US SUPREME COURT DECISIONS

Municipal corporations, acting within the limits of the powers conferred upon them by the legislature, in the exercise of a special franchise granted to them, and the performance of a special duty imposed upon them are responsible for the acts and contracts of their agents, duly appointed and authorized, within the scope of the authority of such agents in the same manner as other corporations and private individuals are responsible on their promises, express and implied.

Where, by the charter granted by Congress to the City of Washington, the corporation was empowered "to authorize the drawing of lotteries," for effecting certain improvements in the city, and upon certain terms and conditions, held that the corporation was liable to the holder of a ticket in such a lottery for a prize drawn against its number, although the managers appointed by the corporation to superintend such lottery were empowered to sell and had sold the entire lottery to a lottery dealer for a gross sum who was, by his agreement with them, to execute the details of the scheme as to the sale of the tickets, the drawings, and the payment of the prizes.

It seems that the power granted in the charter "to authorize the drawing of lotteries" cannot be exercised so as to discharge the corporation from its liability, either by granting the lottery or selling the privilege to others or in any other manner, but the lotteries to be authorized by the corporation must be drawn under its superintendence for its own accounts and on its own responsibility.

This was an action of assumpsit brought by the plaintiff in error to recover of the defendants the amount of a prize drawn in a lottery called "the fifth class of the national lottery." A verdict was found for the plaintiff in the court below, subject to the opinion of the court, on a case agreed, on which judgment was rendered for the defendants, and the cause was brought by writ of error to this Court.

By the Constitution of the United States, Congress has chanrobles.com-red

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power to exercise exclusive legislation in all cases whatsoever over the District, which being ceded by particular states, may become the seat of the government of the Union. The District of Columbia having been ceded for that purpose, Congress passed an act creating a municipal corporation for the City of Washington, and by the Act of 4 May, 1812, for amending the charter, gave the corporation

"full power and authority to authorize the drawing of lotteries for effecting any important improvement in the city, which the ordinary funds or revenue thereof will not accomplish, provided, that the amount to be raised in each year shall not exceed the sum of $10,000, and provided also that the object for which the money is intended to be raised shall be first submitted to the President of the United States and shall be approved by him."

For the purpose of carrying this power into execution, ten successive resolutions were passed by the corporation, the first of which was approved by the President of the United States on 23 November, 1812, and the last on 21 May, 1821, each of them for raising $10,000 by lottery, for the several objects of endowing two public schoolhouses on the Lancasterian system; of building a work house and penitentiary, and a town house or city hall. On 24 July, 1815, the corporation passed an ordinance for carrying into effect the three first of the above resolutions, and appointed certain managers by name, viz., John Davidson, Thomas H. Gillis, Andrew Way, Jr. Moses Young, William Brent, Daniel Rapine, and Samuel N. Smallwood, whose duty it was made to agree on and propose a scheme or schemes of a lottery or lotteries, to raise the sum of $30,000 (clear of all expenses), and to sell and dispose of the tickets therein to the best advantage with the least possible delay, and diligently to attend the drawing of the said lottery or lotteries, which should be in the City of Washington and within 60 days after the drawings of the same, respectively (the time of each drawing not to exceed two years), to pay and satisfy the fortunate adventurers for prizes, and, within 70 days, to pay over the balance after deducting all necessary expenses, into the city treasury, and giving to said managers full power and authority to appoint all necessary chanrobles.com-red

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agents, clerks, and servants to do and perform all such acts and things as might be necessary to carry into effect the provisions of the ordinance. Another ordinance was passed on 17 November, 1818, for the purpose of carrying into effect the 4th, 5th, 6th, and 7th of the aforesaid resolutions, by which (inter alia) the mayor was authorized to appoint seven citizens to act as managers for the purpose aforesaid, whose duty was declared to be to agree on a scheme of a lottery to raise the sum of $40,000 (clear of expenses), and to sell the said lottery or dispose of the tickets therein to the best advantage, with the least possible delay and diligently to attend the drawing of the said lottery, which should be in the City of Washington, provided, however, that if the said managers or a majority of them, should sell the said lottery, the individual or individuals purchasing the same, should have the power of making a scheme for the aforesaid lottery, and within 60 days after the drawing (the time of drawing not to exceed one year), to pay and satisfy the fortunate adventurers for prizes, and within 70 days to pay over the balance, after deducting all necessary expenses, into the city treasury, with the like power and authority to the managers as in the former act, to appoint all necessary agents, clerks, and servants, &c. The mayor appointed, under the authority of the last mentioned act, seven citizens to act as managers for the purposes aforesaid, the same as those appointed by name in the former act, except that in the last, Roger C. Weightman takes the place of Samuel N. Smallwood.

On 25 October, 1819, another ordinance was passed by which the managers appointed under the ordinance of 1815 were empowered to sell and dispose of the lotteries to which that ordinance refers, or so much thereof as yet remains to be drawn, in such classes and on such terms and conditions as should appear to them right and expedient.

In pursuance of the ordinances of 1815 and 1819, the managers sold to David Gillespie, of New York, a lottery called the "Fifth Class of the Grand National Lottery," for the sum of $10,000, to be paid before the commencement of the drawing thereof, and the following articles of agreement were entered into for that purpose. chanrobles.com-red

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"Memorandum of an agreement, made and entered into this 4 May, 1821, between Roger C. Weightman, John Davidson, Thomas H. Gillis, Andrew Way, Jr., Moses Young, William Brent, and Daniel Rapine, as managers of the lotteries authorized by an act of the Board of Aldermen and Board of Common Council of the City of Washington for the purposes therein mentioned, approved July 24, 1815, of the one part, and David Gillespie, of the City of New York, in the State of New York, of the other part:"

"Whereas, by an act of the Board of Aldermen and Board of Common Council of the said City of Washington approved October 25, 1819, supplementary to the act aforesaid, the said managers are authorized and empowered to sell and dispose of the said lotteries in such classes and on such terms and conditions as shall appear to them right and expedient and according to the true intent and meaning of the act aforesaid, and that the said managers, for the purpose of raising the sum of $10,000 in conformity with the provisions of the said first mentioned act and in pursuance of the power and authority in them vested by the said supplementary act, have agreed to sell and dispose of, to the said David Gillespie, a lottery, denominated the Fifth Class of the Grand National Lottery, to be drawn according to the scheme hereunto annexed; and the said David Gillespie, in consideration thereof, hereby agrees to pay to the said managers the sum of $10,000, before the commencement of the drawing the said lottery, or class, at his own proper cost, charge and expense; to pay and defray all, and all manner of costs, charges, and expenses of the said lottery, or class, excepting the expense of drawing the same, and to draw the same in the City of Washington, in the presence of the said managers, and to finish and conclude the said drawing within two years from the date hereof, and to pay all the prizes within sixty days from the completion of the said drawing. It is further understood and agreed by and between the said parties that the said David Gillespie is to provide, at his own cost and expense, two competent clerks to assist in the drawing of the said lottery or class, and to execute and deliver, before the commencement of the drawing of the said lottery or class and within thirty days from the date hereof to the said managers a bond with such security

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as may be approved by them in the penal sum of $35,00, conditioned for the true, fair, and faithful drawing of the said lottery or class and according to the said scheme, for the punctual payment of all prizes, and for conducting the said lottery or class fairly and honestly and according to this agreement and the true intent and meaning of the said acts of the said Board of Aldermen and Board of Common Council."

The bond with security, as required by the above agreement, was given by Gillespie on 28 May, 1821.

On the 22d of the same month, an ordinance of the corporation was passed authorizing the managers to appoint a president, whose duty it should be, in addition to the duties imposed by the ordinances of 1815 and 1819, to sign all contracts with the concurrence of a majority of the managers and to sign all the lottery tickets in every scheme or schemes sold by them. The 2d section of the ordinance allowed each of the managers of the city lotteries $3 each day he had been or should be employed, and the 7th section enacts that this compensation, "except for the class now contracted for," should be provided for and paid out of the proceeds of lotteries thereafter contracted for.

Under this authority, Thomas H. Gillis was appointed president, who signed the following ticket, No. 2929, on which the suit was brought, and which was endorsed, "Undrawn 29th day over. D. Gillespie, per J. James." The ticket was purchased by the plaintiff, from an agent of Gillespie, at Richmond, Virginia, and drew the prize of $100,000, in the fifth class of the lottery.

"National Lottery, Number 2929. $100,000 highest prize. William Brent, John Davidson, Thomas H. Gillis, Andrew Way, Jr., Moses Young, Daniel Rapine, R. C. Weightman, managers. This ticket will entitle the possessor to such prize as may be drawn to its number if demanded within twelve months after the completion of the drawing, subject to a deduction of fifteen percent. Payable sixty days after the drawing is finished. Washington City, February, 1821. Thomas H. Gillis, Manager. By authority of Congress."

In the margin, on one side -- "Fifth Class." On the other, "For erecting two public schoolhouses, a penitentiary, and town hall." chanrobles.com-red

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The drawing of the lottery was advertised in two newspapers printed in the City of Washington; in the National Intelligencer from 18 May, 1821, and in the Washington City Gazette from 17 July, 1821, until the completion of the lottery. These advertisements exhibited the scheme agreed upon between the managers and Gillespie and annexed to their contract, gave notice of the time when the drawing would take place, of the number of days to be employed in the drawings, and that they would be completed as soon as possible, under the superintendence of the managers, whose names were annexed. To each of these advertisements was appended an advertisement signed by Gillespie as "agent for the managers," for the sale of tickets at his "Fortunate Office, Pennsylvania Avenue, Washington City." The lottery was drawn in pursuance of the advertisements, and the managers superintended the drawing. In its progress, a postponement took place, and an advertisement appeared purporting to be signed by three of the managers, giving notice of the postponement and its cause. Another advertisement soon afterwards followed purporting to be signed by the President, by order of the board, giving notice when the drawing would recommence.

As soon as the scheme was agreed on, all the tickets, amounting to 50,000 in number, were delivered by the managers to Gillespie, some of them signed and others unsigned by the President, the latter of which it was necessary to take to him to be signed before they could be sold. Sometime after the drawing commenced, the president refused to sign tickets unless an equivalent in prize tickets, either paid or taken in by Gillespie or drawn on hand, or unless the notes of individuals which Gillespie had taken, payable to himself, for tickets sold, were deposited with them. When Gillespie's clerk and agent, Webb, presented tickets to be signed, he was obliged at the same time to deposit such prize tickets or promissory notes, and on some occasions when tickets were called for and wanted, the managers refused to sign the same for want of such equivalent. The amount of the prize tickets so deposited with the managers was about $141,779. The managers on such occasions chanrobles.com-red

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objected to trusting Gillespie with the disposal of the tickets much beyond the penalty of his bond, and Webb, who was a witness in the cause, understood from the conversations and transactions between the parties at the time that this precaution arose from doubts which had been circulated respecting Gillespie's solvency. chanrobles.com-red

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