Case Name: Terry and others against Olcott
Court: Connecticut Supreme Court
Jurisdiction: Connecticut
Decision Date: 1823-06
Citations: 4 Conn. 442
Docket Number: 
Parties: Terry and others against Olcott.
Judges: In this opinion the other Judges concurred, on the ground taken by the Chief Justice. Chapman, Brainard and Bris tol, Js. were also of opinion, that there was a new consideration for the note.
Reporter: Connecticut Reports
Volume: 4
Pages: 442–446

Head Matter:
Terry and others against Olcott.
The statute prohibiting the sale of lottery tickets in this state, issued under the authority of any other state, extends to the sale of tickets in a lottery authorized by the national government.
Where A. effected an illegal sale of a lottery ticket to B., and such ticket having drawn a prize, B., for a valuable consideration, assigned his interest to C., who was ignorant of the previous illegal sale; after which, in satisfaction of the prize money, A. made and B. indorsed a promissory note to C.; it was held, that such note was valid.
This was an action against the defendant, as the indorser of a promissory note, made by Hezekiah Kilbourn.
The case was tried at Hartford, February term, 1822, before Peters, J.
Hartford,
June, 1823.
On the trial, the making and indorsement of the note, the demand of payment, non-payment and notice, as alleged in the declaration, were admitted. It was also admitted, that in March, 1820, previous to the making of the note, Kilbourn kept an office, in the city of Hartford, for the sale of tickets in the “National Lottery,"—a lottery set up without special liberty from the General Assembly of this state; and there, sold to Charles Buck a quarter of a ticket, No. 9008, in that lottery, for three dollars, having previously sold seven quarters of the same ticket. At the time of such sale, he gave to Buck, a writing of the following tenour: “National Lottery. No. 9008. This ticket entitles the possessor to one quarter of such prize as may be drawn to its number, in the above-named lottery, according to the terms of the scheme, subject to a deduction of fifteen per cent. March, 1820. Hezekiah Kilbourn." In October, 1820, the ticket, No. 9008, in the National Lottery, drew a prize of 1000 dollars; and Buck afterwards assigned his scrip, for a valuable consideration, to the plaintiffs; in satisfaction of which, Kilbourn made, the defendant indorsed, and the plaintiffs accepted the note in suit, all knowing that said tickets were not issued under the authority of this state. The judge thereupon instructed the jury, that the note was void, and directed them to find a verdict for the defendant; which they accordingly did; and the plaintiffs moved for a new trial, on the ground of a misdirection.
T. S. Williams and S. Terry, in support of the motion,
contended, 1. That the original transaction, viz. the sale of the ticket by Kilbourn, and the purchase by Buck, was not within the prohibition of the statute for preventing and suppressing lotteries. This statute applies only to the sale and purchase of tickets “issued from or under the authority of any other state.” Stat. 477. ed. 1808. By the term state, in our statutes, is meant one of the confederated states of the Union. Cohens v. Virginia, 6 Wheat 292. Hepburn & al. v. Ellzey, 2 Cranch 445.
2. That the assignment by Buck to the plaintiffs of his interest in a prize already drawn, was not illegal. This was neither within the letter nor the spirit of the statute. The plaintiffs were the bona fide purchasers of the scrip; and had nothing to do with the original transaction.
3. That admitting the sale of the ticket to Buck, and the assignment by Buck of his interest in the prize to the plaintiffs, to be illegal; yet Kilbourn was under a moral obligation to pay the plaintiffs the prize money; and that was a good and sufficient consideration for an express promise. It was a new consideration. Church v. Tomlinson, 2 Conn. Rep. 134. n.
4. That to render the act of the plaintiffs in taking the assignment in a question, illegal, it must appear that they knew that the ticket had been sold in this state, contrary to the prohibition of the statute; but it appears only that they knew that the ticket was not issued under the authority of this state—i. e. that the lottery was not granted by the General Assembly of this state. The plaintiffs might have been aware of this fact, and yet they might have honestly supposed, that the ticket was sold in the district of Columbia, or the city of New-York; in which case their contract would be valid. Bull. N. P. 146. Coventry v. Barton, 17 Johns. Rep. 142.
Tousey, contra,
insisted, 1. That from the face of the scrip and the finding in the motion, it was sufficiently apparent, that the plaintiffs were acquainted with the whole transaction.
2. That the sale of the ticket was illegal, being within the spirit and policy, if not within the letter, of the statute. Hunt & al. v. Knickerbacker, 5 Johns. Rep. 327.
3. That if the sale of the ticket was illegal, the note given for the prize money, was void. Shirley v. Sankey & al. 2 Bos. & Pull. 130 Steers v. Lashley, 6 Term Rep. 61. Lansing v. Lansing, 8 Johns. Rep. 454. No contract can arise directly out of an illegal transaction, on which an action can be sustained. Mitchell & al. v. Cockburn, 1 H. Bla. 379. Booth & al. v. Hodgson & al. 6 Term Rep. 405. Brown v. Turner, 7 Term Rep. 626. Webb v. Brooke, 3 Taun. 6. Cannan & al. v. Bryce, 3 Barn. & Ald. 179.

Opinion:
Hosmer, Ch. J.
By the act for preventing and suppressing lotteries, it is enacted, "That no person or persons whatever shall, within this state, buy, purchase, sell or otherwise dispose of any lottery ticket, issued from or under the authority of any other state whatever." This law was aimed not only against the sale of tickets, authorized by any of the United States, but against the sale of such as proceeded from any other sovereignty. The words of the law, undoubtedly, reach to this extent; and the object of it entirely harmonizes with the expression. It was the intent of the legislature to prohibit a species of gambling highly detrimental to the state; and the sale of tickets, issued by the authority of other governments, is equally pernicious as the vending of those, which emanate from a sister state. The decisions of the supreme court of the United States, cited from the reports of Cranch and Wheaton, in which it was adjudged, that the term state, as used in the federal constitution, contemplated this confederacy only, were unquestionably correct. The comprehensive sense of the word, is, in the constitution, restrained by the subject matter; while, in its more enlarged signification, it includes all republics, and governments not monarchial; and even monarchies, if they fall within the reason of its use.
The original transaction between Kilbourn and Buck, was opposed to the direct prohibition of the statute; and of consequence, it was illegal and void. Lowe v. Peers, 4 Burr. 2225. Bartlett v. Vinor, Carth. 252.
I do not consider it necessary to decide the question, whether the note indorsed by the defendant, was on a new consideration, and thus rescued from the objection of illegality. Admitting, for the sake of argument, that it was not; yet, if the plaintiffs, at the time when they became the assignees of Buck, and when the note in suit was executed, were uninformed, that the ticket was sold "within this state," their contract was lawful and unimpeachable. Cuthbert v. Haley, 8 Term Rep. 390. Coventry v. Barton, 17 Johns. Rep. 142. 1 Vin. Abr. 299. pl. 27.
On inspecting the motion, it appears neither expressly, nor by construction, that the plaintiff had knowledge where the ticket was sold, or that it was purchased by Buck in violation of the statute. Kilbourn's certificate does not mention the place of sale; and the motion merely states, that the parties knew "said ticket was not issued under the authority of this state." It is entirely compatible with this assertion, that the ticket was sold to Buck in the city of New-York.
The charge of the judge, that the note in suit was void, was incorrect; and for this reason, I would advise a new trial.
In this opinion the other Judges concurred, on the ground taken by the Chief Justice. Chapman, Brainard and Bris tol, Js. were also of opinion, that there was a new consideration for the note.
New trial to be granted.
Stat. 477. ed. 1808.