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decided: November 29, 1897.



Author: Harlan

[ 168 U.S. Page 489]

 MR. JUSTICE HARLAN delivered the opinion of the court.

By section 226 of the constitution of Kentucky of 1891 it is provided that "lotteries and gift enterprises are forbidden, and no privileges shall be granted for such purposes, and none shall be exercised, and no schemes for similar purposes shall be allowed. The General Assembly shall enforce this section by proper penalties. All lottery privileges or charters heretofore granted are revoked."

By joint resolution of the General Assembly passed January 30, 1892, the Attorney General of that Common wealth

[ 168 U.S. Page 490]

     was directed, in execution of this constitutional provision, to immediately instituted and prosecute such legal proceedings as might be necessary to suppress or revoke all lotteries or lottery franchises, privileges or charters operated in Kentucky.

In conformity with that resolution the present action was instituted in the Louisville Law and Equity Court. The petition charged that the defendants were exercising in the city of Louisville, Kentucky, and elsewhere, without lawful warrant, the right, privilege and franchise to operate a lottery. The relief asked was a judgment preventing the exercise by the defendants of such lottery franchise.

The defendant Douglas in his answer set out numerous acts of legislation under the authority of which he claimed the right to conduct the lottery in question. He insisted that the statutory and constitutional provisions invoked in support of the action were repugnant to the clause of the Constitution of the United States prohibiting any State from passing a law impairing the obligation of contracts.

The defence was sustained by the court of original jurisdiction, which overruled a demurrer to the answer; and the Commonwealth having declined to plead further, its petition was dismissed. That judgment was reversed by the Court of Appeals of Kentucky, and the validity of the above constitutional provision relating to lotteries, and as applied to the defendant's claim of a lottery privilege, was adjudged not to be repugnant to the Constitution of the United States.

The case is here upon writ of error sued out by Douglas, who claims that by the final judgment of the highest court of Kentucky he has been denied a right and immunity secured to him by the Constitution of the United States.

It appears that under authority conferred by various legislative enactments which need not be specially set forth, the Mayor and Board of Councilmen of the city of Frankfort, a municipal corporation of Kentucky, made, December 31, 1875, a written agreement with one E.S. Stewart, whereby that city sold, conveyed and assigned to him a scheme of lottery composed of 30,900 classes which it had devised, not more than two of which were to be drawn on each day, Sundays excepted,

[ 168 U.S. Page 491]

     until the whole number should have been fully drawn; Stewart to have the right to control and operate such scheme in accordance with the provisions of the acts under which the city proceeded. The agreement provided that, in consideration of the above sale, assignment and transfer, Stewart should pay to the city of Frankfort various sums of money at stated times. As required by the agreement, and in conformity with the acts of Assembly, he executed to the Commonwealth a bond in the penal sum of one hundred thousand dollars, conditioned for a faithful compliance with the provisions of those acts, and for the payment of all sums stipulated to be paid to the city of Frankfort, as well as all prizes drawn in any class under said lottery scheme.

By an act approved March 22, 1890, the General Assembly of Kentucky repealed the charter of the Frankfort lottery. Acts, Ky. 1889-90, c. 391, vol. 1, pp. 42, 43. But Stewart had died before the passage of that act, and by contract with his wife, as sole legatee and devisee of his estate, Douglas acquired the right to operat the lottery scheme that had been acquired by Stewart.

It is stated in the answer -- and as this case was determined upon demurrer to the answer, it must be assumed in the present action to be true -- that Stewart and Douglas fully complied with all the provisions of the above contract, paid all installments due the city of Frankfort as the same became payable, fully performed every condition of his contract and bond, and was ready and willing to carry out the same according to the terms, stipulations and covenants thereof.

The answer further averred that on the 11th day of September, 1878, the Court of Appeals of Kentucky, in the case of Webb v. The Commonwealth of Kentucky -- brought to enjoin the exercise of the privileges of a lottery grant -- adjudged that the sale of a lottery franchise, under the authority of the State, vested in the vendee a property right to conduct such lottery in accordance with the terms of his contract, which could not be repealed by the legislature of the State, and held section 6 of article 21, chapter 28, of the Revised Statutes attempting such repeal to be void so far as it affected the

[ 168 U.S. Page 492]

     rights of the purchaser under a contract made before the passage of the act.

The answer also contained the following averments: "Defendant says that he has a vested right to conduct the lottery business by drawing the classes contained in the scheme which the city of Frankfort sold and conveyed to E. S. Stewart under the terms, conditions and covenants of the contract of December 31, 1875, executed and delivered as aforesaid, and that there has never been at any time more than two classes in said scheme drawn in one day, and there are a large number of classes in said scheme yet to be drawn; that his said right under his said contract was authorized and approved by the Commonwealth of Kentucky, repeatedly adjudged valid by the judicial tribunals of this State, and such right has always been held by the courts of this State inviolable and not subject to repeal, alteration of modification by subsequent legislatures. Defendant says that he has paid large sums of money for said scheme devised as aforesaid and said contract, and has made ...

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