Opinion
No. 76-195
Decided February 17, 1977.
In action by foreign hotel to recover funds loaned to Colorado defendant for gambling at its casino, trial court held the gambling debt unenforceable, and hotel appealed.
Affirmed
1. CONTRACTS — Gambling Debts — Unenforceable — Repeal of Statute — No Change in Policy. The repeal of the statute upon which gambling debts have previously been held unenforceable in Colorado does not necessarily evidence an intent by the General Assembly to change existing policy, rather legislative declarations evidence a continuation of the policy against gambling for profit, and this policy restrains any activities related thereto when not specifically sanctioned by statute, including collection of any gambling debts; thus, in an action by a foreign hotel to recover funds loaned to a Colorado defendant for gambling at its casino, the trial court properly held the debt unenforceable.
2. BILLS AND NOTES — Gambling Debts — Paid by Check — Subject To — Available Defenses. In an action by a foreign hotel to recover funds loaned to a Colorado defendant for gambling at its casino, where defendant wrote two checks to repay the debt, each of which was returned for insufficient funds, even assuming that the hotel was a holder in due course, it did not take the instruments free of any defenses of a party thereto with whom it had dealt; thus, inasmuch as gambling debts are unenforceable in Colorado, this defense precluded defendant's liability for such debts.
3. Gambling Debt — Remains Not Enforceable — After Partial Payment — No Innocent Third Party — And — No Change of Position. While there may be certain situations where the action of a Colorado party who issues a negotiable instrument for a gambling debt may be estopped to deny the validity of the instrument, in an action by a foreign hotel to recover funds loaned for gambling purposes, where checks written by the defendant to repay the debt were returned for insufficient funds, and defendant subsequently paid $5,500 of the $20,000 debt, since there was neither an innocent third party nor a change of position by the hotel as a result of defendant's partial payment, such payment did not mean that defendant was therefore liable for the remainder of the debt.
Appeal from the District Court of the County of Arapahoe, Honorable William B. Naugle, Judge.
Brownstein, Hyatt, Farber Madden, Judith D. Levine, for plaintiff-appellant.
Frickey, Cairns Wylder, P.C., Earl S. Wylder, for defendant-appellee.
Plaintiff, Condado Aruba Caribbean Hotel, N.V., appeals a judgment denying relief on their claim for $14,500 against defendant, Bill Tickel. We affirm.
The facts are undisputed. Plaintiff hotel loaned defendant $20,000 for gambling at its casino in Aruba, Netherlands Antilles. Gambling is legal in Aruba. Defendant wrote two checks to repay the debt, each of which was returned for insufficient funds. Defendant subsequently paid $5,500 of the debt, and plaintiff brought this action to recover the remainder.
Plaintiff contends that the trial court erred in holding that the gambling debt was unenforceable. We disagree.
Plaintiff concedes that gambling debts have been held unenforceable in Colorado, see, e.g., National Surety Co. v. Stockyards National Bank, 84 Colo. 563, 272 P. 470, but asserts that this refusal to enforce such debts was based on a statute, C.R.S. 1963, 40-10-13, which has now been repealed. Colo. Sess. Laws 1971, ch. 121, sec. 1. Therefore, plaintiff urges, collection of gambling debts incurred where gambling is legal is no longer against public policy in Colorado, and such debts should now be enforced. This contention is without merit.
Contrary to plaintiff's assertion, the policy of refusing to enforce gambling debts in Colorado has not been based solely on statutory grounds. In the early case of Eldred v. Malloy, 2 Colo. 320, the court ruled that enforcement of gambling debts was against sound public policy, and so ruled without reference to the statutory prohibition in effect at the time.
[1] Even in the absence of grounds independent of the statutory prohibition against the enforcement of gambling debts, repeal of C.R.S. 1963, 40-10-13, does not necessarily evidence an intent by the legislature to change the existing policy. The current legislative declaration relating to the criminal statutes regarding gambling declares that it is the policy of the general assembly:
"to restrain all persons from seeking profit from gambling activities in this state; to restrain all persons from patronizing such activities when conducted for the profit of any person; [and] to safeguard the public against the evils induced by common gamblers and common gambling houses . . . ." Section 18-10-101, C.R.S. 1973.
This declaration evidences a continuation of the policy against gambling for profit in Colorado, and we therefore conclude that gambling debts owed to a for-profit gambling business are still unenforceable in this state.
Furthermore, we find no indication in this declaration which would support plaintiff's contention that, although gambling is illegal and against public policy when it occurs in Colorado, it would not be contrary to public policy to enforce gambling debts incurred where gambling is legal. To the contrary, we find in the above legislative declaration a policy restraining any activities related to gambling conducted for profit, when not specifically sanctioned by statute, including collection of any gambling debts.
Plaintiff also claims that because defendant drew a check to pay a debt that was legal where incurred, he is liable on the check, even if the underlying debt is unenforceable. We disagree.
[2] Even if we were to assume plaintiff was a holder in due course, it does not take the instrument free of defenses of any party to the instrument with whom it had dealt. See § 4-3-305(2), C.R.S. 1973.
[3] Finally, plaintiff contends that since defendant paid a portion of the debt, he has reaffirmed it, and is therefore liable for the remainder. Not so.
While there may be certain situations where the action of a party who issues a negotiable instrument for a gambling debt may be estopped to deny the validity of the instrument, here there is neither an innocent third party, see Sullivan v. German National Bank, 18 Colo. App. 99, 70 P. 162, nor a change of position by plaintiff as a result of defendant's partial payment which could make the doctrine of estoppel applicable. See Ayer v. Younker, 10 Colo. App. 27, 50 P. 218.
Judgment affirmed.
JUDGE RULAND and JUDGE KELLY concur.