Stratford Evening Post. WITH WHICH IS INCORPORATED THE EGMONT SETTLER SATURDAY, MAY 11, 1912. THE PREMIUM BONOS' CASE.

Stratford Evening Post, Volume XXXIII, Issue 12, 11 May 1912, Page 4

Stratford Evening Post. WITH WHICH IS INCORPORATED THE EGMONT SETTLER SATURDAY, MAY 11, 1912. THE PREMIUM BONOS' CASE.

Commenting upon tho decision of the Full Bench of the Supreme Court on tlie appeal of the rlnternational Investment Company, the Wellington “Past” remarks that anything relating to the interpretation of the Gaming Acts is usually interesting, owing to the wide prevalence and gravity of the abuses'at which they are aimed,

vhc intricacy of their provisions, and

ilio difficulties of enforcement. Proceeding, the “Post” says:—ln the present case, there was an additional element of interest in the differences between. New Zealand’s laws and customs and those of a foreign but friendly and closely-allied nation. With

this aspect of tlio matter, however, the court was not concerned. No technical problem in tiie conflict of laws was raised by the differences in question. What was done by the appellant company was done under the British flag and on New Zealand soil, it was, therefore, just as fully subject to New Zealand law as the sale of a pakapoo ticket by a Chinaman in Haining Street. In accordance with French law, which recognises in lotteries under proper restrictions a legitimate source of public revenue, the -Municipality of Paris issues premium

bonds in which the element of chance plays n considerable part, and the question was wlicther tlie sale of one of these bonds in New Zealand by the International Investment Company was an oli'once against New Zealand law. Hid the sale of this bond give the purchaser an interest in “a scheme hy which prizes of money wore gained by a mode of chance contrary to law”? If the transaction had concerned an ordinary lottery or sweepstake, the question would have been too obvious to be worth an appeal, the fact that the prize was to come from Paris being, as we have said, immaterial if (he sale of (lie interest in the “scheme

took place here. 13ut the scheme with which the court had to deal was hy no means of so simple a character, it offered a genuine investment, winch guaranteed in any event a certain rate of interest, hut utilised the element of chance to provide special prizes

ior some of tlio contributors. Every business investment necessarily involves some risk, and the prizes are usually proportioned to the risks. Had this enterprise of the City of Paris exceeded the legitimate element of risk inherent in all profitable business? The bonds in question were issued in respect of a loan required by the municipality for public purposes. They were issued at par, had a ctirrency of sixty years, and bore interest for tlie whole period at 2} por cent. In France, as in England, this rate of interest is a good deal a sirer to the current rate of interest than it is in New Zealand, but in Xew Zealand at least some very substantial extra inducement would lie' reeded to make an investor content

v. itli a 2.V per ciait. security, however safe. In this French scheme the cxti ,i inducement was provided by periodical drawings, in which some of the ;;rise-winners would get their money b ek with a handsome honus before tlie li.ne tlxed for redemption. The highest premium obtainable in tin’s way

was 10,000 francs, obviously a very alluring bait when ado eel to tho certainty of 2\ per cent, and a gilt-edged security during tiie interval of waiting. The argument for the appellant company was that the scheme was a sound and bona lido investment for a public purpose, and that the element ol chance which was thrown in as an extra was not of the essence of the scheme, and should not be allowed to vitiate the whole of it. The decision of the Full Court, affirming that of Dr. INI ‘Arthur, S.M., shows that the technicalities of the law and the demands of common-sense are not always at variance. Both the excellence of the object for which the money was raised and the excellence of the security were ruled to be irrelevant. These considerations would not have sufficed unaided to draw a New Zealand investor’s money. “In such circumstances,” said Mr Justice William j in delivering the judgment of the Court, “it seems to us that the real and substantial inducement to a person who takes up those lionds is the hope of drawing a prize. . . He gives for the bond a sum in excess of what he would have given if there 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 and simply for the chance, of obtaining a prize.’’ Technically, ‘ the sums thus contributed constituted the fund out of which the investors were from time to time to draw prizes by lot, and the Court accordingly held the scheme to be a lottery within the meaning of the statute., The gambling clement was a necessary induccmnt to investors, and therefore was hold to colour the whole scheme.