necessary to show that actual cash passed. [Sidenote: Payment by set
off.] If the agent settled with the bookmakers by balancing accounts
with him, this would no doubt be equivalent to payment.[128]

[Sidenote: Estoppel of agent.]

The case of _Moore_ v. _Peachey_[129] will no doubt go some way to
remove the plaintiff’s difficulty in this respect. CHARLES, J., held
that the defendant having entered into an agency agreement, and from
time to time rendered accounts to the plaintiff, showing bets to have
been made and moneys received or paid on his behalf, was estopped from
denying the truth of his representations.

It must, however, be admitted, for it is common knowledge, that the
documents passing between the supposed principal and agent do not
represent the real facts. In a majority of such cases the agent is a
myth; he is in reality a bookmaker making a book with his different
clients, that is if his _clientèle_ is sufficiently large. If not, a
common course of business (and this has frequently been proved in the
Courts) is for him to lay his clients the odds at a point or two below
the market odds, and “back the horse back” in a club at the longer odds.
Of course, if this be professedly his business, he is amenable to the
provisions of the Betting House Act (as to which see _post_). That is no
doubt the reason why he affects to act as agent; but _Moore_ v.
_Peachey_ (_ubi sup._) says that he cannot afterwards turn round and say
he was a principal.

[Sidenote: Rights of agent against principal.]

(_b._) The next class of cases in which the application of the statute
has come in question is where an agent has been employed to enter into
wager-contracts on behalf of a principal; the bets are lost; the agent
pays, and seeks to recover from the principal.

Upon this matter two distinct questions have arisen.

I. Whether an authority to bet implies an authority to pay the bet if
lost.

II. Granted such implied authority, can the principal revoke the
authority to pay, after the event has been determined, and before
payment has been made?

[Sidenote: Does authority to bet imply authority to pay?]

I. Upon this question none of the older authorities go very close to the
mark. Thus in _Oulds_ v. _Harrison_[130] the defendant employed one
Bennett to bet for him, and Bennett laid the bets in his own name on the
defendant’s account. The bets were lost, and Bennett, without further
authority from defendant, paid them, and drew a bill on defendant for
the amounts, which was accepted by the defendant, and indorsed by
Bennett to the plaintiff. Plaintiff sued defendant on the bill. For the
defendant it was argued that the payment of the debts by Bennett was in
his own wrong and not authorised by his agency. But the Court held that
defendant by accepting the bill acknowledged that the payments had been
made on his account, and that consequently there was a sufficient
consideration for the bill. It must be observed that this case did not
decide the point, viz., whether an authority to bet included an
authority to pay the bets if lost; from a remark of PARKE’S, B. (at page
577), “the defendant was not bound in law to repay the drawer,” it would
seem that in his view it did not. _Jessop_ v. _Lutwyche_[131] turned on
a pleading point: the plaintiff, a broker, sued to recover differences
paid by him on the sale of certain stocks and shares on behalf of the
plaintiff. Defendant simply pleaded the Statute 8 & 9 Vict., c. 109, and
it was held that the plea was bad, as being consistent with the
plaintiff’s having paid the money at defendant’s _express_ request. The
plea in _Knight_ v. _Chambers_[132] was overruled on the same grounds.

The case of _Rosewarne_ v. _Billing_[133] carried the point no further.
This was another action by a broker to recover differences paid for his
principal. The defendant pleaded the statute without traversing the
averment that the money was paid at defendant’s request. The Court,
following the former cases, held the plea bad; but ERLE, C. J., in
giving judgment, expressed his opinion that an authority to bet implied
an authority to pay if the bets are lost; and _semble_ that if a broker
be compellable by the usage of the stock market to pay losses himself,
the principal could not rescind the authority to pay. The older case of
_Clayton_ v. _Dilley_[134] was decided in the Statute of Anne. The
plaintiff, the defendant’s betting agent, sought to recover money he had
paid for the defendant without express authority to do so. The bets were
admittedly illegal by statute. It was held that plaintiff could not
recover on the ground that there being no express direction to pay, it
could not be implied in an illegal transaction. This case would
therefore seem to have little importance at the present day, betting
transactions being void and not illegal. The case of _ex parte
Godfrey_[135] seems to be the earliest direct decision on the point,
where it was held by BACON, V.C., that money paid by a broker on
so-called gaming transactions entered into by him for a principal, was a
debt for which a bankruptcy petition might be presented, as the
principal knew that the broker was liable under the rules of the Stock
Exchange to pay losses, a request to pay on behalf of the principal must
be implied. From this decision it would seem that this authority to pay
would not be implied unless the principal knew of the liability which
the agent was incurring. In _Bubb_ v. _Yelverton_[136] (which is
reported very shortly) Lord ROMILLY laid down in general terms that an
authority to bet implied authority to pay; but in that case (in which
Lord Charles Ker claimed payment out of the Marquis of Hastings’ estate
for money paid on lost bets, he having been the Marquis’ agent to bet
for him) there could have been no question as to knowledge on the part
of the Marquis of the consequences that would result from the agent’s
not paying.

The case of _Thacker_ v. _Hardy_[137] does not afford much assistance on
the present point as to the authority to pay being implied from
authority to bet, as according to the view taken of the facts by
LINDLEY, L.J., which view was supported by the Court of Appeal, the
transaction does not seem to have been in the nature of a wager. The
case, however, being an action by an agent for indemnity against his
principal, the knowledge of the latter as to the course of business the
agent would have to pursue, is made one of the grounds of his liability
to his agent.

In _Oldham_ v. _Ramsbotham_[138] the question was slightly touched upon
in argument, but not noticed in the judgment.

In _Lynch_ v. _Godwin_[139] plaintiff at defendant’s instructions and in
his presence laid £40 on a horse called Vril for the Ascot Stakes. The
horse lost and plaintiff paid the bet. The Court of Appeal held that he
could recover the money he had paid from the defendant. Per JESSEL,
M.R., “If you employ an agent to bet for you, _you know_ that he must
pay or be subject to unpleasant consequences. _If you do not withdraw
your request_, it must continue; and if he pays, he pays at your
request.” LINDLEY, L.J., also added a more general proposition that an
authority to pay was implied in an authority to bet. It is clear that
the agent in this case laid the bet in his own name.

From these remarks of the MASTER OF THE ROLLS it would seem (1) That the
implied authority of the agent to pay depends on the knowledge of the
principal that the agent was himself liable legally or otherwise, which
knowledge would probably be presumed in cases of betting through regular
betting agents, as in both such cases it is well known that the agent is
bound by usage to incur personal responsibility. [Sidenote: Is authority
to pay revocable?] (2) That the principal might withdraw this implied
authority to pay any time before the agent had paid the money over to
the winner, and so prevent the agent’s paying on his account.

II. The general rule of law is that where an agent is invested with an
authority coupled with an interest, that is, where the authority is
given to the donee of such authority for a good consideration for the
purpose of securing to him some benefit, such authority is
irrevocable.[140] Now it has of late been a much vexed question whether
the express or implied authority of a betting agent to pay a bet if
lost, where the agent has made the bet in his own name, can be revoked
by the principal, or, in other words, whether such authority is so
coupled with an interest as to be irrevocable.

Not long ago the very point came before the Courts, in _Read_ v.
_Anderson_,[141] and this was the first occasion on which it underwent
serious discussion. There were a few dicta on the subject—that by EARLE,
C.J., in _Rosewarne_ v. _Billing_,[142] and again the point was mooted
in _Marten_ v. _Gibbons_.[143] In this case the defendant had, through
the plaintiff, a stock broker, sold a future dividend on railway stock
to a firm of jobbers. The dividend was eventually declared at a higher
rate than that at which the defendant had sold it. Defendant being
called upon to pay the difference refused, and revoked the authority of
the plaintiff to pay. Plaintiff paid and sued to recover from defendant.
Sales of future dividends were not enforceable by the rules of the Stock
Exchange. Defendant contended that the authority of the plaintiff to pay
had been revoked, but BLACKBURN, J., in giving judgment said: “If the
contract was binding on the plaintiff it was impossible for the
defendant to revoke it. If not enforceable and not revoked they would be
liable. If not enforceable and revoked, I am inclined to agree that they
would still be liable.” But in this case the plaintiffs had, as brokers,
entered into a contract which, although not enforceable against them by
expulsion according to the rules of the Stock Exchange, left them, in
the opinion of the Court, under a legal liability to the jobbers. In a
wagering transaction the case is different, as the agent is under no
legal liability.

On the other side the dictum of the MASTER OF THE ROLLS in _Lynch_ v.
_Godwin_ seems to imply that the authority in a betting transaction can
be revoked.

[Sidenote: _Read_ v. _Anderson_.]

In _Read_ v. _Anderson_[144] the following were the material facts of
the case.

The plaintiff was a turf commission agent, and a member of Tattersall’s
subscription rooms. The defendant had been in the habit of employing
plaintiff to bet for him, paying losses to him and receiving winnings
from him. By a well-established usage _known to defendant_, such
commission agent employed to back horses does so in his own name, and
becomes responsible for payment if the bet is lost to him. The defendant
by telegram instructed the plaintiff to back certain horses for him,
which plaintiff did in his own name. The race was fixed for 2 o’clock,
and at 3.5 plaintiff handed in at the office a telegram announcing that
the horses had lost. Defendant the same evening repudiated the bets, and
all liability under them, on the ground that the plaintiff ought to have
informed him that he was “on” before the race was run. On the settling
day plaintiff paid the bets in question to the winners; had he not done
so he would have been liable as a defaulter under Rule 3 of Tattersall’s
subscription room to be excluded from it, and also under Rule 50 of the
Jockey Club would, on being reported by such committee as a defaulter,
have been subject to various disqualifications under Rule 49 of the
rules of racing as to entering and running horses. It does not appear
from the report of the case that the defendant knew of the specific
consequences that would ensue from the plaintiff’s making default in
payment of the bets. On behalf of the defendant it was contended (1)
That the plaintiff’s authority to bet was subject to an express
condition that plaintiff should before the race inform defendant that he
was “on.” (2) That anyhow such condition was implied by universal usage.
(3) That the bets were wagering contracts that the plaintiff had no
authority to pay them, or that if he had such authority was revoked. The
judgment of HAWKINS, J., proceeded on the following grounds: (1) He
found as a fact that there was no such condition, either express or
implied, as that contended for by defendant; also that the bets had
_bonâ fide_ been made in accordance with the authority. (2) That
wagering contracts being only void, and not illegal by 8 & 9 Vict., c.
109, the loser of the bet might lawfully either pay himself, or request
somebody else to pay for him. (3) That such request might be express or
implied, and he found _as a fact_ that defendant, in giving authority to
make the bets, also gave authority to pay them if lost. (4) Found, _as a
fact_, that defendant had not revoked this implied authority to pay. (5)
Irrespective of the latter finding such authority was irrecoverable as
being an authority which plaintiff had an interest in carrying out; as
otherwise he would have incurred serious penalties as a defaulter. (6)
That the plaintiff’s case might also be put on the following ground:
That if one man employs another to do a legal act, which, in the
ordinary course of things will involve the agent in obligations
pecuniary or otherwise, a contract on the part of the employer to
indemnify his agent is implied by law ... and it signifies nothing that
such obligation is not enforceable in a Court of Justice. (7) His
lordship distinctly reserved the question as to how far these incidents
would apply where the agent bets, not in his own name, but in that of
his principal.

[Sidenote: Indemnity.]

Perhaps the more logical and less artificial way of putting the rights
of the agent is the alternative suggested by HAWKINS, J.—his right to
indemnity. The “authority coupled with an interest” seems rather too
wide, seeing that the agent has an interest in making the bet directly
the instructions are given; yet the judgments seem to recognise that the
authority could have been withdrawn before the bet was made.

The case has lately been decided by the Court of Appeal.[145] BOWEN and
FRY, L.JJ., affirming the decision of HAWKINS, J., BRETT, M.R.,
dissenting. The grounds upon which the MASTER OF THE ROLLS bases his
judgment are that, although an authority might imply an authority to
pay, yet, as betting contracts were void, and as the only inconvenience
to the agent consists in his being barred from pursuing a calling to
which the law wholly objects, no promise could be implied that such
authority should not be revoked. His lordship considered that as a
matter of fact defendant had revoked plantiff’s authority to pay; thus
differing on that point from HAWKINS, J. BOWEN, L.J., treats the whole
question as an inference of fact. In his lordship’s opinion, the only
inference of fact proper to be drawn was that if the agent carried out
his contract, and involved himself in a difficulty, from which he could
only escape by paying money, the defendant was to indemnify the
plaintiff; further that the plaintiff had paid the bets by virtue of a
contract between himself and his principal, that the latter should not
revoke the original contract.

His lordship therefore treats the matter somewhat differently from
HAWKINS, J., for it will be observed that in the Court below, HAWKINS,
J., treats the implied authority to pay as an inference of fact; which
was no doubt amply justified by the previous dealings between the
parties, while he deals with the question of revocation of authority as
a matter of law.

However, perhaps the result of the authorities may be shortly expressed
in the following way:—(1) Authority to pay is implied in authority to
bet (_a_) where the agent lays the bet in his own name, (_b_) and where
to the knowledge of the defendant non-payment of the bet would entail
serious inconvenience to the agent.

(2.) That under such circumstances the authority to pay is irrevocable
directly the bet has been made.

But it would seem that the cases do not expressly decide how the law
would stand in two cases. (1) Where the agent lays the bet, not in his
own name, but in that of his principal, thus incurring no personal
responsibility. (2) In cases where the principal instructs an agent who
is not a professional betting man or not (at any rate to the knowledge
of the principal) in any other way connected with the turf so as to
incur such penalties for default as the plaintiff in _Read_ v.
_Anderson_ would have incurred. Would the risk of mere social obloquy
give the agent such an interest in paying the bet, as to make the
authority to pay irrevocable? or supposing the agent belonged to a club,
a fact which was unknown to the principal, by the rules of which the
committee were empowered to expel any of its members who failed to
discharge debts of honour. It will be observed that in nearly all the
cases alluded to above that the principal’s knowledge, actual or
implied, of the agent’s responsibility, was the ground of inferring an
authority to pay from the authority bet. [Sidenote: Agent’s authority
revocable before bet made.] Of course this question of revocation only
arises after the bet has been made, when the responsibility of the agent
has attached. There is no doubt, as remarked by HAWKINS, J., in _Read_
v. _Anderson_, that the agent’s authority might have been revoked before
the bet was made.

In actions against the agent as in _Bridges_ v. _Savage_,[146] the
defence of wagering and gaming is often raised, _i.e._, that the person
to whom the instructions were given had acted not as agent but as a
party to the wager. In the former case it was raised by the principal,
who was sued for indemnity; in the latter by the agent, who was called
upon to account for winnings. To avoid such difficulties in future it
would be wise both for persons who employ commission agents, and for the
latter who execute commissions, to have the terms of their bargain
definitely in writing. “Please back    for me,” “Taken for you,” seem to
form a contract of agency on which no such question could arise.

[Sidenote: What agent must prove.]

Of course the agent must prove that the payment made to the winner of
the bet was an authorised payment. In none of the cases as between
principal and agent has any dispute arisen either as to whether the bet
remained valid to the end, or whether the horse really lost or won. It
is however, by no means impossible that such questions might be put in
issue. Supposing after the bet was made the nominator of the horse, in
respect of which the bet was made, died, so that (at any rate according
to the new Rules of Betting) the bet would be off, or supposing
defendant had instructed plaintiff to back horse A; horse B is placed
first by the judge and A second, but B is disqualified afterwards for
reasons which would cause the bets to go with the stakes.[147] It is
obvious that if the agent paid on this as for losses he could not
recover from his principal. The real point of difficulty is on what
evidence the Court would act. It is submitted (1) That the employment of
an agent to make bets in a betting market implies an authority to bet
according to the rules and usages of such market, and that the Court
would look at the Rules of Betting or other document proved to regulate
such transactions. (2) That in all bets the question whether a horse is
the winner or the loser is impliedly to be determined by the Rules and
Conditions under which the particular race is run. We shall hereafter,
page 74, deal more fully with the term “winner,” but it will be noticed
all the cases thereunder were decided on a construction of the Rules and
Conditions.[148]

[Sidenote: Gaming Amendment Act, 1892.]

But the law respecting the rights of the agent against his principal has
lately been materially altered by the Gaming Amendment Act, 1892, 55
Vict., c. 9. This Act provides that “any promise express or implied to
pay any person any sum of money paid by him under, or in respect of any
contract or agreement rendered null and void by the Act 8 & 9, Vict., c.
109, or to pay any sum of money by way of commission fee, reward or
otherwise in respect of any such contract, or of any services relating
thereto or in connection therewith shall be null and void, and no action
shall be brought to recover such sum of money.” Of course the cases
already dealt with will still apply to transactions which took effect
before this statute came into operation. But as to dealings between
principal and agent to which the act applies, _Read_ v. _Anderson_ can
no longer have any application. As has been pointed out above, the
principal’s right of action against his agent to recover winnings
remains untouched.

[Sidenote: Agent cannot recover from third party.]

In _Britten_ v. _Cook_[149] the plaintiff made bets on behalf of his
principal with defendant, which bets he won. Plaintiff not having
received the money from defendant, settled with his principal for the
amount, because he would have been subjected to disagreeable
consequences if he did not, and sued the defendant for the amount.
_Held_ that there being no express request by defendant to plaintiff to
pay on his behalf, and no implied request, seeing plaintiff was not
defendant’s agent, the action would not lie.

[Sidenote: No action shall be brought, &c.]

II. The next class of cases to consider are those which deal with the
interpretation of that part of section 18 of the Act in question, which
provides that “no action shall be brought or maintained in any Court of
Law or Equity, for recovering any sum of money or valuable thing alleged
to be won upon any wager, or which shall have been deposited in the
hands of any person to abide the event on which any wager shall have
been made.”

[Sidenote: Right to recover from stakeholder.]

Nearly all the questions which have arisen on this part of the section
relate to the right of a party to a wager to recover his stakes from a
stakeholder with whom both parties have deposited their stakes. Such
questions are of course entirely distinct from the right of the winner
to recover the whole stakes from the stakeholder, as they usually occur
when one party desires to repudiate the wager, and brings his action
before the stakeholder has paid over the money to the winner.

[Sidenote: Cases before the statute illegal wagers.]

Before the statute 8 & 9 Vict., c. 109, some wagers were legal, some
illegal. With respect to illegal wagers it seems never to have been
questioned, but that one party could at any time before the money was
paid over to the winner revoke the authority of the stakeholder, and
demand back his stakes. All the cases recognise the distinction between
recovering stakes from a stakeholder and recovering on the wager
itself.[150] And in _Hastelow_ v. _Jackson_ it seems to have been
considered that where one of the parties to the wager considering
himself to be the winner demanded the whole of the stakes from the
stakeholder, whereas the other party had really been decided to be the
winner, such demand was a sufficient revocation of the stakeholder’s
authority to pay his stake over to the winner. But this decision was
doubted in _Mearing_ v. _Hellings_.[151]

[Sidenote: Legal wagers.]

But with respect to wagers which were legal the decisions were not
uniform. Thus in _Eltham_ v. _Kingsman_[152] it was held that where two
parties to a wager had deposited two watches to abide the event of a
wager, which was for the purposes of the case assumed to be a legal
wager, either of the parties could, while the contract was executory,
revoke the authority of the stakeholder and recover his watch in trover.
The Court compared the authority of a stakeholder to that of an
arbitrator which was clearly countermandable before he had given his
decision. On the other hand, in the later case of _Emery_ v.
_Richards_,[153] where the plaintiff sued a stakeholder to recover his
deposit on a legal foot-race (the sum deposited being under £10). _Held_
that as the contract was not illegal under the Statutes of Charles II.
and Anne, neither party could retract without the consent of the other.

All such questions as to the right to recover a deposit from a
stakeholder have, since the passing of the Statute 8 & 9 Vict., c. 109,
turned out on the construction of the words “no action shall be
brought,” &c. [Sidenote: Statute only applies to actions by winner.]
There is a long series of decisions to the effect that this provision
only applies to actions brought by the winner of a wager either against
a stakeholder or against the loser to recover his winnings, and does not
prevent either party from revoking the authority of the stakeholder
before the money is paid over to the winner, and suing to recover his
stakes.

In _Varney_ v. _Hickman_,[154] plaintiff and one Isaacs agreed to bet
£20 on a race to be run between their respective horses, the stakes
being deposited with defendant. Before the race the plaintiff declined
the bet and demanded back his deposit. On behalf of defendant it was
contended that it was an action within the meaning of the section.
MAULE, J., in giving judgment, discussed the effect of the part of the
section. “The first part of the section,” he says, “declares the
contract to be null and void; the second prevents the winner from
bringing an action to recover the amount of the bet from the loser; the
third prevents the winner from suing the stakeholder. It certainly is
true that the second branch is involved in the first, _i.e._, if the
section had stopped at the end of the first branch it would have
followed that no action could be brought to enforce a contract so
declared to be void. But I apprehend there is nothing unusual in an Act
of Parliament stating a legal consequence in this way. Then the third
branch of the clause, it is said, will be idle and insensible unless
there be given to it the further effect of prohibiting the parties from
recovering their deposits from the stakeholder upon the repudiation of
the illegal contract.... But I think if the second branch of the clause
be looked at, it is more consistent with the whole to treat the third as
an exposition only of the first.... Although perhaps the third clause
might have been omitted as well as the second, yet, the second being
inserted, the third became necessary also. Looking, therefore, at the
whole section, critically and grammatically, I am of opinion that it
does not apply to an action like this, where a party seeks to recover
_his deposit_ from a stakeholder, upon a repudiation of the wager. Upon
higher grounds also, I think that is the true construction of the Act.
This cannot be considered as an action brought for recovering a sum of
money alleged to be won upon a wager; nor do I think it is an action
brought to recover a sum deposited in the hands of the defendant to
_abide_ the event of a wager. As soon as the defendant received notice
from the plaintiff that he declined to abide by the wager, the money
ceased to be money deposited in the hands of the former to abide the
event, and became money of the plaintiff in his hands without any good
reason for detaining it.”

In _Martin_ v. _Hewson_,[155] where money had been deposited to abide
the event of a cock-fight, it was held that the words “no action shall
be brought,” &c., did not apply where the original object of the deposit
has been revoked by the depositor; and that (assuming cock-fighting to
be illegal) either depositor could _before the event_, revoke the
stakeholder’s authority and recover his stake.

[Sidenote: Notice necessary to determine stakeholder’s authority.]

In _Gatty_ v. _Field_[156] it was held that it was necessary to serve
the stakeholder with a notice to determine his agency before bringing
the action; this would seem to follow from the remarks of MAULE, J., in
_Varney_ v. _Hickman_ that the effect of the notice was to change the
character of the deposit. So in _Savage_ v. _Madder_,[157] to which
allusion has been made above on another point; to an action for money
had and received the defendant pleaded (_inter al._): “That the money
was deposited in the hands of the defendant to abide the event on which
the wager was made and is claimed by the plaintiff as the winner of the
said wager, and the plaintiff did not repudiate the said wager or demand
back his said money _before the event of the said wager_.” The Court
were unanimously of opinion that this was a good plea; but from the form
the plea assumed the case cannot be said to decide that one depositor
can revoke the stakeholder’s authority; indeed an observation of MARTIN,
B. (at p. 180), would seem to imply that section 18 prohibited all
actions against the stakeholder at all. It only shows that, at any rate
where the wager has not been repudiated, the money retains its character
of money deposited to abide the event. The plea, moreover, seems framed
upon the assumption that the revocation must take place before the event
and not merely before the money is paid over, as was also suggested in
_Martin_ v. _Hewson_.

[Sidenote: Relation of stakeholder to depositors.]

The great difficulty in these cases seems to have arisen from the want
of a proper understanding of the real relation in which a stakeholder
stands to persons who deposit money in his hands. This question was much
discussed in _Hampden_ v. _Walsh_.[158] Plaintiff and Wallace deposited
£500 each with defendant, as stakeholder, on an agreement that if
Wallace should by a certain date prove to the satisfaction of the
defendant the truth of some scientific proposition, Wallace should
receive the two sums deposited. Defendant decided in Wallace’s favor.
Plaintiff objected to the decision, and before the money was paid over
to Wallace demanded repayment of his deposit from defendant. In spite of
this notice defendant paid the whole to Wallace. COCKBURN, C. J., in
delivering judgment, alludes to this particular point, which had
evidently been dealt with in argument: “We cannot concur in what is said
in ‘Chitty on Contracts,’ 8th edition, p. 574, that ‘a stakeholder is
the agent of both parties, or rather their trustee.’ It may be true that
he is the trustee of both parties in a certain sense, so that, if the
event comes off and the authority to pay over the money by the depositor
be not revoked, he may be bound to pay it over. But primarily he is the
agent of the depositor, and can deal with the money deposited so long as
his authority subsists. We should look upon the defendant merely as the
agent of the plaintiff and as no longer justified in paying over the
money when once his authority had been countermanded.” The Court held
plaintiff entitled to recover, and the case seems to go one step further
than previous cases on the statute in showing that the stakeholder’s
authority may be countermanded after, as well as before, the event has
came off, as in _Hastelow_ v. _Jackson_.[159]

The same view seems to have been taken of the matter by the Irish
Courts.[160]

These decisions afterwards were supported, first by the Court of
Exchequer Chambers, and next by the Privy Council. In _Diggle_ v.
_Higgs_,[161] plaintiff and A agreed to walk a match for £200 a side,
that sum to be deposited by each with defendant. A was declared winner;
but before the money was paid over plaintiff gave notice to defendant
not to pay to A. Defendant disregarded the notice and plaintiff sued to
recover his stakes. The Court were unanimous in upholding the authority
of the previous decisions. COCKBURN, C. J., however, who had in
_Hampden_ v. _Walsh_ hinted a doubt as to the correctness of the
authorities, here expressly intimates, that if the matter were _res
integra_, he would have thought that the words of the statute precluded
an action to recover even a deposit; but that he was unwilling to
disturb the law as settled.

BRAMWELL, L. J., touching on the meaning of the words “no action shall
be brought,” thinks that they are wholly superfluous and might have been
left out. It will be remembered that MAULE, J., in _Varney_ v.
_Hickman_, looked upon them as a statement of legal consequence, not
strictly necessary, but intended by way of explanation of the results of
the general enactment. It seems, however, not improbable that the words
were inserted to prevent any question arising as to the right of the
winner to recover from the stakeholder on a count for money received to
his use—a point which would have presented more difficulty than an
action by the winner against the loser, and which might have been made a
means of evading the Act, by doing through the interposition of a
stakeholder what could not be done directly. It being thought advisable
to provide for the one case, the other more obvious provision would be
inserted for the sake of completeness.

It will be unnecessary to refer to _Trimble_ v. _Hill_,[162] further
than to say that the same point was decided in the same way.[163]

It seems, therefore, to be clearly settled law, subject only to reversal
by the House of Lords, that a stakeholder holds each stake as agent for
the depositor and that a depositor can recall his stake at any time
before it is paid over to the winner, whether before or after the event
has been decided. [Sidenote: Qy. Where horse disqualified.] It was,
however, held in two cases[164] that where the owner entered a horse
that was afterwards disqualified he could not recover his stakes on the
ground that he would be playing a game of heads I win, tails you lose.
But it is very doubtful whether these decisions would be supported at
the present day considering the bias of the more recent cases.

His authority may be determined in the same way as that of an ordinary
agent—

[Sidenote: Determination of stakeholder’s authority.]

(1.) By express notice of revocation, as in all the cases quoted above.

(2.) Where the objects for which the deposit was made have, to the
knowledge of the stakeholder, become impossible of performance. Thus in
_Carr_ v. _Martinson_[165] where stakes had been deposited with
defendant to abide the event of a horse-race between the plaintiff and
one C, the race to be decided by a person named as judge, C on the day
appointed did not appear and A’s horse walked over the course, and was
decided by the judge to be the winner. Plaintiff demanded the whole of
the stakes from the defendant, which defendant refused to pay except
with the consent of C.

_Held_, that as soon as the race became impossible to the knowledge of
the defendant, he held the stake _eo instanti_ as money had and received
to the use of the defendant, the defendant’s authority to pay the winner
being thereby revoked; and that although plaintiff demanded the whole of
the stakes as winner, yet that was a sufficient demand of his own stake,
which defendant ought to have handed over. Per Lord CAMPBELL, C. J., a
demand was unnecessary in this case at all.

[Sidenote: Death of principal.]

(3.) Probably by the death of one of the depositors. That is the general
rule in ordinary transactions between principal and agent, that the
authority of the agent is revoked by the principal’s death. This point
occurred, but was not taken in _Manning_ v. _Purcell_.[166] Testator had
deposited with two stakeholders a sum of money to abide the result of
bets made by himself. It appeared from the evidence that a bet is always
“off” on the death of one of the parties. On testator’s death the
stakeholders repaid the deposit to his administratrix. One question
raised in the case was whether this deposit passed under a gift in the
will of all testator’s “money.” The Court held that it did not, as
although, according to _Varney_ v. _Hickman_, testator had power to
revoke the stakeholders’ authority, he had not in his lifetime exercised
this right: therefore the deposit was in no sense his moneys, though
since his death it had become part of his assets. The point was not
taken that the principal’s death of itself revoked the stakeholders’
authority, though that result seems to have been arrived at by means of
the custom among betting men. But, as Lord Justice Bruce seems to imply,
that if testator had before his death given notice to the stakeholders
to return the deposit, it might then have been considered his money, it
is not easy to see why the same result should not follow from a
revocation by operation of law.

It will be remembered that it has been suggested above (p. 36) that the
deposit of stakes by the competitors in a race is the same thing legally
as the deposit in respect of an ordinary bet. If it be true, therefore,
that the death of a depositor revokes the authority of the stakeholder
with respect to that particular stake, [Sidenote: Right of executors
against stakeholders.] it would seem that where a competitor in a race
happens to die between the time of paying his stake or forfeit and the
time when the whole is paid to the winner strictly speaking and from a
legal point of view the stakeholder should repay them to his
representatives, seeing that by Rule 156 of the Rules of Racing stakes
and forfeits are part of the fund payable to the winner. The same would
apply to entrance money where, according to Rule 160, it is payable to
the winner as part of the stakes. But, of course, entrance money would
not be part of the stakes where, as is usual, it is paid into the race
fund.

[Sidenote: Bankruptcy.]

(4.) As a general rule the authority of an agent (_i.e._, a bare
authority not coupled with an interest) is revoked by the
bankruptcy[167] of the principal. Although there seems to be no express
decision on the point, it seems probable that the same rule would apply
in the case of a stakeholder where either of the depositors became
bankrupt before the money was paid over to the winner. As the
stakeholder is, according to _Hampden_ v. _Walsh_,[168] merely the agent
for each depositor, the safest plan for him to adopt on receiving notice
of a depositor’s bankruptcy would be to consider his authority as to
that stake revoked, and repay it to the trustee in bankruptcy; or
perhaps he would be safe in paying it to the bankrupt himself, if the
trustee had not intervened to claim it.

[Sidenote: Stakeholder cannot sue for stakes.]

As the stakeholder is merely the agent for the depositors, he cannot
maintain an action for the stakes. Thus, in _Charlton_ v. _Hill_[169]
the Clerk of the Course of a race meeting, who was sued by the plaintiff
for the stakes won by him in one race, attempted to set off against that
claim a sum due from plaintiff in respect of the stakes of another race.
_Held_, that he could not do so as no action could have been maintained
by the defendant seeing that the plaintiff could at any time recover the
stakes back again.

[Sidenote: Competitors can choose their own stakeholder.]

It is, moreover, competent to the competitors to choose their own
stakeholder or to select a substitute for the one nominated by the rules
of the race. Thus, in _Dines_ v. _Wolf_[170] by the rules of the race
the stakes should have been paid to the Treasurer of the Australian
Jockey Club, but plaintiff insisted on their being retained by the
defendant. _Held_, therefore, that plaintiff could not make defendant
liable as he had acquiesced in the change.

[Sidenote: Liability of steward for default of stakeholder.]

A question has occasionally been raised whether a steward who nominates
a stakeholder can be made liable for the latter’s insolvency or default.
It is difficult to see how he could be without express agreement, or
perhaps unless he wilfully appointed a man unfit for the post.

[Sidenote: Liability of stakeholder.]

The stakeholder should be very careful before he pays the stakes to the
winner to ascertain that the winner has been so declared by a competent
authority, seeing that if he pays and it turns out that the judge,
umpire, or stewards have not acted in accordance with his or their
authority, he may be liable to the other subscribers. See _Smith_ v.
_Sadler_.[171]

[Sidenote: When responsible for stakes.]

By Rule 28 of the Rules of Racing the clerk of the course, who is
generally the stakeholder, is responsible for the stakes if he allows a
horse to start in respect of which the stakes have not been paid. This
seems to be a liability in the nature of a guarantee of a wager, seeing
that the liability for stakes is simply the liability on a wager.

[Sidenote: Guarantee of a wager.]

There seems no reason why an action should not be maintained in a
contract by one person to guarantee the due performance of a wager
contract by another. Such a contract could not of itself be void as a
wager seeing that the statutes as we have seen only apply to the parties
to the wager itself. Probably, it would have to be in writing to satisfy
the Statute of Frauds as being a promise to answer for the _default_ of
another, but this is by no means certain seeing that it is not a default
in paying a legal demand. If the contract be held to be within the
Statute of Frauds the stakeholder ought to be required to sign an
acceptance of the post, subject to the Rules of Racing, so that he may
be subject to the liability provided by Rule 28.

[Sidenote: Forfeit or penalty not enforceable.]

As no action will lie on a wager, so no action can be brought to enforce
a penalty for non-performance of a wager. In _Irwin_ v. _Osborne_[172]
the plaintiff and defendant agreed each to nominate a mare for a race,
the party or parties nominating the winner to receive from the parties
or party nominating the other mare the sum of £100; the party or parties
who should make default in nominating a mare to pay a forfeit to the
other side of £100. Defendants failed to cause their mare to run and
plaintiff sued to recover £100 penalty.

_Held_, that it could not be recovered, as the agreement was a mere
wager. “If the agreement be legal there is no obstacle to prevent the
recovery of the penalty for non-performance, but if illegal the penalty
can no more be recovered than damages for non-performance.”[173]

It has been shewn above, p. 36, that no action will lie to recover
stakes from any of the competitors in a horse race, a sweepstakes being
on the same footing as any other game for money. This decision would
therefore show that what are known as “forfeits” in racing, _i.e._, sums
payable in withdrawing a horse from the race, frequently half the stake
(see Rule of Racing 105) are equally irrecoverable.

[Sidenote: Deposits on bets.]

It may here be convenient to consider the rights of the parties with
respect to money deposited by one party with the other on bets made
between the two.

In _Manning_ v. _Purcell_,[174] persons who had made wagers with the
testator had deposited with him the sums they had staked. Some of these
bets were lost to the testator in his life time, and after his death his
testatrix paid the winners both the amounts they had deposited and the
amounts they had won. Some of the bets were undecided at the time of
testator’s death, and in respect of these the executrix repaid the
depositors the amount of their deposits.

It was proved that by the custom among betting men bets are off on the
death of one of the parties. It was held that in respect of bets decided
against testator in his life time, the executrix was not justified in
paying either the sum won or the deposit; but that as to the bets which
had not been decided, she was justified in repaying the deposits. KNIGHT
BRUCE, L. J., put the case on the ground that the contract being
illegal, the executrix was justified in determining the bets before they
came off. It is difficult to justify the first part of this decision
relating to the deposits on the bets which had been decided in
testator’s life time. A makes a ready money bet with a book maker at 5
to 1, depositing the £1 with him. A’s horse wins; A of course cannot
recover the £5, but why not the £1? The truth seems to be that the
deposit is made as a security for what A might lose to B on the bet, an
event which became impossible. The fallacy seems to be treating the
betting contract as illegal; no doubt if A had lost the bet he could not
have recovered the deposit (see, however, p. 66).

In _Reggio_ v. _Stevens_,[175] the plaintiff had deposited sums of money
with the defendants in respect of stock exchange transactions which he
intended to open at the defendant’s office. These transactions being for
differences were held by the Court to be wagering contracts (see _post_
on the Chapter on Stock Exchange). The plaintiff, as he was by the
agreement entitled to do, gave notice to close the transactions, which
showed a balance in his favour, at the same time demanding the winnings
and repayment of his deposit.

It was contended under the authority of _Manning_ v. _Purcell_, that
inasmuch as the notice to close the transaction was in effect determined
the wager, the deposit could be recovered. The Court held that inasmuch
as the money had been deposited in respect, not of one, but of a series
of transactions, the case came under the second part of _Manning_ v.
_Purcell_, and that the deposit could be recovered.

By sect. 5 of the Act of 1853: “Any money or valuable thing received by
any such person as aforesaid, as a deposit on any bet, or as or for the
consideration for any such assurance, undertaking, promise, or agreement
as aforesaid, shall be deemed to have been received to or for the use of
the person from whom the same was received, [Sidenote: Deposit with
keeper of betting house.] and such money or valuable thing or the value
thereof may be recovered accordingly with full costs of suit.” It is
obvious that the section is hardly intelligible without reference to the
other sections of the Act, which will be found set out in the Chapter on
Betting Houses. In _Doggett_ v. _Catterns_,[176] the defendant was in
the habit of standing by a tree in Hyde Park, making bets with other
persons. The plaintiff deposited a sum of money with the defendant in
respect of one of these bets, which sum plaintiff now sued to recover.
The majority of the Court held that the “person aforesaid,” in section
5, alluded to the persons specified in section 4, _i.e._, the owner or
occupier of the place, &c., or person acting on his behalf, or having
the care or management of the business. That the section did not include
any “person using the same,” and that as the defendant could not be said
to be the owner or occupier of any place in Hyde Park, the section did
not apply.

It will, however, be noticed that the section speaks of a deposit (1) on
any bet, (2) as or for the consideration for any assurance as aforesaid.
Now the assurance spoken of in the previous section refers only to an
agreement to pay on the contingency of a horse-race or other sport. It
would seem, therefore, that while the penal provisions of section 4 are
confined to deposits on bets on horse-races, &c., [Sidenote: Does s. 5
apply to bets in stocks and shares?] the right of action given by
section 5 to recover deposits on any bet applies to bets of every kind,
and therefore to wagering transactions, &c., on stocks and shares. It is
to transactions of the latter kind that this question would have a
practical application. In the outside Stock Exchange places, commonly
known as “bucket shops,” bargains for differences (which are really
wagers) are well known. (See _post_, the Chapter on Stock Exchange).

Another point which would seem somewhat doubtful under the section is,
supposing a deposit be made within the section, _i.e._, with the owner
or occupier, &c., of the place kept for the unlawful purpose, and the
bet is determined against the depositor, can he still recover this as a
deposit on the bet, [Sidenote: After bet lost to depositor.] even though
the money ceases to retain its character as a deposit, and has been
appropriated to the payment of a lost bet? It would seem that he could.
The Act was passed to discourage and penalize establishments of a
specified kind. Besides, it would seem that even before the Act,
according to _Manning_ v. _Purcell_ (_ubi sup._) money deposited on a
bet can in all cases be recovered before the event, so that for this
purpose the Act was unnecessary.

At all events, before an action can be brought under this section at
all, the following circumstances must combine: (1) Receipt of money on
deposit (2) by the owner or occupier (or his agent or manager in the
betting business) (3) of a place, etc., kept or used for the purposes
mentioned in sections 1 and 3. As to this and “place” and “user,” see
the Chapter on Betting Houses; but (4) it is at p. 190 pointed out that
the receipt under section 4 need not be in the house or place.

[Sidenote: Foreign law.]

The insertion of the clause commencing with the words, “no action shall
be brought,” may, perhaps, have a practical significance in one case,
where an action is brought in England on a wager-contract made in a
foreign country where such contracts are enforceable.

It will be sufficient for present purposes to state a few general rules
which prevail in a case of what is called a conflict of laws:—

(1.) Where a contract contemplates any particular country as the place
of performance, the contract is governed by the law of that country, the
_lex loci solutionis_; _e.g._, the liability of the acceptor and
indorser of a bill of exchange, drawn and accepted in France, but
accepted payable in England, must be decided according to the law of
England.[177]

_Robinson_ v. _Bland_[178] is an example of a bill accepted for gaming
debts contracted abroad. Plaintiff sued on an acceptance given in
France, payable in England, for money lost at play in France. The
acceptor died before action brought. It appeared that the debt could
only have been enforced in France by the marshals in a court of honour
and not in the ordinary courts, and the only process ultimately
available was personal attachment, which in the present case would have
been impossible as the debtor was dead. So as the debt could not have
been enforced in France, no action would lie here. According to English
law the bill was void by the Statute of Anne.

(2.) Where no special place of performance is named, the _lex loci
contractus_ prevails, that is, the law of the place where the contract
is made; or in the case of an executed contract, where the transaction
is carried out; _e.g._, money advanced in France for the purposes of
gaming is a transaction governed by French law.[179]

In _Quarrier_ v. _Coulston_,[180] a bill was filed by the personal
representative of a deceased person to have an I O U given to defendant
by deceased delivered up to be cancelled, on the ground that it was
given in respect of money won from deceased at cards, or lent to him for
gaming purposes, while travelling on the Continent at Baden-Baden and
other places in Germany. Judgment was given for the defendants, on the
ground that it did not appear that the games were unlawful by the laws
of the country where the money was won.

(3.) The formalities necessary for a contract must be decided by the law
of the place where the contract is made.

(4.) Questions of procedure are decided according to the law of the
forum where the case is tried.

In _Leroux_ v. _Brown_,[181] it was decided the words in the 4th section
of the Statute of Frauds, which provide that “no action shall be
brought” upon certain contracts therein specified unless there be some
memorandum of them in writing, refer to procedure only, and do not
affect the substance of the contract; consequently, where an action was
brought in England on a verbal contract entered into in France, where no
writing was required, but which by the 4th section of the Statute of
Frauds ought to have been in writing in England, it was held that as the
Statute of Frauds referred to procedure only, the law of England must
prevail where the action was brought, and that the rule above stated as
to the formalities did not apply.

[Sidenote: Qy. Effect words in 8 & 9 Vict., c. 109.]

It may be, therefore, that the same words used in 8 & 9 Vict., c. 109,
section 18, would have the same effect, viz., in preventing an action
being brought in English Courts on a wager-contract entered into abroad
in a country where they are legally enforceable.[182] This, of course,
would not apply to money lent for gaming purposes,[183] which depends on
5 & 6 William IV. and not on 8 & 9 Vict., c. 109. (See _ante_ p. 14.)

[Sidenote: The “Proviso.”]

III. We now come to the last part of the section, commonly called the
“Proviso,” which says that “this enactment shall not be deemed to apply
to any subscription or contribution, or agreement to subscribe or
contribute for or towards any plate, prize, or sum of money to be
awarded to the winner or winners of any lawful game, sport, pastime, or
exercise.”

There are three series of questions on this proviso.

  I. As to what is “a subscription or contribution to a prize”?

  II. As to when a person is “the winner” within the statute?

  III. What are lawful games, sports, &c.?

[Sidenote: Subscription or contribution.]

I. What is the meaning of a subscription or contribution to a prize?

In many of the cases the line is very fine between such subscription and
a deposit of sweepstakes. In _Batty_ v. _Marriott_,[184] a foot-race was
agreed upon between plaintiff and A for £10 a side, and each deposited
£10 with the defendant as stakeholder. A was declared winner, but
plaintiff disputed the decision and demanded back his stakes. The Court
held that the provisions of 16 Car. II. and 9 Anne relating to the
question, were repealed by 8 & 9 Vict., c. 109; and that although the
contract was in the nature of a wager, still the Act laid down no rule
with respect to the number of subscribers necessary to form “a
subscription to a prize.” It made no difference between the case of two
or fifty. They all intimated that their decision went farther than the
Legislature intended to go—consequently, as a foot-race is a lawful
game, and as one party who has paid money on a legal contract cannot
recall it without the consent of the others, they held that the
plaintiff could not recover his stake.

If this case were good law, it would follow that the real test to be
applied is, whether or not the money were deposited before the event
came off in the hands of a stakeholder.

But the decision was not regarded with much favour in the later case of
_Parsons_ v. _Alexander_.[185] Plaintiff sued on an account stated for
money which had been won at billiards. Defendant having, to start with,
a few shillings in his pocket played the plaintiff for a certain sum and
lost. They then played again for “double or quits,” and defendant was
again unsuccessful. This was repeated until the defendant lost to the
plaintiff about £65, for which he gave an I O U. The Court, while
intimating doubts as to the correctness of _Batty_ v. _Marriott_,
distinguished the case before them on the ground that the parties had
played entirely on credit, and had not, as in _Batty_ v. _Marriott_,
deposited the stakes before the event came off.

Per ERLE, J.: “The distinction is between gaming and cases where a
person either pays down a contribution to a stake, or holds himself
forth as having contributed.” Per CRAMPTON, J.: “This was an agreement,
if you win, I pay you; if you lose, you pay me.”

This distinction suggested by the Court of cases where the money is
actually deposited by the parties who play, and cases where it is not,
seems also to have occurred to MAULE, J., in _Johnson_ v.
_Lansley_:[186] “The 18th section seems to treat the money which is in a
man’s pocket at the time as the reasonable limit to which he may
lawfully gamble.” So, too, under the older statutes of Charles II. and
Anne, as interpreted by _Applegarth_ v. _Colley_, there was no objection
to gaming so long as the stakes were prepaid.

Some of the Court said that but for _Batty_ v. _Marriott_, they would
have thought the proviso was confined to subscriptions by outside
parties to a prize, and not to deposits by the players themselves. In
_Brown_ v. _Overbury_,[187] the plaintiff was a subscriber to a race.
The stewards could not agree as to the winner. Plaintiff claimed that
his horse had won, and brought an action against the stakeholder to
recover the stakes, thereby submitting the decision of the race to the
jury. At the trial it was contended that he was, at all events, entitled
to recover his own contribution. It was not even argued that this case
was within the “proviso” as a contribution to a prize. The Court held
that as it had not been shown that it had become impossible to obtain
the decision of the stewards, he could not call on the stakeholder to
return his contribution.

In _Irwin_ v. _Osborne_,[188] plaintiff agreed with the defendants that
a match should be run between a mare, the property of M, and a mare the
property of the plaintiff; that the party who nominated the winner
should receive from the party or parties nominating the other mare the
sum of £100; and that if either party who nominated a mare should make
default in causing such mare to run, he or they should pay the other
party £100. The defendants made such default, and plaintiff sued for
£100. The Court held that this was not within the proviso of the
statute; there was “no subscription; no contribution; no deposit. This
action has been brought, not for a contribution, but to recover a
penalty.... For the amount is not made up by a contribution or money
deposited, and the winner had to depend on his good fortune in
nominating the successful horse.... The contract depended on an
accidental circumstance, not on the running of a race.”

Per CRAMPTON, J.: “If it be an ordinary wager it is unlawful; all
betting is disallowed, but an exception is made on what I may call a
particular species of wagering, namely, a number of persons making a
fund, the whole of which is to become the property of the successful
party.”

It is clear that in this case the test of prepayment of stakes was
adopted by the Court, following _Batty_ v. _Marriott_.

In _Crofton_ v. _Colgan_ it seems to have been assumed that a
subscription to a race by all the owners of the horses running, and a
further sum added by the stewards of the race was within the proviso;
but the real dispute in this case was on the meaning of the term
“winner,” which will be fully discussed hereafter. So the case is of no
great value in laying down any test or principle for determining what
amounts to “subscription” or “prize.”

In _Coombes_ v. _Dibble_,[189] plaintiff and defendant agreed to ride a
race on their own horses, the winner to keep both horses as his own
property. _Held_ that this was not within the proviso, as there was in
no sense a contribution to a prize. Neither party could be said to
“contribute” their horses if they won. MARTIN, B., however, suggested
that if a horse had been placed in the custody of a stakeholder before
the race came off, that might have been in the nature of a contribution
to a prize within the statute.

So far the balance of authority seems to have been in favour of the
decision in _Batty_ v. _Marriott_ and the test therein suggested, the
only dicta to the contrary were the remarks made by some of the judges
in _Parsons_ v. _Alexander_.

But the point has now been decided the other way by the Court of Appeal
and by the Judicial Committee of the Privy Council, in two cases to
which we have alluded above on another point, viz., _Diggle_ v.
_Higgs_[190] and _Trimble_ v. _Hill_.[191] In _Diggle_ v. _Higgs_, in
addition to the point decided above, it was contended for the defendant
that the deposits were in the nature of a contribution to a prize; but
the Court held—

(1.) That the agreement was a mere wager, in spite of the fact that the
money was deposited with a stake holder;

(2.) That the proviso in favour of subscription to a prize was only
meant to apply to agreements which were not in the nature of wagers. Per
Lord CAIRNS, L. C.: “It is clear that there may be in scores of forms
‘subscriptions or contributions’ towards a plate or prize without there
being any wager, and I cannot read this proviso, which has a natural and
intelligible meaning, in a different way, any one which would have the
effect of neutralizing the enactment.... I read the proviso thus:
‘Provided that so long as there is a subscription which is not a wager,
the second part of the section shall not apply.’”

(3.) That the enactment avoiding wagers apply to all wagers,
irrespective of the legality or illegality of the game.

This case was afterwards followed by the Privy Council in _Trimble_ v.
_Hill_.[192]

[Sidenote: Result of foregoing cases.]

The foregoing cases do not leave the matter very clearly settled. They
afford a number of illustrations of transactions which are _not_ within
the proviso as subscriptions to a prize; and finally _Diggle_ v. _Higgs_
lays down the general rule that the proviso is not intended to apply to
any case which is at all in the nature of a wager. But with the
exception of the case of _Crofton_ v. _Colgan_, they do not go far
towards showing what is a subscription or contribution to a prize. It is
obvious that the exact line of distinction between a wager and a prize
is very difficult to draw. _Diggle_ v. _Higgs_ shows that a mere deposit
of stakes to be awarded to the winner of a race between two persons is a
wager and nothing more; a decision that would seem to apply to the
agreements in _Sadler_ v. _Smith_[193] and _Dines_ v. _Wolfe_.[194] In
both these cases the parties agreed to race, in one case a horse-race
and in the other a sculling race, having previously deposited stakes
with the stakeholder to be awarded to the winner, though in the latter
cases the point did not arise, as in neither of those actions did the
plaintiff show himself to be the winner. Thus the test suggested in
_Batty_ v. _Marriott_ is completely rejected, viz., the distinction
between cases where money is deposited before the event and cases where
it is not. Another test, hinted by the Court in _Parsons_ v.
_Alexander_, was between cases where the winnings are contributed by the
competitors themselves, and where they are given by some outside person.
If this be the true test, the result would be that many _bonâ fide_
races would be placed simply on the footing of wagers,[195] at any rate
so far as the right of the winner to recover the stakes is concerned.
Where the winnings consist of sums deposited and a sum added, [Sidenote:
Distinction between the stakes and a sum added.] the case of
_Applegarth_ v. _Colley_ shows that a distinction can be drawn between
the two; the deposits might be in the nature of money won at gaming and
so not recoverable, while it was held that the “sum added” by some
outside person was under any circumstances recoverable by the winner. It
seems that that distinction exists under the present state of the law,
and that strictly and technically speaking, the stakes deposited
previously to a race are not recoverable; though, no doubt, any sum of
money contributed by a stranger would be a contribution to a prize
within the proviso.

It is some argument in favour of this view that section 6 of the Betting
House Act exempts from the penal provisions of the Act any “deposit of
stakes.” This would have been unnecessary if a sweepstakes were not in
the nature of a wager.

[Sidenote: Entries, stakes, forfeit, cups.]

If this, as it is submitted, is the true principle, it is not difficult
to ascertain how far the different forms of prizes given for races are
recoverable, or how far they come within the law of wagers. Thus “a
plate,” which, according to the Rules of Racing, is a prize in money not
made up by subscription among the competitors, would seem to be on the
same footing as “added money” as decided in _Applegarth_ v. _Colley_.
Entrance money would be on the same footing as the stakes in cases
where, according to Rule 160, it is payable to the winner.[196] As to
“forfeits,” they would seem to be, as their name implies, in the nature
of small penalties payable for withdrawing a horse from his engagements.
By Rule 109 horses coming up in time to start are liable for the whole
stake. It has already been pointed out (_sup._ p. 63), that such a
penalty is not recoverable. A “cup” is any prize not consisting of
money. If awarded by some outside person it would, no doubt, be within
the proviso, a prize to be awarded to the winner. But if it is obtained
by subscription among the competitors it would seem to be on the same
footing as a money fund made up of stakes, and the subscribers would be
joint owners of aliquot shares,[197] until they have all assented to its
being handed over to the winner, otherwise the statute might be evaded
by the parties purchasing a chattel with the stakes.

[Sidenote: Meaning of term “winner.”]

II. With respect to the term “winner,” some rather curious points have
been decided. In _Crofton_ v. _Colgan_,[198] the parties subscribed £3
each in respect of their stakes, the stewards of the race subscribing
£30. There were two prizes to be awarded. It was contended that this did
not come within the proviso as a prize to be awarded to the winner, on
the ground that the horse that came in second could not be considered a
“winner,” and, therefore, as the whole sum was not to be awarded to the
winner the statute did not apply. [Sidenote: 2nd horse may be “winner.”]
But the Court held (1) that the term “winner” might apply to a second
horse as well as to a first;[199] and (2) that, apart from that
objection, the mere fact that part of the stakes were not to go to the
winner would not take the case out of the statute.

Another point arose in _Batson_ v. _Newson_,[200] where a man called
Hawkins wagered with the plaintiff, that his, Hawkins’, horse would trot
eighteen miles in one hour. Hawkins and plaintiff deposited £50 each
with defendant as stakeholder to abide the event. The referee decided in
Hawkins’ favour, but plaintiff, disputing the decision, gave notice to
defendant to pay him back his stakes. Defendant disregarded the notice,
and paid the whole to Hawkins. Plaintiff sued to recover his deposit.
[Sidenote: There must be a “loser.”] _Held_, that the agreement was a
mere wager; there could be no winner in such a case as only one person
was to do anything. In such a case there could be no “loser,” and
without a loser there can be no winner. It will be remembered that in
_Applegarth_ v. _Colley_ the same view was taken as to the meaning of
the term “winner of £10” in the Statute of Anne, and the Court there
held that a man could not be said to be a winner of £10 within the
statute, unless there were a corresponding loser of the same sum.
[Sidenote: Winner must be a competitor in the race, &c.] It would seem,
too, that a person cannot be called a winner unless he either take some
part himself in a competition or be the owner of an animal engaged
therein. Thus, in _Irvine_ v. _Osborne_[201] the plaintiff and
defendants simply nominated the winner of a race, the person who
nominated the successful horse to have the stakes. Plaintiff nominated a
horse not belonging to himself. _Held_, that he could not be a winner of
the race, as “the contract depended on some accidental circumstance, not
on the winning of a race.”

[Sidenote: Breeders’ stakes.]

A case that seems to fall within this rule is that of breeders’ stakes,
where a certain sum is, by the conditions of the race, to be awarded to
the breeder of the winner. It would seem according to the above case
that not being the owner of the animal winning, the breeder could not
recover under this proviso of the section.

[Sidenote: Disputes as to the winner.]

It is obvious that any person suing to recover stakes as winner has cast
upon him the burthen of proving himself to be such. The determination of
such a question will generally depend upon agreement or special
conditions by which competitors agree to be bound. Thus, horse-races are
generally run either subject to the rules of the Jockey Club, or subject
to specially advertised regulations. However, it may be taken that the
winner is declared by the judge, all further questions or objections—as
to, for instance, qualification—being decided by the stewards.

[Sidenote: The judge.]

With respect to the authority of the judge to declare the winner, the
conditions upon which it is exercisable must be strictly observed, and
the same in the case of the arbitrators or umpires of other kinds of
races. In the head note to _Carr_ v. _Martinson_[202] it is stated the
power of the judge of a horse-race to award the stakes to a winner does
not arise until the race has been run! This extraordinary point arose in
the following way: the parties agreed on a race between their respective
horses, naming both a starter and a judge, and fixing a particular hour
on a certain day. The stakes were deposited with the defendant, to be
handed over to the winner according to the decision of the judge. The
parties made their appearance, but the starter did not turn up. One of
the parties refused to run and the plaintiff walked over the course and
was declared by the judge to be the winner. But the Court held that the
presence of the starter was, by the agreement, a condition precedent to
the race, and so to the judge’s authority. There had been no starter,
and so no race; consequently, the judge’s authority to declare the
plaintiff winner did not arise. The other point decided in this case as
to recovering stakes has been noticed above.

N.B.—This case by no means decides that an umpire never has power to
award the stakes to a person whose horse has simply walked over the
course.

[Sidenote: _Smith_ v. _Sadler_, L.R., 4 Q.B., 214.]

A somewhat similar point occurred in _Smith_ v. _Sadler_.[203] The
plaintiff and K deposited stakes with the defendant to abide the event
of a sculling race between themselves, “to row according to the
recognised rules of boat-racing.” The decision of the referee to be
final. It was proved in evidence that according to custom in a sculler’s
race between watermen the men start themselves, but in the event of
either or both making a default in starting, the referee was entitled to
interfere. At the time appointed, a great difficulty took place in the
men starting themselves. K complained to the referee, who told him to
give notice to the plaintiff that if he did not start K was to row over
the course without him. K rowed over without giving plaintiff such
notice. The referee, without further inquiry, ordered the stakes to be
paid to K, which the defendant did. Plaintiff sued to recover his
deposit, thus disputing the decision of the referee. For the defendant
(_i.e._, practically in favour of the referee’s decision) it was
argued—(1) That the referee was in the position of an arbitrator; that
therefore not even misconduct on his part could be pleaded in answer to
an action on the award; but the award must first be set aside; (2) that
the referee had virtually decided that there had been a proper start and
a proper race, and that according to the authorities such decision was
binding. The Court, however, held (1) That the cases as to setting aside
the award did not apply because the jurisdiction of the referee had
never arisen. The order he had given to K was conditional and K had not
carried it out; therefore the race had never been rowed and there was
nothing for the referee to decide. (2) That although _primâ facie_ it
would be implied from the award of the stakes that there had been a
proper start and a race, that inference had been rebutted by the
evidence given at the trial. Therefore the referee never had authority
to declare K the winner, and the plaintiff was entitled to recover his
stake from defendant.[204]

[Sidenote: Decision of stewards.]

Whenever it is made part of the conditions of a horse-race that the
decision of the stewards shall be final, it is not competent for any
party to question their decision, and it seems that they are not in the
same position as arbitrators. They are not bound to hear the parties
before deciding, they need not give a joint decision, they are not
disqualified by having an interest in the race. Thus in the case of
_Benbow_ v. _Jones_[205] the plaintiff was the owner of the horse that
came in first, but the steward had previously decided, without hearing
him, that his horse was disqualified. The Court held that these
circumstances did not prevent the decision being final. As ALDERSON, B.,
humorously expressed it, the next contention would be that the steward
was bound to hear the parties on oath and counsel on both sides. In
_Parr_ v. _Winteringham_[206], where the stewards gave separate
decisions without consultation, it was held that this was sufficient. In
_Ellis_ v. _Hopper_[207] a steward was held not to be disqualified by
his having made a bet on the race. In _Brown_ v. _Overbury_,[208] where
the stewards could not agree as to the winner, it was held that the
exclusive right of the stewards to decide lasted until it had become
impossible to obtain their decision.

Again, in _Dines_ v. _Wolfe_,[209] the facts were as follows; Agreement
between plaintiff and A for a race between their respective horses for
£500 aside, weight for age, to be run under Australian Jockey Club
rules; £100 aside deposited with defendant as stakeholder, balance to be
paid to defendant fourteen days before the race. According to the rules
of the Jockey Club, the stakes ought previously to the race to have been
paid over to the Treasurer of the Jockey Club, but plaintiff insisted on
their being retained by defendant. A’s horse won; after the race,
plaintiff, finding that A’s horse had only been weighted as a
four-year-old, objected that he was a five-year-old. He wrote a letter
to this effect to the stewards, objecting to A’s horse being declared
winner. By the rules of the Jockey Club, when the age or qualification
of a horse was objected to, either before or after the running, the
stewards should call for such evidence as they might require, and their
decision was to be final. The stewards met to consider their decision
and the plaintiff produced certificates as to the age of A’s horse;
after the meeting had been several times adjourned, the plaintiff
demanded another adjournment, which the stewards refused. They finally
decided in favour of A’s horse. The defendant paid over the money to A.
It does not appear that the plaintiff had previously demanded his stakes
back from defendant.

Plaintiff sued defendant for the whole of the stakes as winner of the
race. He contended (1) that the rules of the Jockey Club had not been
complied with, inasmuch as the stakes had not been deposited with the
treasurer of the club; therefore the race had never been run according
to agreement; (2) that the stewards had not fairly decided the case,
having refused his request for a further adjournment.[210]

The jury awarded the plaintiff £500 (the amount of his own stakes) on
the ground that the rules of the Jockey Club had not been complied with.
The Supreme Court granted a new trial, and from this plaintiff appealed
to the Privy Council. The judgment of the Privy Council was delivered by
Lord CHELMSFORD. Plaintiff could not recover the whole of the stakes
without a decision of the stewards that he was the winner. He could not
recover even his own stakes back unless he had repudiated the agreement
before the race was run (_i.e._, run according to the agreement). The
plaintiff could not maintain his objection that the agreement had not
been complied with, as he himself had consented to the money remaining
in the stakeholder’s hands instead of being paid over to the treasurer;
further, that plaintiff in writing to the stewards was really claiming
the benefit of the rules, and could not therefore be heard to say that
the race was not run under them. _Held_, also, that the stewards had
acted _bonâ fide_, and that according to the rules there was no appeal
from their decision.

[Sidenote: Provisional decision.]

Again, in _Smith_ v. _Littledale_,[211] where objections were taken to
the winner on several grounds, the stewards in the weighing room decided
in his favour on one point, subject to the other questions.
Subsequently, the winner was disqualified on grounds that were
inconsistent with the first decision. _Held_, that the first decision
was provisional only and therefore, _ultra vires_, that the final
decision was binding.

[Sidenote: Stewards’ decision on points of construction.]

In _Newcomen_ v. _Lynch_[212] it was held, where the rules of a race
provide that the decision of the stewards should be final, that applies
to questions of construction of the rules of the race, as well as to
questions of fact.

[Sidenote: Construction of agreement by the Court.]

But where the agreement does not contemplate any special method of
deciding disputes, the Court will construe it. If necessary, parol
evidence will be admitted to explain conventional or sporting terms.

[Sidenote: Parol evidence.]

Thus, in _Hussey_ v. _Crickett_,[213] evidence was admitted to explain
the term “Rump and dozen.” In _Evans_ v. _Pratt_,[214] it was explained
that an agreement for a steeplechase “across country” meant a course
over all obstructions, and prohibited going through open gates.

In _Daintree_ v. _Hutchinson_[215] there was an agreement between
plaintiff and defendant for a dog match to be run on the Wednesday
during the Newmarket February Meeting, 1841, P.P. Plaintiff was member
of the Newmarket Club, but defendant was not. By the rules of this club,
the February Meeting was fixed at the previous November Meeting, for a
certain date, weather permitting. On the day of the meeting there was a
hard frost, and the club adjourned to another day, weather permitting.
The meeting had again to be put off to a subsequent Tuesday. On the
Wednesday after that, the plaintiff appeared, ready to run the race, but
defendant did not turn up. Defendant contended that the agreement meant
the Wednesday in the week originally fixed for the Newmarket Meeting.
But the Court held that the rules of the club were admissible to show
that the meeting was what Baron PARKE called a “moveable feast,” and
that the true construction was that the race should come off on the
Wednesday in any week in which the meeting should actually take place.
_Held_, also, that parol evidence was admissible to explain that the
letters P.P. meant that the parties were either to run the match or
forfeit the stakes.

[Sidenote: Play or pay.]

It may, perhaps, be mentioned here that the term “play or pay” is well
known and understood both in racing and betting matters. In most races
the conditions provide, that if the owner of a horse nominated withdraws
him from the race he pays a smaller sum than the stake, usually half the
stake, by way of “forfeit.” In some cases, however, he still remains
liable for the whole stake and then it is called a “play or pay” race.
So in betting, to say that a bet is “p.p.” means that if the horse
backed does not run the backer still has to pay.[216]

[Sidenote: Gentleman rider.]

As to the construction of the term “gentleman rider,” see _Walmsley_ v.
_Mathews_ (3 M. & G., 133).

[Sidenote: Rules of racing are evidence.]

In construing an agreement, the Court will look at the Rules of Racing
or other the conditions of the race,[217] [Sidenote: Agreement requires
stamp.] but it seems that any sporting agreement should be stamped
before the Court can look at it.[218]

[Sidenote: Starter when requisite.]

Thus in _Carr_ v. _Martinson_ (_sup._ p. 76) the Court held on the
construction of the agreement that the presence of a starter was
necessary before the race could properly be run at all. By the Jockey
Club Rules the horses must be started by the official starter or his
authorised substitute.

[Sidenote: Parties can waive conditions.]

The parties can, of course, waive any of the conditions of the race by
mutual consent or acquiescence, as was done in _Dines_ v. _Woolf_;[219]
or any party can without the consent of the others waive a condition
which tells solely for his benefit. In _Evans_ v. _Sumner_ (35 J.P.
761), the plaintiff sued the stakeholder for the stakes. An objection
had been lodged against the plaintiff as winner on the ground of his
being on the unpaid forfeit list, but the objection was, according both
to the local rules and the Newmarket Rules, lodged too late. The
plaintiff appeared before the stewards and did not raise the point as to
time, and the objection was sustained. _Held_, that he could not now set
up the point, as he waived the benefit of the rule, which under the
circumstances told solely in his favour. _Quis que renunciare potest_,
&c., &c.

[Sidenote: Qy. in case of a Plate or “added money.”]

At least this would appear to be the case so far as regards the
authority of the stakeholder to pay over mere stakes to the winner; the
waiver of the competitors who have subscribed them would be sufficient.
But in the case of a Plate, or where there is “added money” (_ante_ pp.
73 and 74) contributed by an outsider, the consent of such person or
persons would be necessary before any of the conditions could be waived.
Compare with this suggestion Rule of Racing 143, which provides that in
a sweepstakes the competitors may waive a walk over, but in a Plate the
consent of the Stewards is necessary.

[Sidenote: Stewards’ liability.]

A steward, being an unpaid official, is not liable for negligence in not
appointing a judge,[220] nor, _semble_, could he be responsible for the
default of the stakeholder unless he knowingly appointed an unfit
person.

[Sidenote: Games and sports within the Act.]

III. What are “lawful games, sports, or pastimes or exercises” within
the Act?

[Sidenote: Horse-racing.]

The question can be best answered by showing what games are unlawful
either at Common Law or by statute. Some have a history. Thus
horse-racing was for a long time subjected to considerable restriction.
It will be remembered that by the Statute of Anne, section 5, it was
made penal to win any sum over £10 at any one time, by means of gaming.
It was always understood that horse-racing, which was expressly
mentioned in the Statute of Charles II., was a game within the Statute
of Anne, the games in both statutes being the same.[221] The result was,
as is shown in _Evans_ v. _Pratt_[222], that a horse-race for a prize of
over £10 was held to be illegal. Curiously enough, in _Applegarth_ v.
_Colley_, an entirely different construction was put upon those statutes
by the Court of Exchequer; it being there held that the statutes did not
affect a case (1) where the stakes were deposited with a stakeholder
before the race was run, the statutes aiming at gaming on credit and
“contracts for the payment of money won at gaming;” (2) where the stakes
were made up of subscriptions under the value of £10, the term winner of
£10 only contemplating a case where there was a corresponding loser of
that sum. However, by the time that this case was decided, all
restrictions on horse-racing had been wiped off the statute books: so
that this more lenient construction of the earlier prohibitive statutes
came rather late.

The immediate result of the statutes was that a large number of races
were started for small prizes under £10, so as not to infringe the Act,
a practice which tended to deteriorate rather than improve the breed of
horses. [Sidenote: 13 Geo. II., c. 19.] To remedy this the Statute 13
George II., c. 19, was passed, which prohibited any horse-race being run
except at Newmarket or Blackhambleton in Yorkshire, for any prize of
less value than £50. It also prescribed some arbitrary regulations as to
the weights which horses of certain age should carry. The object, of
course, of this statute was to prevent horse-races being run where the
prize was not sufficiently remunerative to encourage the improvement of
the breed. [Sidenote: 18 Geo. II., c. 34.] The Statute 18 George II., c.
34, repealed so much of the previous statute as related to the carrying
of weights, but the other provisions of 13 George II., c. 19, which
restricted the practice of horse-racing, remained in force until the
passing of 3 & 4 Vict., c. 35. [Sidenote: 3 & 4 Vict., c. 35.] By this
statute all the enactments of 13 George II., c. 19, relating to
horse-racing, were repealed. [Sidenote: _Evans_ v. _Pratt_.] In _Evans_
v. _Pratt_[223] a question was raised as to the exact effect or result
of this statute. The plaintiff sued to recover the stakes of a
steeplechase “across country,” of which he had been declared winner. The
main point was whether such a steeplechase for a prize of more than £10
was within the Statutes of Charles II. and Anne. It was argued on the
one hand, that by the repeal of the earlier Statute of George II.,
without mentioning the statutes of Charles II. and Anne, the law as it
existed under the latter was virtually restored, and, therefore, that a
race for £10 was illegal. On the other hand, it was contended that the
restrictions on horse-racing contained in the Statutes of Charles II.
and Anne were repealed by 13 George II., c. 19, which substituted other
provisions; and that the repeal of the latter statute had given “a new
charter to horse-racing.” [Sidenote: All horse-racing made legal.] The
Court held that the Statute 3 and 4 Vict., c. 35, had legalised all
horse-racing, and that steeplechases were included in that term.

[Sidenote: 42 & 43 Vict., c. 18. Horse races near London require a
           license.]

The only restriction in modern times to which horse-racing has been
subjected is in the case of races within ten miles of London, the
increase of which had been productive of great inconvenience.

By 42 and 43 Vict., c. 18, it is provided—

By section 1, a horse-race is in substance defined to be any competition
between horses, or any race against time for any prize or any wager in
respect of any such horse, at which more than 20 persons shall be
present.

Section 2 makes all horse-races within 10 miles from Charing Cross
unlawful unless licensed.

Sections 3 and 4 prescribe the method of obtaining such license.

Section 5 inflicts a penalty of £10 or two months on any person taking
part in such unlicensed horse-race.

Section 6 inflicts a penalty of from £5 to £25 on owner or occupier of
ground where no such race takes place.

Section 7 makes any horse-race contrary to the Act a common nuisance.

Cock-fighting seems to have been illegal at Common Law. In “Bacon’s
Abridgment” it is stated that an information would lie at Common Law for
using the game of cock-fighting. In _Squiers_ v. _Waiskin_, Lord
ELLENBOROUGH described it “a barbarous diversion not to be encouraged in
a Court of Justice. I believe that cruelty to these animals in throwing
at them forms part of the dehortatory charge of judges to grand juries.”
It was forbidden in the metropolis by 2 & 3 Vict., c. 47, section 47,
under a penalty of £5, and by 12 & 13 Vict., c. 92, the same penalty is
inflicted for keeping or using any “place” for the purpose of fighting
or baiting any bull, bear, badger, dog, cock, or other animal. But these
Acts[224] only apply to a place kept for the purpose. A case was lately
noticed in the newspapers of a cock-fight having taken place on board a
ship out at sea, and the question was suggested whether this could be a
“place” within the Act. It should be remembered that the Statute 4
George IV., c. 60, defines the word “place” in previous statutes as
including places “on land or water.”

_Billiards_ is a perfectly lawful game,[225] except that the keeping of
public tables is subject to restrictions. By 8 & 9 Vict., c. 109,
sections 11 and 13, it is necessary for the keeper of any public house,
or any person setting up a public table, to take out a license for the
same. It is made penal to allow playing on such table between the hours
of 1 a.m. and 8 p.m., or in the case of a licensed victualler’s, at any
time when his premises may not be open for the sale of intoxicating
liquors. However, a subsequent statute, 37 & 38 Vic., c. 49, section 10,
empowered licensed victuallers to sell liquor at any time to persons
residing on their premises, but it has been held that that does not
authorise the playing of billiards except at the times mentioned in the
previous statute; it was, the Court said, a _casus omissus_ in the
statute.[226] So, of course, games played on public tables at other than
the authorised hours are not within section 18 of 8 and 9 Vict., c. 109.
This will be more fully discussed in the chapter on gaming houses.

_Lotteries_ are illegal, as will be explained in a future part of this
work.

By 12 George II., c. 28, section 2, _ace of hearts_, _pharaoh_,
_bassett_ and _hazard_,[227] are declared to be illegal games, to which
list 13 George II., c. 19, section 19, has added the games of _passage_
and any game with one or more dice or instrument in the nature of dice
with one or more figures or numbers thereon, except _backgammon_.

18 George II., c. 34, provides that no person shall keep any house or
place for playing _roulet_ or _roly-poly_ or any game with cards or dice
prohibited by law.

[Sidenote: 33 Henry VIII., c. 9.]

A number of games were made unlawful by a statute 33 Henry VIII., c. 9,
on the ground that they diverted people’s attention from the pursuit of
archery. Among these were _bowling_, _coyting_, _tennis_, when played by
artificers and apprentices; and all persons were bound, under penalty of
6s. 8d., to provide themselves with bow and arrow. But these provisions
of the statute were repealed by section 1, 8 & 9 Vict., c. 109.

_Dominoes_ has been held to be a lawful game.[228]

The subject of unlawful games will be more fully treated in the Chapter
on Gaming Houses.[229]

[Sidenote: Exception in favour of Royal Palaces.]

All the statutes against unlawful games contain exceptions in favour of
royal palaces during the actual residence of the Sovereign.

As to what constitutes a royal palace see _Coombe_ v. _De la Bere_ (22
Ch. Div. 316) and cases therein quoted.

                              CHAPTER II.
                  TRANSACTIONS ON THE STOCK EXCHANGE.

It has been deemed advisable to treat of transactions on the Stock
Exchange under a separate heading: not that they are, in the main,
subject to different statutory provisions; but as the facts in these
cases are of a very special character, and to a great extent stand on
common ground, it will probably facilitate reference if they are all
grouped together instead of being scattered over the rest of the work.
This Chapter is not intended to give an exposition of Stock Exchange
transactions generally, but only so far as it has been sought to apply
the gambling statutes thereto.[230]

It will be remembered that wagering transactions of this description
were not touched by the earlier statutes of Charles II. and Anne, which
applied solely to games and pastimes. So that until the passing of the
statute we are about to mention, time-bargains, as they have been
called, were not only lawful but were enforceable by action.

The chief statute on this subject was 7 George II., c. 8, commonly
called Barnard’s Act, which provided—“That [Sidenote: 7 Geo. II., c. 8.]
all contracts or agreements upon which any premium should be paid for
liberty to put upon, or to deliver, receive, accept, or refuse any
public or joint-stock or public securities whatsoever ... and all wagers
and contracts in the nature of wagers, and all contracts in the nature
of puts and refusals relating to the then present or future value of any
such stock or securities as aforesaid, shall be null and void.” The
statute also inflicted penalties both for entering into such contracts
and for making payments in respect thereof.

Section 8 made invalid all sales of stock not in the vendor’s
possession.

[Sidenote: Statute only applied to public English stocks.]

The statute only applied to English public stocks, and not to foreign
stocks nor to shares in companies.[231]

It also made the contracts and compounding for differences not merely
void but illegal. Thus in _Cannan_ v. _Bryce_[232] it was held that
money lent for the purpose of compounding such differences could not be
recovered. But in _Faikney_ v. _Reynous_,[233] where a bond was given to
repay money advanced by plaintiff to settle for differences, it was held
that the bond was good.

[Sidenote: _Nicholson_ v. _Gooch_, 5 E. & B., 999.]

The case of _Nicholson_ v. _Gooch_[234] was an important case under this
statute, and also seems to have some bearing on Stock Exchange
transactions at the present day.

The bankrupt Lodge was a member of the Stock Exchange and the defendant
was the official assignee of that body. By the rules of the Stock
Exchange every member unable to fulfil his engagements was declared a
defaulter, and all members indebted to him in respect of Stock Exchange
transactions were to pay their debts to official assignees appointed by
the Stock Exchange, whose duty it was to distribute the money received
rateably among his Stock Exchange creditors. On 11th November, Lodge
wrote to the secretary to say he could not meet his engagements, and
large sums were paid to defendant by members who were his debtors. On
23rd November a petition in bankruptcy was presented against Lodge; on
the 31st, Lodge was adjudicated bankrupt. The plaintiffs were Lodge’s
assignees in bankruptcy. It seemed from the evidence that according to
the customary way of dealing, speculative transactions and genuine sales
were so mixed up, that it was impossible to separate the two; but the
jury found that the majority of the transactions were speculative and
the parties merely intended to settle differences. It seemed that the
method of settling these differences was for the members on the account
day to set off the amount of stock which they had respectively agreed to
buy and sell, and by a fictitious bargain for the sale at the price of
the day of as much stock as would cover the balance, and then settle by
paying the difference in the price. The plaintiff sued defendant for the
moneys they had received from Lodge’s debtors. The Court drew an
inference of fact that they were all contract for differences only.
_Held_, that the settling of differences without actual delivery of
stock was, so far as the public stock was concerned, illegal by section
5 of Barnard’s Act. That money paid to defendant in pursuance of this
illegal arrangement, and forming the fund sought to be recovered, could
not be recovered, as it could not form part of Lodge’s estate.[235]
Therefore the assignees had no title to it.

It had been attempted on the plaintiff’s behalf to apply the doctrine of
_Tennant_ v. _Elliott_, and so prevent the defendant from setting up the
illegality against them.[236] But the Court held that this did not apply
because defendant received the money, not as agent for Lodge or for his
use, [Sidenote: Position of Official Assignee of Stock Exchange.] but on
an implied mandate to distribute it according to the rules of the Stock
Exchange.

CRAMPTON, J., distinguished the receipt of money for differences on
public stock which was illegal, and on ordinary shares which were not
within the statute. In the latter case the doctrine of _Tennant_ v.
_Elliott_ might have applied if defendant had received the money as
Lodge’s agent, and subject to his disposal. But the receipt seems to
have been under _an adverse claim_ by virtue of the stock Exchange rules
rather than as agent of the bankrupt.

Of course to a great extent the importance of this case was diminished
by the Statute 23 & 24 Vict., c. 28 by which Barnard’s Act was repealed.
[Sidenote: Repeal of Barnard’s Act.] At the same time it seems still of
importance as showing the position of the official assignee of the Stock
Exchange, _i.e._, the agent of the Stock Exchange, to distribute the
money according to their rules; the defaulter, as a member of that body,
binding himself to authorise the money in the event of his default to be
paid to the Stock Exchange or their agent.

[Sidenote: _Ex parte Grant._ 15 Ch. D.]

A late case bearing on this topic, and to a great extent confirming the
views of CRAMPTON, J., in _Nicholson_ v. _Gooch_, is that of _ex parte
Grant re Plumbly_.[237] Plumbly declared himself a defaulter and on the
same day presented his petition in bankruptcy. By virtue of his being a
defaulter the official assignee, as stated above, became entitled to
receive money due to him for differences. An injunction was obtained in
bankruptcy against the official assignee against receiving and
collecting such debts, and an order to pay all sums that he had received
to the trustee in bankruptcy. Against this order the official assignee
appealed.

The evidence chiefly consisted of affidavits filed by leading members of
the Stock Exchange. Some points in these affidavits call for special
notice.

(1.) That contracts on the Stock Exchange are never for payment of
differences, but are real transactions for cash ... contemplating
transfer or delivery of the stocks, &c. The transfer and payment can
only be rendered unnecessary by a new and equally real bargain, on the
one part to accept and pay for on the same day, and on the other part to
transfer or deliver, an equivalent amount of the same stocks, &c.

(2.) Members having bargains open in stocks and shares which the
defaulter has contracted either to take or deliver, but which contracts
he breaks by his default, pay to the official assignee the difference in
value of stocks, &c., as determined by the prices fixed by the official
assignee, at the time of such default, when the change in price is
against such members; and on the other hand become entitled to claim
against the fund so created in the hands of the official assignee for
any such differences when in their favour.

(3.) The defaulter cannot claim differences on damages in respect of
contracts which he has broken by his default, nor can he claim the
moneys payable as differences under the rules to the official assignee.

(4.) Had Plumbly not become a defaulter nor a liquidating debtor, and
had all the contracts been duly performed by him, none of the
differences received by the official assignee would have found their way
into Plumbly’s possession. In payment of differences, bank notes and
cash do not pass and cannot be demanded. All payments on account of
differences must be by crossed cheques on a clearing house banker, and
the whole of the differences which a member is entitled to pay or liable
to receive on each account day must all pass through the Clearing House
together. If the balance is in his favour, he receives only the
difference; otherwise, the general balance of all his dealings goes to
his debit through the operation of the bankers’ clearing. The credit
differences of each member are thus directly hypothecated for the
payment of his debit differences.

The reader is referred generally to the affidavits in the case, which
are set out _in extenso_ in the report; but the above will be sufficient
to render the judgment intelligible. _Held_ (1) that the official
assignee received the moneys by a title adverse to the trustee, who on
that account could not claim them as received to his use. (2) The fund
claimed was an entirely artificial fund, created by the rules of the
Stock Exchange: if the contracts were winning ones, the trustee could
not have enforced them at law, as the defaulter had shown his incapacity
to perform the contracts himself: so that the differences could never
have been payable to the trustee who was now claiming them. (3) That the
trustee could not take advantage of those rules, to which alone the fund
owed its existence, and claim the moneys, without also complying with
them with respect to the distribution; _i.e._, he could not claim for
distribution among the general body of creditors. JAMES, L.J., put the
case on a more general ground. If A owes money which is claimed by B and
C, and he pays B, C cannot sue B; but payment does not discharge A, if
wrongful.

The case shortly seems to come to this:—“Differences” are payable simply
by the rules of the Stock Exchange, and not as a matter of contract
between two parties; being payable to the official assignee by virtue of
those rules, the fund thereby created in his hands must be subject to
the same rules. That the official assignee receives these differences in
his own right and not to the use of the defaulter’s trustee in
bankruptcy.

It seems, then, that even if bargains for “differences” were known on
the Stock Exchange (which it appears they are not), the rights of the
official assignee with respect to them as against the trustee in
bankruptcy would be governed by the above case, as he could only receive
them under the rules, and not as a legal debt. [Sidenote: _Nicholson_ v.
_Gooch_ and _ex parte Grant_ compared.] The two cases seem to a great
extent to stand on a common ground, though the former was not cited in
argument in the latter. In both it was held that the title of the
official assignee was adverse to that of the trustee in bankruptcy, so
that the former could in no sense be considered his agent. In both the
ratio of the decision was that the fund was entirely artificial and owed
its existence to the Stock Exchange rules, as the moneys which formed
the funds were irrecoverable at law. They were irrecoverable in
_Nicholson_ v. _Gooch_ on the ground that the payments were in pursuance
of illegal or void contracts; and in Plumbly’s case there was the
additional reason pointed out that as he by his default was incapable of
performing his part of the contract, he could not enforce it himself.

[Sidenote: 8 & 9 Vict., c. 109.]

The next statutory provision concerning this class of cases is contained
in the statute we have discussed above, declaring all wager-contracts to
be void. The question of the application of this statute to Stock
Exchange transactions, depends upon how far such transactions are in the
nature of wagers.

[Sidenote: Contracts for payment of differences.]

The Courts have more than once been called upon to adjudicate upon what
have been supposed to be contracts for the payment of “differences,”
that is the difference between the present and the future price of
stock. Contracts of this sort have been called “time-bargains”; a phrase
we shall avoid, as it seems to be used in more senses than one. An
instance of such a contract, or rather of a contract which the jury
found to be of this nature, is to be found in _Grizewood_ v.
_Blane_.[238] It will be seen that the bargain as the jury found the
facts took the form of two collateral bargains, the result of which was
that differences only passed between the parties.

[Sidenote: _Grizewood_ v. _Blane_, 11 C. B., 526.]

The bargain was that plaintiff should purchase of defendant, and
defendant should sell to plaintiff a certain number of shares in certain
companies at a specified price. The said shares rose in price. The
parties then entered into a second agreement to rescind the former one,
and that defendant should buy of plaintiff the same number of similar
shares at such increased prices, and that defendant should merely pay
the plaintiff the difference between the two prices.

Defendant pleaded generally that the contracts were void under the
statute, which plea was held bad, for not stating the facts which
brought the case within the statute.

The case went to trial on issues of facts raised in the pleadings—that
the contract was by way of wagering on the price of the shares, and was
merely colourable; that it never was intended that the said shares
should be bought and sold, but was a mere wager.

The plaintiff was a stock jobber; and the defendant had dealt with
plaintiff through his broker. Evidence was given to show the former
course of dealing between parties, that no shares ever passed, but the
parties merely settled differences.

[Sidenote: Test of a gaming transaction.]

JERVIS, C.J., directed the jury that if at the time of making the first
contract the intention of the parties, as understood by both of them,
was neither to purchase nor sell the shares, but only to settle
differences, then the transaction was void under the statute.

The Court held that this ruling was right. The jury found that it was a
mere gambling transaction—_i.e._, that it was the intention of the
parties at the time that there should be no actual acceptance or
delivery of the shares.

This finding of the jury upon the facts of this case have been
questioned in later cases, probably through the Courts being in
possession of more complete information as to the true nature of
transactions on the Stock Exchange. Thus BRAMWELL, L.J., in _Marten_ v.
_Gibbons_,[239] and BRETT, L.J., in _Thacker_ v. _Hardy_,[240] both
express their doubts as to the correctness of the view the jury took of
the facts. The case had one peculiar feature, viz., that it was an
action by a jobber against the principal on transactions affected
through a broker, and as evidence was given of a long course of dealing
between the parties, there may have been special circumstances in the
case. It is remarkable that in _Cooper_ v. _Niel_[241] the jury there
found that the contract was simply for the payment of differences; but
again BRETT, L.J., in _Thacker_ v. _Hardy_,[242] says he could see no
evidence of it.

In the former case the broker became insolvent, and his trustee sued the
defendant for indemnity in respect of the claims of the jobbers. But as
the jury found that the contracts were mere wagers, the jobbers could
not claim in respect thereof against the estate of the broker, and,
being insolvent, payment could not be enforced against him by the rules
of the Stock Exchange.

[Sidenote: Suggested test of a difference bargain.]

It seems that the test adopted in some of the cases, viz:—the intention
of the parties to deliver or not is unless properly qualified and
understood likely to be misleading. A sells to B. A may be a “bear” or
speculative seller of what he does not possess; and B may be a “bull” or
speculative buyer. Both parties may hope or intend to secure a
difference in their favour, the one by re-purchasing, the other by a
resale. Each party may suppose that the other may be willing at any time
to close the bargain and settle by payment of differences, yet the
bargain as stated in this simple way is in no sense a wager. The real
test seems to be, what is the primary bargain between the two parties,
to ascertain whether each of the parties could be called upon by the
other in any contingency, under the terms of the contract, to deliver,
or to take delivery and make payment. The subsequent arrangements which
the parties may make, _i.e._, to close or settle by payment of
differences even if carried out through a long series of transactions
and even though in contemplation of the parties at the time of the
contract, do not affect the question if it was not part of the original
agreement that the bargain should be settled in this way, and if not the
contract could not be a wager. The expectation of the parties might be
upset by such a contingency as the winding up of the Company; and it is
the strict rights of the parties to the bargain that must be regarded.
This view of the matter is confirmed by a passage in the judgment of
LINDLEY, L.J., in _Thacker_ v. _Hardy_, 4 Q.B.D., at p. 689.

“What are called time bargains are in effect the result of two distinct
and perfectly legal bargains, viz: (1) a bargain to buy or sell; (2) a
subsequent bargain that the 1st shall not be carried through, and it is
only when the first is entered into upon the understanding that it is
not to be carried out, that you get a time bargain in the sense of an
unenforceable bargain.” In a more recent case in the Court of Sessions,
Scotland, _Shaw_ v. _The Caledonian Railway Company_, a passage in Lord
SHAND’S[243] judgment requires attention. “If it appears clearly that
the contracts and the dealings between the parties were for differences
only and were not intended in any sense to be real transactions, and
were not in effect real transactions, then they must be regarded as
gambling transactions. If it appears that any writings which passed
between the parties in the form of sale notes or otherwise were a mere
form intended by both parties, to give form to the transaction, and to
have no legal effect of any kind, then I do not think that writings
under such circumstances would take the case out of the rule I have
mentioned. But if contracts for the sale of shares or goods are entered
into _so as to create mutual obligations upon the parties, on the one
hand to give and the other to take delivery, if the obligation is such
as can be enforced if either of the parties_ think fit to do so, then I
think we get out of the region of arrangements of mere differences of
the nature of betting or gambling.

“If either one or both of the parties may, as and when he thinks fit
demand or give delivery of stock and ask payment of the price under the
contract, if that be so as to one of the parties, then I think the
transaction has the mark or stamp of a real transaction and is
inconsistent with the notion of transaction for mere differences.”

The passage in the judgment down to “betting or gambling” seems entirely
to confirm the view above expressed, that a real transaction of purchase
and sale must create “mutual obligations” to deliver and accept. A can
call on B to complete and B can call on A. But the passage which follows
seems to contain a somewhat different proposition: “If either one or
both the parties may demand,” etc. This would cover a case where A can
demand delivery from B, but B cannot from A. We shall have occasion
again to allude to this seeming discrepancy when we come to deal with
the case of _Shaw_ v. _Caledonian Railway_ again.

From the cases to which we are about to refer it would appear that in
point of fact transactions on the Stock Exchange never do take the form
of contracts for the mere payment of differences. [Sidenote: Contracts
for differences not really known on Stock Exchange. _Thacker_ v.
_Hardy_, 4 Q. B. D.] Thus in _Thacker_ v. _Hardy_,[244] from a remark in
LINDLEY, J.’S judgment at (p. 689), it seems to have been stated by
witnesses that time-bargains are unknown on the Stock Exchange. The real
nature of the agreement in that case was found by LINDLEY, J., to have
been as follows:—(1) That defendant was a speculator and employed
plaintiff, a stock broker, to speculate for him on the Stock Exchange.
(2) Defendant knew that in order to do so plaintiff would have to enter
into contracts to buy or sell stocks, &c., and, to protect himself, to
make other contracts to sell or buy respectively. (3) Plaintiff knew, as
was the fact, that defendant never intended to accept or make actual
delivery of the stocks, &c., bought or sold for him. (4) That defendant
took the risk of having to accept or deliver, &c., hoping that plaintiff
would be able so to arrange matters that nothing but differences would
be payable to or by defendant. (5) That otherwise defendant would be
unable to pay for what was bought or deliver what was sold.

Plaintiff brought an action for indemnity for what he had been called
upon to pay in respect of these transactions.

[Sidenote: A case between broker and principal.]

This was a case it will be noticed turning on dealings between a broker
and a member of the outside public, and so differed from _Grizewood_ v.
_Blane_. The judgment of LINDLEY, J., decided the following points:—

(1.) That agreements between buyers and sellers of stock to pay
differences are gaming contracts within 8 & 9 Vict., c. 109, s. 18.

(2.) That that section of the statute only affects the contract which
constitutes the wager. In this case plaintiff was bound to enter into
the contract himself as principal. The contract between himself and the
real principal was not a wager-contract, but an implied contract of
indemnity.

(3.) That an agent is entitled to be indemnified against all liabilities
incurred on behalf of his principal, unless such were illegal.

(4.) That the statute made gaming transactions void, and not illegal.

(5.) It had been argued that such gambling transactions were illegal at
Common Law on the ground of public policy, relying on Lord TENTERDEN’S
opinion in _Bryan_ v. _Lewis_. But this was overruled in _Hibblethwaite_
v. _M‘Morrine_.[245] Besides, it had required a special Act of
Parliament to make gambling in the funds illegal, and that Act was
repealed by 23 & 24 Vict., c. 28.

(6.) He did not infer as a fact that this contract was a contract for
differences. The real nature of the transaction is stated above.

It will be seen, therefore, that the judgment treats of the case from
two points of view: first, granted the main contract were in the nature
of a wager. _Held_, in this case, that according to previous
authorities, the right of an agent to be indemnified, was not affected.
Second, that as a matter of fact, there was no wagering in the
transaction at all, so that 8 & 9 Vict., c. 109, did not affect the
question.

The case was taken up to the Court of Appeal, where the view taken by
Lindley, J., as to the facts was confirmed; consequently it became
unnecessary to consider the application of the statute to the case.

BRAMWELL, L.J., said he would assume that the broker might by the terms
of the bargain be called upon to resell the stock, so that the principal
would only have had to pay differences. That would not infringe the
statute as a gaming contract, for the principal might at any time elect
to take the stock and hold it as an investment ... also the broker might
be unable to sell, if, for instance he had bought shares in an insolvent
bank. There is no wagering in a transaction of that kind—the broker has
no interest in the stock—it does not matter to him whether the market
rises or falls; but when a transaction comes within the statute against
gambling and wagering, the result of it does affect both parties.

[Sidenote: _Ex parte Rogers._]

In _ex parte Rogers_[246] the facts seem to have been substantially the
same. A stockbroker named Evans issued a debtor’s summons against Rogers
in respect of money due to Evans on the purchase and sale of stocks and
shares on Rogers’ behalf, and for commission, and for money paid by
Evans for carrying over[247] a portion of the said stocks and shares.
The contracts were made by Evans, subject to the rules of the Stock
Exchange, according to which Evans had to deal as principal between
himself and the jobbers. It was understood between Evans and Rogers that
the latter was only buying for the rise and never intended to accept
delivery, but meant to sell them again before the next account day and
receive or pay differences. Evans admitted that sometimes in buying the
same kind of stock for two clients he bought the whole amount in one
from the jobber, and then resold to the clients, but he could not say
whether that had been done in respect of any transactions for Rogers.
There was also evidence to show that Rogers had met Evans in his office,
and authorised him to borrow money and pay the jobbers. It was sought on
behalf of the debtor to distinguish the case from _Thacker_ v. _Hardy_,
on the ground that the broker had acted as a principal and not as an
agent, having purchased for himself and resold to his clients, and that
the transaction being in the nature of a wager was illegal (? void). But
the Court held that there was sufficient evidence that the broker had
paid money at the debtor’s request, therefore the case was within
_Thacker_ v. _Hardy_.

[Sidenote: _Ex parte Grant_, 13 Ch. Div. Dealings between members of the
           House.]

The case of _ex parte Grant_,[248] to which we have alluded above, is
important on the present subject, chiefly from the evidence given in the
case as to the course of dealing on the Stock Exchange, which seems to
confirm the finding of LINDLEY, J., and the Court of Appeal, as to the
facts of the case in _Thacker_ v. _Hardy_. At p. 671 it is stated:
“Contracts on the Stock Exchange are never for payment or receipt of
differences. All contracts, &c., are real transactions for cash or for a
day named, contemplating the actual transfer or delivery ... and which
transfer or delivery can only be rendered unnecessary by a new and
equally real bargain on the one part to accept and pay for on the same
day, and on the other part to transfer or deliver an equivalent amount
of the same stock.” It is then further stated that if a member having,
say, bought stock which he was unable or unwilling to take up, he
balances the transaction by selling a similar amount of (but not the
identical) stock for the same settling day for which the bargain was
originally made, so as to enable that particular transaction to be
written off and balanced. “The whole amount of stock or shares to be
taken and delivered balances itself at all times, [Sidenote:
Differences, how adjusted.] but the amount of stock to be accepted from
or delivered to the several persons with whom any member has dealings,
is liable to vary with every new transaction entered into.” “When the
settling day arrives each member only transfers or delivers and accepts
and pays for the then balance of each particular description of stocks
or shares contracted for with each person with whom he has dealt.”

The affidavits in this case should be carefully perused, as they afford
a great deal of information as to the method of doing business on the
Stock Exchange. It seems clear that the transactions there described can
in no sense be in the nature of wagers—they consist of an original
purchase or sale and a sub-sale or sub-purchase, the latter being
probably to a person who was not a party to the original contract.
Possibly if the sub-sale or sub-purchase were made between the original
parties and were contemporaneous with the first contract, this might,
according to the case of _Grizewood_ v. _Blane_, amount to a wager, but
this method of dealing seems to be unknown on the Stock Exchange.

No doubt the transactions which go on may be made a means of reckless
gambling; but it is necessary to bear in mind LINDLEY, J.’S warning in
_Thacker_ v. _Hardy_ against being misled by an epithet.

[Sidenote: Qy. _Byers_ v. _Beattie_.]

There is, however, an Irish case,[249] which certainly seems open to
question, in which the agreement was that the plaintiffs, as
stockbrokers, should buy and sell for the defendant such stocks, &c., as
the defendant might require on the terms that if a profit should result
from the sale the plaintiffs should account to the defendant for such
profit, deducting commission; if a loss, then the defendant was to pay
the amount of such loss to the plaintiff, plus commission. _Held_ that
this was a wagering contract, as involving an agreement for the payment
in receipt of losses or profits, and that the result would have been the
same even if the plaintiffs had shown themselves liable to third parties
and had sued on an implied contract of indemnity. The answer to this
decision seems to be that even if there were a wager at all it was not a
wager between plaintiffs and defendant.

It seems probable, therefore, in view of the facts laid before the Court
as to the customary course of dealing on the Stock Exchange, and
particularly having regard to the decision in _Thacker_ v. _Hardy_, that
the statute will have but little application to Stock Exchange
transactions. [Sidenote: Effect of 8 & 9 Vict., c. 109, likely to be
very small on the Stock Exchange.] Bargains may no doubt in many cases
be mere speculations on the part of one party, but it is clearly stated
by many witnesses before the Stock Exchange Commissioners in 1878, that
a man’s intentions as to holding or reselling his purchases is not known
to the other party, so that it cannot be a wager as between the two.

That this is the real state of the case is shown by the evidence given
by Mr. Pyemont before the Stock Exchange Committee in 1878 (_see_ p.
315). “With regard to wagering and gaming, I may say that it was in
consequence of the remarks of the Lord Chief Justice which appeared in
the _Times_ the other day, that I was led to tender my evidence; I was
sorry to see, in so high a quarter, such a total misapprehension of the
action of the Stock Exchange. We have no such transaction on the Stock
Exchange as wagering and gaming. The only possible approach to anything
of the kind was dealing in dividends, which was always reprobated by the
Committee. The accounts were never recognised if there were failures;
and finding that not recognising them did not stop the practice, the
Committee then made it penal to do so, but with that exception I have
never known such a thing as a wager. Every £1,000 of stock which is sold
on the Stock Exchange must be delivered _per se_ or _per alium_. It must
be delivered (whether demanded or not) and for this reason: If the buyer
does not pass me a name on the name day, I sell it out through the
secretary of the Stock Exchange for a name to complete the bargain.
There is no such thing as a bargain left uncompleted. What I mean by
_per se_ or _per alium_ is that if I have sold £1,000 stock to B, if I
am not prepared to deliver it, I get D to deliver it to B on my account,
and pay him for doing so. If B does not want it, he must find somebody
who does. There is no such thing as fiction in regard to any part of a
Stock Exchange bargain.”

[Sidenote: Time-bargains.]

It does not seem that a Time-bargain in the proper sense of the term,
_i.e._, a contract for the future delivery of something the amount or
value of which cannot be ascertained, is in the nature of a wager. Thus,
as put by BRAMWELL and COTTON, L.JJ.,[250] the sale of next year’s apple
crop would be a good contract.

So when a person enters into a speculative sale of stock on behalf of
himself and another not having the stock in possession, it was held in
the Court of Session that it was not a wagering transaction either as
between the joint adventurers, or as between the buyer and seller.
_Mollison_ v. _Noltie_.[251]

A contract for “differences” on the Stock Exchanges though sometimes
called a time bargain, is not such according to BRAMWELL, L.J., in the
ordinary sense of the word. [Sidenote: Sale of prospective dividends.]
So in _Marten_ v. _Gibbon_[252] a question arose as to the validity of
the sale of a prospective dividend. Defendant employed plaintiffs, who
were stockbrokers, to sell for him the next dividend on £50,000 of South
Eastern Railway A Deferred Stock, and plaintiffs sold it to a firm of
dealers on the Stock Exchange. The dividends declared were in excess of
the price at which the plaintiffs had sold them; so plaintiffs requested
defendant to authorise them to pay the difference to the dealer. On
defendant’s refusal plaintiffs paid the amount and sued defendant for
indemnity.

It appeared that by Rule 61 of the Stock Exchange, the Committee did not
recognise bargains in prospective dividends. There was no evidence as to
whether the defendant was at the time of the contract in possession of
the £50,000 of Stock.

It was argued for the defendant (1) That this was a transaction within 8
& 9 Vict., c. 109. (2) That as this was not a contract which the Stock
Exchange would enforce, no authority to pay the difference could be
implied, and there was no evidence of an express authority. (3)
Defendant had revoked the plaintiff’s authority to pay.

But the Court held (1) That it must be assumed, in the absence of
evidence to the contrary, that the defendant had the £50,000 of Stock in
his possession at the time of the contract. Therefore, although an
agreement of this kind would have been within Barnard’s Act, it was not
within 8 & 9 Vict., c. 109, any more (as was put by BLACKBURN, J.) than
the purchase from a fisherman for the next haul of his net at a fixed
sum. Even if it were a wager as between the principal and the broker, it
could not be assumed that the jobber knew that it was. (2) That the
meaning of Rule 61 was, only that the Committee would not enforce such a
contract by expulsion, but the contract was otherwise left good between
the parties. The broker therefore, having at defendant’s request entered
into a contract on which he was personally liable, the defendant could
not revoke plaintiff’s authority.

[Sidenote: New rule.]

Since this case was decided, the rule of the Stock Exchange (No. 61) on
this subject has been changed into one of a prohibitive character, it
being there provided “That no member shall enter into bargains in
prospective dividends in shares or stock of railway or other companies.”
So that while this rule continues in force, no question is likely to
arise as to the rights or liabilities of members of the Stock Exchange
in bargains of this description.

[Sidenote: Sale of dividends of stock not in possession.]

The case, it will be seen, leaves quite unsettled what the result of a
bargain for the sale of dividends of Stock _not_ in vendor’s possession.
It is submitted that the result of such a bargain would be that the jury
would, on the facts, find that such were only in the nature of a wager,
and that the question would be left to them as one of fact.[253]

So much for differences on the Stock Exchange. It must not, however, be
assumed that transactions in stocks and shares or indeed any kind of
goods are never bargains for differences only, and so equal to wagers.
Those dealings in outside Stock Exchange places, [Sidenote: Bucket
shops.] commonly known as “bucket shops,” sometimes take that form, see,
for instance, _Reggio_ v. _Steven_,[254] where the terms of defendant’s
prospectus, on the footing of which dealings had taken place, stipulated
that all bargains should be settled by payment of differences. These
bargains were held to be wager contracts. In _Shaw_ v. _Caledonian
Railway Company_[255] to which allusion has already been made, the real
issues in the action were between the plaintiff Shaw and “R,” a
customer. Plaintiff carried on business as a stock and share dealer, not
a member of the Stock Exchange. The terms on which the dealings were
conducted were as follows: the parties dealt as principals not as
principal and agent. “R” bought or sold of Shaw, but in the main he
bought. He deposited cover with Shaw to the extent of 1 per cent. on the
stocks he had opened. If the price of the stock dealt in went against
“R” to the extent of 1 per cent., it was Shaw’s duty to close the
transaction. Prices were regulated by the tape. If “R” bought of Shaw at
100 and the stock fell to 99 (middle figure) it would be Shaw’s duty to
close that stock by re-purchasing from “R” at the lower price, so that
“R’s” loss was to be limited to the extent of 1 per cent., unless before
the closing “R” should deposit more cover.

It appears from the judgment of Lord SHAND, at p. 477, though it does
not appear from the report of the evidence given in the case, that all
these dealings were for the next Stock Exchange account day, but that
subject to Shaw’s duty to close, “R” had the right of carrying over to
the subsequent account, (see _post_ as to this transaction, p. 108) but
so long as the stock did not go against “R” to the extent of the cover,
“R” had the right of (1) keeping the bargain open, of (2) closing by
resale or repurchase from Shaw, (3) calling on Shaw to deliver the
stocks and paying for them. On some occasions “R” was on the account day
credited with dividends on the stocks he had opened, and with a premium
on new stocks issued in right of old, also on one occasion he was