Title: Schnoor v. Griffin
Citation: 439 P.2d 922
Docket Number: 8474
State: new-mexico
Issuer: new-mexico Supreme Court
Date: April 22, 1968

439 P.2d 922 (1968) Robert L. SCHNOOR and Robert McNeece, Plaintiffs-Appellees, v. Gilbert GRIFFIN, Defendant-Appellant. No. 8474. Supreme Court of New Mexico. April 22, 1968. Shipley, Seller &amp; Whorton, Alamogordo, for appellant. Albert J. Rivera, John P. Otto, Alamogordo, for appellees. CARMODY, Justice. By statute, pari-mutuel betting is authorized under certain conditions. The *923 problem in this case is whether a person, at a place away from the enclosure, can lawfully place a bet through an agent and recover from the agent the amount of the winnings received upon a winning ticket. This appeal is from the trial court's determination that the agent was responsible by reason of breach of contract. Ruidoso Downs, New Mexico, is a race track where pari-mutuel wagering is licensed. The plaintiffs, at Alamogordo, gave to the defendant $6.00 to take to Ruidoso Downs to bet on what is called the "Big Q." This is a combination bet on which horses finish first and second in the eighth and ninth races, respectively. The defendant was instructed how to place the bet, and it was agreed that he would receive ten per cent of any winnings if the bet was successful. The defendant placed the bet and won, the winning tickets paying $4,138.60. The defendant, by having his nephew cash the winning ticket, appropriated the money to himself and refused to turn it over to the plaintiffs. The trial court found the above facts, and, in addition, made finding No. 10, that the parties, on frequent occasions in the past, had taken bets of other persons to wager at Ruidoso Downs, with the understanding that the person carrying the bet would receive ten per cent of the winnings. The court concluded that the defendant had converted the entire sum less ten per cent, and that there was a valid contract between the parties, which had been breached by the defendant. Judgment was entered in favor of the plaintiffs for $3,724.74 together with interest. The defendant quarrels with the conclusions and judgment of the trial court, saying that the findings, which they do not attack, established that the contract was illegal and against public policy; that the parties were in pari delicto, the contract of agency being a wagering contract under the common law. There is no question but that if this was a wagering contract, it is void. Appleton v. Maxwell, 1901, 10 N.M. 748, 65 P. 158. Cf., State v. Schwartz, 1962, 70 N.M. 436, 374 P.2d 418; and compare, Garvin v. Hudson, 1966, 76 N.M. 403, 415 P.2d 369. The New Mexico statute, with reference to pari-mutuel betting, is as follows (§ 60-6-6, N.M.S.A. 1953, 1967 Pocket Supp.): The statute relating to gambling (§ 40A-19-1, N.M.S.A. 1953, 1967 Pocket Supp.), insofar as here pertinent, is as follows: Sec. 40A-19-2, N.M.S.A. 1953, provides that "Gambling consists of: A. making a bet; * * *." We also make reference to § 40A-19-3, N.M.S.A. 1953, which, insofar as material, is as follows: The question is whether the legislature intended to exempt from the operation of the gambling laws only such pari-mutuel bets as are made by patrons of a racing track where pari-mutuel machines are located, or whether it intended to include in the exemption any and all bets made through the pari-mutuel machines even though initiated outside of the enclosure where the betting machines are located. The language used by the legislature was not without reason. Certain portions of § 60-6-6, supra, make evident the legislative intent. This is particularly obvious where, in paragraph A, it is stated, "Within the enclosure" and "but only within the enclosure where such races are held"; in paragraph B, "The sale to patrons present on the grounds * * * shall not be construed to be * * * betting, * * * and is authorized under the conditions provided by law" (emphasis added); and in paragraph D, "Existing statutes * * * against horse racing * * * are not repealed, but are * * * expressly continued in effect, with the exception that the operation of the pari mutuel method, * * * when used as provided by law, is lawful." It would seem apparent that it was the intention of the legislature to exempt pari-mutuel betting from the general provisions of the gambling laws only when done by patrons who are physically present at the track. It follows from the above that one who is not personally present at the track is not a patron thereof and does not come within the pari-mutuel exemption. Although the plaintiffs' position that defendant was merely an agent and that there was no illegal act because there was no bet until the wager was made at the pari-mutuel window which by itself was lawful has considerable appeal, we are compelled to disagree. On analysis, it is obvious the entire transaction was a mere subterfuge to accomplish a purpose outside the contemplation of the law. The giving of money to defendant and his transporting it to the place of betting are inseparable from the act of placing the bet itself. To sanction such a procedure would permit a mode of gambling not allowed by the pari-mutuel statute. Plaintiffs were neither "patrons" nor "within the enclosure." We have not been cited to, nor have we found (with one possible exception), any cases which have determined that the type of transaction here involved is other than illegal. New York has often had occasion to rule on this type of problem, and in Stewart v. Department of State, 1940, 174 Misc. 902, 22 N.Y.S.2d 164, aff'd 260 App. *925 Div. 979, 23 N.Y.S.2d 226, leave to appeal denied 261 App.Div. 851, 25 N.Y.S.2d 1011, the court said: The court, in Stewart, also made the following statement, which is peculiarly applicable to the case before us: We have not overlooked the recent New York case of Cohen v. Iuzzini, 1966, 25 A.D.2d 878, 270 N.Y.S.2d 278. This was a memorandum decision and makes reference to "current public policy of this State." The court, in Cohen, apparently ruled as a matter of law that an agent could collect the proceeds of a winning ticket and be responsible to his principal. Although the opinion is not completely clear as to the facts, we assume from the dissent that the case involved "off-track" betting. This case appears to be the only decision approving of this practice, and, as we view it, is less than persuasive. We would also observe that the case was either not appealed to the New York Court of Appeals, or, if appealed, no decision has as yet been rendered. California also allows pari-mutuel betting. Until 1953, that state, by statute, authorized wagering by an agent on behalf of a principal who was not within the enclosure. Even so, in People v. Tompkins, 1952, 109 Cal. App. 2d 215, 240 P.2d 356, a conviction for violation of the gambling statutes was affirmed on the facts, the court stating that to allow the defense of the statute would be to permit commercial gambling away from the race track to flourish; that to sustain such a contention "would be to ascribe to the legislature an intent to eliminate most of the protective regulations designed to prohibit widespread commercial gambling on horse races." It is also of considerable interest that the statute referred to in Tompkins was repealed by the California legislature the following year (in 1953). Thereafter, in 1959, there having been no statute on the subject in the intervening six years, the legislature passed a new section to take *926 the place of the statute which had been repealed in 1953, one sentence of which reads, "Also illegal is any wagering or betting on horse races outside an inclosure where the conduct of horse racing is licensed by the board." Cal.Bus. &amp; Prof.Code § 19595 (West 1964). Two very old cases from Tennessee, Ransome v. State, 1892, 91 Tenn. 716, 20 S.W. 310; and Debardelaben v. State, 1897, 99 Tenn. 649, 42 S.W. 684, also held that an off-track bet placed by an agent is illegal because the bet must be made within the enclosure where the race takes place. Plaintiffs seek to distinguish the California Tompkins case, supra, because it involved commercial gambling. Perhaps such a distinction is well-founded in the sense that the case is not "on all fours" with the case before us; but, nevertheless, the language used by the court is very persuasive, particularly when it is realized that the California agency statute then existed. It would not be amiss in this connection to take cognizance of the trial court's finding No. 10 referred to above, and query, if the taking of one bet to a race track for a friend is permissible, then is the taking of more than one commercial gambling? Without saying that the action of the parties here constituted commercial gambling, in any event it is not far removed. Plaintiffs also argue that the Tennessee cases, supra, have been overruled by Cuffman v. Blunkall, 1938, 22 Tenn. App. 513, 124 S.W.2d 289. We disagree. Reliance on this case, as well as Leake v. Isaacs, 1936, 262 Ky. 640, 90 S.W.2d 1001; and Matta v. Katsoulas, 1927, 192 Wis. 212, 212 N.W. 261, 50 A.L.R. 291, is to no avail. The three cases all involved the liability of an agent who obtained a prize by presenting the winning ticket when acting as representative of the owner of the ticket who had personally purchased the same. The distinction is obvious in our case, the defendant was a participant from the very inception of the transaction (see Stewart v. Department of State, supra) and not merely one acting in a representative capacity to collect a bet legally made. The plaintiffs also reason that § 22-10-11, N.M.S.A. 1953, requires the judgment be affirmed. This section of the statute makes a stakeholder liable for money placed in his hands "staked upon any betting." We find this contention without merit. The defendant was not a stakeholder he was a party to the illegal act particeps criminis in an illegal transaction, and the law will leave the parties where it found them. Appleton v. Maxwell, supra; Strum v. Truby, 1935, 245 App.Div. 357, 282 N.Y.S. 433; compare, Restatement, Second, Agency § 412(2) (b) (ii), comments a and e. The applicability of this section of our statute was really disposed of in State v. Schwartz, supra, where we referred to the entire original act of which the above section was a part, and said: Note must be taken that plaintiffs claim that this court has decided a case which is dispositive of the issue herein presented. We agree, but not in the manner urged by plaintiffs. Citation is made to State v. Capital Bank, 1927, 32 N.M. 369, 257 P. 993, 53 A.L.R. 1356, which cited and quoted from McMullen v. Hoffman, 1899, 174 U.S. 639, 19 S. Ct. 839, 43 L. Ed. 1117. The quotation from McMullen appears at page 379 of 32 N.M., on page 996 of 257 P. and is as follows: Actually, the Capital Bank case is dispositive of this appeal, in view of our determination that the pari-mutuel statute *927 does not authorize off-track betting. The syllabus by the court is, "(1) An action cannot be maintained on a contract that is illegal or against public policy, where both parties are equally culpable." Such is the situation here. At the close of the trial of this case, the defendant moved to amend his answer to assert the affirmative defense of illegality, so that the pleadings would conform to the evidence before the court. The transcript brought up upon appeal contains only the pleadings, and therefore we do not have the benefit of the evidence submitted, nor the trial court's reasons for refusing the proposed amendment. However, the trial court, in its conclusion No. 3, determined that there was a "valid contract," thus making it apparent that the validity of the contract was ruled upon. In any event, we are of the opinion that the contract was void as contrary to public policy; refusal to allow the amendment is of no consequence. Skeet v. Wilson, 1966, 76 N.M. 697, 417 P.2d 889, is not to the contrary. Further, rule 15(b) (§ 21-1-1(15) (b), N.M.S.A. 1953) provides that amendments shall be liberally allowed. See, Kleeman v. Fogerson, 1964, 74 N.M. 688, 397 P.2d 716; and Maine v. Garvin, 1966, 76 N.M. 546, 417 P.2d 40. We also take note of § 22-10-7, N.M.S.A. 1953, which is a part of the same chapter referred to in State v. Schwartz, supra, allowing the defense urged to be presented in evidence "under the general issue." Permitting the defendant to escape liability and retain the fruits of this transaction is not entirely to our liking; nevertheless, where two parties to a transaction are particeps criminis, the law will render no aid to either and will leave the parties where it found them. Except in very limited circumstances, the public policy of this state is to restrain and discourage gambling. This policy must override the rule which prevents unjust enrichment, particularly where, as here, there is a choice between that which is considered to be for the benefit of the public at large as distinguished from any benefit to an individual litigant. Should the people of the State of New Mexico, through their elected representatives, decide to allow "off-track" betting, it should be done by statute specifically declaring the change in public policy, and not by court decision. The judgment will be reversed and the cause remanded to the district court of Otero County, with instructions to enter judgment for the appellant. Each of the parties will assume their own costs. It is so ordered. MOISE and COMPTON, JJ., concur.