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 the Thirteenth 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, 1990 
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 llbetll 

button. After placing his bet, the player would start the game by 

pushing the llstartll button. The start button would activate a card 

selection device, which was a bowl-shaped 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 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 

selected betting squares on 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. 

The parties encountered a variety of problems with the 

machines and were forced to modify the contract on several 

occasions. In December, 1984, a prototype was delivered to MPH 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 the company that the machine would be illegal 

in Montana because it incorporated certain components that enabled 

the game to be played for cash. These illegal components included 

devices to display the last credits cleared, coin out meters and 

cancel credit switches, also known as reset 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. 
Justice William E. Hunt, Sr., 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. 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 therefore unenforceable. 

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 Sam McDonald, Jr., 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 poker, it was essentially a variation 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 screen was to be the same as 

that found on the Poker All Keno table layout. The game would be 
After shipping the games, Imagineering sent employees to 

Montana to explain the assembly of the machines to technicians 

hired by MPH. While in Montana, 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 kits were delivered in March, 1985. They were assembled 

in April of that year and subsequently installed in bars in 

Billings, Great Falls and other locations in Montana. The machines 

placed in the Montana bars were equipped with components permitting 

them to be played for cash. 

Although the machines worked 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. 

Imagineering sent several technicians to Montana in an attempt 

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 MPH1s claims 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 stipulated 
facts. 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 the machines were in compliance 

with Montana law at the time the contract was 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 actually were played for cash. 

We agree that Montana statutes and interpretive case law prohibited 

the type of gambling devices for which the parties contracted and 

that the machines were, at best, unlawful slot machines. 

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 slot machines. 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, or paper currency therein by the 

player and from the play of which he obtains or may 

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 certain enumerated card games, including poker. Section 

23-5-311, MCA, (1983) (amended 1989). The authorized card games 

could be 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 

authorized playing 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 considered the legality of electronic keno 

games under the Bingo and Raffles Law. In Treasure State Games, 

Inc. v. State, 170 Mont. 189, 551 P.2d 1008 (1976), we upheld the 

legality of electronic keno under these laws, concluding that 

electronic keno machines 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 to have the table version of Poker All Keno declared 

lawful. The District Court held that the game was lawful under the 

Card Games Act. On appeal, we reversed, reasoning that Poker All 

Keno was a "casino-type of banking game" that pitted players 

against the house rather than against each other, an activity that 

the legislature did not intend to authorize when it enacted the 
Card Games Act. Goott, 630 P.2d at 234, 38 St.Rep at 1039. On 

remand, the District Court held that Poker All Keno was legal under 

the Bingo and Raffles Law, which left the game subject to the 

prohibition against cash prizes. 

The following year, we were 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 the game was legally played for cash prizes was 

not presented to this Court. Rather, the issue in Gallatin I was 

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, in Gallatin I, discuss the legality of playing keno for 

cash, it cannot be said that the case authorized such activity. 

In fact, Gallatin I could not possibly have 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 question that Gallatin I permitted 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 being 
assembled and placed in bars in Montana. The statute was amended 

to read as follows: 

Bingo prizes may be paid in either tangible 

personal property or cash, except that a prize must 

be paid in tanqible personal property if the qame 

is played on a player-operated electronic video 

qame machine. (Emphasis added.) 

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 the parties entered into the 

contract for the manufacture of Poker All Keno machines, this Court 

decided Gallatin County v. D & R Music and Vending, Inc., 208 Mont. 

138, 676 P.2d 779 (1984) (Gallatin 11). Using much the same 

reasoning as that employed in Goott, we held that electronic poker 

machines were not authorized under the Montana Card Games Act. We 

held that electronic poker machines were slot machines, which 23- 

5-101, MCA (1983), expressly barred. 

In 1985, the legislature passed the Video Draw Poker Machine 

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 law was expressly limited to machines 

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, the passage of the Video Draw Poker Machine Control 

Law did not legalize the electronic version of Poker All 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 

Games Act. Gallatin 11, which banned electronic draw poker games, 

emphasized the holding in Goott, i.e., that forms of gambling that 

pitted a player against the house, whether the games were live or 

mechanical, were not permitted under the Card Games Act. Although 

the Video Draw Poker Machine Control Act overruled the holding in 

Gallatin I1 by legalizing electronic draw poker machin'es, the act 

did not authorize Poker All Keno machines. 

Assuming that electronic Poker All Keno machines were legal 

under the Bingo and Raffles Law, the game could still not be played 

legitimately for cash. Gallatin I, while holding that electronic 

keno was a lawful game, did not authorize playing the game for cash 

prizes, nor could it have done so in the face of the express 

statutory prohibition against such activity. Furthermore, the 1985 

amendment of 5 23-5-412, MCA, specifically provided that electronic 

versions of bingo could be played only for prizes of tangible 

personal property. 

In light of the above discussion, we must conclude that, at 

the time the parties entered into and performed the contract, Poker 

All Keno machines played for cash prizes were not authorized under 

either the Montana Card Games Act, the Video Draw Poker Machine 
Control 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 I1contrary to an express provision of 1aw.I' 

Slot machines were expressly prohibited by 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 contract has but a single object and such object is 

unlawful, whether in whole or in part, . . . the entire contract 

is void.I1 Section 28-2-603, MCA. "The object 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 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 asreement has been 

executed in whole or in part by the payment of 

money or the transfer of other property, lend its 
aid to recover it back. (Emphasis added.) 

Glass v. Basin & Bay State Mining Co., 31 Mont. 21, 33, 77 P. 302, 

305 (1904) (quoting 9 D. Lawson, Cyclopedia of Law and Procedure 

546) . Accord McPartlin v. Fransen, 199 Mont. 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 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 reject this argument for two reasons. First, 'I [t] he object 

of the contract must 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 Poker All Keno machine that could 

be played for cash prizes. Therefore, the object was not lawful 

when the contract was made. 

Second, although Imagineering may have shipped lawful 

machines, it appears that the contract was not fully performed at 

that point. Imagineering sent employees to Montana to oversee the 

assembly of the machines and to show MPH1s technicians 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 the general 

scheme of the contracting parties is to bring about unlawful 
results, 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 the manufacturer shipped lawful machines into 

this state. The end product--a Poker All 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 an unlawful slot machine, the contract 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: .-a 
Justice 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 

contract here for the manufacture of the machines is severable from 

any illegality; and 3) Principles of restitution allow recovery 

here. 

Confusion in the Law 

In Treasure State Games, Inc. v. State (1976), 170 Mont. 189, 

551 P.2d 1008, this Court held that electronic bingo and keno 

machines were lawful in Montana 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), 

201 Mont. 409, 654 P.2d 998 (Gallatin I). 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. This Court 

said that such a device was in accord with the Bingo and Raffle 

Law of 1974 and issued mandamus requiring the appropriate officers 

to issue licenses for the keno machines. 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 

receive money if he won. Justice Shea pointed out that even though 

§ 23-5-412, as above quoted, was in effect, the county attorneys 
did not prosecute any establishment for paying cash to the winners 

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. for the manufacture of video keno machines. The 

only theoretical difference between the machines contracted for 

and the usual version of keno is that the proposed machines would 

be operated by a single player and the numbers would 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 

sub j ect . 

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, as passed 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 same machine. (Italics supplied.) 

It is important to note the change that the 1985 amendment to 

5 23-5-412, MCA, made with respect to its former version. 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 

operated by ping pong balls could merit cash prizes, but a player- 
operated video keno machine in the same premises, could not legally 

award cash prizes. 

Yet, the same 1985 legislature passed a law making valid video 

draw poker machines (which is a flvideo game machineff), 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 Ifvideo game 

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 further than 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 which would show the number of game credits to which the winner 

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 

legal without doubt. It was 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 transporting them to Montana for acceptance by the buyer. 

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 

either malum in se or prohibited by law, if the cause of 

action between them is disconnected from the illegal act 

and is founded upon a distinct and collateral 

consideration, and the plaintiff is not obliged to resort 

to the illegal agreement or transaction in order to 

maintain the suit, the illegality of the formal 

transaction will not impair or bar the right to maintain 

the suit. 

17 Am.Jur.2d 590, 591, Contracts, 5 219. 

The legality or illegality of the eventual use of the 

machines, if they had been properly manufactured, should not be an 

issue in this case. If a hardware store sold on credit to a 

customer a gun which the customer later used 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 these parties, 

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 "keno machine" by 

amending 5 23-5-602, MCA, to include electronic video keno machines 

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 

lesislation of a minor character, in the absence of which 

the provision would be enforceable, or 

(b) He was not equally in the wrong with the promisor. 

(Emphasis added.) 

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 keno machines were used, is obvious when 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, the public policy was to award cash prizes. 

The minor character of the illegality is further demonstrated 

that in 1989 the legislature adopted the Video Gaming Machine and 
Control Law, 88 23-5-602, et seq. Under the new law, video draw 

poker and keno machines are described, provision is made 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 keno machine, 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 

is whether the winner in using the machines, 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 from phony defenses. 

I would affirm the District Court. 
SPATE REPORTER 

Box 749 

Helena, Montana 59624 

VOLUME 47 

c~XGZ-J 

MPH COMPANY AND TROPIC INDUSTRIES, 

Plaintiffs and Respondents, 

Submitted: Dec. 12, 1989 

v. Decided: May 16, 1990 

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

C 

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CONTRACTS--GAMING, Appeal from finding that ellant ant- breached the 

contract and the implied warranty where the contract was illegal under 

the laws of Montana and therefore unenforceable. . The Supreme Court 

held: 

1. 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. 

2. When thi general scheme of the contracting parties is to bring 

about unlawful results, the contract is unenforceable. . 

, Appeal from the ~hirteent)l Judicial District Court, Yellowstone 

County, Honorable G. Todd Baugh, Judge 

For Appellant: W. 

For Respondent: Pierre L. 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. 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 

therefore unenforceable. t 

Defendant and appellant, Imagineering, Inc., -isL a Nevada 

corporation engaged in the design and-manufacture of electronic video ' 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 game was illegal under the Montana Card Games Act [thencodified at secs. 23-5-301 through -332, MCA). District:' 

Court declared that the game was legal under 

(then codified at sec. 23-5-401 through -431, 

The contract specified that the electronic v 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 

Poker All 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 selecsjbn device, 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" 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 selected betting squares on 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, Plaintiffs and Respondents, v. 

rmagineering, Inc., Defendants and Appellants 

47 St.Rep. 947 

[I] "Where a 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. "The object 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 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 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." (Emphasis added.)- 

Glass v. Basin & Bay State Mining Co., 31 Mont. 21, 33, 77 P. 302, 305 

(1904) (quoting 9 D. Lawson, Cyclopedia of Law and Procedure 546). 

Accord McPartlin v. Fransen, 199 Mont. 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 contract must be lawful when the contract is made . . . ." 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 contract was 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 

(3d ed. 1972).