This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
Payment is sometimes made to a third party, to hold until some question be determined, or some right ascertained.1 The third party is then a stake-holder, and questions have arisen as to his rights and duties, and as to the rights of the several parties claiming the money. If it be deposited with him to abide the result of a wager, it seems to be the law in England, or to have been so before the recent statute of 8 & 9 Vict., that where the wager is legal, neither party to it can claim the money until the wager is determined; and then he is bound to pay it to the winning party. (w) That is, neither party can rescind the agreement ; * although Lord Ellenborough said otherwise, in one case. (x) If the wager be illegal, either party may claim the money. If the loser claim money he has deposited on an illegal wager, and claim it even after the wager is decided against him, but before it is actually paid over, the stake-holder is bound to return it to him. (y) l But although the wager be illegal, if
(t) Pedder v. Watt, Peake, Ad. Cas. 41.
(u) Eyles v. Ellis, 4 Bing. 112. This was an action of covenant for rent due from the defendant to the plaintiff. At the trial before Onslow, Serjt., it appeared that the plaintiff, in October, authorized the defendant to pay in, at a certain banker's, the amount due. Owing to a mistake it was not then paid; but the defendant, who kept an account with the same bankers, transferred the sum to the plaintiff's credit on Friday, the 9th of December. The plaintiff, being at a distance, did not receive notice of this transfer till the Sunday following, and on the Saturday the bankers failed. The learned serjeant thought that this transfer amounted, under the circumstances, to payment. And this ruling was sustained by the Court of Common Pleas, on a motion for a new trial. Best, C. J., said: "The learned serjeant was right in esteeming this a payment. The plaintiff had made the Maidstone bankers his agents and had authorized them to receive the money due, from the defendant. Was it then paid, or was that done which was equivalent to payment? At first, not; but on the 8th a sum was actually placed to the plaintiff's account; and though no money was transferred in specie, that was an acknowledgment from the bankers that they had received the amount from Ellis. The plaintiff might then have drawn for it, and the bankers could not have refused his draft" See also Bodenham v. Purchas, 2 B. & Ald. 89, and ante, vol. i. pp. 217-220. See Hewes v. Hansom, 10 Gray, 336.
(v) M'Carthy v. Colvin, 0 A. & E. 607.
1 As to the distinction between "bets or wagers,1' and "purses, prizes or premiums, and the driving of horses for either, see Harris v. White, 81 N. T. 582.
(w) Brandon v. Hibbert, 4 Camp. 37. There the plaintiff laid a wager with a butcher that another butcher would sell him meat at a certain price. The wager was accepted, and the money placed in the defendant's hands, and the decision of the question was left to him, and he decided against the plaintiff, who then brought this action to recover his deposit; but Dampier, J., was of opinion that the action could not be maintained, and directed a nonsuit In Bland v. Collett, id. 157, the plaintiff, in the presence of the defendant and one Porter, boasted of having conversed with Lord Kensington. Porter asserted that the plaintiff had never spoken to Lord Kensington in his life. A bet was talked of upon the subject, but none was then laid. Next morning the parties again met, when Porter asked,"what will you now lay that you conversed with Lord Kensington ?" The plaintiff answered, "80 guineas to 10." The money was accordingly deposited in the hands of the defendant, as a stake-holder. Upon which Porter exclaimed, "Now 1 have you; I have made inquiries, and the person you conversed with was Lord Kingston, not Lord Kensington." The plaintiff owned his mistake; but said he had been imposed upon, and gave notice to the defendant not to pay over the money. This action was brought to recover back the deposit of eighty guineas, on the ground that it was a bubble bet. But per Gibbs,
C. J.: "I think the action cannot be maintained. There is nothing illegal in the wager. Nor can it be said that the point was certain as to one party, and contingent as to the other. The plaintiff relied upon his own observation, Porter upon the information he had received. The former was the more confident of the two; and either might have turned out to have been mistaken."
(x) Eltham v. Kings man, 1 B. & Ald. 688. This was an action against a stakeholder to recover back a wager. Lord Ellenborough said: "1 think there is no distinction between the situation of an arbitrator and that of the present defendant; for he is to decide who is the winner and who is the loser of the wager, and what is to be done with the stake deposited in his hands. Now an arbitrator's authority before he has made his award is clearly countermandable; and here, before there has been a decision, the party has countermanded the authority of the stake-holder." This position, however, was strongly doubted in the subsequent case of Maryatt v. Broderick, 2 M. & W. 369.
(y) Cotton v. Thurland, 6 T. R. 406; Smith v. Bickmore, 4 Taunt 474; Bate v. Cartwright, 7 Price, 640; Hastelow v. Jackson, 8 B. & C. 221; Hodson v. Terrill, 1 Cromp. & M. 797 ; Martin v. Hewson, 10 Exch. 787, 29 Eng. L. & Eq. 424. In Manning v. Purcell, 7 De G., M. & G. 66, 81 Eng. L. & Eq. 462, a testator hethe stake-holder has paid it over to the winner, before notice or demand against him by the loser, he is exonerated. (z) But in New York it has been held, under a statute giving the losing party a right of action against the stake-holder for the stake, "whether the same shall have been paid over by such stakeholder or not, and whether any such wager be lost or not," that the stake-holder was liable to the losing party although he had paid over the stake by his directions. (a) But *in such a case he must declare on the statute and cannot recover at common law;(b) and though he has deposited the money of others as well as his own, he can only recover against the stake-holder the portion belonging to himself. (c) When the event has been determined, it is said that the winner may bring an action for the money against the stake-holder, without giving him notice of the happening of the event. (d)
 
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