Watts v. Malatesta

• Decision Date: 23 May 1933
• Citation: 186 N.E. 210,262 N.Y. 80
• Parties: WATTS v. MALATESTA.
• Court: New York Court of Appeals Court of Appeals

262 N.Y. 80

186 N.E. 210

WATTS

v.MALATESTA.

Court of Appeals of New York.

May 23, 1933.

Action by Michael T. Watts against John B. Malatesta. From an order of the Appellate Division (237 App. Div. 558, 261 N. Y. S. 51), entered December 20, 1932, reversing a judgment of the Trial Court entered in the office of the clerk of the county of New York on April 19, 1932, in the sum of $101,223.41, and granting judgment to plaintiff for the sum of $42,513.95, and from the judgment entered in the clerk's office on January 6, 1923, in favor of the plaintiff, for $42,513.95, the defendant appeals.

Affirmed.

CRANE and LEHMAN, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First department.

Frederick S. Lyke and William H. George, both of Brooklyn, and John E. Mack, of Poughkeepsie, for appellant.

John Caldwell Myers, John F. Keating, and Hugh B. Archer, all of New York City, for respondent.

CROUCH, Judge.

The action is under section 994 of the Penal Law (Consol. Laws c. 40) to recover money paid by plaintiff to defendant upon the event of prohibited wagers or bets. Plaintiff proved conclusively that on divers dates and occasions from April 28, 1928, to April 17, 1930, he had paid defendant, a bookmaker, various sums of money aggregating $37,535 for wagers lost upon a series of horse races. The defendant adduced evidence which, it may be assumed, warranted a finding that during the same period defendant lost and paid to plaintiff like wagers aggregating a much larger sum. It was the contention of the defendant, under a pleaded counterclaim, that he was entitled to recover from the plaintiff a sum equal to the excess of the total amount lost and paid by him to the plaintiff over the total amount lost and paid by the plaintiff to him. That contention, accepted by the trial court, was rejected by the Appellate Division. Plaintiff was granted judgment for the entire amount of the wagers lost and paid by him to the defendant. As matter of law, the judgment was right.

Under the evidence and for the purpose of this case, plaintiff must be regarded as a casual, and the defendant as a professional, gambler. ‘The statute against betting and gaming was enacted as a protection of the public morals. The intention of the legislature was to discourge and repress gambling in all its forms, and the law * * * is to be construed so as to accomplish, so far as possible, the suppression of the mischief against which it was directed.’ Luetchford v. Lord, 132 N. Y. 465, 469,30 N. E. 859, 861, citing Ruckman v. Pitcher, 1 N. Y. 392, 396, and Storey v. Brennan, 15 N. Y. 524, 527,69 Am. Dec. 629. But casual betting or gaming by individuals, as distinguished from betting or gambling as a business or profession, is not a crime. People v. Stedeker, 195 N. Y. 57, 67 N. E. 132;People v. Bright, 203 N. Y. 73, 96 N. E. 362, Ann. Cas. 1913A, 771;People ex rel. Collins v. McLaughlin, 128 App. Div. 599, 113 N. Y. S. 188. The distinction between the two species has long ‘obtained in this state where ordinary betting has never been made a crime * * * while the keeping of a gambling house, selling lottery tickets and the profession of a common gambler have been subjected to severe punishment.’ People v. Stedeker, supra, page 62 of 175 N. Y.,67 N. E. 132, 133. Discouragement of casual betting has never gone beyond the point of making recovery by a winner impossible upon default by the loser (Penal Law, §§ 991 and 992); and of compelling return to the loser of voluntary payments made by him (Penal Law, §§ 994 and 995). Attack or defense in a civil action has been regarded as adequate-‘as one of the best and surest means' (Ruckman v. Pitcher, supra, page 405 of 1 N. Y.)-for the suppression of that kind of betting. The evil which the law chiefly condemns (N. Y. Const. art. 1, § 9) and makes criminal (Penal Law, art. 88) is betting and gambling organized and carried on as a systematic business. The reason seems obvious. Curb the professional with his constant offer of temptation coupled with ready opportunity, and you have to a large extent controlled the evil.

It is clear that in the eye of the law the professional gambler and his customer do not stand on the same place. They are not in pari delicto.

To argue, therefore, that the Legislature, by using the phrase ‘any person’ in section 994 of the Penal Law, intended to confer a right upon the professional to recover his losses from his customer, is unconvincing. Under such a construction, a criminal act would give rise to a cause of action. That cannot be the law. Cf. Riggs v. Palmer, 115 N. Y. 506, 22 N. E. 188, 5 L. R. A. 340, 12 Am. St. Rep. 819; Murray v. Interurban Street Ry. Co., 118 App. Div. 35,105 N. Y. S. 1026. By no possibility could such a construction tend, as we have said it should, to ‘the suppression of the mischief against which it [the statute] is directed.’

But it is urged that, in any event the defendant, a professional specializing in the field of bookmaking, may offset his losses against the plaintiff's claim. How may that be, if he has no cause of action at all? To permit it would be to permit pro tanto what the law denies in toto. Nowhere in the statute is there any indication of an intent to afford a locus poenitentiae to the professional. Quite the contrary. Whatever his shape may be, he is an outlaw. Moreover it is to be remembered that the right of recovery given by statute to the casual gamester is not intended to benefit him, but to put teeth in the prohibition against all betting.

As a precedent for the theory of offset, however, there is pressed to our attention the case of Elias & Shepherd v. Gill, 92 Ky. 569, 18 S. W. 454. The compromise involved in that decision is a sporting one, and on that ground admirable. We think it can be sustained on no other, and prefer to follow Lyons v. Coe, 177 Mass. 382, 59 N. E. 59, which dealt with an analogous, if less ambiguous, statute.

The judgment should be affirmed, with costs.

CRANE, Judge (dissenting).

The plaintiff and the defendant are two gamblers, the defendant being a bookmaker at the race tracks, and the plaintiff placing his bets on the races with the defendant through himself and his betting agent. These transactions covered the period between April 27, 1928, and May 28, 1929, during which time the plaintiff won nearly $240,000, and had lost about $150,000. His gains over losses were about $100,000. All the money he won was paid to him. He now brings this action under section 994 of the Penal Law to recover his losses, but makes no offer to repay his winnings-these he wants to keep.

In his complaint he alleges that between the dates stated he paid to John B. Malatesta $37,773 as his wagers upon horse races at the Belmont track, the Jamaica race track, and the Empire City race track; that, having lost, he demanded back his money which the defendant failed to pay. Mind you, he sues to recover no single bet, nor does he even state or prove what the wagers were as made. He lumps his demands for a year's betting and asks for the total; he treats the transactions as a running account.

The defendant in his answer admits that between the dates mentioned he and the plaintiff entered into a series of wagers upon horse races, but denies that the plaintiff's losses have not been repaid. He further alleges, as a counterclaim, the fact that he paid the plaintiff $95,938, his winnings at the track over and above the losses, and demands judgment for its return.

At the trial the complaint was dismissed and the defendant was awarded judgment on his counterclaim. The Appellate Division reversed the judgment and gave judgment for the plaintiff, dismissing the counterclaim. The result in may judgment is that both parties should have lost; that neither should have recovered from the other; that they were in pari delicto; and that section 994 never intended that a person who makes a wager may sue for and recover the same, althoughhe may at the same time keep all his own winnings made in the same course of transactions more than sufficient to meet his losses.

Section 991 reads as follows: ‘All wagers, bets or stakes, made to depend upon any race, or upon any gaming by lot or chance, or upon any lot, chance, casualty, or unknown or contingent event whatever, shall be unlawful.’

Section 992 reads: ‘All contracts for or on account of any money or property, or thing in action wagered, bet or staked, as provided in the preceding section, shall be void.’

The plaintiff could not have recovered his winnings from the defendant. He would have no standing in court, for the law refuses to recognize gambling debts or afford the winner any relief. Meech v. Stoner, 19 N. Y. 26. The Revised Statutes (1 R. S. p. 662 [§ 9]), the forerunner of section 994 of the Penal Law, permitted a recovery of his losses.

When, however, the plaintiff, under section 994, seeks to recover what he has lost, at the same time having in his possession and having received from the defendant more than sufficient to cover such losses, all coming out of the same course of transactions, the court should afford him no relief. Section 994 of the Penal Law was never intended to cover such a case. Instead of discouraging gambling and bookmaking, which is the purpose of the law, such a result would do the very reverse by encouraging people to wager on horse races with a bookmaker whose money they could legally take, and then recover all that they may have lost in the same afternoon. The very purpose of section 994 is thus nullified.

This was the view taken of a similar statute by the Supreme Court of Kentucky in Elias & Shepherd v. Gill, 92 Ky. 569, 573, 18 S. W. 454, 456. The Kentucky statute, like our Revised Statute (1 R. S. p. 662), provides (section 2, article 1, chap. 47, General Statutes [1888]) that: ‘If any person shall lose to another at one time, or within any twenty-four hours, five dollars or more * * * and shall pay * * * the same, such loser, or any...