On appeal from Bergen County District Court.
Botter, King and McElroy. The opinion of the court was delivered by Botter, P.J.A.D.
The issue on this appeal is whether plaintiff (Resorts), a gambling casino operator licensed under the Casino Control Act (act), N.J.S.A. 5:12-1 et seq. , can recover $1,500 in credit extended to defendant on his issuance of three $500 checks, despite the fact that the checks were not deposited in the time required by N.J.S.A. 5:12-101(c) and one check was undated, contrary to N.J.S.A. 5:12-101(b)(2). N.J.S.A. 5:12-101(f) provides that any check "cashed, transferred, conveyed or given in violation of this act shall be invalid and unenforceable." Resorts contends that notwithstanding the invalidity of the checks drawn by defendant, plaintiff may sue on the underlying obligation incurred by defendant, of which the checks are mere evidence, as provided in N.J.S.A. 12A:3-802(1)(b) of the Uniform Commercial Code ("If the instrument is dishonored action may be maintained on either the instrument or the obligation . . .").
The essential facts in this case are not in dispute. On July 3, 1978 defendant signed and issued three separate instruments on
forms furnished by Resorts (referred to in the industry as counter checks or "markers") to the order of Resorts. Each was drawn on defendant's bank, New Jersey Bank of Westwood, in the sum of $500. It is not disputed that in exchange for these checks credit was given to defendant in the form of cash or chips to enable him to gamble in plaintiff's casino. Two checks were dated by "pit clerks" on the transaction date, July 3, 1978, but one check remained undated until July 30, 1978, when that date was inserted by plaintiff's "cage manager," Gary Thompson. All three checks were deposited with plaintiff's bank for collection for the first time on or about July 30, 1978. The checks were returned unpaid by defendant's bank because of insufficient funds in the account. Thereafter, plaintiff communicated with defendant in an effort to obtain payment but was unsuccessful, and this action was commenced.
Clearly, subsection (c) of N.J.S.A. 5:12-101*fn1 was violated by plaintiff's failure to deposit each check for collection within [178 NJSuper Page 601] seven banking days of the date of the transaction. This subsection allows a casino operator to hold a check for less than $1,000 for seven banking days. A delay of 14 days is allowed for
checks from $1,000 to less than $2,500, and 90 days for checks in the sum of $2,500 or more. Subsection (b)(2) was also violated with respect to the undated check. That subsection requires every check to be "dated, but not postdated." It is possible, as the trial judge found from unclear answers to interrogatories furnished by plaintiff, that subsection (b)(3) was also violated. This section requires that checks be presented "to the cashier or his representative" to be exchanged only for a credit slip or slips which "may be presented for chips at a gaming table." However, we find it unnecessary to resolve this issue in view of the clear violation of the deposit requirements of N.J.S.A. 5:12-101(c) as to all checks and N.J.S.A. 5:12-101(b)(2) as to the undated check.
On cross-motions for summary judgment in the trial court, Judge Thomas Franklin, ruled in favor of defendant. He reasoned that the Casino Control Act intended "strict" regulation and control of licensed gambling activities "to further . . . public confidence and trust," N.J.S.A. 5:12-1(b)(6) and (13); that N.J.S.A. 5:12-101(a)(1) prohibits a casino operator from cashing
any check or making any loan or giving any credit to enable a person to gamble unless certain conditions are met, and that, in addition to voiding the checks themselves, noncompliance with the conditions of N.J.S.A. 5:12-101 prevents an "underlying obligation" from coming into being and becoming enforceable.
We concur with Judge Franklin's reasoning and result. As he noted, the public policy of this State has traditionally opposed enforcement of gambling debts. N.J.S.A. 2A:40-3; Schwartz v. Battifarano , 2 N.J. 478, 483-484 (1949) (a judgment based on a gambling transaction declared void by statute is subject to collateral attack); Fisher v. Brehm , 100 N.J.L. 341, 345-346 (E. & A. 1924) (despite the Negotiable Instruments Law, a check or note given to pay a gambling debt "is not a negotiable instrument" and cannot be enforced by a holder in due course). Our Supreme Court has more recently enforced a gambling debt, evidenced by checks, lawfully contracted in Puerto Rico. Caribe Hilton Hotel v. Toland , 63 N.J. 301 (1973). However, in tracing the history of our public policy toward gambling, Justice Mountain concluded that "our policy has become one of carefully regulating certain permitted forms of gambling while prohibiting all others entirely." Id. at 307. Indeed, only by constitutional provision or amendment can any type of gambling be lawfully conducted in this state, subject to approved "restrictions and control." N.J.Const. (1947), Art. IV, § VII, par. 2. While gambling in licensed casinos has been legalized, the Legislature has imposed strict conditions for advancing credit and cashing checks to facilitate such gambling. It provided that no licensee "may accept a check, other than a recognized traveler's check or other cash equivalent, from any person to enable such person" ...