Intercontinental Hotels Corp. v. Golden, 15 N.Y.2d 9 (1964)

New York courts will generally enforce rights validly created by the laws of another jurisdiction, even if those rights arise from activities (like gambling) that are restricted or prohibited in New York, unless enforcing those rights would violate a strong public policy of New York.

Summary

Intercontinental Hotels Corp. sued Golden to recover $12,000 in gambling debts evidenced by a check and I.O.U.s Golden incurred at the plaintiff’s licensed casino in Puerto Rico. The debts were valid and enforceable under Puerto Rican law. The issue before the New York Court of Appeals was whether New York’s public policy against gambling prevented its courts from enforcing these legally contracted debts. The Court of Appeals held that it did not, reasoning that New York’s public policy, as reflected in evolving social attitudes and the legalization of certain forms of gambling, did not preclude the enforcement of gambling debts validly contracted in jurisdictions where such activity is legal and regulated. The Court reversed the Appellate Division’s decision and reinstated the Supreme Court’s judgment in favor of Intercontinental Hotels.

Facts

Plaintiff, Intercontinental Hotels Corp., owned and operated a government-licensed gambling casino in Puerto Rico.
Defendant, Golden, incurred gambling debts at the casino, totaling $12,000.
Golden provided a check and I.O.U.s to cover the debts.
Golden failed to pay the debts.
Under Puerto Rican law, the gambling debts were validly contracted and enforceable.

Procedural History

Plaintiff sued Defendant in the Supreme Court, New York County, to recover the gambling debts.
The Supreme Court, New York County, entered judgment in favor of the Plaintiff.
The Appellate Division reversed the Supreme Court’s decision, dismissing the complaint.
The Plaintiff appealed to the New York Court of Appeals.

Issue(s)

Whether New York courts must deny access to a party seeking to enforce obligations validly entered into in the Commonwealth of Puerto Rico and enforceable under Puerto Rican law, specifically gambling debts.

Holding

Yes, because in this case enforcing the gambling debt does not offend New York’s sense of justice or menace the public welfare, given the evolving social attitudes toward gambling and the fact that the gambling was legal and licensed in Puerto Rico.

Court’s Reasoning

The Court of Appeals considered whether enforcing a foreign right (the gambling debt) would violate New York’s public policy. The Court noted that foreign-based rights should be enforced unless the underlying transaction is “inherently vicious, wicked or immoral, and shocking to the prevailing moral sense.”

The Court reviewed past New York decisions, including Thatcher v. Morris, Harris v. White, and Ormes v. Dauchy, where the Court upheld contracts involving activities illegal in New York but legal and valid elsewhere. The court quoted Loucks v. Standard Oil Co., stating that courts should not refuse to enforce a foreign right unless it violates some “prevalent conception of good morals.”

The Court rejected the argument that New York’s policies against gambling rendered all gambling contracts void, stating that such considerations apply only to transactions governed by New York domestic law. The Court emphasized that “Public policy is not determinable by mere reference to the laws of the forum alone. Strong public policy is found in prevailing social and moral attitudes of the community.”

The Court pointed to the legalization of pari-mutuel betting and bingo games in New York as evidence that the public no longer considers authorized gambling a violation of good morals. The Court distinguished cases involving Nevada gambling debts, noting that Nevada law does not provide for the enforcement of such debts, whereas Puerto Rican law does.

The Court concluded that enforcing the Puerto Rican gambling debt would not be “repugnant to the ‘public policy of this State’” and that it would be unjust to allow New York citizens to benefit from legal gambling in another jurisdiction but renege on their debts. The Court also pointed out that Puerto Rican law allows courts to reduce or decline to enforce gambling obligations if they exceed what “a good father of a family” would typically spend.