Clark v. The Mayor, Aldermen, and Common Council of the City of Washington/Opinion of the Court

This cause depends on the liability of the corporation to pay the ticket on which the suit was instituted. In considering this question, that part of the charter which contains a grant of power on the subject of lotteries, the ordinances of the corporate body in execution of the power, and the proceedings of its agents, must be reviewed.

The charter enacts, 'that the corporation shall have full power and authority' 'to authorize the drawing of lotteries, for effecting any important improvement in the city, which the ordinary funds or revenue thereof will not accomplish; provided, that the amount to be raised in each year shall not exceed the sum of 10,000 dollars. And provided also, that the object for which the money is intended to be raised, shall be first submitted to the President of the United States, and shall be approved of by him.'

Some doubt has been expressed whether this power is to be exercised by drawing the lottery, on account and at the risk of the corporation, or by selling the privilege to individuals, and authorizing them to draw it on their own account. This doubt is founded on the word 'authorize.' Congress, we are told, has not granted the power to draw lotteries, but to 'authorize' their being drawn.

We cannot admit the correctness of this criticism. We do not admit the justice of that construction, which denies to the corporation the power of causing the lottery to be drawn on its own account. A corporation aggregate can legislate within its prescribed limits, but can carry its laws into execution only by its agents. Any legislative act directing a lottery to be drawn, is literally an act 'to authorize the drawing of lotteries.'

The object for which the lottery may be authorized, is 'any important improvement in the city.' Its produce is to come in aid of the ordinary funds or revenue thereof; and 'the amount to be raised in each year shall not exceed the sum of 10,000 dollars.' The language of the charter is not that the sum to be brought into the treasury of the city shall not exceed the sum of 10,000 dollars, but that 'the amount to be raised shall not exceed that sum.' This language, it is admitted, comprehends the net proceeds of the lottery, but it comprehends all those net proceeds, and does not allow a partition of profit, so as to retain 10,000 dollars for the treasury, and reserve a residue for others. The single object, for which the lottery can be drawn, is 'any important improvement in the city,' not the emolument of individuals. The motive with Congress for this restriction on the amount is, not to limit the sum to come into the city treasury, but to limit the extent of gaming, which the corporation may authorize. Congress must have perceived, that to bring 10,000 dollars into the treasury, either 'the amount raised must exceed that sum,' or the lottery must be drawn on account of the city; for no man will purchase a lottery from which he can make nothing.

The counsel of the plaintiff in error have remarked, and the remark is certainly entitled to attention, that, in describing the power, Congress has used no words indicating the idea, that the corporation might grant or sell lotteries. 'To authorize the drawing of lotteries,' is, as has been said, an appropriate term for a corporate act, instituting a lottery for the benefit of the city; but if the granting a lottery to others, or a sale of the privilege to others, had been in the mind of Congress, it is to be presumed that some words would have been used, indicating the idea.

There is great weight, too, in the argument, that it is a trust, and an important trust, confided to the corporation itself, for the purpose of 'effecting important improvements in the city,' and ought, therefore, to be executed under the immediate authority and inspection of the corporation. It is reasonable to suppose that Congress, when granting a power to authorize gaming, would feel some solicitude respecting the fairness with which the power should be used; and would take as many precautions against its abuse, as was compatible with its beneficial exercise. Accordingly, we find a limitation on the amount to be raised, and on the object for which the lottery may be authorized. It is to be for 'any important improvement in the city, which the ordinary funds or revenue thereof will not accomplish;' and is subjected to the judgment of the President of the United States. The power thus cautiously granted, is deposited with the corporation itself, without an indication that it is assignable. It is to be exercised, like other corporate powers, by the agents of the corporation, under its control. While it remains where Congress has placed it, the character of the corporation affords some security against its abuse; some security that no other mischief will result from it, than is inseparable from the thing itself. But if the management, control, and responsibility, may be transferred to any adventurer who will purchase, all the security for fairness, which is furnished by character and responsibility, is lost.

We think, then, that the most obvious, if not the exclusive construction of the charter, is, that the lotteries to be authorized by the corporation, are to be drawn under its superintendence and on its own account.

We will next advert to the measures which have been adopted for carrying this power into execution.

Ten successive resolutions were passed, the first approved on the 23d of November, 1812, and the last on the 21st of May, 1821, each of them for raising the sum of 10,000 dollars, by lottery, for particular improvements mentioned in the resolution.

The ordinance of the 24th of July, 1815, which was passed for carrying the three first of these resolutions into effect, contemplates and authorizes lotteries to be drawn entirely under the management, for the benefit, and on the responsibility of the corporation. Seven managers are appointed by the ordinance, and they, or a majority, are authorized to employ agents, fill up vacancies in their own body, and to do every act which may be necessary for carrying its provisions into effect.

The ordinance passed on the 17th of November, 1818, forcarrying the 4th, 5th, 6th and 7th resolutions into effect, authorizes the may or to appoint seven managers, whose duty it was to agree on a scheme, to sell the said lottery, or dispose of the tickets to the best advantage. A proviso is inserted, that, should the lottery be sold, the purchasers may make the scheme; but the ordinance enacts generally, (and the enactment makes no distinction between a sale of the lottery itself, and a disposition of the tickets,) that it shall be the duty of the managers to attend diligently to the drawing of the lottery, and to pay the fortunate adventurers for prizes drawn by them. The ordinance, however, adds the farther duty of paying over the balance, after deducting all necessary expenses, into the city treasury. From this it has been inferred, that these provisions are made for the contingency that the tickets should be disposed of for the benefit of the city, and are entirely inapplicable to the contingency of an entire sale. Certainly, in the event of an entire sale, the balance, after deducting all necessary expenses, would not be payable into the treasury, unless we suppose it to mean the balance of the sum for which the lottery might be sold. But this is the only part of the clause which is inapplicable to a lottery sold out and drawn for the benefit of the purchaser.

In October, 1819, the managers appointed under the act of 1815, were empowered to sell and dispose of the lotteries to which that act refers, or so much thereof as yet remains to be drawn, in such classes, and on such terms and conditions, as shall appear to them right and expedient. The duty of the managers to superintend the drawing, and to pay the prizes, is not changed by this act, unless the mere power to sell implies such change.

The managers sold to David Gillespie, of New-York, in pursuance of the acts of 1815 and 1819, a lottery denominated the 5th class of the Grand National Lottery, for the sum of 10,000 dollars, to be paid before the commencement of the drawing the said lottery or class; and articles of agreement, in pursuance thereof, were executed on the 14th day of May, 1821. The ticket held by the plaintiff is in this class.

On the 22d of the same month, an ordinance was passed, authorizing the managers to appoint a president, whose duty it should be, in addition to the duties imposed by the acts of 1815 and 1819, to sign all contracts, with the concurrence of a majority of the said managers, and to sign all the lottery tickets in every scheme or schemes sold by them.

This ordinance recognises the duties prescribed by the the acts of 1815 and 1819. Its 2d section allows each of the managers of the city lotteries 3 dollars for each day he has been or shall be employed; and the 7th section enacts that this compensation, 'except for the class now contracted for,' shall be provided for and paid out of the proceeds of lotteries hereafter contracted for.

This act is understood to recognise it as a part of the duty of the managers, to continue their superintendence of the drawing of the very class which had been sold, and which comprehended the ticket that drew the prize for which this suit is brought.

The defendant has excepted to the admissibility, as well as sufficiency of the testimony offered by the plaintiff in the Circuit Court, and the objection is made in general terms. We presume, however, that it cannot apply to the charter, or to the resolutions and ordinances of the corporation. Nor do we suppose that any exception was intended to be made to the testimony which establishes the ownership of the tickets, or to the admissibility of the deposition of Mr. Webb. The first document on which a question can arise, is the ticket itself. Is this admissible in a suit against the corporation.

In considering this question, we must inquire into the connexion between the ostensible managers and the corporation.

The persons who were held out as managers to superintend the drawing of the lottery comprehending this ticket, were, with one exception, the same persons who were appointed in the ordinance of 1815, as managers for the lotteries established by that act. The name of R. C. Weightman, is substituted for that of S. N. Smallwood. No other change appears. It is in proof that S. N. Smallwood was elected mayor; and, as the managers have, by the ordinance, a right to fill up vacancies in their own body, their acting uniformly with R. C. Weightman, is a proof that they had chosen him to fill the vacancy made by Mr. Smallwood.

But it is contended that this lottery was drawn under the act of 1818, and there is no proof that the individuals who appeared and acted as managers, had any authority under that act.

There is undoubtedly some confusion in this part of the case, and there is not much difficulty in ascribing it to its real cause. The mayor was authorized by the ordinance of 1818, to appoint managers to carry that act into execution, and the probability is, that he appointed the persons who were in office under the appointment of the corporation. The fitness of this proceeding renders it probable; and the subsequent proceedings of the corporation itself, turn this probability almost into certainty. In a case where written evidence of appointment is not in the power of the plaintiff, if indeed it exists, circumstances must be relled on to prove the fact, should it be deemed necessary.

The act of 1821 takes no notice of any appointment under the act of 1818, and makes it the duty of the managers, created under the act of 1815, to elect a president to sign all contracts, 'and to sign all the lottery tickets, in every scheme or schemes sold by the said managers.' Class No. 5, was then sold by these managers. Lotteries, under seven resolutions, to raise the sum of 70,000 dollars, were either sold, or for sale, either in mass or in detail, under the acts of 1815, 1818, and 1819. The language of this ordinance appears to extend to them all; and if it does, certainly admits the authority of the managers appointed under the act of 1815, to extend to all. The 7th section of the act of 1821, which provides the fund for their compensation, expressly excepts 'the class now contracted for.' The contract for the 5th class was executed a few days before the passage of this ordinance, and it is difficult to resist the conviction that the allusion is to this contract. These provisions in the ordinance of 1821 go far to establish the authority of these managers in this very case. The receipt of the purchase money under this very contract, is also a strong circumstance in support of the authority of those who made it. But we think the corporation has waived all exception to the authority of the managers, by producing and relying on their contract for the sale of this very lottery. That body defends itself from the claim of the plaintiff, by alleging that their managers sold this lottery. Their attorney produces the contract in Court, and insists that it exempts his clients from all liability. Can he in the same cause deny the authority of those who made it? We think the connexion between the managers and the corporation is established beyond controversy.

If the persons who made this contract, are the persons appointed under the authority of the corporation, as managers for class No. 5, no doubt exists whether the ticket has emanated from them. The ordinance of the 21st of May, 1821, authorizes them to appoint a president from their own body, whose duty it shall be 'to sign all the lottery tickets in every scheme or schemes sold by the said managers.' The scheme for the 5th class was annexed to the agreement between Gillespie and the managers, and has been produced in Court with it. Mr. Webb proves that the ticket 2929, on which this suit was brought, was signed by T. H. Gillis, whose name is subscribed to it; and that T. H. Gillis was at that time president of the board of managers.

It is then satisfactorily proved that the ticket was issued and sold under the authority of the corporation, and was consequently admissible in a suit brought against that body. The remaining inquiry is, does it bind the defendants to pay the prize it has drawn in the lottery?

Had the managers, instead of selling the whole scheme in mass, sold the tickets in the usual manner, and received the purchase money of the several tickets, instead of a sum in gross, for the use of the city, this question could not have arisen. No person would have denied the liability of the corporation. The sole inquiry then is, whether the agreement of the 14th of May, 1821, has discharged this liability.

If the exposition of the charter in the early part of this opinion be correct, this question is answered. If the corporate body was not empowered to vest in an individual the independent right of drawing lotteries for himself, and on his own responsibility, uncontrolled by the city government, then the agreement with Gillespie can operate only as a sale of the profits for a given sum, leaving the responsibility of the corporation as if that agreement had never been made. The contract would be between the corporation and the ticket purchaser; and, although the price of the ticket was paid to Gillespie, yet the corporation had consented that he should receive it for the purpose of performing their engagements to such ticket holders as should draw prizes, and had consented to receive from him 10,000 dollars, as full compensation for that portion of it which would remain after satisfying those engagements.

If the charter did grant the power to the corporation which is now claimed, the whole transaction must be considered, in order to determine its actual character. We must inquire whether the corporation has so acted as to devest itself entirely of all connexion with, control over, and responsibility for, this lottery, and substituted the purchaser in their place.

In its orgin, the lottery was a city lottery. It was to be managed by persons appointed by the city, drawn under their superintendence, and, so far as the public was informed, for the benefit, and on the responsibility of the city. Tickets were prepared under the authority of the corporation, bearing on their face the city improvements for which the lottery was to be drawn, the names of the managers appointed by the city, and the words 'national lottery,' and 'by authority of Congress.' Before these tickets were disposed of in the usual way, the managers entered into an agreement with David Gillespie, to sell him a lottery denominated the fifth class of the Grand National Lottery, to be drawn according to the scheme annexed, at the costs of the said Gillespie, except the expense of drawing the same.

The stipulations of this contract show that it was not intended to dissolve the connexion between the city and the lottery, and to give the absolute property in it, and control over it, to Gillespie; nor to exhibit him to the world as its owner, with whom alone the purchasers of tickets were to contract, and to whom the fortunate adventurers were to look for the payment of their prizes. He engages to draw the lottery in the city of Washington, in the presence of the managers; to finish the drawing within two years from the date of the contract; to pay all the prizes within sixty days from its completion; to provide two clerks to assist at the drawing; and to execute, within thirty days, and before the drawing should commence, a bond to the managers, with such security as they should approve, in the penal sum of 35,000 dollars, conditioned for the faithful drawing of the lottery, according to the scheme, for the punctural payment of the prizes, and for conducting the lottery fairly and honestly, according to the scheme, and according to the true intent and meaning of the acts of the aldermen and board of common council.

A bond was executed in pursuance of this agreement.

These provisions are in the spirit of a contract made to secure the city from the hazard of a continuing responsibility; a responsibility which they were induced to continue by the consideration of the $10,000 dollars paid by Gillespie. Why else stipulate that the lottery should be drawn in the city? Why that it should be completed within a limited time, and drawn in the presence of the managers appointed by the corporation? Why that the prizes should be paid? other things, for their payment? conditioned, among other things, for their payment? Had the corporation felt no farther interest in the lottery, the purchaser might have been permitted to exercise his own discretion with the article he had purchased, and to appear to the world as its owner. But the nature of the case justifies the opinion that such a sale could not have been made. No purchaser could have been found who would have given 10,000 dollars for the privilege of drawing a lottery on his own account and responsibility, having no connexion with the city. The probability is strong, that the aspect which the lottery still continued to bear was a necessary part of the contract, without which it would never have been made, and that these precautions were used to diminish the hazard of a responsibility which was unavoidably continued. We find the appearance of this responsibility carefully preserved by the corporation itself, and by its managers. In the ordinance of the 22d of May, 1821, it is enacted, that the tickets shall be signed by the president of their board of managers, and that their managers shall receive a daily allowance for attending the drawing of the lottery. The tickets were signed in conformity with this ordinance.

The manner in which the lottery was advertised, confirms the opinion that the contract of sale was made with a view to the continuing the responsibility of the city. Exception is taken to the admission of these advertisements, and we will not affirm that their appearance in the city papers, one of which was published by a member of the corporate body, is evidence that the publication was made by authority of the managers; but the advertisements prove the fact that the lottery was ushered to the world in the form and character which those advertisements represent. It is proved that they were published in two papers in the city, in the National Intelligencer from the 18th of May, 1821, and in the Washington City Gazette from the 17th of July, 1821, until the completion of the lottery. These advertisements exhibited the scheme which was agreed on between the managers and Gillespie, which was annexed to their contract; gives notice of the time when the drawing would take place; of the number of days to be employed in the drawings, and that they would be completed as soon as possible, under the superintendence of the managers. To this advertisement the names of the managers are annexed. The lottery is drawn in pursuance of it, and the managers superintend the drawing. In its progress, a postponement takes place. An advertisement purporting to be signed by three of the managers appears, giving notice of this postponement, and of its cause. Another advertisement soon follows, purporting to be signed by the president, by order of the board, giving notice when the drawing would recommence. It does recommence under the super intendence of the managers.m25 U.S. 62m It is not, we think, within the compass of human credulity, to believe that the managers did not see these advertisements, or did not believe that they would be received by the public as being accredited by their names. Not to contradict them was to sanction them. To appear in pursuance of them, and superintend the drawings of which they had given notice, was to adopt them. It is not to be believed that this concurrence of circumstances, all tending to assure the public that these advertisements were published by authority of the managers, could have been produced by accident. To sit daily superintending the drawing of a lottery, in pursuance of notice published every day under their names, verifies that publication, and must be considered as a ratification of it.

The proceedings which took place between the managers and Gillespie, after the contract, still farther corroborates the opinion that this continuing responsibility of the corporation which was held out to the public, was not a fraudulent representation for the purpose of enabling Gillespie to sell the tickets, but a representation of the fact as then understood.

It appears, from the deposition of Mr. Webb, that all the tickets, amounting to 50,000, were put into the possession of Gillespie; but these tickets were not vendible until signed by the president of the board of managers. Those unsigned could no more be used by him than if they had not been in his possession. As soon as the scheme was agreed on, three or four thousand tickets were signed, and afterwards tickets were occasionally signed, so as to make the additional number of 17,203. Why were these tickets thus withheld from him, if he had become the absolute and unconditional proprietor of them? The conduct of the managers, as disclosed in the subsequent part of Webb's deposition, will inform us. He says, that some time after the drawing of the lottery commenced, the president of the managers refused to sign tickets, unless an equivalent in prize tickets, either paid and taken in by Gillespie, or drawn on hand, or the notes of individuals which Gillespie had taken, payable to himself, for tickets sold, were deposited with them; and, accordingly, when the witness, as the clerk and agent of Gillespie, presented tickets to be signed, he was obliged, at the same time, to deposit such prize tickets or promissory notes; and, on some occasions, when tickets were called for, and wanted, the managers have refused to sign the same for want of such equivalent; that the amount of such prize tickets so deposited with the managers was about the sum of 141,779 dollars; that the managers on such occasions objected to trusting Gillespie with the disposal of tickets much beyond the penalty of his bond, and the witness understood, from the conversations and transactions between the parties at the time, that this precaution arose from doubts which had been circulated respecting Gillespie's solvency. The whole number of tickets actually signed was 30,960. This conduct of the managers is explained by the supposition that they considered the city as still responsible for prizes, but is irreconcilable with the idea of an entire transfer of responsibility to Gillespie. Such entire transfer would have entitled him to the free use of all the tickets. That the parties who made the contract so understood it, would go far in its construction, were it even in the power of the corporation to transfer its responsibility.

We, think then, that the contract of May, 1821, can be considered only as a sale of the profits of the lottery, and could not, under all the circumstances of the case, affect the responsibility of the corporation. The ticket was in fact what it purports on its face to be, a ticket in the National Lottery, by authority of Congress, sold under the direction of the corporation, and signed by the person who was authorized by an act of the corporate body to sign it. It asserts that it shall entitle the possessor to such prize as may be drawn to its number; and this is, we think, in such a case, the promise of the corporation, made by its authorized agent, to pay such prize.

The judgment of the Circuit Court, then, on the verdict found in the cause, and on the case agreed, to which that verdict refers, ought to have been for the plaintiff. The judgment is to be reversed, and the cause remanded to the Circuit Court, with directions to enter judgment for the plaintiff.