[COURT OF APPEAL]

EARL OF ELLESMERE v. WALLACE.

[1928. E. 695.]

Gaming - Contract - Horse Race - Sweepstakes - Entrance Fee - Forfeiture in Event of Horse not running - Action to recover - Wagering Contract - Gaming Act, 1845 (8 & 9 Vict. c. 109), s. 18.

At the invitation of the Jockey Club, which was issued subject to the Club's Rules of Racing, the defendant nominated a horse for two races - namely, (1.) the Peel Handicap, described as a sweepstakes for 5 sovereigns, of which 2 sovereigns to be forfeit, with 200 sovereigns added money, second to receive 30 sovereigns of the stakes, 15 entries or race to be at the option of the stewards, and (2.) a long course Selling Plate of 200 sovereigns, entrance 2 sovereigns, 10 entries, or the race to be at the option of the stewards, winner to be sold by auction for 300 sovereigns. The horse did not run in either race. In an action by E. on behalf of himself and the other members of the Club, the trustees of the Club and W. & Sons as stakeholders, to enforce payment by the defendant of the entrance fees or the part of them agreed to be forfeited:-

Held, by Clauson J., first, that both the contracts were made between the Club and the defendant, neither of them being contracts between the several entrants inter se, to contribute stakes to abide an event (notwithstanding that the Peel Handicap was described as a sweepstakes); secondly, that the transaction was a subscription towards a prize or sum of money to be awarded to the winner of a lawful sport; but, owing to the fact that on the face of each contract it was a contract under

which each of the parties staked something of value upon the issue of an uncertain event, it was a contract by way of wagering within s. 18 of the Gaming Act, 1845, and, consequently, upon the principle of Diggle v. Higgs (1877) 2 Ex. D. 422 it was void.

Held, further, that the Court could not inquire into the consideration moving from either of the parties beyond his interest in the stakes, nor into the motives (e.g., the encouragement of sport or the breed of horses) for the purpose of contradicting the unenforceable character of the contracts which on the face of the written documents were contracts by way of wagering.

On appeal:-

Held (reversing the decision of Clauson J.), that the contracts for the two races, which were between the Club and the defendant, and not between the various entrants inter se, were in neither case by way of gaming or wagering within s. 18 of the Gaming Act, 1845, and (Lawrence L.J. dissenting as to the case of the Peel Handicap) that the Club were entitled to recover from the defendant the amount of the fees agreed to be forfeited in the two races.

Held, by Lawrence L.J., that the Peel Handicap was a game played for stakes hazarded by the players involving an agreement between the players inter se that their stakes (which were to be deposited with the plaintiffs W. & Sons as stakeholders) should be transferred to the winner: that such an agreement was a gaming contract as between the players, and therefore void under s. 18 of the Gaming Act, 1845; that the plaintiffs W. & Sons, as the potential stakeholders, could not recover the stakes agreed to be contributed by the players; that if on the other hand the effect of the agreement was to constitute the plaintiffs W. & Sons or the Jockey Club agents or trustees for the winner they would thereby have become parties to the gaming contract between the players, and s. 18 of the Gaming Act, 1845, would afford a good defence to any claim made by them as such agents or trustees; and, lastly, that the 2l. forfeit, being in the nature of damages for the non-performance of an unenforceable contract, stood in no better position than the full stake of 5l.

Per Russell L.J.: There cannot be more than two parties or two sides to a bet. There may be a multipartite agreement to contribute to a sweepstakes, which may be illegal as a lottery, if the winner is determined by chance, but not if the winner is determined by skill.

ACTION.

The Jockey Club, an association of persons interested in the sport of horse racing, framed and published Rules of Racing according to which all race meetings held under the Club's sanction were conducted. Entries of horses for races at such race meetings were lodged at their registry office, and information as to race meetings, entries for races thereat, etc., was given in the Racing Calendar, which was printed and published under the authority of the Club by Messrs.

Weatherby & Sons, who also were the authorized stakeholders to whom entrance moneys and forfeits in connection with the race meetings were payable.

In the issue of the Racing Calendar of April 12, 1928, Messrs. Weatherby & Sons published a notice of the First Spring Meeting for 1928 at Newmarket, a race meeting held under the sanction of the Jockey Club which, so far as material, was as follows:-

"Newmarket First Spring Meeting, 1928.

"Nominations can only be made and accepted on the condition that the nominator subjects himself, in all respects, to the Rules of Racing.

"The following will close by 10 P.M. on Tuesday next, Apr. 17, to Messrs. Weatherby & Sons, at the Registry Office of the Jockey Club, 15, Cavendish Square, London, W. 1.

"Third Day, Thursday, May 3.

"The Peel Handicap; a Sweepstakes of 5 sovs. each, 2 forfeits, with 200 sovs. added; second to receive 30 sovs. out of the stakes; for 3 year old and upwards; the lowest weight to be not less than 7 stone; a winner, after the publication of the weights (Apr. 26, at noon), to carry 10 lbs. extra: Peel Course, 6 furlongs; 15 entries, or the race to be at the option of the Stewards."

"Third Day, Thursday, May 3.

"A Long Course Selling Plate of 200 sovs., for three year old, 7 stone 8 lbs., four, 9 stone, five and upwards, 9 stone 4 lbs.; mares and geldings allowed 3 lbs.; the winner to be sold by auction for 300 sovs., if entered to be sold for 100 sovs. allowed 7 lbs.; a winner of a race of a mile or upwards to carry 7 lbs., of a race of such distance in 1928 10 lbs. extra; entrance 2 sovs.; last mile and a half of Cesarewitch Course. Ten entries, or the race to be at the option of the Stewards."

It was not disputed that the effect of the advertisement of the Peel Handicap was that the nominator of a horse agreed to pay 5l. if the horse started and 2l. only if the horse did not start.

By letter dated April 10, 1928, the defendant, in acceptance of the offer so made by the Club through Messrs. Weatherby & Sons, in the issue of the Racing Calendar, nominated a horse named "Master Michael" for those two races.

Master Michael did not run in either of those races which were held by the Club, and the sum of 2l. in respect of each race, not having been paid by the defendant to Messrs. Weatherby & Sons, accordingly became forfeit and payable by the defendant. By letter dated May 7, 1928, Messrs. Weatherby & Sons demanded payment by the defendant of those two sums of 2l., but the defendant by letter dated May 9, 1928, refused (in breach of his contract, as the plaintiffs alleged) to pay those sums or either of them. As a result of such refusal this action (which was a test action) was brought by the Earl of Ellesmere (the senior steward of the Club) on behalf of himself and the other members; the trustees of the Club and Messrs. Weatherby & Sons, who conducted the registry office of the Club and received the entrance fees, being joined as co-plaintiffs, in which action the plaintiffs claimed a declaration that the defendant was liable to pay, as forfeits, 2l., the portion of the entrance fee for the Peel Handicap made forfeitable, and 2l., the whole of the entrance fee for the Selling Plate race.

The main defence to the action was that if there were a contract between the defendant and the plaintiffs or any of them which was on the pleadings denied, such contract was by way of gaming or wagering and void and unenforceable within s. 18 of the Gaming Act, 1845. (1)

It was not disputed that the contracts made by nominating a horse were, so far as the plaintiffs or any of them were

(1) Gaming Act, 1845, s. 18: "All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit 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: Provided always, 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."

parties to them, contracts with the Jockey Club, and that the other plaintiffs between them could properly be treated as the Jockey Club for that purpose.

The relevant rules of the Rules of Racing, subject to which the defendant nominated his horse, were the following:-

Rule 1. "'Added money' is money actually contributed towards the stakes by the Race-fund or from other sources, as distinct from money contributed by the owners of horses engaged.

"A 'plate' is a race for which a prize or prizes of definite value are guaranteed by the Race-fund, the entrance fee, forfeit, subscription or other contribution of owners going to the Race-fund (subject to the provision of Rule 159, as to disposal of surplus).

"A 'sweepstakes' is a race in which the entrance fee, forfeit, subscription or other contribution of three or more owners go to the winner or placed horses, and any such race is still a sweepstakes when money or other prize is added."

Rule 29. "The stakeholders shall at the expiration of fifteen days after the Meeting render an account and pay over all stakes and added money to the persons entitled."

Rule 56. "In all selling races the winner shall be offered for sale by auction immediately after the race, and the surplus over the selling price shall be divided between the owner of the second horse and the Race-fund."

Rule 86. "Subscriptions and all entries or rights of entry under them become void on the death of the subscriber. ...."

Rule 105. "Entrance money, forfeits, stakes, and arrears must be paid in cash (if so required) to the Clerk of the Course or authorised stakeholder, and entrance money must (if so required) be paid at the time of entry."

Rule 106. "Entrance money shall go to the Race-fund of the Meeting, unless otherwise specified in the conditions of the race, and subject to the application of surplus under Part XXII."

Rule 108. "The nominator is liable .... for the entrance money, stake or forfeit. .... A subscriber to a sweepstakes is liable for the stake or forfeit. ...."

Rule 154. "The full amount of all added money advertised by any meeting to be given in prizes must be paid to the stakeholders within three days of the conclusion of the meeting."

Rule 155. "(i) Prizes, stakes, and forfeits in a race belong to the winner, except as otherwise declared in the conditions. (ii) The value of prizes not in money must be advertised."

Rule 159. "Should there be any surplus from entrance or subscription over the advertised value of the plate, it shall be divided in the following proportions, viz., one-half of the whole surplus shall go to the Bentinck Benevolent Fund, or Rous Memorial Fund, and of the other half two-thirds shall be paid to the second, and one-third to the third. If the winner has walked over, or if no horse has been placed second or third, the proportion of the surplus allotted by this rule to the second or third horse shall also go to the Bentinck Benevolent Fund or Rous Memorial Fund."

The action was tried before Clauson J. on July 18 and 19, 1928.

Hon. Geoffrey Lawrence K.C. and Theobald Mathew for the plaintiffs.

Archer K.C. and H. M. Giveen for the defendant.

1928. July 31. The following written judgment was delivered by

CLAUSON J. In April, 1928, public announcement was made of two races to be run at the Newmarket First Spring Meeting, 1928, namely: (1.) the Peel Handicap described as a sweepstakes of 5 sovereigns each, of which 2 sovereigns to be forfeit with 200 sovereigns added money, second to receive 30 sovereigns out of the stakes; fifteen entries or the race to be at the option of the stewards; and (2.) a Long Course Selling Plate of 200 sovereigns, entrance 2 sovereigns; ten entries or the race to be at the option of the stewards; winner to be sold by auction for 300 sovereigns. For these races nominations were invited, subject to the Rules of Racing. The

defendant nominated a horse for each race, but when the time came the horse did not run. The defendant did not pay any part of the entrance fee for either race. The plaintiffs claim 2 sovereigns in respect of the nomination for the Peel Handicap (being the portion of the entrance fee made forfeitable) and 2 sovereigns in respect of the nomination for the Long Course Selling Plate, being the total entrance fee.

The plaintiff, Lord Ellesmere, is the senior steward of and sues on behalf of the members of the Jockey Club. The Jockey Club conducts the Newmarket Spring Meeting. The three next plaintiffs are the trustees of the Club. The plaintiffs, Weatherby & Sons, conduct the registry office of the Club and under the Rules of Racing entrance fees are to be paid to them. On the pleadings questions were raised as to the party entitled to sue for the 4l.; but these possible questions were not argued before me. It was treated before me - and in my opinion correctly - that the contract made by nominating the horse was a contract, so far as the plaintiffs or any of them were parties to it, with the Jockey Club, and that the plaintiffs between them could properly be treated as the Jockey Club for this purpose.

I need not travel in detail through the Rules of Racing. It will suffice to say that I hold that the effect of the defendant's nomination of a horse for each of the two races in question (subject to the operation and effect, if any, of s. 18 of the Gaming Act, 1845) was to constitute two contracts between him and the Jockey Club the salient features of which may, without condescending upon unnecessary detail, be stated as follows. First, as regards the Peel Handicap, the defendant agreed to pay an entrance fee of 2l. with a further 3l. if the horse ran; the Jockey Club agreed, if fifteen entries were received, to provide for holding the race and to pay to the defendant, if his horse won, a prize of 200 sovereigns in addition to a sum equal to the amount of the entrance fees less 30 sovereigns, or, if his horse was second, 30 sovereigns out of the entrance fees: and, secondly, as regards the Selling Plate, the defendant agreed to pay an entrance fee of 2 sovereigns; the Club agreed, if ten entries were received, to provide for

holding the race, and to pay to the defendant, if his horse won, a prize of 200 sovereigns; if the defendant's horse won, the Club was to sell him by auction at a reserve of 300 sovereigns, any sum realized in excess of the 300 sovereigns to be divided between the owner of the second horse and the race fund, that is, the Club (see rule 56). So far I did not understand there to be any dispute between the parties.

I pass over for the moment a question, to which I shall return later, as to the legal relations, if any, between the defendant and other entrants to the races, and I likewise defer any comment on the use of the word "sweepstakes" in relation to the Peel Handicap.

It was not disputed that, subject to the operation and effect, if any, of s. 18 of the Gaming Act, 1845, the two contracts which I have summarized were valid and binding as between the Club and the defendant and enforceable in this action. Mr. Lawrence, for the Club, in an interesting historical argument, the accuracy of which was not impugned by counsel for the defendant, pointed out that while, first, horse racing is at common law a lawful sport, secondly, certain statutes operated to restrict certain forms of and contracts relating to horse racing (see 16 Car. 2, c. 7; 9 Anne, c. 14; 13 Geo. 2, c. 19; 18 Geo. 2, c. 34; 3 & 4 Vict. c. 5), the repeals effected by the Gaming Act of 1845, operated to sweep away preceding statutory restrictions and to leave horse racing as a lawful sport and to leave contracts relating thereto to operate according to their tenor and the general law of contract subject only to the operation and effect, if any, of s. 18 of the Gaming Act, 1845. In the course of his argument Mr. Lawrence cited Marryat v. Broderick (1); Evans v. Pratt (2); Goldsmith v. Martin (3); Applegarth v. Colley (4); Bentinck v. Connop (5); and Brown v. Overbury. (6) As however the correctness of his submissions on this part of the case was not impugned by counsel for the defendant, it is unnecessary for me to travel through those authorities or to say more than that I

(1) (1837) 2 M. & W. 369.

(2) (1842) 3 Man. & Gr. 759.

(3) (1842) 4 Man. & Gr. 5.

(4) (1842) 10 M. & W. 723.

(5) (1844) 5 Q. B. 693.

(6) (1856) 11 Ex. 715.

see no reason to doubt that Mr. Lawrence's argument stated the law correctly. This case accordingly turns on the application to the facts of the case of s. 18 of the Gaming Act, 1845. That section is as follows: "All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit 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: Provided always, 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." The first point made on the section for the plaintiffs was that the transaction between the defendant and the Club in respect of each race being "a subscription or agreement to subscribe to a prize to be awarded to the winner of a lawful sport" (as indeed in my opinion it clearly is) the proviso exempted the two contracts between the Club and the defendant from the operation of the section altogether, and left them perfectly valid and enforceable contracts, even though they are or may be contracts by way of gaming or wagering. This construction of the section was in the year 1848 adopted, though with some hesitation, by Truro L.C. (then Chief Justice of the Common Pleas) and Coltman, Cresswell and Williams JJ. sitting in banc in the Court of Common Pleas in Batty v. Marriott. (1) There is, however, an alternative construction of the section - namely, that the proviso merely applies to such subscriptions or agreements to subscribe as are not contracts by way of wagering. This construction was expressly adopted by the Court of Appeal, consisting of Cairns L.C., Cockburn C.J. and Bramwell L.J., in Diggle v. Higgs (2), and the Privy Council in Trimble v. Hill (3) stated that Diggle v. Higgs (2) had "settled the vexed

(1) (1848) 5 C. B. 818.

(2) 2 Ex. D. 422.

(3) (1879) 5 App. Cas. 342, 345.

question of the construction of a not very intelligible enactment." As a judge of first instance I ought not, I conceive, even to discuss a statement of the law delivered in the Court of Appeal fifty-one years ago and stated by the Privy Council forty-nine years ago to have settled a previously vexed question. Accordingly, the plaintiffs must fail before me on their first point and I must undertake the task of determining whether or not the contracts with which I have to deal are "contracts by way of gaming or wagering." If they are, I must hold them null and void by reason of the first sentence of s. 18.

I must now return to a point to which I have already alluded. As I have stated the contracts, they are in each case contracts between the Club and the defendant, to which there is no other party, and the argument for the Club is that that is a correct view of the contracts. I am not sure that Mr. Archer for the defendant disputed this; but however that may be, it may be well that I should express my opinion that the contracts are merely contracts between the Club and the defendant, and that no contract in suit before me is a contract between the various entrants inter se to contribute stakes which are to abide an event. It is true that the Peel Handicap is described in the public announcement as a sweepstakes and that a sweepstakes is the term commonly used to describe the contract entered into by several competitors who agree with one another to put up stakes to abide the event of the competition. The term "sweepstakes" appears to be used in connection with the Peel Handicap, because the quantum of the prize varies with the number of the entrance fees contributed, a feature common to this particular race and to a sweepstakes properly so called. But I cannot find on the facts alleged and either admitted or proved before me any contract inter se between the various persons who enter for the two races in question.

Each contract thus being, as I hold, a contract between the Club and the defendant, I have to deal with the question whether it is a contract by way of gaming or wagering. For this purpose I may, I think, treat it as settled that it is essential

to a wagering contract that each party may under it either win or lose, his winning or losing being dependent on the issue of the event (per Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (1)). It is clear that the defendant risks the loss of his entrance fee on the issue of the race and that he stands to win in the case of the Peel Handicap a sum equal to the entrance fees of the competitors, less 30 sovereigns, and 200 sovereigns added money, and in the case of the Selling Plate 200 sovereigns. Does the Club stand to lose anything and, if so, what? Obviously in the case of the Peel Handicap the 200 sovereigns added money and in the case of the Selling Plate the 200 sovereigns. What does the Club stand to win? As between the Club and the defendant 5l. on the Peel Handicap if the defendant's horse runs and fails to win or be placed, and if the horse fails to run 2l., and on the Selling Plate in the like events 2l.

It was strenuously argued for the plaintiff that the Club could in no event win, and this may be the case if the result of all the contracts which the Club enters into in regard to each race is taken into account. But if I am right in the view, which was in fact urged upon me as the correct view by the plaintiffs, that the contracts which the plaintiffs seek to enforce are bipartite and not multipartite contracts, that is, are in fact contracts simply between the Club and the defendant, how am I concerned, for the purposes of considering whether or not both parties stand to win or lose on the two contracts, with the probability or even the certainty that the Club will enter into other contracts with other entrants with the result that it can never be an ultimate gainer? Must I not consider the individual contracts before me and their operation as between the two parties to them? I believe it is not unknown for an individual to arrange a series of bets upon the result of a particular race in such a way that while, as the event turns out, he may win largely or only to a slight extent, he will in no event be left a loser; such a case would be an example of a case in which a series of transactions each of which would be a wagering transaction would, in the

(1) [1892] 2 Q. B. 484, 491.

aggregate, leave the individual free of risk, and yet it could not, I think, be seriously contended that each separate bet would not be a "contract by way of wagering" as between the parties to it.

A further point urged by the plaintiffs was that in any case the Club could not retain the defendant's entrance fee, even if the event turned against the defendant; that under the Rules of Racing his entrance fee would either find its way to the owner of the winner or of a horse placed second or third, or to certain benevolent objects: see rule 159. That appears to me to be irrelevant. If the entrant fails to secure a win or a place, his rights under the contract seem to me to come to an end. He could not sue the Club for breach of contract, if they chose to deal with his entrance fee otherwise than in accordance with the Rules of Racing; that would be a matter which would and could affect only those who have a claim to the successful entrant's fee under the Rules of Racing. But the truth is that, as between the unsuccessful entrant and the Club, the fee which the entrant risks and loses belongs to the Club, and none the less so because the Club may, as between itself and a successful entrant, be bound by virtue of its contract with the latter entrant, to account to that entrant for the fee or because the Club has declared its intention of devoting the fee or part of the fee so gained to some benevolent object.

I thus come to the conclusion that in the case of each of the contracts in suit the essential element of wagering is present - namely, that each party may under each contract either win or lose, as the event may turn out. That, however, so it is argued, does not necessarily conclude the matter. It was argued (reference being made to the language of Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (1), that in the case of each contract the Court is at liberty to inquire into the real consideration for the making of the contract and that the Court can hold that the contract is a contract by way of wagering if, but only if, there is no real consideration for the making of the contract by either party beyond his

(1) [1892] 2 Q. B. 484, 491.

interest in the stake to be won or lost. Now it is quite true that where the terms of the contract appear on the face of them to be legally enforceable, the Court may, at the instance of either party, inquire whether its terms conceal the true contract which is a contract by way of wager: see the authorities to which Hawkins J. refers in his judgment. (1) But where the terms of the contract are to be gathered from written documents - in this case the advertisement of the meeting and the Rules of Racing - and on a perusal of them nothing of substance is to be found in the contract save stipulations as to the bringing about of the event - in the present case the running of the race - and as to the operation of the event by way of gain or loss upon the pecuniary position of the parties, and the Court thus, on the construction of the contract, finds nothing to mitigate the character of the contract as a wagering contract, I do not see what right the Court has to inquire, at the instance of one party, into any circumstances dehors the contract or into the motives of the parties or either of them in search of material to enable a party to contradict the unenforceable character of the contract, as appearing in its terms. At all events, no authority was produced to the effect that the Court has any such right. It was suggested that both contracts might be read as contracts under which, in consideration of the entrance fee, the Club contracted to give the defendant the opportunity (said to be very important for all breeders and owners of race-horses) to exhibit his animal's powers at the Newmarket Spring Meeting and that the prize was a mere subsidiary matter to which an owner would attach no real importance. It was suggested that the contract in regard to the Selling Plate might be fairly read as a contract to give the defendant the chance of having his horse sold under favourable circumstances. I cannot so read the contracts. They appear to me to be nothing more nor less than contracts under which the defendant risks his entrance fee to gain a prize while the Club risks the added money and the prize against the entrance fee. In the case of the Selling Plate the provisions

(1) [1892] 2 Q. B. 484, 492.

as to auction seem to me to be subsidiary and ancillary to the main feature in the contract.

One further argument on the plaintiff's behalf remains. It was suggested that in fact the real interest of the Club in such contracts as the present is not pecuniary gain, but the encouragement of sport and horse breeding. That may well be so; and the fact that, on the sum total of the contracts with the various entrants, the Club would seem, on the face of it, not to be an ultimate gainer, points in that direction. That argument, however, seems to me to be addressed to the motive which actuates the Club in entering into the contract. It may or may not be that, if there is a question whether a contract, on the face of it enforceable, is obnoxious to the law as being in fact, though not in form, a contract by way of wagering, the motives of the parties in entering into the contract can be regarded: but I do not see how I can take into account the motives of the Club, however excellent, in relation to a contract which I find on the face of it to be a contract by way of wagering.

I may sum up my conclusions very shortly. I am not free, by reason of authorities which bind me, to construe s. 18 of the Gaming Act, 1845, as enacting that the contracts of entrants to such races as those in question are enforceable in the Courts whether they are or are not contracts by way of wagering. I accordingly have to consider whether the contracts between the Jockey Club and the defendant effected by the defendant entering his horse for the Peel Handicap and the Long Course Selling Plate are or are not contracts by way of wagering. I hold that they are contracts by way of wagering, because the contracts on the face of them are arrangements by which each party stakes something of value on the issue of an uncertain event.

The action will accordingly be dismissed, on the ground that it seeks to enforce contracts which, being by way of wagering, are null and void by reason of s. 18 of the Gaming Act, 1845.

H. C. H.

The plaintiffs appealed. The appeal was heard on December 10 and 11, 1928.

Hon. Geoffrey Lawrence K.C. and Theobald Mathew for the appellants. The contract made on the entry for a race by which the nominator agrees to pay an entry fee is not void as a gaming transaction within the Gaming Act, 1845, s. 18. The plaintiffs are therefore entitled to recover the whole or such part of the fee as is forfeited upon the nominator failing to run the horse.

The Jockey Club are particularly anxious to obtain a decision on the point owing to the difficulty that arises when a nominator dies before the race is run. In view of the doubt whether the fee was recoverable from his executors, the Rules of Racing at present provide (r. 86) that the entry becomes void. This is undesirable, and these proceedings are in the nature of a test action to ascertain the true position.

In so far as Clauson J. has decided that the contract of entry is made between the entrant or nominator and the Jockey Club, the appellants accept his decision; but the contract is, it is submitted, protected from being void under the Gaming Act, 1845, by the proviso to s. 18. The Jockey Club can in no circumstances take any benefit under the contract, for r. 159 of the Rules of Racing provides that any surplus from entrance fees or subscriptions over the advertised value of a plate is to be divided between two benefit funds and the owners of the second and third horses.

Horse racing is a "lawful sport," so as to come within the proviso to s. 18. At first it was legalized, subject to certain restrictions, in order to discourage gaming on credit: see 16 Car. 2, c. 7; 9 Anne, c. 14; 13 Geo. 2, c. 19; 18 Geo. 2, c. 34, s. 11; and 3 & 4 Vict. c. 5 (which repeated, as regards horse racing, the Act of 13 Geo. 2, c. 19). Finally came the Gaming Act, 1845 (8 & 9 Vict. c. 109), under which horse racing was fully legalized. Further, the words "any plate, prize or sum of money" appeared in some of the earlier Acts: see Evans v. Pratt. (1)

(1) 3 Man. & Gr. 759.

The whole difficulty here is caused by Diggle v. Higgs (1), where it was held that an agreement between two persons to walk a match for 200l. a side was a wagering transaction, so that the loser could recover the sum which he had deposited with a stakeholder. That case is however distinguishable. The essence of the transaction was an even wager of 200l. It is different where a number of persons put up sums of money which are to provide a prize for the winner. There the Court of Appeal overruled Batty v. Marriott (2), but that also was a transaction between two persons. The essence of the decision in Diggle v. Higgs (1) is that a subscription by two persons towards a prize for one of them is merely colourable: see Crofton v. Colgan. (3) Diggle v. Higgs (1) was followed in Trimble v. Hill (4) and applied in Shoolbred v. Roberts (5), where Phillimore J. appears to have drawn a distinction between cases where the contributions were by the competitors and cases where they were by outsiders.

The contract here has no element of wagering. It is made between the entrants and the Jockey Club. It is bipartite and not multipartite. The best definition of a "wagering" contract is that given by Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (6), where he says: "A wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties."

[LORD HANWORTH M.R. I do not quite see how that proposition is supported by Thacker v. Hardy. (7)]

Some light is thrown upon what Hawkins J. meant by the statement in Stutfield on the Law relating to Betting, 3rd ed.,

(1) 2 Ex. D. 422.

(2) 5 C. B. 818.

(3) (1859) 10 Ir. C. L. R. 133.

(4) 5 App. Cas. 342.

(5) [1899] 2 Q. B. 560.

(6) [1892] 2 Q. B. 484, 490.

(7) (1878) 4 Q. B. D. 685.

p. 32. It is clear in the present case that the Jockey Club cannot win: see r. 154; and therefore the contract is not a wagering contract. The Club cannot possibly win in the case of a sweepstakes, because the stakes go to the winners. Can it be said that in every tournament in which an entrance fee is paid there is a wagering contract? What does the proviso in s. 18 apply to if it does not apply to a case like the present? Rule 158 throws some light on what is the nature of the entrance fees. They are sums fixed with reference to the value of the plate, and are devoid of any reference to a wager.

As therefore the Jockey Club cannot win, the contract does not contain the element of wagering.

Then as to whether there is any consideration in the contract other than a wagering element, it is submitted that the true consideration is not a wagering consideration, but that the contract is a bona fide business contract between the Club and owner of the horse, the object of the Club being to keep up Newmarket and that of the owner to improve the value of his horse.

There is no reported case which detracts from what was said by Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (1): see also Weddle, Beck & Co. v. Hackett. (2)

Where the consideration is other than mere gaming the case does not fall within s. 18: Peers v. Caldwell. (3)

[RUSSELL L.J. I do not think that case has much bearing upon the present.]

Our contention still remains that to constitute a wagering contract there must be no consideration other than the wager, and that was clearly not the case here. The consideration moving from the Jockey Club was the provision of a place for holding the race meeting at Newmarket with all the facilities which Newmarket provides. We do not rely on any terms dehors the contract but on the contract itself.

To sum up. On the true construction of the proviso to s. 18 the contracts here are clearly within the proviso.

(1) [1892] 2 Q. B. 484, 490.

(2) (1928) 45 Times L. R. 67, 70.

(3) [1916] 1 K. B. 371.

[RUSSELL L.J. The proviso only applies if you are not within the first part of the section: see Diggle v. Higgs. (1)]

If the real object of the contract is a wager then the contract is not within the proviso. If the contract is really within the proviso it does not matter if it also contains an element of wagering.

[LORD HANWORTH M.R. referred to Batson v. Newman. (2)]

Archer K.C. and H. M. Giveen for the respondent. The decision of Clauson J. was right. The problem is to set a limit to what is gaming and wagering.

Sect. 18 shows that wagering and contracts by way of wagering were in the mind of the Legislature, and that all contracts by way of gaming or wagering are wrong.

What you have to look at first of all is the nature of the transaction. The contract is merely the machinery for carrying the transaction into effect. Here the Jockey Club is the promoter of betting on a lawful game. Each entrant to a race makes a bet with each of the other entrants. If the element of wagering be present where there are two entrants it is equally present where there are more than two. Each of the entrants to a race stands to lose or win.

A contribution to a prize is a bet if the contributor is himself a competitor: Diggle v. Higgs (1); see also Shoolbred v. Roberts. (3)

The idea conveyed by all the statutes dealing with the matter is the changing of the right to money as the result of some sporting event. The event may be quite lawful, but it would nevertheless be gaming.

As to r. 159, a contract is none the less a gaming or wagering contract because one of the parties undertakes some duty or gives his winnings to a benevolent object. The ultimate destination of the money can make no difference in the nature of the winnings.

It is submitted that the transactions in this case are not other than bets. To take the plate race. That is clearly the case of a bet. The entrant pays 5l. to enter for the plate, which is

(1) 2 Ex. D. 422.

(2) (1876) 1 C. P. D. 573.

(3) [1899] 2 Q. B. 560, 563.

of the value of 200l. If he wins he gets 200l.; if he loses he loses his 5l. The transaction is just as much a bet as if made with a bookmaker.

[LAWRENCE L.J. The case is different. In the present case the entrant has the privilege of entering his horse for the race and the Club provides the accommodation.]

The payments have no reference to the privilege of running a horse over a racecourse.

If a transaction once comes within the ambit of the earlier part of s. 18 the proviso does not apply. The fact that a stakeholder is introduced does not affect the nature of the transaction.

The Hon. Geoffrey Lawrence K.C. in reply. There is no distinction between a contract of wagering and a contract by way of wagering.

The Court cannot speculate as to the motives of the parties but must look at the contract.

All the reported cases in which the transactions have been held to fall within s. 18 have been cases of bets between two persons.

1929. Feb. 5. The following written judgments were delivered:-

LORD HANWORTH M.R. This is a test action brought by the senior steward of the Jockey Club on behalf of himself and all other members of the Jockey Club, the trustees of the Jockey Club and Messrs. Weatherby & Sons, a firm who act as registrars and stakeholders for the Jockey Club, against Mr. Edgar Wallace, who is the owner of racehorses. The statement of claim prays a declaration that the defendant is liable to pay two sums of 2l. each as forfeits in respect of two races in which the defendant had nominated one of his horses named "Master Michael" to run; and the question to be determined in the action is whether the plaintiffs can recover this total sum of 4l. by an action at law. Clauson J. in a considered judgment held that the contracts under which the plaintiffs contend that the liability of the defendant arises are contracts by way of gaming and wagering within s. 18 of the Gaming Act, 1845, and, therefore, null and void.

There is no dispute about the facts. The two races in question were races advertised to be run at the Newmarket First Spring Meeting, 1928, under the authority of the Jockey Club, for which nominations were invited subject to the Rules of Racing. The first was the Peel Handicap, described as a sweepstakes of 5 sovereigns each, of which 2 sovereigns were to be forfeit, with 200 sovereigns out of the stakes; 15 entries, or the race to be at the option of the stewards of the Jockey Club. The second race was a Long Course Selling Plate of 200 sovereigns - entrance 2 sovereigns; 10 entries, or the race to be at the option of the stewards; the winner to be sold by auction for 300 sovereigns. The defendant nominated a horse for each race, but when the time came for starting the horse did not run. The defendant has not paid any part of the entrance fee for either race. The plaintiffs, therefore, claim in this action to establish a legal liability upon the defendant to pay the sum made forfeitable in the first race - namely, 2l. - and likewise 2l. payable in respect of his nomination for the second race, which in fact was the total entrance fee for that race. It is not contested that by nominating a horse in each of those two races a contract was made by the defendant with the Jockey Club which incorporated the Rules of Racing, or that the plaintiffs are the right persons to sue upon these contracts. It is, however, necessary to recall the statement of the terms of the contracts made by Clauson J. as follows: "First as regards the Peel Handicap, the defendant agreed to pay an entrance fee of 2l. with a further 3l. if the horse ran; the Jockey Club agreed if 15 entries were received to provide for holding the race, and to pay to the defendant, if his horse won, a prize of 200 sovereigns in addition to a sum equal to the amount of the entrance fees less 30 sovereigns; or, if his horse was second, 30 sovereigns out of the entrance fees; secondly, as regards the Selling Plate, the defendant agreed to pay an entrance fee of 2 sovereigns; the Club agreed, if 10 entries were received, to provide for holding the race and to pay to the defendant, if his horse won, a prize of 200 sovereigns; if the defendant's horse won, the Club was

to sell him by auction at a reserve of 300 sovereigns, any sum realised in excess of the 300 sovereigns to be divided between the owner of the second horse and the race fund, that is the Club (see r. 56)." Now there is one feature in this statement which in my judgment oversteps the mark. It is not right to say that the Club agreed in each race to pay to the defendant if his horse won a prize of 200 sovereigns. The Club agreed to provide and pay away 200l. if the race was run at all and upon any result of the race. The Club lose 200 sovereigns, not as against the defendant or upon any event to be determined with the defendant. Clauson J. asks the question, "Does the Club stand to lose anything, and if so, what?" and answers it: "Obviously in the case of the Peel Handicap the 200 sovereigns added money and in the case of the Selling Plate 200 sovereigns." This is too wide an inference to be drawn from the contracts between the Club and the defendant. The Club loses once and for all, if either of the races are run, 200l. Whether the defendant's horse won or another of those nominated was an eventuality of no importance to the Club. The Club agreed to provide for holding the races and to pay to the winner 200l. There was no direct alternative provided as between the Club and the defendant, that in one event the defendant should lose his 5l. or 2l., as the case might be, or in the other win 200l. The competition of the other horses must not be left out of account in stating the terms agreed upon. The Club provided for holding the two races, in which the defendant had the opportunity of running his horse and the chance among 14 others in the first race and among 9 others in the second race of winning 200l. The definitions of a "plate" and of a "sweepstakes" in the Rules of Racing make it plain that this correction of the judge's statement of the contracts must be made.

It is unnecessary to refer in greater detail to the Rules of Racing, though I may say in passing that I do not think that the ultimate destination of any surplus from entrance fees or subscriptions to the benevolent funds mentioned in r. 159 has any bearing upon the nature of the contracts now

under consideration, whether in favour of or against them, or upon the question whether the contracts are rendered null and void under the section of the Gaming Act: see per Lord Reading in Welton v. Ruffles. (1) It is, however, of importance to observe that it is found to be a term of the contract that the Club should provide for the holding of the race, subject only to a term in each case as to the number of entrants. The importance of an additional element to a contract which is claimed to be a gaming contract is pointed out by Sankey J. in Welton v. Ruffles (2), where refreshments were provided under the contract for all those who came upon the premises to play the game. Such an element negatives the inference that the only object or aim in the contract was to win money or money's worth.

Horse racing, in spite of restrictions placed upon it from time to time, remains a lawful sport. The Gaming Act of 1845 is interesting from the history recalled in its preamble and in the several Acts which are repealed in whole or in part by s. 15; but s. 18 is the one which is relevant to this case. Its terms are: "All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit 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: Provided always, 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." It is tempting to say that the sums in question in the present action fall within this proviso, as they would appear to do. Indeed in Batty v. Marriott (3) it was decided in 1848 that a deposit with a stakeholder of 10l. a side by two persons who agreed to run a lawful foot-race, the winner to receive the 20l., fell

(1) [1920] 1 K. B. 226, 229.

(2) [1920] 1 K. B. 233.

(3) 5 C. B. 818, 829.

within the proviso, and not within the enacting part of the section. In his judgment it is to be noted that Wilde C.J. (as he then was) said this: "Horse-racing was not meant to be put down; yet, if two persons only run their horses one against the other, for a sum of money, that is clearly a wager." This case was, however, definitely overruled by Diggle v. Higgs. (1) There the action was brought to recover the deposit made by one party who had agreed to walk a match with the other party for 200l. a side. Lord Cairns (2) read the proviso thus: "Provided that so long as there is a subscription which is not a wager the second part of the section ['no suit shall be brought or maintained in any Court of law or equity for recovering' etc.] shall not apply to it." And he adds: "I therefore think that although there was a deposit of money, the contract in this case was a wager, and that all the consequences which are imposed by s. 18 on contracts by way of wagering follow." Cockburn C.J. said (3): "In my opinion that proviso was intended to meet the case of bona fide contributions to a prize to be given to the winner in some lawful competition, but not to money deposited by way of wager." Bramwell L.J. agreed. That case is binding upon this Court. It was approved in Trimble v. Hill (4); and it is not possible to read the proviso otherwise than as stated in the two excerpts that I have made. Thus the question must be determined whether these contracts made with the defendant were "by way of gaming or wagering."

Now in all the cases referred to, Daintree v. Hutchinson (5); Batty v. Marriott (6); Batson v. Newman (7); Diggle v. Higgs (1); Trimble v. Hill (4); Shoolbred v. Roberts (8); and Martin v. Hewson (9), the deposit or wager was between two persons for the purpose of a match, and the words I have quoted from the judgment of Wilde C.J. refer to a match also where two persons run their horses one against the other. There is a clear distinction between all those cases and the

(1) 2 Ex. D. 422.

(2) Ibid. 426.

(3) Ibid. 428.

(4) 5 App. Cas. 342.

(5) (1842) 10 Mee. & W. 85.

(6) 5 C. B. 818.

(7) 1 C. P. D. 573.

(8) [1899] 2 Q. B. 560, 564.

(9) (1855) 10 Ex. 737.

dicta referred to and the present. I turn, therefore, to the consideration by Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (1) as to whether the contract before him was a contract by way of gaming or wagering within the statute. The passage quoted was approved by the Court of Appeal. (2) It is as follows (3): "It is not easy to define with precision what amounts to a wagering contract, nor the narrow line of demarcation which separates a wagering from an ordinary contract; but, according to my view, a wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties." There is no doubt that the terms of this definition were carefully chosen. The latter part of it, as to neither of the contracting parties having any other interest in the contract than the stake, is of great importance. It is a qualification that accords with the words used by Grose J. in Good v. Elliott (4), where he speaks of wagers as illegal under the statutes then in force: "where the party has no other interest in the subject matter of them than that which he chooses to create by his bet," and the qualification is necessary to exclude policies of insurance.

Whether the word "interest" is sufficient to cover what is intended to be expressed is doubtful. A contract of insurance as between insured and insurer may be expressed in terms of a wager. On the other hand a wager may be concealed in the terms of a contract with a condition as to quality, as in Brogden v. Marriott. (5) In that case there was an agreement for the purchase of a horse for 200l. if he trotted 18 miles an hour or for 1s. if he failed, and Tindal C.J.

(1) [1892] 2 Q. B. 484.

(2) [1893] 1 Q. B. 256, 261.

(3) [1892] 2 Q. B. 484, 490.

(4) (1790) 3 Term Rep. 693, 694.

(5) (1836) 3 Bing. N. C. 88.

rejected the pretended reality of the condition, looked at the substance of the matter, and held the seeming contract to be a wager.

It is clear from other like cases that the substance of the matter is to be regarded; and if so, it may be more accurate to say that if there is no other purpose in the contract than that of gaming or wagering, it is void - the interest of the parties being evidence of the purpose for which it is entered into.

But whether "interest" or "purpose" be the right term, Thacker v. Hardy (1) affords an illustration of the importance of this qualification. The broker who sued the defendant in respect of contracts made on the latter's behalf with jobbers on the Stock Exchange had quite a different interest and purpose from that of the defendant, who expected merely to pay differences. Bramwell L.J. there says (2): "There is no gaming or wagering in a transaction of that kind: the broker has no interest in the stock, and it does not matter to him whether the market rises or falls." He then adds the significant observation: "When a transaction comes within the statute against gaming and wagering, the result of it does affect both parties"; and he distinguished the case of Thacker, the broker, from that of Grizewood v. Blane (3), where it was found by the verdict of the jury that the plaintiff and defendant were gambling direct with each other, and contracts for the purchase and sale of stocks were devices, used colourably, in the course of their gambling.

Again in Thacker v. Hardy (4) Cotton L.J. says: "The essence of gaming and wagering is that one party is to win and the other party to lose upon a future event, which at the time of the contract is of an uncertain nature - that is to say, if the event turns out one way A. will lose, but if it turns out the other way he will win."

That definition was cited with approval by Lord Herschell in the judgment of the Privy Council in Forget v. Ostigny (5),

(1) 4 Q. B. D. 685.

(2) Ibid. 692.

(3) (1851) 11 C. B. 526, 538.

(4) 4 Q. B. D. 685, 695.

(5) [1895] A. C. 318, 326.

and was adopted by Sir W. Anson as indicating the essential nature of a wagering contract. Sir William's own definition is: "A wager is a promise to give money or money's worth upon the determination or ascertainment of an uncertain event; the consideration for such a promise is either something given by the other party to abide the event, or a promise to give upon the event determining in a particular way": Anson on Contract, 15th ed., pp. 230, 231, 232. He adds: "There must therefore be mutual chances of gain and loss"; and "the parties must contemplate the determination of the uncertain event as the sole condition of their contract." Sir W. Anson concludes that in essence, there is no difference between insurance contracts with an insurable interest, and a wager; and that it is the fact that one wagering contract is, and the other is not, permitted by law which makes the distinction between the two.

Now to apply the definition of Hawkins J., and the reasoning, above stated, to the facts of the present case.

Clauson J. does not find, nor do I find, any contract, inter se, between the various persons who nominate horses for entry in either of the two cases in question; and indeed the question to be decided in this action depends upon the contract between the Club and the defendant. Clauson J. goes on to state his view of the situation created by this contract - that is, that the defendant risks the loss of his entrance money on the issue of the race, and that he stands to win in the case of the Peel Handicap a sum equal to the entrance fees of the competitors, less 30 sovereigns, and 200 sovereigns added money. He proceeds in the passage already referred to: "Does the Club stand to lose anything, and if so, what? Obviously in the case of the Peel Handicap the 200 sovereigns added money, and in the case of the Selling Plate the 200 sovereigns. What does the Club stand to win? As between the Club and the defendant 5l. on the Peel Handicap if the defendant's horse runs and fails to win or be placed; and if the horse fails to run 2l.; and on the Selling Plate in the like events 2l." I cannot accept this statement. The Club "loses" - to use his term - 200l. if either race is run

at all, and that "loss" does not depend upon the issue of a future event between the Club and the defendant. It is paid away, not lost, in any event. To whom 200l. shall be paid depends upon the issue between the running of the horses of the other entrants and of the defendant. The only event outstanding between the defendant and the Club is whether the defendant's horse will run in the races or not, and that depends not upon the determination of any future event, but solely upon the volition of the defendant.

In my judgment the interest of the two parties is not the same. Each of them has interests in the contract other than the sum that will be won or lost when the race is decided. The defendant secures the rights to nominate his horse for two races on Newmarket Heath, together with rights or chances which he shares with others who nominate horses to run in the races. The plaintiffs get a payment from the defendant of 2l. in each race, and in the first race for the handicap, that sum may be increased accordingly as the defendant at his own will exercises his option to run his horse in the race or not to do so. There is another consideration present in these contracts besides the so called stake - namely, the undertaking by the Club to provide facilities for the holding of both races.

As in its terms the definition stated by Hawkins J. is of a wagering contract, although he refers to the statute against "gaming and wagering," it is necessary to add some consideration of the word "gaming." Does it enlarge the scope of the Act of 1845 beyond what has been determined in the cases cited?

There are Acts which prohibit a licensee holding a licence to sell liquor, from allowing gaming upon his premises, though the considerations that arise upon such Acts are not the same as under the Gaming Act, 1845. It is not the contract of the licensee which is avoided, but he is liable to a penalty if he suffers the act of gaming to take place on his premises.

Thus 9 Geo. 4, c. 61, s. 21, provided that the licensee "do not knowingly suffer any unlawful games or any gaming

whatsoever on his premises." In Reg. v. Ashton (1) Lord Campbell in giving judgment quashing a conviction under this section for playing a lawful game upon licensed premises said: "If money were staked, that would be gaming; and then there might be a lawful conviction for allowing gaming in the house."

Under the Licensing Act, 1872 (35 & 36 Vict. c. 94), s. 17, it is provided that "if any licensed person suffers any gaming or any unlawful game to be carried on on his premises .... he shall be liable to a penalty."

In Lockwood v. Cooper (2) Lord Alverstone in deciding a case under this Act said that: "To amount to gaming the game played must involve the element of wagering - that is to say, each of the players must have a chance of losing as well as of winning."

In Welton v. Ruffles (3) - a case under the same Act - Avory J. says that it is sufficient if the money which is staked indirectly goes toward the prize; but the element of a chance of winning or losing money or money's worth in the games is treated as fundamental to the gaming: see also Dyson v. Mason. (4)

The words of Cotton L.J. in Tacker v. Hardy (5) are used as to "the essence of gaming and wagering"; and Lord Herschell in Forget v. Ostigny (6), when referring to that definition, says: "Cotton L.J. laid down what in his view was the essence of a gaming contract." And Channell J. in Richards v. Starck (7) also treats the definition as applicable to a gaming and wagering contract. He decided the case before him upon the question whether on the facts there was a bet, and he held that there was a bet, though on terms favourable to the plaintiff.

A consideration of these cases appears to me to show that the interpretation to be given to "gaming" must be one that involves wagering or betting. One is thus brought back

(1) (1852) 1 E. & B. 286, 289.

(2) [1903] 2 K. B. 428, 431.

(3) [1920] 1 K. B. 226, 231.

(4) (1889) 22 Q. B. D. 351.

(5) 4 Q. B. D. 685, 695.

(6) [1895] A. C. 318, 326.

(7) [1911] 1 K. B. 296, 302.

to the same question - were the contracts made with the Jockey Club by way of betting or wagering?

If the substance of the matter is to be regarded I fail to see that there was a bet made, or that the only consideration between the Club and the defendant is the issue of the uncertain event - namely, the determination of the race for which the horse was entered. It was not the result of the race which in substance made either of the two sums of 2l. claimed payable to, or a win for the Jockey Club.

I agree with Clauson J. that one must look at the contracts contained in the written documents and not go outside them to alter or mitigate their terms or effect. It is on a strict interpretation of them and not only upon the substance of them, that I have reached the conclusion stated. No doubt, if the contract is by way of gaming or wagering, it must be treated as such, however it may be dressed up, for example, as in Batson v. Newman (1) or Brogden v. Marriott. (2)

But I cannot find any win for the Jockey Club as against the defendant dependent upon any gaming or wagering event to be decided between them. The payments of 2l. do not depend upon the issue of a "future event." These payments, and also that of the payment of the extra 3l., depend upon the defendant's will. The 200l. is paid away by the Club if the race is run, and whether to the defendant or to some other entrant is a matter irrelevant to the payment of the entrance fee, be it larger or smaller.

In order to hold these contracts to be by way of gaming and wagering, it appears to be necessary to hold (a) that the Club in each contract bets with the entrants severally, and against the horse nominated by each of the entrants respectively; and (b) that the Club is or may be a winner or a loser of the 2l. on that event - the success or failure of the entrant's horse - for it is of the essence of a wagering contract that one party should win and another lose upon the future uncertain event: see per Cotton L.J. in Thacker v. Hardy (3) and Applegarth v. Colley. (4)

(1) 1 C. P. D. 573.

(2) 3 Bing. N. C. 88.

(3) 4 Q. B. D. 685, 695.

(4) 10 Mee. & W. 723, 734.

I have dealt with the so called stake of 200l.; and the 2l. in each contract is not payable upon a gaming or wagering event, but upon a decision of the defendant only. There is an absence of mutuality under the contract considered as a gaming or wagering contract. Nor can these sums of 2l. be treated as stakes in the hands of the club awaiting and dependent only upon the result of the horse race so as to induce the right to recover payment before the issue is decided or before they have been paid over.

For these reasons I am of opinion that the appeal succeeds, and must be allowed with costs. The order of Clauson J. must be discharged, and a declaration made in the action that the defendant is liable to pay to the plaintiffs as authorized stakeholders for the Newmarket First Spring Meeting, 1928, the two sums of 2l. with liberty to apply.

LAWRENCE L.J. This action is brought on behalf of the Jockey Club for a declaration that the defendant is liable to pay two sums of 2l. each alleged to be due from him by reason of his having nominated a horse for two races called the Peel Handicap and a Long Course Selling Plate, which were advertised in the Racing Calendar of April 12, 1928, to be run at Newmarket on May 3, 1928, under the Rules of Racing. The advertisement stated that nominations could only be made and accepted on the condition that the nominator subjected himself in all respects to the Rules of Racing. The nominations so made by the defendant were duly accepted, but the horse did not run in either race.

The plaintiff's case is that the effect of such nominations and acceptance was that under the terms of the advertisement and Rules of Racing the defendant became legally bound to pay to the plaintiffs, Weatherby & Sons (as the authorized stakeholders), a forfeit of 2l. in respect of the Peel Handicap and an entrance fee of 2l. in respect of the Long Course Selling Plate. Clauson J. held that, subject to the provisions of s. 18 of the Gaming Act, 1845, the effect of the nominations so made and accepted was to constitute two binding contracts between the defendant and the Jockey

Club, whereby the defendant became legally liable to pay the two sums in question as claimed. The main defence to the action is that the two contracts so constituted are contracts by way of gaming or wagering within the enacting part of s. 18 of the Gaming Act, 1845, and are thereby rendered null and void. The learned judge has decided that this defence is well founded, and has dismissed the action. Hence the present appeal.

The relevant provisions of the Rules of Racing relating to the payment and destination of entrance fees, stakes and forfeits are: that in case of plates the entrance fees go to the Race Fund (subject to the provisions of r. 159 as to disposal of surplus), and in case of sweepstakes the entrance fees and forfeits go to the winner or placed horses (r. 1); that the stakeholders shall at the expiration of fifteen days after the meeting render an account and pay over all stakes and added money to the persons entitled (r. 29); that entrance money, forfeits, stakes and arrears must be paid in cash (if so required) to the clerk of the course or authorized stakeholder, and entrance money must (if so required) be paid at the time of entry (r. 105); that entrance money shall go to the race fund of the meeting unless otherwise specified in the conditions of the race and subject to the application of surplus under Part XXII. (r. 106); that the nominator is liable for the entrance money, and that a subscriber to a sweepstakes is liable for the stake or forfeit (r. 108); that prizes, stakes and forfeits in a race belong to the winner, except as otherwise declared in the conditions (r. 155); and that should there be any surplus from entrance or subscription over the advertised value of a plate it shall be divided in the following proportions - namely, one-half of the whole surplus shall go to the Bentinck Benevolent Fund or Rous Memorial Fund, and of the other half two-thirds shall be paid to the second and one-third to the third (r. 159). The effect of these provisions is that the 2l. entrance fee in respect of the Long Course Selling Plate is payable by the defendant to the plaintiffs, Weatherby & Sons, as agents of the Jockey Club,

and goes to its race fund of the Newmarket First Spring Meeting, 1928, and that the 2l. forfeit in respect of the Peel Handicap is payable by the defendant to the plaintiffs, Weatherby & Sons, as stakeholders for the entrants, and goes to the nominators of the winning and second horses. The learned judge has apparently held that under the defendant's contract with the Jockey Club the 2l. forfeit in respect of the Peel Handicap became payable to the Jockey Club for its own use, and that the Jockey Club undertook to pay to the nominators of the winning and second horses in that race (in addition to the added money of 200l.) a sum of money equivalent to the total amount of the stakes and forfeits it should receive in respect of that race. In my opinion that is not the true construction of the contract. It appears plain to me that as the Peel Handicap was a sweepstakes, all the stakes and forfeits payable by the entrants for that race (including the defendant's 2l. forfeit) had, under the Rules of Racing, to be deposited with the plaintiffs, Weatherby & Sons, as stakeholders for the depositors and not as agents for the Jockey Club, and that the Jockey Club had no beneficial interest whatever in such stakes or forfeits.

The grounds upon which the learned judge held that both contracts were wagering contracts as between the Jockey Club and the defendant were that as to the Peel Handicap the defendant on the issue of that race stood to lose his entrance money or forfeit, and to win, if his horse came in first, 200 sovereigns added money and a sum equal to the amount of the entrance fees and forfeits (less 30 sovereigns), or, if his horse came in second, 30 sovereigns, and the Jockey Club stood to lose 200 sovereigns added money and to win the defendant's entrance fee or forfeit; and that as regards the Long Course Selling Plate the defendant, on the issue of the race, stood to lose his entrance fee and to win the value of the Plate, and the Jockey Club stood to lose the value of the Plate and to win the defendant's entrance fee. With the greatest respect for the learned judge I am unable to agree with this view of the effect of the two contracts. For the reasons stated hereafter I am of opinion that in

neither contract was there any element of gaming or wagering as between the Jockey Club and the defendant.

Before considering this question further I will deal with a point made by Mr. Archer on behalf of the defendant. As I understood him, he contended that as the expression in s. 18 of the Gaming Act, 1845, was contracts "by way of gaming or wagering" and not contracts "for gaming or wagering," it was not essential for the purpose of bringing a contract within the section that the contract should itself be a gaming or wagering contract between the parties to it, and that although the two contracts in the present case, if taken singly and looked upon as isolated transactions, might not be gaming or wagering contracts yet, as they were made by the Jockey Club solely because it was entering into similar contracts with other racehorse owners in connection with the race meeting at which the two races in question were run, and as the transaction in which the Jockey Club was engaged, and of which the contracts formed part, was one concerned with the provision of money on the part both of the Jockey Club and of the entrants for the races, the destination of which money depended upon the result of the races, the contracts were contracts by way of gaming or wagering. In my opinion the conclusive answer to this contention is that the expression contracts "by way of" gaming or wagering in s. 18 means contracts "for" gaming and wagering, and relates only to contracts which are of themselves contracts by way of gaming and wagering: see per Cleasby B. in Beeston v. Beeston (1); per Lindley J. in Thacker v. Hardy (2); and per Hawkins J. in Carlill v. Carbolic Smoke Ball Co. (3) Although the surrounding circumstances relevant to the question whether a particular contract (whatever its form may be) is a gaming or wagering contract must, of course, be considered, yet the crucial test for determining whether or not it comes within the section is whether when looked at in the light of the surrounding circumstances it is a contract which contains the element of gaming and wagering as

(1) (1875) 1 Ex. D. 13, 15.

(2) 4 Q. B. D. 685.

(3) [1892] 2 Q. B. 484.

between the parties to it. The decision in Thacker v. Hardy (1) shows that a contract does not become a gaming or wagering contract because one of the parties to it enters into it with the intention of gaming or wagering unless the other party takes a part in such gaming or wagering, therefore, neither the fact that the defendant may have entered into the contracts with the intention of gaming or wagering with other persons, nor the fact that the Jockey Club has entered into the contracts with the defendant and into other contracts of a similar nature with third parties with the object of promoting gaming or wagering as between the defendant and such third parties, operates to make the contracts with the defendant gaming or wagering contracts as between him and the Jockey Club. In my judgment the only relevant inquiries in the present case are, first, whether the contracts in question were contracts by way of gaming or wagering as between the Jockey Club and the defendant; and, secondly, if they were not, whether there is any other obstacle which prevents the plaintiffs from enforcing them.

In order to determine the true nature of the contracts it is material to have regard to the position of the two contracting parties and to the considerations moving thereunder from the one to the other. The Jockey Club, as part of its activities, carries on business at Newmarket similar to that carried on elsewhere in England by many racecourse companies. It promotes and organizes horse races on Newmarket Heath, and invites racehorse owners to enter their horses for such races. It maintains a properly equipped racecourse, a staff of officials to manage the racing, and provides other facilities and accommodation (such as the free stabling, forage and lads' sleeping accommodation mentioned in the present contracts) for the purpose of enabling racehorse owners to run their horses at its race meetings. As an inducement to such owners to enter their horses for the races it offers money prizes and promotes sweepstakes. It is essential for the successful carrying on of its business that the race meetings should be well attended by the public, and in order to secure such

(1) 4 Q. B. D. 685.

attendance it is necessary to have an adequate entry for every race. It is obvious that for the proper management of its race meetings the Jockey Club must know beforehand how many and what horses are going to run in each race. For that purpose entry lists are kept and closed in due time before the meeting. It is the established custom of the Jockey Club to charge a small entrance fee for entering a horse for a Plate, which entrance fee under r. 158 of the Rules of Racing cannot exceed 2 per cent. of the advertised value of the Plate. The defendant is a racehorse owner, and as such it is of importance to him that he should have opportunities of testing the speed and endurance of his horses against other racehorses on properly kept racecourses at race meetings efficiently conducted under the Rules of Racing, so as to ensure that his horses are tested under proper and recognized conditions.

Bearing in mind the position of the respective parties as thus described the next step is to ascertain what is the real consideration moving from each party to the other under the terms of the two contracts in question. If I am right in my construction of the contract relating to the Peel Handicap there is no money consideration moving to the Jockey Club from the defendant under that contract, and the only money consideration so moving under the contract relating to the Selling Plate is the entrance fee of 2l. The main consideration so moving under each of the two contracts is that the defendant engages his horse to run in the race to which it relates, such engagement being, as already explained, a matter of considerable importance to the Jockey Club. The main consideration (besides the value of the prize and added money) moving from the Jockey Club to the defendant under each contract is that the Jockey Club binds itself to hold the race for which the defendant has entered his horse at the time and place and under the conditions advertised, and to allow him to run his horse on its racecourse against any other horses that may be entered for that race. Further, in the case of the Selling Plate the defendant secures the selling and claiming advantages given

to entrants under the Rules of Racing. In view of the circumstances under which and the considerations for which the contracts were entered into, I am of opinion that they contain no gaming or wagering element as between the Jockey Club and the defendant.

The primary meaning of "wagering" is staking or hazarding something of value on the issue of an uncertain event or on some question to be decided, and its secondary and narrower meaning is betting: see The Oxford English Dictionary. In Carlill's case (1) Hawkins J. has given what purports to be an exhaustive definition of the expression "contracts by way of wagering" in s. 18 of the Gaming Act, 1845, which definition was apparently accepted by the Court of Appeal. According to this definition (which I will not repeat, as it has been quoted at length by the Master of the Rolls) the word "wagering" in that expression bears the narrower meaning of "betting," and three conditions have to be complied with in order to constitute a contract by way of wagering within the section - namely: (1.) there must be two persons or sides who profess to hold opposite views touching the issue of a future uncertain event; (2.) the two persons or sides must mutually agree that dependent upon the determination of that event one of them shall win from the other, and that the other shall pay or hand over to him or them a sum of money or stake; and (3.) neither of the contracting parties must have any other interest in that contract than the sum or stake he or they will win or lose, there being no other real consideration for the making of such contract by either of the parties. Clauson J. has adopted this definition of a contract by way of wagering, and has held that both the contracts in the present case fall within it. My reasons for differing from the learned judge are as follows: In the first place the Jockey Club is not interested in the result of either of the races, and it is a matter of complete indifference to it whether the horse of the defendant or that of any other entrant wins or loses. In the matter of the prize for the Plate and of the added

(1) [1892] 2 Q. B. 484, 490.

money for the sweepstakes the Jockey Club is in the position of a third party desirous of encouraging racing on its race-course, and for that reason providing prizes to be competed for by racehorse owners. The provision of such prizes is in no way dependent upon the result of the races; the prizes are given in any event. It cannot therefore be said that the Jockey Club is staking its money on the result of the races, which is an essential element of a wagering contract. In the next place the payment by the defendant of the entrance fee for the plate is in no way dependent upon the result of the race. It has to be paid by him whether his horse wins or loses and whether it runs in the race or not. When paid it becomes the property of the Jockey Club, and is not returned to the winner, who receives the prize and nothing more. As between the defendant and the Jockey Club therefore the entrance fee is not a stake hazarded upon the result of the race, and neither party stands to "win" it or "lose" it from or to the other dependent upon a future uncertain event. As regards the forfeit in respect of the sweepstakes the Jockey Club acquires no interest in it either dependent upon the result of the race or otherwise, and the defendant stands to lose it not to the Jockey Club, but to the winner of the race who is no party to the contract. In the third place both the Jockey Club and the defendant had, besides their interests in the prizes, entrance fee and stakes, the other substantial interests under the contract to which I have already referred. But even apart from any such interests and regarded from the monetary point of view only it cannot be said of the two contracting parties that they had mutually agreed that dependent upon the determination of a future uncertain event one of them should win from the other, and that other should pay over to him any sum of money. The cases of Diggle v. Higgs (1) and Trimble v. Hill (2), which were relied upon by the defendant, are in my opinion clearly distinguishable from the present case on the facts. In both these cases the agreements were held to be bets made by the contracting parties with each other, and

(1) 2 Ex. D. 422.

(2) 5 App. Cas. 342.

these decisions in effect amount to this, that a bet is none the less a bet because the parties express it in the form of a contract to make a contribution for or towards a prize to be awarded to the winner.

Having stated the reasons which have led me to the conclusion that the learned judge was mistaken in holding that the two contracts in the present case were contracts by way of wagering as between the Jockey Club and the defendant within the meaning of s. 18, I will now pass on to the reasons which have led me to the conclusion that the contracts were not contracts by way of gaming as between the parties within the section. The word "gaming" as used in the Gaming Acts in my opinion means playing a game for stakes hazarded by the players. It would appear that in Welton v. Ruffles (1) the Divisional Court gave a more extended meaning to "gaming" as used in the Licensing Acts, and held that it applied to a game played for money or money's worth where the players had paid an entrance fee for joining in the game to the licensee, but had not staked any money on the result of the game, and where the prize for which they were playing consisted of a copper kettle provided by the brewers. As, however, no argument has been addressed to this Court as to the precise meaning of the word "gaming" in s. 18, or as to the existence of any distinction between gaming within the Gaming Acts and gaming within the Licensing Acts, and as it is immaterial for the purposes of this case whether the word "gaming" bears such an extended meaning or not, I prefer not to express any opinion as to the correctness or otherwise of the decision in Welton v. Rules. (1) It is settled that "gaming" includes playing at games of skill as well as at games of chance: Dyson v. Mason (2), and that horse racing is a game within the meaning of the Gaming Acts: Applegarth v. Colley. (3) The expression "contract by way of gaming" in s. 18 of the Gaming Act, 1845, in my opinion means the contract resulting from the mutual promises which the

(1) [1920] 1 K. B. 226.

(2) 22 Q. B. D. 351.

(3) 10 Mee. & W. 723.

players necessarily make (expressly or by implication) in playing for stakes, as to the transfer of such stakes upon the result of the game: see Halsbury's Laws of England, vol. xv., p. 266. If that be the right conception of a gaming contract it follows that neither of the two contracts in question is a gaming contract as between the parties, for the simple reason that the Jockey Club did not join in either of the games nor did it stake any money or money's worth upon the result of either of the games.

In the result I have come to the conclusion, for the reasons stated, that neither the fact that the Jockey Club, besides promoting and organizing the Selling Plate and the sweepstakes, agreed to provide the prize and added money for those races, nor the fact that the entrants agreed to pay an entrance fee for the Plate to the Jockey Club and to deposit their stakes for the sweepstakes with the authorized stakeholders operated to constitute the contracts made by the Jockey Club with the entrants contracts by way of gaming or wagering as between the Jockey Club and such entrants. In these circumstances I can see no obstacle to prevent the plaintiffs from obtaining the relief which they seek as regards the 2l. entrance fee for the Long Course Selling Plate, and am therefore of opinion that the appeal ought to be allowed so far as this fee is concerned.

As regards the 2l. forfeit payable in respect of the Peel Handicap, however, I am of opinion that different considerations apply. The Peel Handicap was a game played for stakes hazarded by the players. By entering his horse for this race the defendant agreed with the Jockey Club (as the promoters of the race) to join with the other entrants in playing a game for stakes hazarded by the players, which agreement meant, not only that he would run his horse in the race, but also that he would join with his fellow players in the mutual promises which all the players taking part in such a game by necessary implication make between themselves, that the stakes for which they were going to play should be transferred to the winner of the race; in other words, it involved that the defendant should enter into an agreement by

way of gaming with the other entrants for the sweepstakes. The fact that each of the entrants had entered his horse for the sweepstakes on the invitation of the Jockey Club and without prearrangement with his co-entrants does not, in my opinion, alter the nature of the game which the entrants were going to play with each other or the character of the appointment of the plaintiffs, Weatherby & Sons, as stakeholders for the players. In seeking to compel the defendant to pay his stake to the plaintiffs, Weatherby & Sons, for the purpose of its being immediately handed over by them to the winner of the Peel Handicap, the plaintiffs are in truth endeavouring to enforce for the benefit and on behalf of that winner the mutual promises necessarily implied as between the players who had agreed to enter for the game that the stakes for which they were going to play should, after the race, be transferred to the winner. The plaintiffs, in support of their claim, plead that the forfeit was payable to the plaintiffs, Weatherby & Sons, either as principals or as agents of the Jockey Club or as trustees for the winner. The defendant, on the other hand, pleads that it was payable to the plaintiffs, Weatherby & Sons, as potential stakeholders. In my opinion the defendant's plea is clearly right. It is plain that under the contract neither the plaintiffs, Weatherby & Sons, nor the Jockey Club acquired any beneficial interest in the stakes, which the entrants were hazarding upon the result of the race, and in my opinion the plaintiffs, Weatherby & Sons, were not by the terms of the contract constituted agents or trustees for the winners, but were merely named as stakeholders for the entrants. As such stakeholders they were bound under r. 29 to account for and pay over all the stakes to the winner. It is well settled that a stakeholder is the agent of each depositor with authority to pay over the stake to the winner, which authority, however, may be revoked at any time before the stakeholder had actually paid over the stake to the winner. It follows from this that the plaintiffs, Weatherby & Sons, as potential stakeholders, cannot sue the defendant for his stake, and in my opinion it equally follows that the Jockey Club cannot compel the

defendant to deposit his stake with the stakeholders, the ground in both cases being that the defendant could at any time revoke the authority of the stakeholders and obtain a return of his stake: see Diggle v. Higgs. (1) The only case which I have been able to find in which a potential stakeholder has endeavoured to establish a right to obtain payment of an unpaid stake is Charlton v. Hill (2), where the Clerk of the Course at the Lichfield Races of 1830 sought to set off an unpaid stake payable to Messrs. Weatherby in respect of an entry for a two-year-old stake to be run at the same meeting against a stake which the plaintiff had won in another race at that meeting, and Patteson J. held that there was no such right of set-off on the ground that the Clerk of the Course was a mere stakeholder, and could not have brought an action against the plaintiff for the unpaid stake.

For the reasons stated, I am of opinion that neither the Jockey Club nor the plaintiffs, Weatherby & Sons, are entitled to the relief claimed in this action in respect of the 2l. forfeit for the Peel Handicap.

Assuming, however, contrary to my opinion, that the contract had the effect of constituting the plaintiffs, Weatherby & Sons, or the Jockey Club, agents or trustees for the winner of the Peel Handicap, the result would be that they would thereby have become parties to the gaming contract between the entrants. As such agents or trustees the plaintiffs could only sue (if at all) in right of the winner, and any defence available against such winner would be available against them. The winner could only recover the forfeit from the defendant on the footing that the contract as to the deposit and transfer of the stake came within the proviso of s. 18 as an agreement to subscribe or contribute a sum of money for or towards a prize to be awarded to him as winner. Having regard to the decision in Diggle v. Higgs (1) (by which this Court is bound), I am of opinion that such a contract would not come within the proviso; the principle of that decision being that if a contract falls within the enacting part of the section the proviso has no application

(1) 2 Ex. D. 422.

(2) (1831) 5 Car. & P. 147.

to it. The result is that if the contract purports to constitute the plaintiffs, Weatherby & Sons, or the Jockey Club, agents or trustees for the winner it would in my opinion be null and void, and neither the winner nor his agent or trustee could enforce the deposit or transfer of the defendant's stake. Were it otherwise, every gaming contract could be rendered valid and enforceable by the players entering into a contract with the promoters of the game or some other third party and appointing him the agent or trustee for the winner to recover and hand over the stakes hazarded by them.

There only remains the question whether the 2l. forfeit stands in any different position from that of the full stake of 5l., which the defendant agreed to contribute if his horse should take part in the race. There are two cases relating to wagering contracts in which the question of forfeits has been considered. In Irwin v. Osborne (1), where the parties had agreed upon a match between two horses for a stake of 100l. a side, either party to forfeit the 100l. in default of his horse running in the match, it was held by the Irish Court of Queen's Bench that such a forfeit could not be recovered. Lefroy C.J. in his judgment stated: "If that agreement" (that is, the agreement for the match) "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 its non-performance." Although the learned Chief Justice uses the expressions "legal" and "illegal" in this passage it is plain from the rest of his judgment that he thereby meant "valid" and "void," as the sole question in the case was whether the agreement was void under s. 18 of the Gaming Act, 1845, and no question of illegality arose. In Daintree v. Hutchinson (2), where the parties had agreed upon a coursing match between two greyhounds for 100l. a side, either party to forfeit the 100l. in default of his greyhound running in the match, it was held that the agreement for the match was illegal, and that the payment of the forfeit could therefore not be enforced. In the course of the argument Alderson B. put this pertinent

(1) (1856) 5 Ir. C. L. 404, 406.

(2) 10 Mee. & W. 85.

question to counsel (1): "Can a contract which, if carried out, could not be enforced, be enforced so far as to make a contracting party pay for not carrying it out?" The right answer to this question in my opinion is in the negative. Under the contract in the present case the defendant engages his horse for the sweepstakes, and agrees to put up a stake of 5l., but if his horse does not run in the race he agrees to forfeit 2l., part of the 5l. stake. In other words the contract is what was described in Daintree v. Hutchinson (2) as a P. P. (play or pay) contract. Although the facts in both the cases I have mentioned differ materially from those in the present case, as here we are concerned with a sweepstakes between more than two persons and no question of illegality arises, yet the principle upon which they were decided in my opinion governs the decision here. A forfeit such as the one in question, which is to form part of the stakes and go to the winner, is (as the name implies) in the nature of a penalty or damages for non-performance of the implied agreement made with the other entrants for the sweepstakes, and if that agreement be unenforceable it cannot be enforced so far as to make the defendant pay a forfeit for not carrying it out.

In the result for the reasons stated I am of opinion that the plaintiffs are not entitled to any relief in respect to the 2l. forfeit, and that the appeal as to this part of the case ought to be dismissed.

RUSSELL L.J. In this action the Jockey Club sue the defendant to recover payment of the sum of 4l. alleged to be due from him, as to 2l. as the result of his having entered his horse "Master Michael" for the Peel Handicap to be run at the Newmarket First Spring Meeting last year, and as to the remaining 2l. as the result of his having entered the same horse for the Long Course Selling Plate to be run at the same meeting. The only defence raised and argued was that the contracts made by the defendant in nominating his horse for those races were "contracts by way of gaming or wagering" within s. 18 of the Gaming Act, 1845.

(1) 10 Mee. & W. 97.

(2) 10 Mee. & W. 85.

Clauson J. held this to be the case, and dismissed the action. The plaintiffs appeal.

The first thing to do is to ascertain what in regard to each race was the contract and between whom was it made; and I will deal in the first place with the Peel Handicap.

I may say at once that I agree with the learned judge that the parties to the contracts are the defendant on the one hand and the Jockey Club on the other. There is nothing in the Rules of Racing or other documents to suggest or justify the view that the nominators made any contract with each other collectively or individually. This appeal must in my opinion be decided upon that footing.

The conditions governing the Peel Handicap were advertised in the Racing Calendar of April 12, 1928, and are set out in para. 2 of the statement of claim. They incorporate the Rules of Racing. By that advertisement the Jockey Club invites owners to nominate horses for that race upon the stated conditions, one of which is a liability to pay to the Jockey Club the sum of 5l. if the horse nominated starts in the race, or the sum of 2l. only if the horse does not start. At this point two views are possible, but it is I think immaterial which is adopted. Either the advertisement in the Racing Calendar is an offer by the Jockey Club, which becomes a contract by the acceptance of the nominator in making the nomination, or the advertisement is an invitation to the horse owners to make an offer by the nomination which becomes a contract by the acceptance of the nomination. The phrase "nominations can only be made and accepted on the condition," etc., lends colour perhaps to the latter view.

However that may be, a contract was here established between the defendant and the Jockey Club. The terms of the contract were in my opinion as follows: the defendant on his part undertook to pay 5l. for the right to run "Master Michael" over the Peel Course in the Peel Handicap on May 3, 1928, carrying the weight allotted by the handicapper, the defendant's liability to be reduced to 2l. in the event of his not exercising that right. The Jockey Club on their part

undertook: (1.) To run the Peel Handicap on the said date. (2.) To allow the defendant to run "Master Michael" over their Peel Course in the Peel Handicap as aforesaid. (3.) To pay to the nominator whose horse wins the race (a) a sum of 200l., and (b) the entrance moneys to be paid by the various nominators less a sum of 30l. (4.) To pay to the nominator whose horse is placed second the said sum of 30l. Those appear to me to be the promises on either side in this contract, which however is subject to an overriding provision (which in the present case never operated), that if fewer than 15 entries were obtained the Jockey Club might cancel the race and with it (under r. 169) the defendant's pecuniary liability. This statement of the contract differs from the view of Clauson J. only in this respect: that I think that the true promise by the Jockey Club is to pay the added money and entrance fees to the nominators of the first and second horses, although no doubt that involves a promise to pay the defendant if he should answer either description.

Now is that a contract by way of wagering? In making that contract have the Jockey Club and the defendant made a bet between themselves?

To the unsophisticated racing man (if such there be) I should think that nothing less like a bet can well be imagined. It is payment of entrance money to entitle an owner to compete with other owners for a prize built up in part by entrance fees, the winning of the prize to be determined not by chance but by the skill and merit of horse and jockey combined. Lord Falmouth, the most prominent and successful patron of the turf in the second half of last century, used to pride himself on the fact that (with the exception of a single sixpence wagered with the wife of his trainer) he had never made a bet on a horse race. If the defendant's counsel are correct in their contention here, he was sadly mistaken; for, according to them, he spent his life in betting with the various racing executives in this country and elsewhere. We must see if they are right, for it may be that the microscope of the law is enabled and bound to detect some betting bacillus lurking within, which converts this apparently innocent

bargain into "a contract by way of gaming or wagering," and which turns the 2l. which the defendant promised in the event which happened to pay into "a sum of money .... alleged to be won upon a wager" for the recovery of which the stewards are forbidden to bring or maintain any suit.

Let us clear our minds of the betting atmosphere which surrounds all horse racing, and affirm a few relevant propositions. There is nothing illegal in horse racing: it is a lawful sport. There is nothing illegal in betting per se. There is all the difference in the world between a club sweepstakes on the result of the Derby and a sweepstakes horse race as defined in the Rules of Racing. In each no doubt the winner is ascertained by the result of an uncertain event, but in the case of the former the winner is ascertained by chance, i.e., the luck of the draw not the result of the race (for the result is the same whether the draw is made before or after the race); in the case of the latter the winner is ascertained not by chance, but by merit of performance. The former is a lottery; the latter is not. Finally, but for the presence in the Gaming Act, 1845, of s. 18, there can be no doubt that the liability of the defendant to pay his 2l. is enforceable here. The defence accordingly depends wholly upon the provisions contained in that section. It runs as follows: "All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit 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: Provided always, 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."

At the outset one is struck by the proviso which (apart from authority) one would have thought qualified the previous part of the section and exempted from its operation a

transaction which might otherwise have been subject to it, if the transaction could properly be said to fall within the language of the proviso. Such a view fits in with the usual function of a proviso and with the words which here occur, "shall not be deemed to apply." It is said however that the Court of Appeal has definitely decided to the contrary in Diggle v. Higgs (1), and has laid it down, as a matter of construction of this section, that if a transaction can be made to fall within the earlier part of the section the proviso has no operation on it at all, and that the proviso only applies to cases which never did or could fall within the earlier words of the section. If this be the true view of Diggle v. Higgs (1) it binds us, and only the House of Lords can effectively entertain a different opinion; but Diggle v. Higgs (1) needs careful scrutiny. The facts were such that the transaction was a bet pure and simple between the two foot racers. Diggle promised to pay Simonite 200l. upon one possible issue of an uncertain event; Simonite promised to pay Diggle 200l. upon the other possible issue of the uncertain event. That was quite clearly a contract for a bet. The only matter alleged to bring the transaction within the proviso was that each 200l. was deposited with a stakeholder, and so it was said the transaction was merely a subscription of sums to a money prize for the winner. It was held that the contract was clearly a wager, and that the proviso did not take it out of the enactment, because the deposit of the money in the hands of the stakeholder did not turn a bet into an agreement to contribute to a money prize. As I read the case the decision was not (as suggested in argument here) that the proviso only applies to contributions by non-competitors, but that the facts of the particular case (there being only the two competitors) fell clearly within the words of the section and did not fall within the words of the proviso at all.

That is what I think Lord Cairns means when he says (2) that the Legislature never intended to say that if the wager is in the form of a subscription or contribution the winner

(1) 2 Ex. D. 422.

(2) 2 Ex. D. 422, 426.

may recover it. In my opinion there is nothing in the decision in Diggle v. Higgs (1) which excludes what I believe is the true operation of the proviso - namely, that while it does not enable a man to recover that which is nothing but a wager, though it masquerades as a prize, it does exclude from the operation of the section what are prizes, though composed in part of stakes contributed by competitors. In other words, I should like to decide the present case upon the simple ground that, even if the contributions by competitors do introduce some element of gaming or wagering into the transaction, which would prima facie defeat this action under s. 18, nevertheless the proviso operates according to its tenor, and the section does not invalidate the contract (whatever it be) or disentitle the plaintiffs to sue. I realize however, more particularly in view of what was said in Trimble v. Hill (2), that a decision on those lines is probably open only to the House of Lords. I realize also that the language used in the judgments in Diggle v. Higgs (3) may justify a wider view of the effect of that decision. I will therefore assume that we must act upon the view that if a transaction once falls within the words "contracts or agreements .... by way of gaming or wagering" the proviso can never save it.

Does the defendant's contract in relation to the Peel Handicap fall within those words? Some subtle distinction was attempted to be drawn before us between "a contract of gaming or wagering" and "a contract by way of gaming or wagering." I am not equal to this. To me the two forms of expression carry the same meaning. To me the first question for solution here is, did the Jockey Club and the defendant by their contract make a bet with each other?

To define a bet was never an easy task until the job was tackled by Hawkins J. after careful consideration of the relevant authorities. The result appears in his judgment in Carlill v. Carbolic Smoke Ball Co. (4); every word is thought out and deserves careful attention. The definition has been

(1) 2 Ex. D. 422, 426.

(2) 5 App. Cas. 342.

(3) 2 Ex. D. 422.

(4) [1892] 2 Q. B. 484, 490.

cited over and over again without so far as I know any judicial criticism. I need not read the passage, because it has already been read.

I draw attention to certain features stated to be essential to the existence of a wagering contract.

There must be two persons (or groups of persons) to the bet. One (the loser) must be bound to pay money (or money's worth) to the other (the winner) if an event happens. The other (the loser) must be bound to pay money (or money's worth) to the one (the winner) if the event does not happen. The bet is decided according as one event does or does not happen. The commonest example is the bookmaker who lays say 5 to 1 in sovereigns to A. B., a member of the public, against a particular horse for a race. In that case A. B. is backing the horse, and is being promised by the bookmaker 5l. if the positive event happens of the horse winning; the bookmaker is backing the field, and A. B. is promising to pay him 1l. if the negative event happens of the horse backed by A. B. not winning. I omit the consideration of a case of a dead heat to which special betting rules apply by which each wins and loses a moiety of the bet.

Let me now try and fit these essential features to the defendant's contract in relation to the Peel Handicap. The alleged wager falls to be decided according to the positive event of the defendant's horse winning or the negative event of his horse not winning. If the defendant's horse wins he gets the first prize, which consists of (a) the added money, and (b) the total entrance moneys less 30l. In one view he gets his 5l. back, in that (a) plus (b) will exceed 5l. in value: but from another point of view part of his entrance money remains behind to make up the 30l. But do the Jockey Club, by reason of the event happening that the defendant's horse wins, lose anything? In my opinion they do not, and cannot, under their contract with the defendant, lose anything by reason of that event. Their contract is to pay away 200l. and the entrance fees less 30l. to the winner of the race. Their liability to lose or part with the 200l. is absolute whichever way the two events issue, and is in no

way contingent upon or affected by the fact of the defendant nominating the winner.

If the defendant's horse does not win the matter stands thus. The defendant has to pay his 5l. or 2l. as the case may be. To that extent he is out of pocket; but he has not paid or become liable to pay the money because his horse failed to win. He paid, or became liable to pay it, as the price of that which he in fact obtained - namely, the right to run his horse in the race.

Further, have the Jockey Club won anything? So far as I can see, not a sixpence. By the terms of their contract with the defendant the moneys paid by him are earmarked for the nominators of the first and second horses, and in addition by the same contract they have agreed to provide 200l. for the winner.

The essential features of a wagering contract are absent, for although under the terms of the contract it may be said that in one event the defendant wins, in the other event he does not really lose; and it must be added that whichever way the event issues the Jockey Club can never win. The result of this is, that the contract between the Jockey Club and the defendant in relation to the Peel Handicap is not a contract by way of wagering within s. 18.

But it was suggested, rather than argued, before us, that the true contract was not a bipartite contract between the defendant and the Jockey Club, but a multipartite contract between the defendant and the other nominators, and also (but I am not certain of this) the Jockey Club. In his judgment Clauson J. says that he was not sure whether counsel for the defendant disputed that the contract was one between the Jockey Club and the defendant. I have read the shorthand notes of the proceedings below, and I can find no argument based on the contrary view, nor do I recollect any such argument before us. But when the suggestion was made of a multipartite wagering contract, I invited counsel to state in terms of wagers the contracts alleged to be made by the nominators inter se. I could get no answer; nor was I surprised. The difficulties are obvious. Let me

suppose that the defendant contracts with all the other nominators jointly; what is the bet made by him with them? If the defendant's horse does not win, then I suppose the defendant loses the alleged bet; but do the other parties to the alleged bet win it? Not at all. One of them only may be said to win, but the other persons who have made the alleged bet with the defendant (who has lost his bet) must rank as losers also. Let me suppose that the defendant contracts with each of the other nominators separately. What is the bet made by him with each? If the defendant's horse does not win the defendant loses the alleged bet; but does the other party to the bet win it? Only if his horse is the one which wins the race, but not otherwise. If the horse of one of the other nominators wins the race, the result of the "bet" which I am considering is that nothing is won or lost by either party to the alleged bet.

Let me try to express in words the alleged contract between the defendant and each fellow nominator separately. It is not easy, but I think it may be done thus if we omit the complication introduced by the existence of the prize of 30l. for the owner of the second horse: The defendant promises A. B. that if A. B.'s horse wins the race he, the defendant, will pay to the Jockey Club to the use of A. B. 5l. (if the defendant starts a horse in the race) or 2l. (if he does not). A. B. promises the defendant that if the defendant's horse wins the race, he, A. B., will pay to the Jockey Club to the use of the defendant 5l. (if A. B. starts a horse in the race) or 2l. (if he does not). These are two contingent promises, each of which may be the consideration for the other - but they do not constitute a bet. The failure of one contingency does not carry with it the fulfilment of the other, for a third party - namely, C. D. - may be the winner.

Let me try to clothe the defendant's promise under this contract in the language of a bet and test it that way. The defendant lays A. B. X to Y against A. B.'s horse winning the race. If X and Y represent money or money's worth, that is a bet. In this case X must be 5l. or 2l., according as the defendant does or does not himself run a horse in the

race. But what is Y? Y is and can only be nothing. For no liability arises in A. B. to pay anything to the use of the defendant in the event of A. B. failing to win the race. A. B.'s only liability arises under the supposed promise by him to pay 5l. or 2l. to the defendant, which is contingent not on A. B. losing the race, but on the defendant winning it. If a man lays another 2l. to nothing against a horse, there is no bet; there is only a contingent promise to pay 2l., which may or may not be nudum pactum.

The truth is that you cannot have more than two parties or two sides to a bet. You may have a multipartite agreement to contribute to a sweepstakes (which may be illegal as a lottery if the winner is determined by chance, but not if the winner is determined by skill), but you cannot have a multipartite agreement for a bet unless the numerous parties are divided into two sides, of which one wins or the other wins, according to whether an uncertain event does or does not happen.

Take a simple case of five horse owners each agreeing to contribute 10l. for a horse race to be run by their five horses, the owner of the winning horse to take the whole 50l. The only way in which that transaction could, as it seems to me, be twisted into a wager or series of wagers is to say that each one of the five has made a separate bet with each one of the other four in these terms: "I bet you a level 10l. that my horse will beat yours, one to win." The last three words must be added, otherwise the owner of the horse which finished last would find himself saddled with a liability of 40l., not 10l. The addition, however, of the last three words makes the wager a contingent wager. But are the results as to pecuniary liability identical with the results of the promises to subscribe 10l. each? If one horse wins outright I think they are. Each of the four losers loses one contingent bet of a level 10l., as to his three other bets, the contingency does not materialize. Suppose, however, that A.'s horse dead heats for first place with B.'s horse and the dead heat is not run off. How then? Have A. and B. both won within the meaning of the bets, so that C., D. and E. each loses his alleged

bets of 10l. with A. and B.? Or does neither A. nor B. win the race within the meaning of the bets, so that no money passes under the bets at all? Or do the rules of betting as to halving each bet apply, with the same resulting cancellation of liability all round? The answer to each question in fact is "No" - because the stakes are divided. This establishes the objection to twisting a transaction which is not a wager, and was never intended to be a wager, into a wager, and shows how in so doing you may achieve a result never intended by the parties.

I am aware that certain text writers affirm that in cases where more than two competitors agree to compete for a prize made up of money subscribed by themselves, the agreement is a wager. Mr. Stutfield (Law relating to Betting, Time-Bargains and Gaming, 3rd ed., p. 37) does, and cites as authority for the statement the case of Bentinck v. Connop. (1) I can find no such decision in Bentinck v. Connop. (1) That case was decided on demurrer to several pleas, to a declaration in assumpsit. All that it decided was that a declaration, which alleged an agreement to contribute to a sweepstake sums in excess of 100l., was insufficient, in view of s. 3 of 16 Car. 2, c. 7. That section provided that a person playing at certain games (which include horse racing) for money, and losing on credit more than 100l. at one time, was not compellable to pay. I can find nothing in the case to justify Mr. Stutfield's statement: "it was held that such an agreement was a wager and nothing more." The matter does not seem to have been treated as a bet at all, but as money lost on credit at playing a game.

Another text writer who takes the same view is the learned author of the title, "Gaming and Wagering," in Halsbury's Laws of England, vol. xvi., p. 267. He cites an additional authority - namely, Applegarth v. Colley. (2) In that case the winner of a sweepstake horse race sued the person with whom had been deposited the subscriptions (2l. each) of seven owners, and added money 15l. The total amount of the prize was accordingly less than 50l. The defendant pleaded that fact

(1) 5 Q. B. 693.

(2) 10 Mee. & W. 723.

as a defence, relying apparently on s. 2 of 13 Geo. 2, c. 19, which had in fact been repealed. The case was argued on demurrer, the defendant relying not of course on the repealed section, but on the following general grounds: (1.) that the whole transaction was illegal under 16 Car. 2, c. 7, and 9 Anne, c. 14; and (2.) that by the joint effect of the statute of Anne and 5 & 6 Will. 4, c. 41, all contracts for payment of money won at play were avoided. The Court decided against the defendant on both points. They held on the first point that there was no illegality. They held on the second point that the effect of the two statutes was to avoid both contract and security for future payment of money won at playing a game, but that in the case before the Court, the money having been deposited, there was no question of credit or future payment. The plaintiff accordingly got judgment on the demurrer. That is the whole decision in the case. It is true that Rolfe B. at the end of the judgment (1) in referring to a race for a sum "raised by the parties themselves" uses the language "that being in truth a wager." That is a remark made purely by the way, and has nothing to do with the points argued or decided. The case was in fact decided on the footing not of the action being one to enforce a bet, but to recover money won at playing a game.

Notwithstanding the statements of text writers, I am of opinion that you cannot have more than two parties or sides to a wager. That was, I think, clearly the view of the judges who decided Batty v. Marriott. (2) Wilde C.J. uses the following language (3): "The difficulty is in saying, when two persons, and only two, mutually agree to put down a stake, the whole of which is to be paid over to the winner, in what respect that differs from a wager." Coltman J. (4) says: "It is like a wager, because there are only two parties to it."

Although the case was argued before us on the footing of the existence of an agreement for a bet, one must not overlook the word in the section "gaming." Was there, if not a

(1) 10 Mee. & W. 734.

(2) 5 C. B. 818.

(3) 5 C. B. 828.

(4) 5 C. B. 831.

contract "by way of wagering," a contract "by way of gaming"? It is not easy to say what gaming exactly means in the section when opposed to "wagering" - but I think this is clear: it can only refer either to gambling, or to playing games for money or money's worth or to both. The old statute of Charles II. is probably the ancestor of this antithetical or alternative phrase. In that statute a distinction is drawn between persons who play at the games referred to and persons who bet on the sides or hands of such as do play thereat.

Here there is no gamble for the prize, for the prize is won not by chance, but by merit or skill. There is undoubtedly gaming in the other sense in that the owners of the starting horses play together at the game of horse racing for money or money's worth. But as I have already indicated, the defendant's contracts here are with the Jockey Club, and between the Jockey Club and the defendant there is no gaming in that sense. The Jockey Club are not playing with the defendant at the game of horse racing. The contract between the defendant and the Jockey Club cannot, I think, be a contract by way of gaming within the relevant section.

It may be said, and with truth, that these moneys if recovered by the Jockey Club will enure for the benefit of the winner or will recoup the Jockey Club for moneys already paid over to the winner. But the winner could not in my view sue the defendant, because no contract exists between them; moreover, the Jockey Club are not suing at the instance of the winner, nor could they in pursuance of any term of their contract with the winner be compelled to sue. They are suing only to enforce their own contract with the defendant, by which the defendant while acquiring the right to run his horse in the Peel Handicap did not bind himself so to do. It is not possible in my opinion to say that there existed here any contract by way of gaming.

As regards Welton v. Ruffles (1) the Divisional Court, upon the facts found by the magistrates, held that the defendant had suffered the act of gaming to take place upon his

(1) [1920] 1 K. B. 226.

licensed premises. There was no question there of any gaming contract. The case seems to have no bearing on the problems which we have had to consider.

In the result I hold that the contract entered into by the defendant in relation to the Peel Handicap was a contract with the Jockey Club, and was not a contract by way of gaming or wagering within s. 18 of the Act of 1845. The whole case here depends upon the provisions of that section. In my opinion, the contract sued upon is not within the first portion of the section, and this action is not within the second portion, which prohibits a suit by the winner against the loser or a wager, nor is it within the third portion, which prohibits a suit by a winner of stakes against a stakeholder.

So far, I have only dealt with the Peel Handicap. I will now turn to the Long Course Selling Plate. This appears to be an a fortiori case. The prize of 200l. is provided by the race fund - i.e., by the executive. The entrance fees are not earmarked in any way for the winner. Under the Rules of Racing they go to the race fund, subject to the provisions of r. 159. The race being a Selling Plate carries with it certain features as to the sale by auction of the winner and other matters which appear irrelevant to the questions with which this appeal is concerned. The only relevant new feature of the contract between the Jockey Club and the defendant in regard to the Long Course Selling Plate (as compared with the Peel Handicap contract) is this: that if the entries exceeded 100 in number the entrance fees received by the Jockey Club would exceed in value the prize of 200l. offered by them. But for r. 159 it might in these circumstances be impossible to say that in no event could the Jockey Club win. But r. 159 in my opinion cuts out that argument. It forms part of the contract between the Jockey Club and the defendant, and effectually prevents the Jockey Club from making a gain from the transaction. If the Jockey Club in fact made a gain, they would do so not in pursuance of but in violation of their contract with the defendant.

The result is that I hold that in neither case was there a contract by way of gaming or wagering, and that the sums sued for are recoverable in this action.

I am not sorry to arrive at this conclusion, for I think it would be a travesty of the true facts to say that an owner in entering his horse for a race is gaming or wagering with the racecourse authorities. Neither he nor they intend to do any such thing. He is asked for and intends to pay an entrance fee, and nothing else. I confess I am glad that the law does not compel me to decide otherwise. I think the learned judge erred in coming to the conclusion that the Jockey Club stood to lose the 200l. added money and the amount of the Plate in the event of the defendant's horse proving the winner. Those amounts were never at risk at all under the contracts with the defendant: their payment never depended upon the issue of the question did the defendant's horse win or not. Under the contract (which involved holding the race on the advertised terms) those sums had to be paid away by the Jockey Club whether the defendant's horse won or not. Further I think the learned judge erred in holding that the defendant lost money in the event of his horse not winning the race. His liability to pay the 5l. or 2l. did not depend on his not winning the race. It was the price of the right to run his horse in the race.

The appeal should be allowed, the order below discharged, and in lieu thereof an order for payment should be made in the terms indicated by the Master of the Rolls.

Solicitors for plaintiffs: Charles Russell & Co.

Solicitors for defendant: Andrew, Wood, Purves & Sutton.

W. I. C.