinction between a video poker game and a video keno game, or for that matter a video bingo game. They are all Ifvideogame machines.If Was there considerable confusion about the legality of video keno machines at the time of this contract? There certainly was. We need look no furtherthan the finding of District Judge G. Todd Baugh in this case:



# . . 

# . The court finds that the machines were legal and in compliance with Montana law at the time the contract was to be performed and that the contract, as amended, is therefore enforceable. The only feature of the machines manufactured in this case upon which the majority may hinge their decision is that the machines had been modified after manufacture to provide for the payment to winners in cash. The modification involved a printout whichwould showthenumber of game credits to which thewinner

was entitled. The credits could be paid off by the owner of the machines for the value of goods instead of cash, which would be legalwithout doubt. Itwas the eventual establishments that paid these credits in cash.Severability of the Contract There is no law of which we have been made aware here that prohibited Imagineering, Inc. from manufacturing the machines in Utah and transportingthem toMontana for acceptance by thebuyer. The fact is that the machines could not be used for any purpose. They were defective. They did not work. They were inoperable legally or illegally. Imagineering, Inc. admits the deficiencies, and acknowledges in this case that insofar as its performance was concerned, breached the contract.

Where an agreement or obligation is incidentally, indirectly, or remotely connected with an illegal transaction, it will generally be enforced if it is supported by an independent consideration so that the plaintiff does not require the aid of the illegal transaction to make out his case. Even though the parties to an action have been engaged in a transaction eithermalum in se orprohibited by law, if the cause of actionbetween them isdisconnected from the illegal act and is founded upon a distinct and collateral consideration,and theplaintiff isnotobliged toresort to the illegal agreement or transaction in order to maintain the suit, the illegality of the formal transactionwill not impair orbar the right tomaintain the suit. 17 Am.Jur.2d 590, 591, Contracts, 5 219. The legality or illegality of the eventual use of the machines, if theyhad been properlymanufactured, should not be an issue in this case. If a hardware store sold on credit to a customer a gunwhich the customer laterused to shoot somebody,the hardware store can still collect on its bill though the gun was used for an illegal purpose. The situation is no different here. The contract,to the extent that it existed between theseparties,

was legal.Restitution The 1987 session of the legislature also busied itself concerning electronic video gambling games. It amended 5 23-5- 402, MCA, to include a definition of a video keno machine as one where the winner could receive cash. Ch. 652, Laws of Montana

(1987). The 1987 legislature again defined a "kenomachine" by amending

### 5 23-5-602,MCA, to include electronic video kenomachines where the player could receive cash winnings. In the circumstances,principles of restitution apply here. Restatement (Second) of Contracts 

### 5 198 provides:

A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if:

(a) He was excusably ignorant of the facts or of lesislationofaminor character,intheabsenceofwhich the provision would be enforceable,or

(b) He was not equally in the wrong with the promisor. (Emphasisadded.) The parties in this case testified that they thought their machines were legal. The district judge thought they were legal. The minor character of the illegality, that is that the prizes should be paid in values of personal property rather than by cash when video kenomachines were used, is obviouswhen one considers the number of other legal gambling devices or machines which paid off in cash,particularly including live and video keno. In sheer numbers of situations,thepublic policy was to award cashprizes. Theminor characterof the illegality is furtherdemonstrated that in 1989 the legislatureadopted theVideo Gaming Machine andControl Law, 88 23-5-602, et seq. Under the new law,video draw poker and kenomachines are described, provision ismade for their licensing,cash winnings are allowed, and instead of the top $100 per game cash winnings formerly permitted, the top limit now is $800 cash per game for a video kenomachine, 5 23-5-608,MCA, and the payment must be in cash! Section 198 of the Restatement (Second) of Contracts is particularly applicable here. The purported issue of illegality iswhether thewinner inusing themachines, if they worked,could get cash, or receive the value in goods. Legislative enactments before and after the contract in this case demonstrate the minor character of the difference that relates to illegality. The investors in this case should not take the hit. We ought to promote a better business climate in this state by protecting in-state entrepreneurs fromphony defenses. 

### Iwould affirm the District Court.SPATE REPORTER Box 749 Helena,Montana 59624 VOLUME 47 

# c~XGZ-J

MPH COMPANYAND TROPIC INDUSTRIES, Plaintiffs and Respondents, Submitted: Dec. 12, 1989 v. Decided: May 16, 1990 

# IMAGINEERING,INC., and BILL R.' WILLIAMS,

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'I . 1 Defendantsand Appellantsr

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## ellant ant- breached the contractand the implied warranty where the contract was illegalunder the laws of Montana and therefore unenforceable. 

# . The Supreme Court held: 1. The object of the contractwas the design and manufacture of Poker All Keno machines. Because the machines were unlawful, the entire contractwas void. 2. When thi general scheme of the contracting parties is to bring about unlawful results, the contract isunenforceable.

.

, Appeal 

### from the ~hirteent)lJudicial District Court, Yellowstone County, HonorableG. Todd Baugh, Judge ForAppellant: W. For Respondent: PierreL. Bacheller, Billings Opinion by Justice Hunt; Chief Justice Turnage and Justices Harrison, Barz, McDonough and Weber concur. Justice Sheehy dissents and filed an opinion. Reversed. Mont. -

. ,K2H Company, Plaintiffs and Respondents, 

### v. ,Imasineering, Inc., Defendants and Appellants



### 47 St.Rep. 947 Justice Hunt delivered the Opinion of the Court. 

# ( The District Court of the Thirteenth Judicial District, Yellowstone County, found defendant, Imagineering, Inc., liable for breach of contract and breach of implied warranty. The court entered judgment in favor of plaintiff, MPH Company, in the amount 

### of $193,663 plus interest. Imagineeringappeals. We reverse. The sole'issue raised on appeal is whether the contract entered into by the parties was illegal under the laws of Montana and therefore unenforceable.

t Defendant and appellant, Imagineering, 

### Inc., -isL 

### a Nevada corporation engaged 

### in the design and-manufacture of electronicvideo ' 1 t I machines. Plaintiff and respondent, MPH Company, is 

### a joint venture compriseda of 

### am '~c~onald, -3r., Paul Pendergrass and Ronald Harding, all of Billings, and Joe Goott of Salt-Lake City. Goott is also the president of Tropic Industries,

### a Utah corporation. In January, 1984, MPH and Tropic entered into 

### a contract with Imagineering wherein Imagineering agreed to design and manufacture an electronic Poker All Keno machine. This machine was to be the electronic version of the table game developed and patented by Joe Goott. A detailed description of the table game can be found in our decision Goott v. State, 630 P.2d 232, 38 St.Rep. 1037 (Mont. 1981). - In Goott, we found that, although the game possessed some 

### of the characteristics of ppker, it was essentially 

### a variation of keno. 

### We held that the gamewas illegal under the Montana Card Games Act [thencodified at secs. 23-5-301through -332, MCA). District:' Court declared that the game was legal under (thencodified at sec. 23-5-401through -431,

# v The contract specified that the electronic ersion of Poker All Keno was to be a single-player, stand-up 

### video game designed with 

### a reset key to allow the player to cash in his accumulated credits. The image projected on the screen was to be the same 

### as that found on the PokerAll Keno table layout. The game would be played by positioning 

### a chip on the layout by means of four separate directional buttons. Once the player made his selection, he would place a bet by either inserting coins or pushing the "bet"button. After placing his bet, the player would start the game by pushing the "start" button. The start button would activate 

### a card selecsjbndevice,which was a bowlshaped container with 

### a spinning wheel in the bottom and 52 pockets around the periphery, each pocket representing a different card from a standard deck of cards. From the "pocket" selectionsof the last game, six balls would be dumped into the bowl. The spinning wheel would continue 

### to randomly bounce the balls around until each found 

### a pocket. As each ball entered 

### a pocket, it would close 

### a switch, sending information 

### to the computer. The computer would then display the selectedbetting squareson the screen. After the sixth ball found its pocket, the computer would compute the results 

### of the best possible poker hand by using 5 out of the 

### 6 selected cards. It would then display the results on the screen by calculating the total winnings and advancing the credit meter accordingly.KPH Company, Plaintiffsand Respondents,

### v. rmagineering, Inc., Defendants and Appellants 

### 47 St.Rep. 

### 947 [I] "Wherea contract has but a single object and such object is unlawful, whether in whole or in part, 

# . . . the entire contract is void." Section 28-2-603,MCA. "Theobject of a contract is the thing which it is agreed on the part of the party receiving the consideration to do or not to do." Section 28-2-601, MCA. 

### In the present case, the object of the contract was the design and manufacture of Poker All Keno machines. Because the machines were unlawful, the entire contract was void. A party to an illegal contract may not use the courts of this state to enforce the agreement. "No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out, nor can he set up a case inwhich hemust necessarily disclose an illegal purpose as the groundwork 

### of his claim



# . . 

# . . The law, in short, will not aid either party to an illeqal agreement. It leaves the parties where it finds them. 

## heref fore neither - a court of law nor 

### a court of equity will aid the one in 

### ------ ----- enforcinq it, or give damages for a breach of it, or set it aside at 

### -- -- ------- the suit of the other, or, when the agreement has been executed in 

### ---- 

### --- -- whole or 

### - in part 

## 9 the payment of money or the transfer of other 

### - -- property, 

### ---- lend its aid to recover iTback." (Emphasisadded.)- 

### -- Glass

### v. Basin & Bay StateMining Co., 31 Mont. 21, 33, 

### 77 P. 302, 305 (1904) (quoting 9 

### D. Lawson, Cyclopedia of Law and Procedure 546). Accord McPartlin

### v. Fransen, 199Mont. 143, 146-47, 648 P.2d 729, 730- 31 (1982); McManus 

### v. Fulton, 85 Mont. 170, 182-83, 278 P. 126, 131 (1929). At oral argument, MPH advanced the theory that the parties' modification of the contract changed the agreement from an illegal to a legal contract. MPH argued that because the Poker All Keno machines shipped to Montana by Imagineering did not include the components enabling them to be played for cash, the machines were legal under Montana law. We reject this argument for two reasons. First, "[tlhe object of the contractmust be lawful when the contract ismade 

# .

# ..

# ."Section 28-2-602,MCA. The original object of the contract was the design and manufacture of a Poker All Keno machine that could be played for cash prizes. Therefore, the object was not lawful when the contract was made. [23 Second, although Imagineering 

### may have shipped lawful machines, it appears that the contractwas not fully performed at that point. agineering sent employees to Montana to oversee the assemb the machines and to show MPH's technicians how to install the pa hat would enable the machine to be played for cash. These 

### a common scheme or plan to use the machines for illegal purposes within this state. When the general scheme of the contracting parties is to bring about unlawful results, the contract is unenforceable. See 15 Williston on Contracts secs. 1752 and 1755 (3ded. 1972).