S.D. justices invalidate gambling-tainted note

Kathy Woods Nov. 12, 2009, 12:01am

PIERRE, S.D. (Legal Newsline)-A $1,500 gambling debt nullifies a loan of $33,000, the South Dakota Supreme Court has ruled.

In its ruling, the state's high court cited a 1907 law that says notes given in full or partial consideration of gambling debts are absolutely void.

The case involves Donald Davis and Gerald Neve, who met in the early 1990's while they gambled in card games at an Elks Club.

One night in 1992. Neve lost $1500 to Davis during one of their gambling sessions. Unable to pay the debt Davis said they would work something out, court documents indicate.

In September 1993, Neve fell on financially hard times and Davis made him a loan of $33,000, which according to Neve included the gambling debt.

In 2005, Neve sought an order to have the promissory note declared invalid. Davis filed a countersuit claiming that Neve owed him $83,156 with interest and minus the amount Neve had already paid.

A jury in 2007 found that the loan did indeed include the gambling debt. Circuit Judge Kathleen Caldwell declared the note void. Later, Caldwell said there was not enough evidence to support the jury's verdict and it went to the appeals court.

Davis died after the appeal was filed. Attorney for Neve, Rollyn Samp, said that Neve had settled with Davis' estate.

In a 3-2 ruling Thursday, the South Dakota high court concluded that Neve's testimony alone was enough evidence for the jury to reach its decision and reinstated the jury's decision.

The two dissenting Justices believed the loan should have been enforced stating; "A weak connection to gambling should not be used to avoid repaying a legitimate loan," they said.

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