Carnival Leisure Industries, Ltd. v. Aubin

• Decision Date: 16 August 1991
• Docket Number: No. 89-6289,89-6289
• Citation: 938 F.2d 624
• Parties: CARNIVAL LEISURE INDUSTRIES, LTD., Plaintiff-Appellee, v. George J. AUBIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 624

938 F.2d 624

CARNIVAL LEISURE INDUSTRIES, LTD., Plaintiff-Appellee, v. George J. AUBIN, Defendant-Appellant.

No. 89-6289.

United States Court of Appeals Fifth Circuit.

Aug. 16, 1991.

Clinard J. Hanby, Houston, Tex., for defendant-appellant.

Hugh L. McKenney, McKenney & Jesse, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARWOOD and WIENER, Circuit Judges, and VELA, District Judge. ¹

GARWOOD, Circuit Judge:

Appellant-defendant George J. Aubin (Aubin) appeals the district court's grant of summary judgment in favor of appellee-plaintiff Carnival Leisure Industries, Ltd. (Carnival Leisure) enforcing a gambling debt of $25,000. Aubin claims that Texas public policy prevents enforcement of debts incurred for funds or credit advanced to a gambler for gambling purposes by a participant in the gambling activity. We agree and accordingly reverse.

Facts and Proceedings Below

During a January 1987 visit to the Bahamas, Aubin, a Texas resident, visited Cable Beach Hotel and Casino (the Casino), which was owned and operated by Carnival Leisure. While gambling at the Casino, Aubin received markers or chips from the Casino and the Casino received drafts drawn on Aubin's bank accounts in Texas. Aubin spent all of the markers provided on gambling, although he could also have spent them on food, beverages, souvenirs, or lodging at the Casino. Aubin ultimately gambled and lost $25,000, leaving the Casino with the same amount in bank drafts.

Carnival Leisure was unable to cash the bank drafts because Aubin had subsequently directed his bank to stop payment. Carnival Leisure sued Aubin in the United States District Court for the Southern District of Texas to enforce the debt. The district court granted Carnival Leisure's motion for summary judgment against Aubin in the amount of $25,000 and attorney's fees and costs. Carnival Leisure claimed that the debt was enforceable under Texas law because public policy had changed and now favored enforcement of gambling debts. The district court agreed. Aubin raises on appeal only the issue of whether public policy in Texas continues to prevent the enforcement of gambling debts.

Discussion

Gulf Collateral, Inc. v. Johnston, 496 S.W.2d 123, 124 (Tex.Civ.App.1973), restates the long-standing rule in Texas against enforcing gambling debts:

" 'Patrons of gambling establishments occasionally borrow money from the proprietor or secure cash or chips from him by giving a check or other instrument, so as to take part in the game. It has been recognized that under such circumstances the proprietor (who is regarded as a participant in the game) cannot recover from the borrower on the loan or because the check or other instrument has been dishonored.' " Id. (quoting 53 A.L.R.2d at 372).

See Gulf Collateral, Inc. v. George, 466 S.W.2d 21 (Tex.Civ.App.1971); Gulf Collateral, Inc. v. Cauble, 462 S.W.2d 619 (Tex.Civ.App.1971); Springer v. Sahara Casinos Co., 322 S.W.2d 33 (Tex.Civ.App.1959). Both parties concede that under this rule Aubin's debt to Carnival Leisure would be unenforceable under Texas law. ²

Carnival Leisure claims, however, that since 1973 the public policy of Texas toward gambling and the legality of gambling debts has changed. Although gambling is generally proscribed in Texas, Tex.Penal Code Secs. 47.01-.08, there has been an exception for the "social" gambler since 1973. Tex.Penal Code Sec. 47.02(b). The Texas legislature enacted the Bingo Enabling Act in 1981, Tex.Rev.Civ.Stat.Ann. art. 179d (Vernon 1991), the Texas Racing Act in 1986, Tex.Rev.Civ.Stat.Ann. art. 179e (Vernon 1991), and the Charitable Raffle Enabling Act in 1989, Tex.Rev.Civ.Stat.Ann. art. 179f (Vernon 1991). Provisions were added to the Texas Penal Code excepting these three activities from its general proscription against gambling. Tex.Penal Code Secs. 47.02(c), 47.10 (bingo exception); Tex.Penal Code Sec. 47.11 (racing exception); Tex.Penal Code Secs. 47.02(c), 47.12 (raffling exception).

The enactment of statutes legalizing some forms of gambling admittedly evidences some dissipation or narrowing of public disapproval of gambling. However, such statutes hardly introduce a judicially cognizable change in public policy with respect to gambling generally. See GNLV Corp. v. Jackson, 736 S.W.2d 893, 894 (Tex.App.1987) (stating in dicta that "Texas has a well-established public policy of not recognizing or enforcing rights arising from gambling transactions.") (citation omitted). The social gambling permitted by section 47.02(b) is confined to private places where no one receives any benefit other than his personal winnings and all participants are subject to the same risks, a categorically vastly different kind of activity from the sort involved here. Moreover, Johnston was decided the same year section 47.02(b) was enacted, and Jackson was handed down over a decade later. The racing, bingo, and raffling exceptions are narrow, strictly regulated exceptions to a broad public policy in Texas against most forms of gambling. ³ Further, the kind of gambling engaged in here is not of the sort permitted by any of these exceptions.

Even if gambling legislation in Texas were evidence sufficient to warrant judicial notice of a shift in public policy with respect to legalized gambling, such a shift would not be inconsistent with a continued public policy disfavoring gambling on credit. See, e.g., King International Corp. v. Voloshin, 33 Conn.Supp. 166, 366 A.2d 1172, 1174 (Super.Ct.1976) ("It is not incongruous for a legislature to sanction certain forms of gambling and still refuse the collection of gambling debts."). In fact, in enacting the Texas Racing Act, the legislature both expanded the field of legalized gambling and implicitly restated its disapproval of gambling on credit. The Act provides that the Texas Racing Commission "shall adopt rules prohibiting an association from accepting a wager made on credit and shall adopt rules prohibiting automatic banking machines within the enclosure." Tex.Rev.Civ.Stat.Ann. art. 179e, Sec. 11.04(c) (Vernon 1991). ⁴ Bingo game operators are effectively prohibited from loaning bingo-generated funds to customers for the purpose of enabling participation in bingo games. See Tex.Rev.Civ.Stat.Ann. art. 179d, Sec. 19a (Vernon 1991).

"On appeal, we evaluate a district court's decision to grant summary judgment by reviewing the record under the same standards used by the district court. Therefore, we cannot affirm a summary judgment ruling unless 'we are convinced ... that the movant is "entitled to a judgment as a matter of law." ' " Herrera v. Millsap, 862 F.2d 1157, 1159 (5th Cir.1989) (citations omitted) (quoting Brooks, Tarlton, Gilbert, Douglas & Kressler v. United States Fire Ins. Co., 832 F.2d 1358, 1364 (5th Cir.1987) (quoting Fed.R.Civ.P. 56(c))). Although Aubin could have used the loaned markers for non-gambling purposes at the Casino, it is undisputed that they were in fact used exclusively for gambling. Aubin's gambling debt therefore fits squarely within the terms of Johnston 's statement of the public policy of Texas prohibiting enforcement of gambling debts owed to gambling participants incurred for the purpose of gambling.

Conclusion

We hold that the public policy in Texas against gambling on credit prevents enforcement of a debt incurred for the purpose of gambling and provided by a participant in the gambling activity. As "we are bound to apply state law as it is, not as we might wish that it were," Sheppard Federal Credit Union v. Palmer, 408 F.2d 1369, 1372 (5th Cir.1969), the district court's grant of summary judgment in favor of Carnival Leisure is accordingly REVERSED and this case is REMANDED to the district court for further proceedings consistent with this opinion.

REVERSED and REMANDED.

VELA, District Judge, concurring:

I reluctantly concur in this panel's opinion. I recognize that Texas case law currently supports Judge Garwood's well reasoned opinion and in all likelihood, the Texas Supreme Court would have come to the very same decision but the unfortunate outcome seems...