THOSE PARIS BONDS.

Dominion, Volume 5, Issue 1435, 9 May 1912, Page 6

THOSE PARIS BONDS.

DECLARED A LOTTERY. JUDGMENT OF FULL COURT. MAGISTRATE UPHELD. "It is manifest that, if it were not. for Hie chance of drawing "■ prize given by the bond, the bond would not be worth its par,value. A purchaser, however, is \villiug to give the par value lie thereby (fives 11 sum in execs* of what lie would have given if there had been no condition in the bond for Hip drawing of prizes. The sum that lie so (rives in excess is n .linn {riven purely for'l lie chance of obtaining a prize. The total of tlic excess sums so given help to constitute, the fund out of which I lie prizes are given. It .seems to us that these considerations make the raisins of money by these bonds a lottery." In those words Sir. Justice Williams summed up'the l-'nll Court's view of tho premium bonds of (In- municipality of the City of Paris when delivering decision of tho Court yesterday. Previous History of Case. On February 2 last the polico at Wellington proceeded agoinst (ho International Investment Co. for selling to Harold Petersen (on January a) a premium bond issued by the municipality of the City of Paris, by which permission was (riven to Petersen to have an interest in a scheme by which prizes of money are gained by a mode of chance. The 'information iras laid under Section II (H) of the Gaming Act of JflOS. The principal facts had been agreed upon, ;ui(l a .statement of them signed by the solicitors on both sides. The case- was argued at length before Dr. A. M'Arthur, S.M., who delivered u reserved decision on February 13, in which he held, thnfc tho scheme was a lottery, lie. fined the company ,£SO. ■From this decision the companv appealed to the Full Court on the ipo'iiml (hat the judgment of. the magistrate was erroneous in point of law. During th;appeal case Sir John Findlny, K.C., with him Mr. 'Manna, of Auckland, appeared for the appellant, and' the SolicitorGeneral (Mr. -J. W. Salmond) for the respondent. ' >'

;' What the Full Court Found. In delivering ■ rh'o judgment of Hie Court yesterday, Jfr. Justice . Williams said:— The bond in question was issued by the Municipality of Paris in respect of a loan of 170,000,000 francs raised b.v Hie Municipality for public purpose*. The loan was raised by (lie issue of a forge number of similar bonds. The bond was issued at par,' and had a currency cf some sixty years. It bore interest during its currency at the rate of 2' per cent, per annum. At the end of the term the bonds would be redeemable at par unless previously redeemed 'by being drawn at one of tho periodical drawings. The bonds are redeemable by four periodical drawings by lot at regular intervals each year. At every surli drawing certain of the bonds so drawn earn- with thorn substantial money prizes far in excess of the amount of the bond, the-e prizes being paid to the holder of the bond so drawn, inchidtn? the redemption par value of the bond. The highest premium payable by means of these , periodical drawings .is 40,000 francs. Is then, this scheme a lottery? The object for which the money was raised appears to us to be irrelevant. If the means by which it wa* raised amounted to a lottery, the fact that it was raised for the most beneficent purpose* cannot fender the means of rat:iu<? it the less a lottery. The Crux of the Matter. In the present ea-n; the effect of (he transaction is to stvp the purchaser of the bond a good security at a low rate of interest, coupled with the chance of obtaining a valuable prize. The bond, though it may be termed a gilt-edged security, bears a less rate of interest than could be obtained in the country of its origin for equally good and equally negotiable securities, and a considerable less rate of interest than could be obtained for equally good and equally negotiable securities here. In such circumstances it seems to us that the real inducement to n person who takes up these bonds is the hope of drawing a prize. It is manifest that, if it ivero not for tho chance of drawing a prize Riven by the bond, tlm bond would not be worth its par value. A purchaser, however, is willing to give, and dons give, the par value. That is, he gives for the bond a sum in excess of what he would have given if (here had been no condition in the bond for the drawing of prizes. The sum that he so gives in excess is a sum given purely find simply for the chance of obtaining a prize. The total of tho sums so given in excess help to constitute the fund out of which the prisws are (o bo given. It spenis to us that these considerations make the raising of money by these bonds a lottery. Then, after quoting several authorities, his Honour concluded: The present case is not the carrying on of a business for tho purpose of making profits and distributing them. The substantial object of llit scheme is the contribution of money lor (he nurposc of dividing it by lot in prizes. We say "the substantial object" because, if that inducement were absent, it is hopeless to siTgsesf that money could be raised by these bonds at a. lower rate of interest than could be obtained for securities equally good in every respect. Tin; case ot Taylor v. Smetten decides that if a person sells articles which have a real value, and if included in the price lie gives also :i chr.nce of obtaining a prize by lot tho transaction constitutes •i lottery. l The rensoning in the judgment in that case applies here. AVo think, therefore, that the determination of tho Magistrate was correct in point of law, and that the appeal should be dismissed. Tire Solicitor-General was allowed £10 costs.