LAW REPORTS.

Dominion, Volume 5, Issue 1415, 16 April 1912, Page 3

LAW REPORTS.

THO CITY OF PARIS BONDS

ARE THEY A LOTTERY?

FULL COURT ASKED TO DECIDE.

Proceedings, which liiii] originally been brought in the .Magistrate's Court for tin* purpose of I tic Utility of the International Investment (.'umpiiii.v in connection with the disposal «if certain premium liomN, formed tin- subject i>f further liligiitiun before the Full Court yesterday. On (he Bench worn Mr. Jnslieu ■Williams, Mr. Justice Deiiiiisimi, Mr. Justice Edward.- , , Mr. .lustice Cooper, nml Mr. Justice Chapman. First Steps by Police. On February l> l«,t Ilio police lit Wellington proceeded against the International Investment Co., 1,ti1., for selling to Harold PeJor.sen (on January 5) u l>''«lniuin bond issued liy the municipality of tho Oily of l'nris, by which permission was given lo Petersen to have an interest in a scheme by which prizes of money are gained by a mode of chance. 'J'ho information was laid under Section 11 (13) of the Gaming Act of 1008, which stated: livery person who sells or dispo?os of any ticket.*, or other means by which permission or authority is gained or Riven to any person to throw for, compete, or have any interest in any such lottery or scheme, whether promoted in New Zealand or elsewhere, is liable to a fine not exceeding (wo hundred pounds, and, for any second ofl'ence, besides such fine, is liable to imprisonment for any term not exceeding six months. The principal facts liad been agreed upon and a statement of them signed by the solicitors on both sides, ,ns follows: — 1. That tho company is incorporated in New Zealand under the Companies Act, 1908. i. That the company carries on in Now Zealand the business of selling premium bonds, as hereinafter described. 3. That on January 5, 1012, at Wellington, the company sold to Harold Petersen a premium bond issued by the municipality of the City of Paris. •1. That, a premium bond is a bond debenture or obligation issued on the Continent of Europe by municipalities, foreign Governments, banks, and other public bodies or institutions in respect of loans usually exceeding one million pounds sterling raised by them from the public. 5. That the bonds arc issued payable to bearer for amounts varying from 100 francs upwards. G. That the currcney of theso bonds varies from 50 to SO years.

7. That some of the?c bonds bear, during their currency, interest at rates varying from 2 to .'1 per cent, per annum. S. That others of these bonds bear no interest, but are redeemable at prices abovo par, an annual addition being made to each bond by way of interest.

9. That in all cases these bonds are redeemable at not less than par. 10. That in all cases these bonds are redeemable by periodical drawings by lot, there being several of such drawings during each year of the currency of the bond.

11. That at every such drawing certain of the bonds so drawn by lot carry with them substantial money prizes far in excess of tho amount of the bond, these prizes being paid to the holder of the ijond so drawn in iieu of tho redemption value of the bond.

12. That tho prizes so obtained by bondholders vary in total amount from £a to .£40,000.

13. That a majority of the bonds so issued obtain no prize, and are redeemed either at par or at .the agreed value above par.

11. The bond referred to in paragraph 3 is one of a series issued in Paris in 1901. They carry interest at the rate of 2i per cent. The loan in respect of which they were issued amounted to 170.000,000 francs, and their payment is guaranteed bv the. municipality of the City of Paris. Tho highest premium payable' by means of tho periodical drawings hereinbefore referred to is -10,000 francs, and there aro four of such drawings at regular intervals each year. Tin's bond illustrates 1 the practice herein described.

15. Panama Premium Bonds and the City of Ghent Bonds further illustrate the practice above described. In the case of the Panama Bonds the amount of the loan is ,£12,00(1,000, and prizes lo the value of .£135,000 sterling are annually distributed by lot anion; the bondholders. There are six drawings in each year, and on these drawings there are awarded the following prizes in each year: —Three of 500,000 francs, Ihree of 115,000 francs, six of 100,000 francs. 12 of 10,000 francs, 12 of 5000 frauds, 30 of 2000 francs, 300 of 1000 francs. In the case of the City of Ghent .Honds, the total issue amounts to TO million francs. Four drawings take place annually. The total annual value of the premiums is J;S000. How Dr. M'Artliur Decided. The case was argued at,length before Dr.A, M'Arthur, S.M. His decision was delivered on February 13, and in the course of his remarks he commented on the prosecuting counsel's contention that there was a radical difference in building society shares and premium bonds, the attraction in tjjc latter appearing to be the gambling clement—an appral to the cupidity of the investor. "I am," said his Worship, "inclined lo agree with counsel in this opinion." Towards the conclusion of a very long review of the case, his Worship said: "I have fully considered the able arguments of both learned counsel, ami the many authorities cited by them, and am of the opinion that the defendant company has brought itself within the provisions of the Gaining Act, 1008,- Section 41 (B). The leading cases quoted were Taylor v. Smotfcen and Hall v. M'William, English cases; Tait v. Williams, a New Zealand case; Mutual Loan Agency, Ltd., v. At-torney-General of New South Wales, an Australian case; and Horner v. United States, an American case. It seems to me that these cases show clearly that if goods or property are disposed of by way of chance or lot, the person so disposing of them is doing an illegal business and cannot bn excused by reason of the fact that at the same time he is giving what may be considered good value for money received. "I cannot agree with the learned counsel for the defence that, a scheme was not a lottery, if only some part of it determined by lot to whom the benefits were to go. I do not consider it necessary, to constitute a lottery, .that the substantial object of thn whole scheme must bo a lottery. I am aware that the scheme had for its foundation the raising of loans, but I am also aware that a part of the method l)y which the loans were to bo raised was the distribution of prizes by lot or chance, and this I consider brkus the scheme under the Act. . . . Defendant is convicted and fined .£50." the Present Appeal, It was from this decision that the company appealed yesterday to the Full Court on the ground that the judgment of the magistrate was erroneous in paint of law. Sir John Fiudlay, K.C.. with him Mr. Hanna, of Auckland, appeared fer the appellant, and the Solicitor-General (Mr. J. W. Salmond) for the- respondent. Argument was mainly on the lines followed in the lower Court. It occupied the whole day, nnd had not concluded when tlic Court adjourned until 10.30 a.m. today.