Intercontinental Hotels Corp. v. Golden
203 N.E.2d 210, 254 N.Y.S.2d 527, 15 N.Y.2d 9 (1964)
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Rule of Law:
A court will enforce a right validly created by the laws of another jurisdiction, even if the underlying transaction is illegal in the forum state, unless enforcement would violate a fundamental public policy by being inherently vicious, wicked, immoral, or shocking to the prevailing moral sense of the community.
Facts:
- Plaintiff owns and operates a government-licensed gambling casino in Puerto Rico.
- Defendant, a New York resident, gambled on credit at the plaintiff's casino.
- Defendant incurred gambling losses totaling $12,000.
- Defendant gave the plaintiff a check and several I.O.U.s to cover the debt.
- The gambling debts were validly contracted and legally enforceable under the laws of Puerto Rico.
Procedural Posture:
- Plaintiff sued defendant in the Supreme Court, New York County (a trial court), to recover the $12,000 debt.
- The trial court entered a judgment in favor of the plaintiff.
- Defendant appealed the judgment to the Appellate Division (an intermediate appellate court).
- The Appellate Division reversed the trial court's judgment and dismissed the plaintiff's complaint.
- Plaintiff, as the appellant, appealed the Appellate Division's decision to the Court of Appeals, the highest court in New York.
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Issue:
Does New York's public policy against gambling prevent its courts from enforcing a gambling debt that was legally and validly incurred in the Commonwealth of Puerto Rico?
Opinions:
Majority - Burke, J.
No. New York's public policy against gambling does not prevent its courts from enforcing a gambling debt validly created in Puerto Rico. A foreign-based right should be enforced unless its judicial enforcement would approve a transaction that is inherently vicious, wicked, or immoral and shocking to the prevailing moral sense. The court reasoned that New York's public policy on gambling is not so strong as to bar enforcement, pointing to historical cases where the state enforced out-of-state lottery and horse racing contracts. Furthermore, the court noted that the legalization of pari-mutuel betting and bingo in New York indicates that the public's moral attitude has shifted to accept licensed and regulated gambling, viewing only unlicensed gambling as a menace. The court concluded it would be an injustice to allow citizens to retain winnings from legal out-of-state gambling but renege on their losses.
Dissenting - Desmond, C.J.
Yes. New York's strong and long-standing public policy against professional gambling should prevent its courts from enforcing the debt. The dissent argued that New York has consistently treated professional gamblers as outlaws and gambling houses as criminal nuisances. Using New York courts as a 'collection agency' for a gambling house offends the state's deep-rooted concept of good morals. The legalization of limited forms of gambling like bingo and pari-mutuel betting does not signify an abandonment of the state's core policy against casino-style gambling operations. Therefore, the court should close its doors to such a suit as a matter of state sovereignty and public policy, regardless of the contract's validity in Puerto Rico.
Analysis:
This decision significantly narrows the public policy exception in New York's conflict of laws doctrine. It shifts the focus from a rigid analysis of local statutes to a more flexible consideration of the 'prevailing social and moral attitudes' of the community. The ruling establishes that if an activity is legally sanctioned and regulated in a sister jurisdiction, it is unlikely to be considered so 'vicious' or 'immoral' as to bar enforcement in New York, even if the activity itself remains illegal there. This precedent makes it more difficult to use the public policy defense to avoid obligations validly incurred in other states, particularly in areas where public morals are evolving.
