                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                         ASSIGNED ON BRIEFS JULY 14, 2000

ROBINSON PROPERTY GROUP, L.P. D/B/A HORSESHOE CASINO AND
               HOTEL v. YO ANNE RUSSELL

                   Direct Appeal from the Circuit Court for Shelby County
                    No. 97502 T.D.; The Honorable D’Army Bailey, Judge



                  No. W2000-00331-COA-R3-CV - Filed November 22, 2000


This case arises out of a $23,800.00 debt incurred by appellee Yo Anne Russell at the Horseshoe
Casino and Hotel in Robinsonville, Mississippi. The court below granted summary judgment to Yo
Anne Russell because the court held that the debt represented by the drafts is unenforceable in
Tennessee due to public policy considerations embodied in section 29-19-101 of the Tennessee
Code. Plaintiff appeals from the court below, arguing that the trial court erred in granting summary
judgment to Defendant Yo Anne Russell. For the reasons stated hereafter, we reverse the judgment
of the trial court.

   Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Reversed and
                                       Remanded

ALAN E. HIGHERS , J., delivered the opinion of the court, in which DAVID R. FARMER , J., and HOLLY
KIRBY LILLARD , J., joined.

David A. Kirkscey, Memphis, for Appellant

Lawrence R. White, Memphis, for Appellee




                                             OPINION

                                  Facts and Procedural History

         The appellant, Robinson Property Group, L.P., d/b/a Horseshoe Casino and Hotel
(“Horseshoe”) operates a casino and hotel in Robinsonville, Mississippi. The appellee, Yo Anne
Russell (“Russell”), a Tennessee resident, approached Horseshoe in March of 1995 to obtain a “line
of credit” to enable her to issue drafts to the casino. Initially, Russell obtained a $3,000.00 line of
credit from Horseshoe by signing a credit application, furnishing the casino with a blank check and
a copy of her social security card, driver’s license, and a bank credit card. Horseshoe informed
Russell that if she did not pick up the drafts within thirty days, they would be presented to her bank
for payment. Over the next two years, Russell signed a number of drafts. She then presented them
to the cashier’s window at which time she received cash. Russell was a slot machine player and was
therefore given cash at the cashier’s window instead of chips. There was no requirement that the
funds be used in the casino.

        Horseshoe found it necessary to present only two of the drafts to Russell’s bank for payment
in September of 1996. Both of these drafts were for $1,000.00, and both drafts were honored by
Russell’s bank. Over this period of time, Horseshoe increased Russell’s limits. In October and
November of 1996, Russell signed $23,800.00 worth of drafts. These drafts were presented to
Russell’s bank, but they were dishonored due to insufficient funds. Horseshoe’s computer records
reflect that Russell lost a total of $17,815.00 in the casino in October and November of 1996.
Russell claims, however, that she lost all of the money loaned to her by Horseshoe. She claims that
the reason Horseshoe’s records do not reflect all of her losses is because she did not always insert
her VIP card into the slot machines each time she played.1

        Horseshoe began by suing Russell in Shelby County General Sessions Court and then the
case was appealed to Shelby County Circuit Court. The Circuit Court Judge, the Honorable D’Army
Bailey, granted summary judgment to Russell on the grounds that the debt represented by the drafts
was unenforceable in Tennessee due to public policy considerations embodied in section 29-19-101
of the Tennessee Code.

                                             Standard of Review

        We measure the propriety of the trial court’s grant of summary judgment against the standard
of Rule 56.04 of the Tennessee Rules of Civil Procedure, which provides that summary judgment
is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.

       When reviewing a grant of summary judgment, an appellate court must decide anew if
judgment in summary fashion is appropriate. See Cowden v. Sovran Bank/Central South, 816
S.W.2d 741, 744 (Tenn. 1991); Gonzales v. Alman Constr. Co., 857 S.W.2d 42, 44-45 (Tenn. Ct.
App. 1993). Since this determination involves a question of law, there is no presumption of
correctness as to the trial court’s judgment. See id.

                                               Law and Analysis




        1
         A casino issued “VIP card” is used by the casino to track a player’s length and amount of play. The card,
however, must be inserted into a slot machine or checked in at a gaming table before the casino can track one’s play.

                                                        -2-
        The appellant presents three issues for our review, but we find only one to be dispositive.
Specifically, the issue for our review is whether the trial court erred in refusing to give full faith and
credit to the laws of Mississippi regarding the enforceability of the debt in question.

        First, we must determine whether the transaction at issue is an ordinary debt or whether the
transaction is a gambling contract. Corpus Juris Secundum states that even though gambling
contracts often try to take the form of more legitimate contracts, “it is the duty of the courts to pierce
this disguise and to ascertain the real activities involved.” 38 C.J.S. Gaming § 26 (1996). Moreover,
when dealing with a potential gambling contract, courts should determine the real intention of the
parties. See id.

         In the case of Nat’l Recovery Systems v. Bryer, 507 A.2d 1226 (Pa. Super. Ct. 1986), the
court dealt with this same question. The court stated that “there is a presumption of gambling
purpose where the transaction occurs in proximity to the gambling itself in terms of both time and
space.” Id. at 1227. Furthermore, the Bryer court used a test set out by the Nevada Supreme Court
that is stated as follows:

                   In determining the purpose [behind the indebtedness], the
                   significance and relevancy of the surrounding circumstances and
                   environment are readily apparent. If the advancement was made in
                   a gambling establishment in full operation, by the proprietor or his
                   agent, to one then, or immediately prior thereto, engaged in gambling
                   and who ran short of money, the game still being in progress, or if his
                   conversation or the circumstances indicated he intended to resume
                   playing, the purpose of the advancement become[s] clear.

Id. (quoting Craig v. Harrah, 201 P.2d 1081 (1949)).

        Applying the test to the instant case, it becomes clear that the cash advancements made by
Horseshoe were made for gambling purposes. While the actual amount Russell lost at the casino is
disputed, it is undisputed that Russell gambled and lost $17,815.00 of the $23,800.00 loaned to her
by Horseshoe. Moreover, Russell was never more than a few feet away from the slot machines and
other gambling activities when she drew on her line of credit at the casino. Under the
aforementioned test, the facts of the instant case indicate that the “loans” made by Horseshoe were
sufficiently proximate in time and place to Horseshoe’s gambling activities as to be presumed for
gambling purposes. Therefore, we find that the transaction at issue was a gambling contract.

       The gaming transaction at issue between the parties was entered into in Mississippi.
Although section 87-1-1 of the Mississippi Code makes gambling contracts void,2 section 87-1-7 of


         2
             Contracts, judgments, securities, conveyances made, given, granted, or executed, where the whole or any
part of the con sideration o r found ation there of shall be for money, or any valuable thing won, lost, or bet at any game
                                                                                                              (continu ed...)

                                                            -3-
the Mississippi Code expressly exempts lawful gambling activities from the operation of the
aforementioned statute making gambling contracts void.3 Moreover, credit instruments, defined in
section 75-76-5(g) of the Mississippi Code as documents evidencing a gaming debt owed to a
licensed person, are expressly enforceable under section 75-76-175(1).4 Thus, it is clear that the
contract at issue was a lawful gambling contract pursuant to Mississippi law.

       The next question we must answer is whether Tennessee must enforce the Mississippi
gambling contract. We note that, “it is a familiar rule in Tennessee that the construction and validity
of a contract are governed by the law of the place where the contract is made.” Ohio Casualty
Insurance Co. v. Travelers Indemnity Co., 493 S.W.2d 465, 466 (1973). Further, a contract is
presumed to be made with reference to the law of the place where it was entered into, unless it
appears that it was entered into with reference to the law of some other state. See Deaton v. Vise,
210 S.W.2d 665 (1948).

        While Tennessee courts normally apply the law of the state where the contract was entered
into, Tennessee courts may apply Tennessee law, regardless of the general rule of lex loci contractus,
if giving effect to a foreign law would contravene a strong public policy of Tennessee. See Martin
v. Dealers Transport Co., 342 S.W.2d 245, 249 (Tenn. Ct. App. 1960).

         We must now examine Tennessee public policy on the issue of gambling. First, section 29-
19-101 of the Tennessee Code states, “All contracts founded, in whole or in part, on a gambling or
wagering consideration, shall be void to the extent of such consideration.” Tenn. Code Ann. § 29-
19-101 (1999). Additionally, one form of gambling, a lottery, is specifically proscribed by our state
constitution at Article 11, section 5.5 Thus, if the transaction at issue were entered into in Tennessee,
it is evident that the contract would be void and unenforceable in a Tennessee court. It is important


         2
           (...continued)
or games, or on any horse-race, cock-fight, or at any other sport , amusement, or pastime, or on any wager whatever,
or for the reimbursing or repaying any money knowingly lent or advanced for the purpose of such gaming or gambling,
or to be wagered on any game, play, horse-race, cock-fight, or on any sport, amusement, pastime, or wager, shall be
utterly void. Miss. Code Ann. § 87-1-1 (199 9).

         3
            Sections 87-1-1. . . shall not apply to contracts for future delivery which are valid under succeeding sections
of this chapter and shall not apply to activity which is lawfully c onduc ted pursu ant to the reg ulatory au thority of th is
act. Miss. Co de Ann . § 87-1-7 (1999) (For reference to “this act”, see Mississippi Gaming Control Act, enacted by Laws
1990, 1 st Ex. Sess., Ch. 45, codified at § 75-76-1 et. seq.).
         4
             “Credit instru ment” means a writing which evidences a gaming debt owed to a person wh o holds a license
at the time th e debt is created, and includes any writing taken in consolidation, redemption or paym ent of a pr ior credit
instrument. Miss. Code Ann. § 75-7 6-5(g) (1999).
          A credit instrument accepted on or after June 29, 1991, is valid and may be enforced by legal process. Miss.
Code A nn. § 75 -76-17 5(1) (19 99).
         5
            The Legislature shall have no power to authorize lotteries for any purpose, and shall pass laws to prohibit
the sale of lottery tickets in this state. Tenn. Const. Art. 11, § 5.

                                                             -4-
to remember, however, that the transaction at issue was not entered into in Tennessee. It was entered
into in Mississippi where such transactions are legal.

         This court has dealt with a similar question on two prior occasions. First, in Hotel Ramada
Inc., v. Thakkar, No. 03A019103CV00113, 1991 WL 135471 (Tenn. Ct. App. 1991) (perm. app.
denied), the defendant was a Tennessee resident who had executed seven negotiable checks totaling
$19,000.00 in return for chips at a Nevada casino. The Defendant lost all of the money gambling
at the casino. Thereafter, the Ramada Casino obtained a judgment in a Nevada court and sought to
have the judgment enforced in Tennessee. While Thakkar is slightly different from the case at bar
in that the casino in Thakkar was seeking to enforce a pre-existing judgment from another state, the
public policy analysis is still the same. This court, in Thakkar, held that, “[o]ur review of the case
law leads us to conclude that enforcement of a debt incurred in the purchase of gambling chips in
a state where gambling is perfectly legal does not violate the strong public policy of this State.” Id.
at *3. Moreover, in discussing Tennessee public policy on the issue of gambling, this court in
Thakkar noted that, “the Tennessee legislature has specifically provided for horse racing with the
attendant pari-mutuel betting, which leads one to believe that gambling per se is not violative of
Tennessee public policy.”6 Id. at *3.

        Additionally, this court dealt with another similar case in Mirage v. Pearsall, 02A01-9609-
CV-00198, 1997 WL 275589 (Tenn. Ct. App. 1997) (perm. app. denied). In Mirage, the defendant,
a Tennessee resident, executed eight separate negotiable instruments to a Nevada casino totaling
$100,000.00 in exchange for game chips. The defendant lost all of his game chips playing black jack
at the casino. The eight instruments were subsequently dishonored. The casino then sued and
obtained a default judgment against the defendant in Nevada. Thereafter, the casino sought to have
the Nevada judgment enforced in Tennessee. The defendant in Mirage asserted the same argument
that the defendant asserted in the present case; gambling is against the public policy of Tennessee
and therefore full faith and credit should not be extended. This court, however, in Mirage, rejected
that argument and held that Tennessee must give full faith and credit to the Nevada judgment.
        The full faith and credit clause of the United States Constitution provides as follows:

                 § 1. Full faith and credit to records and judicial proceedings of
                 states.–Full faith and credit shall be given in each state to the public
                 acts, records, and judicial proceedings of every other state. And the
                 Congress may by general laws prescribe the manner in which such
                 acts, records and proceedings shall be proved, and the effect thereof.

U.S. Const. art. IV, § 1 (emphasis added).




       6
           See Title 4, Chapter 36 of the Tennessee Code.

                                                       -5-
        We note, as emphasized above, that the Full Faith and Credit Clause of the United States
Constitution provides that not only are judgments from sister states to be given full faith and credit,
but the public acts of each state shall be given full faith and credit as well.

       When deciding whether to enforce another states’ law, while discussing public policy
considerations, Judge Cardozo stated,

               The courts are not free to refuse to enforce a foreign right at the
               pleasure of the judges, to suit the individual notion of expediency or
               fairness. They do not close their doors unless help would violate
               some fundamental principle of justice, some prevalent conception of
               good morals, some deep-rooted tradition of the common weal.

Loucks v. Standard Oil Co., 224 N.Y. 99, 111 (N.Y. Ct. App. 1918).

        Finally, we note the case of Intercontinental Hotels Corp. v. Golden, 254 N.Y.S.2d 527 (N.Y.
1964). The plaintiff in Golden sought to avoid enforcement of checks he had given a Puerto Rican
casino to settle gambling debts which were legal there. The Golden court, while discussing
defendant’s public policy argument, stated, “injustice would result if citizens of this State were
allowed to retain the benefits of the winnings in a state where such gambling is legal, but to renege
if they were losers.” Id. at 531. We too find that it would be a great injustice if Tennesseans could
reap the benefits of gambling in states where it is legal when they are successful, but seek shelter in
Tennessee courts when they lose. As a result, we conclude that there is nothing in the Mississippi
laws in question that outrages the public policy of Tennessee. Therefore, the gaming contract
between the parties is enforceable in Tennessee.

                                             Conclusion

        Accordingly, for the aforementioned reasons, we hereby reverse the trial court and remand
this case for a trial on the merits consistent with this opinion. Costs on appeal are taxed to Yo Anne
Russell, and her surety, for which execution may issue if necessary.




                                                       HIGHERS, J.




                                                 -6-
