Sec. 38. The cases of Johnson vs. Fall, 6 California Reps. 359 (65 Am. Dec. 518) and Beadles vs. Bless, 27 Ill. Reps. 320 (81 Am. Dec. 231) involved also questions in relation to the completion of railroads. In the California case the contest was in regard to a note, given by the defendant to plaintiff, on a wager to the effect that he would pay the plaintiff five thousand dollars, two years after date, if within that time a certain railroad, in which the defendant was interested, was completed and in the Illinois case the controversy related to an agreement for $100, which was to be paid at a designated time, provided the ties and rails were laid on a certain railroad by that time. In both cases it was held that, as wagers at common law, unless contrary to public policy or good morals, were not illegal, the makers of the obligations in question were liable thereon, though they grew out of wagering transactions. The question of chance was not discussed but in the Illinois case the court drew a distinction between a wagering contract and an agreement to pay money, dependent on a future contingency, in this language: "This, in form at least, is simply a contract for the payment of money, dependent on a future contingency; and in that aspect, is quite unexceptionable.

"The testimony, however, gives the transaction something of the character of a wager, and shows that a similar agreement was given by the payee to the maker of this agreement, payable upon the opposite contingency. But if viewed in the light of a wager as we understand the common law, the plaintiff has a right to recover upon it."

Sec. 39. In Brua's Appeal, 55 Pa. St. 294, which in volved an option deal, the court denounced, as gambling anything which induces men to risk their money or property without any other hope of return than to get for nothing a given amount from another, no matter by what name it may be called and that it is the same whether the promise be to pay on the color of a card or the fleetness of a horse.

Sec. 40. Kirkpatrick vs. Bonsall, 72 Pa. St. 155, involved a dealing in what is called futures. The court said a

bargain for an option may be legitimate and for a proper business object and added: "But it is evident such agreement can be prostituted to the worst kind of gambling ventures and therefore its character may be weighed by a jury, * * * whether the bargain was a mere scheme to gamble upon the chance of prices. * We must not counfound gambling

* * *

* * *

they deal.
forecast but they act
in a bona fide way.

*

*

with what is commonly termed speculation. Merchants speculate upon the future prices of that in which Their speculations display thought and upon their conclusions and buy and sell But when ventures are made upon the turn of prices alone, with no intent to deal in the article * the case is changed. Then the bargain represents not a transfer of property but a mere stake or wager upon its future price."

*

Sec. 41. In Pearce vs. Dill, 48 N. E. Rep. 788, it was shown that Pearce was operating a "bucket shop" and was engaged in conducting the business of selling "futures" or "options," without having on hand the products he pretended. to sell and it was mutually understood and intended by both parties that the products, claimed to have been sold, were not to be delivered but when the time fixed for the delivery the market value at Chicago of such products should constitute a basis upon which the settlements should be made. As the market price would rise or fall there would be a loss or gain to the purchaser. The Supreme Court of Indiana said: "The deals or transactions were understood to be a speculation solely on chances. * Such transactions are of like char

*

acter and akin to bets made on a game of poker or faro, and are equally as uncertain and hazardous."

Sec. 42. In McGrew vs. City Produce Exchange, 4 S. W. Rep. 38, the Supreme Court of Tennessee, in passing on an option deal, said: "It is now settled in this state that gaming is not confined to 'playing at any game of hazard or address for money,' etc., in the ordinary sense of these words as used in the Code S-5688; but that it is 'any agreement between two or more persons to risk money or property on a

*

*

contest or chance of any kind where one must be gainer and the other loser;' Bell vs. State, 5 Sneed, 507; Eubanks vs. State, 3 Husk. 488-490. It matters not what the unlawful device is upon which the money is received as a hazard; it is gaming."

Sec. 43. In Golden Rule vs. People, 118 Ill. 492, it was held that where a corporation, upon the death of a member, raises a relief fund by voluntary contributions or donations of its other members, not exceeding $2,000, seventy-five per cent of which is to be paid to a beneficiary to be named by the deceased member in his lifetime and twenty-five per cent to the members who may, by chance, hold the certificates of membership numbered next above and below that of the deceased, its business is not only that of life insurance but it is also illegal as to those taking the twenty-five per cent, it being in the nature of a wager policy.

Here we have presented a very clear distinction between what is dependent on chance and what is not. The seventyfive per cent of the fund was made dependent upon the death of the insured and that was to go to the beneficiary as compensation, in some degree at least, for the loss of the insured, while the twenty-five per cent was made payable to the members, holding by chance the certificates, numbered rext above and below that of the deceased member, and hence was made dependent on chance. One was legitimate and the other a gambling transaction.

Sec. 44. Judge Grosscup in his charge to the jury in the McDonald case, 59 Fed. Rep. 563 made some observations, in which he undertook to distinguish a legitimate transaction from a lottery scheme. On this point he said: "Now every enterprise in which we engage has a return or prize, or is supposed to have. That is the incentive which makes men industrious and active. Whether that return or prize be determinable by mere lot or by chance makes it either a legitimate enterprise or a lottery, and therefore an unlawful enterprise. We perhaps can illustrate that best by referring to some of the schemes of life in which men are engaged. Take,

for instance, the life insurance companies, those that proceed either on the stock plan or on the assessment plan. They require of the member that he pay in a certain amount of money. That is the pecuniary consideration. That money is invested, or supposed to be invested, in securities, and when the member dies a certain amount, stipulated in the policy, is paid to his heirs or the beneficiary named in the policy. That is the return. The man may have been insured but a month and have paid in but a few dollars, and have received back $5,000 or $10,000. In such instances as that a much larger sum has been returned than the consideration, but the fact that there was such a return does not make it an unlawful enterprise. Why? Because the prize is not determinable by or dependent upon chance or lot. It is dependent upon the life of a man, and the life of a man is determined by the laws of nature and not by the chances of lot.

In that

So let us take what is called tontine insurance. class of insurance a man pays for a term of years and then receives back his investment, having in the meantime the insurance for a certain sum fixed in the policy. Now whether the investment paid him is more or less that that, which he has paid in, the prize, that he looks to, is not simply the return of the money, but the return to his heirs or beneficiary named in the policy the amount of the policy in case he dies pending that investment. And, as in other companies, the prize may be very much larger than the pecuniary consideration paid in but it depends again upon the laws of nature, which man is not supposed to violate by taking his own life. A man who makes an investment in real estate may put in a few thousand Idollars and take out a million. What he puts in is the consideration; what he takes out is the prize. It may be a hundredfold larger than what he puts in, but on what is it dependent? Upon the growth of the town in which he lives; upon the growth of public sentiment respecting the value of property in that particular locality; upon the law of growth which is itself a natural one, an industrial law. But suppose a man puts a ticket in a hat with a hundred other tickets, and then it

is drawn by a blindfolded man, and his chance of the prize offered is dependent upon that drawing. The ticket may cost but 50 cents. The prize may be worth $10, much larger than the price of the ticket, though not larger in proportion than the life insurance policy or the real estate investment. But the getting of the prize is dependent upon the chance or lot of his ticket being drawn, not upon any natural law, as a man's life, nor upon the industrial growth as the growth of the value of real estate.

This illustrates to you the difference between legitimate investments which may yield according to the good fortune of the investor a hundredfold more than the amount invested, and a gambling investment, according to a lottery which can only yield in case the allotment or chance, which is purely artificial, turns in his favor."

Sec. 45. With all due deference to the learned judge, who delivered this charge, it is manifest that, applying the test of chance, man's ignorance of the outcome of an event, the life of an insured person is dependent on chance. So far as the insured and the insurer know, life is uncertain. It is true death is the result of the operation of natural laws but here, as elsewhere, the causes of disease and of death are unknown, so that it is impossible to predict the date of death or the length of life. If a wager is made dependent on the continuance of life of a given individual, there is no question, the transaction would be illegal on the ground of the existence of chance in it. The true ground of distinction between life insurance and a lottery is in the gambling or wagering feature alone. In both, as Judge Grosscup clearly shows, there are present the elements of consideration and a prize, and according to the views expressed in this work, the chance element is also present in both, just as this element is present in many legitimate transactions, but in one case there is a wager and in the other there is not. This is made plain in the "Option Deal" and other cases that have been before the courts. In life insurance the money is paid as a compensation for the death of the insured, while in a lottery scheme the