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National Recovery Systems v. Feltman

Decided: April 25, 1986.


Mackenzie, J.s.c.


This action was brought by an assignee to recover on defendant's indebtedness to the MGM Grand Hotel, a gambling casino located in Las Vegas, Nevada. The principal question in this case is whether the New Jersey policy allowing enforcement of certain gambling debts contracted elsewhere controls the facts of this case. In a legalized and appropriately supervised form, gambling is not contrary to this State's public policy. Caribe Hilton Hotel v. Toland, 63 N.J. 301 (1973). A gambling debt may be enforced here if it was validly contracted in another jurisdiction and is enforceable there. Ibid. But what if such debts are not enforceable in the foreign jurisdiction even though gambling is legalized and supervised there?

Cross-motions for summary judgment were before the court on a scheduled motion day. The underlying facts were undisputed which made the case ripe for disposition on the law.*fn2 They may be stated briefly. In the late summer of 1980, defendant received an invitation from the MGM Grand Hotel to enjoy the Labor Day weekend as a guest at the hotel, free of any charge for room and board. He was informed that a $15,000 credit line would be available to him at the hotel. Defendant was only required to buy a round-trip airline ticket to Las Vegas. Defendant accepted the offer. Upon his arrival, a representative of the hotel reimbursed his airfare in gambling chips.

During the course of the extended weekend, defendant gambled at the casino in the hotel. Although promised a line of credit, he was required to sign blank documents, which are similar in form to checks and are known as "markers," in order to receive gambling chips. Those markers did not, however, indicate either the payee or the date, nor were they drawn on a

particular bank or account. A representative of the hotel merely wrote in a dollar amount on the marker and gave it to defendant for his signature whenever he needed money to gamble. Upon signing the marker, defendant received gambling chips of a value equal to the amount shown on the marker. In each instance, the marker transaction took place in the casino of the MGM Grand.

As promised, the hotel charged Feltman nothing for his food, room and drinks. Markers totalling $10,000 were left unpaid when he returned to New Jersey. Two months later, in November 1980, the markers, now filled in as to date, payee and collecting bank, were presented to a branch of the United Jersey Bank in which defendant had a corporate account.*fn3

Defendant does not argue that he has repaid the $10,000; he concedes the sum is unpaid. Nor does he contend that the MGM Grand Hotel is not sanctioned, licensed and regulated by the State of Nevada; he concedes for the purpose of this motion that the hotel operates a lawful gambling business. His argument is that gambling debts contracted in Nevada are unenforceable there, and should be unenforceable here. The court agrees.

In determining the enforceability of gambling debts incurred outside the State of New Jersey, Caribe Hilton Hotel v. Toland, supra, is the controlling authority. In that case, a casino located in San Juan, Puerto Rico, brought suit in New Jersey against a New Jersey resident to recover a debt which defendant admittedly contracted in plaintiff's gambling rooms. In determining the enforceability in New Jersey of such a debt, the Supreme Court instructed that the choice of law should be that of the jurisdiction where the contract was made or the jurisdiction having the most significant relationship to the parties.

Id., 63 N.J. at 303. See also, Restatement, Conflict of Laws 2d, ยง 188 at 575 (1971); State Farm Mutual v. Simmons Estate, 84 N.J. 28, 34 (1980); Winer Motors, Inc. v. Jaguar Rover Triumph, Inc., 208 N.J. Super. 666 (App.Div.1986).

By either test, the substantive law of Nevada must be selected for application in this case. The contract between the parties, as evidenced by the markers, was made in Nevada. The parties were physically present there at the time of the transactions. The debt arose there. Defendant made a pretense of satisfying his obligation to the hotel by delivering the markers in the casino. The gambling was done only in Nevada. He was in Nevada because of the express invitation of the hotel. On the other hand, defendant is, and was, a resident of New Jersey. As the Supreme Court determined in the Caribe Hilton Hotel opinion, this single fact is insufficient to require use of New Jersey law.*fn4 The court concludes that the law of Nevada must be applied.

Although Nevada has legalized casino gambling, the Supreme Court of that state has invariably held that gambling debts are not enforceable there. As was stated in Sea Air Support, Inc. ...

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