Court Opinion

ID: 9517613
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:23:43.953891+00
Date Added: 2024-06-11T11:35:46.307255
License: Public Domain

STATON, Presiding Judge,
dissenting.
I dissent from the Majority Opinion for the following reasons:
1. The Majority has failed to frame the issue in the proper light of the facts. A question of first impression has been presented, and none of the cases cited by the Majority involve a transaction performed in another state where the transaction is authorized by statute.
2. The question involves Zientara's foreign-based right to gain possession of a lottery ticket and title to $1,696,-800.00. The Majority ignores the present and prevailing moral sense test which is commonly used.
8. I do not believe that the Indiana Constitutional prohibition against licensed lotteries is so broad as to deny a citizen's foreign-based contractual right to collect money when the purchase of the ticket is in a state where the purchase is legal and when the payment of the money is by a legally licensed lottery commission in a sister state.
4. The Majority's position, refusal to judicially enforce a vested foreign-based contractual right, does not serve as a deterrent to Indiana citizens who desire to participate in legally licensed lotteries in Illinois, Michigan, or Ohio. It does encourage conversion of another citizen's property which is very much against Indiana public policy.
5. I disagree with the Majority's conclusion that Indiana law governs the contract.
The question presented for our review is one of first impression in Indiana:
Whether the Indiana Courts will judicially enforce a legally vested foreign-based contractual right to the possession of a lottery ticket which has won $1,696,-800.00 in a lottery authorized by a statute in the state of Illinois.
Bernice Kaszuba who was employed as a waitress in an Illinois tavern purchased two lottery tickets for Zientara at the tavern where they were offered for sale. The numbers selected by Zientara won $1,696,-800.00. However, Kaszuba refused to deliver the lottery tickets to Zientara so that he could collect his money from the Illinois Lottery Commission. Zientara brought an action to recover possession of the lottery tickets. After a trial by jury, a verdict was rendered for Zientara. Kaszuba appeals.
None of the cases cited by the Majority involve a transaction performed in another state. Summer v. Union Trust Co. of Indianapolis (1946), 116 Ind.App. 684, 66 N.E.2d 621, (in banc), trans. den. (contract to sell sealed "Moon" and "Lightning" coupons to customers in Marion County, Indiana); Van Orman v. Edwards (1970), 148 Ind.App. 66, 263 N.E.2d 746. (Fort Wayne restaurant lease in violation of statute governing place of consumption of beer-lease unenforceable); Rothrock v. Perkinson (1877), 61 Ind. 39, reh. den. (Plaintiff in Columbus, Indiana purchased one-tenth of Kentucky lottery winnings. The money had been paid to a Columbus *766bank by the Kentucky lottery. The plaintiff sued the defendant lottery winner and the bank. The Indiana Supreme Court held that the plaintiff could recover.)
Substantially all of the commentators agree that foreign-based rights should be judicially enforced unless enforcement would be judicial approval of a transaction which is inherently vicious, wicked or immoral, and shocking to the prevailing moral sense. (Beach, Uniform Interstate Enforcement of Vested Rights, 27 Yale L.J. 656, 662; Goodrich, Conflict of Laws [3d ed., 1949], 305; 2 Rabel, Conflict of Laws; A Comparative Study [1947], 555-575; Paulsen and Sovern, "Public Policy" in the Conflict of Laws, 56 Col.L.Rev. 969; 3 Beale, Conflict of Laws [1985], 1649.) The Majority did not apply the prevailing moral sense test. If it had, it would have affirmed the trial court.
Judicial enforcement of vested foreign-based contractual rights is not a statice concept. It requires a careful examination of the prevalent moral sense at the time of the action to enforce the contract. As Judge Cardozo reflected in Loucks v. Standard Oil Co., (1918) 224 N.Y. 99, 111, 120 N.E. 198, 202; "The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors, unless help would violate some * * * prevalent conception of good morals".
The Majority's reliance on State et al. v. Nixon (1979), 270 Ind. 192, 384 N.E.2d 152 as a test to judicially enforce a vested foreign-based contractual right is misplaced. Nizon held that the Pari-Mutuel Wagering Act constituted a lottery and was prohibited by Article 15, § 8 of the Indiana Constitution. It held that a lottery could not be authorized by the legislature. The real question that needed to be answered by Nizon was whether a pari-mutuel was a lottery, and Nizon answered the question in the affirmative. No one ever doubted that Article 15, § 8 of the Indiana Constitution prohibited lotteries. But Niz-on does not apply the test that must be applied in the present case. All of the dicta in Nizon regarding the wisdom of the constitutional prohibition of lotteries has no application to the question before this Court.
The test to be applied is the prevailing moral sense test: is the mere possession by an Indiana resident of a lottery ticket purchased in Illinois where the sale of lottery tickets and the holding of lotteries are approved by statute so inherently vicious, wicked or immoral, and shocking to the prevailing moral sense that the Indiana resident's right to possession of the ticket will not be judicially enforced in Indiana?
Zientara gave Bernice Kaszuba money to purchase his Illinois lottery tickets. The tickets represent a legally enforceable contract between Zientara and the Illinois Lottery Commission. The Illinois lottery is authorized by statute. Its purpose is "... to implement and establish within the State a lottery to be operated by the State, the entire net proceeds of which are to be used for the support of the State's Common School Fund, except as provided in Section 21.2." Til. Ann.Stat. ch. 120, § 1152 (Smith Hurd, Supp.1986). The exception refers to the Illinois Land Grant Collegiate Athletics Fund. Two other states, Ohio and Michigan, on Indiana's border have similar lotteries. It has been estimated that Indiana residents spent $88 million dollars on lotteries in Illinois, Michigan, and Ohio during 1984. (Indianapolis News, December 21, 1984; "Inside Scoop" by Jack Averitt.) The Majority's refusal to judicially enforce Zientara's vested contractual right to the lottery ticket will not act as a deterrent to those Indiana citizens who choose to participate in Illinois, Michigan, and Ohio lotteries.
The sale and purchase of the lottery tickets were legal in Illinois, since they were authorized by the Illinois statutes. If the prevailing concept of good moral sense test is applied to the transaction in Illinois, it does not appear that there is anything inherently vicious, wicked or immoral, or shocking about the Illinois lottery or its purpose-support of a Common School *767Fund and Athletics Fund. The mere possession of a lottery ticket is not prohibited by statute in Indiana. Brooks v. State (1967), 249 Ind. 291, 231 N.E.2d 816. The Indiana Constitution, Article 15, § 8, has not been violated, since the sale of the tickets took place in Illinois and the lottery was conducted in Illinois. The prohibition of authorized lotteries by the Indiana Legislature and the sale of lottery tickets is left inviolate.
Other states have been faced with the same question before this Court, and they have judicially enforced the vested contractual right. In Castilleja v. Camero (1967), 414 S.W.2d 424, a Texas resident brought an action to recover one-half ($17,000.00) of the winnings in a Mexico lottery. A partnership had been formed to purchase lottery tickets in Mexico and share the winnings. One of the partners went to Mexico and on his return refused to share the winnings. The Supreme Court of Texas held that the defense of illegal transaction could not stand and awarded the plaintiff one-half of the winnings from the lottery in Mexico. The issue was expressed as follows: "... whether Texas policies or Texas interests are sufficiently involved to deny recognition of the right by Texas courts." It applied the prevalent moral sense test and concluded: "... it cannot be said that recognition of the event which is indirectly involved here, and which gave rise to Sev-era's title, is against 'good morals or natural justice.' This is especially so when such a position would require protecting a person who has converted the property of another. Conversion is an act which is indeed contrary to natural justice. * * * Texas has a strong public policy against conversion of property. * * * This policy against conversion is the paramount interest involved here."
In Miller v. Radikopf (1975), 394 Mich. 83, 228 N.W.2d 386, the Michigan Supreme Court held that a vested contractual claim to share money legally paid by the Irish Sweepstakes and legally possessed by the defendant may be enforced. The Court stated: "It is a crime to 'set up or promote' a lottery in this state. It is similarly a crime for a person to 'sell,' 'offer for sale,' or 'have in his possession with intent to sell or offer for sale' lottery tickets. However, it does not appear that Irish law prohibits 'the payment of money to holders of winning sweepstakes tickets. Nor does any statute or rule of law of this state prohibit the holder of a winning ticket from receiving and retaining proceeds paid voluntarily by a lottery without legal action." As to judicial enforcement, the Michigan Supreme Court observed: "Judicial nonen-forcement of agreements deemed against public policy is considered a deterrent for those who might otherwise become involved in such transactions. While nonen-forcement of Miller's claim might tend to discourage people from agreeing to split their legal winnings, nonenforcement would not tend to discourage people from buying or selling Irish Sweepstakes tick ets."
The Majority's refusal to enforce Zien-tara's vested contractual right and title to possession of the lottery ticket held by Kaszuba will not deter Indiana citizens from buying lottery tickets in Illinois; it would create an atmosphere of mistrust and reward those who would convert another's property to their own use and profit. If the mere possession of a lottery ticket purchased in another state by an Indiana citizen is to be made unlawful as a matter of public policy, the Indiana Legislia-ture-not the Judges of this Court-should enact a statute declaring mere possession of a lottery ticket unlawful. Our basic function as a Court is not to choose deterrents to further our concept of proper public policy but to decide a conflict of laws question: can a foreign-based contractual right be enforced judicially in Indiana.
When a similar conflict of laws question was placed before the New Jersey Supreme Court, it held that a gambling debt contracted in San Juan, Puerto Rico could be judicially enforced against a resident of New Jersey although gambling was against New Jersey public policy. Caribe Hilton Hotel v. Toland (1978), 68 N.J. 301, 307 A.2d 85. While considering the conflict *768of law question, the Court stated: "Puerto Rican law controls the question as to the legality of the contract. Whether we simply say that the legality of a contract is to be determined by the law of the place where the contract is made (citations omitted) or whether we adopt the more modern formulation that rights and duties of contracting parties shall be determined by the law of the jurisdiction having the most significant relationship to the parties and to the transaction, Restatement, Conflict of Laws 2d § 188; (other citations omitted) * * * the result in this case will be the same." 307 A.2d at 86.
The New York Court of Appeals noted: "Over 100 years ago this court held in Thatcher v. Morris, 11 N.Y. 437 [1854] that a contract involving lottery tickets if legal and valid without the State would be upheld though illegal in New York." Inter continental Hotel Corporation v. Golden (1964), 15 N.Y.2d 9, 254 N.Y.S.2d 527, 203 N.E.2d 210 at 212. (Desmond, C.J., and Van Voorhis, J., dissenting.) In Golden, the defendant had given a check and an 1.0.U. to cover a gambling debt at a casino in Puerto Rico. Later, he stopped payment on the check and offered the defense of an illegal transaction as not being judicially enforceable. As to the proposed defense, the Court stated: "Worthy though such considerations be, they apply only to transactions governed by our domestic law. This court gave thought to such arguments recently and rejected them as an insufficient basis for projecting domestic philosophies of law to decision making in actions based on transactions governed by the law of another State (citations omitted)" 203 N.E.2d at 212.
The Majority incorrectly assumes that because Chester Kaszuba and Richard Zientara are co-workers and Indiana residents that Indiana law rather than Illinois applies to the transaction's legality. Eby v. York-Division Borg-Warner (1983), Ind. App., 455 N.E.2d 623, written by Judge Miller, is relied upon by the Majority as authority for its position. Its reliance is misplaced. In Eby, Indiana was the jurisdiction having the most significant relationship to the parties. Eby had been employed by Borg-Warner in Indianapolis before he left for Florida to assume the job offered by the Borg-Warner Division in Florida. As Judge Miller points out in his opinion: "Larry was in Indiana when he accepted the job offer over the telephone. The negotiations were begun in Indiana and progressed over the telephone in Indiana by personal appearance in Florida. Indiana was the location where the Ebys performed the alleged consideration, * * * Lastly, the Ebys resided in Indiana where Larry accepted the job while he was working at one of Borg-Warner's facilities."
In the present case, Zientara gave the money for the lottery tickets to Chester Kaszuba so that he could give it to his wife who was a waitress in an Illinois tavern where lottery tickets were sold. She purchased the lottery tickets in Illinois. The place of the contract between Zientara and the Illinois Lottery Commission was in the State of Illinois. The lottery was held in Illinois. The winning ticket must be presented to the Illinois Lottery Commission in Illinois for payment. It is indisputable that the most significant relationship of the parties, Zientara and the Illinois Lot tery Commission, is in Illinois and not in Indiana. The Restatement (Second) of the Conflict of Laws, § 188 (1971) provides:
(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
* #k * * * *
(8) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ 189-199 and 208.
The Restatement (Second) of Conflict of Laws was cited and followed by Judge Miller in Eby and should be followed by the *769Majority under the facts of the present case.
I would affirm the trial court. It was correct when it judicially enforced the contract and recognized Zientara's title and right to possession of the lottery ticket.