Cooley's Anemia Blood & Research Foundation for Children, Inc. v. Legalized Games of Chance Control Commission

• Decision Date: 28 January 1963
• Docket Number: No. A--496,A--496
• Citation: 78 N.J.Super. 128,187 A.2d 731
• Parties: COOLEY'S ANEMIA BLOOD AND RESEARCH FOUNDATION FOR CHILDREN, INC., Appellant, v. LEGALIZED GAMES OF CHANCE CONTROL COMMISSION, Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 128

78 N.J.Super. 128

187 A.2d 731

COOLEY'S ANEMIA BLOOD AND RESEARCH FOUNDATION FOR CHILDREN, INC., Appellant, v. LEGALIZED GAMES OF CHANCE CONTROL COMMISSION, Respondent.

No. A--496.

Superior Court of New Jersey, Appellate Division.

Argued Sept. 17, 1962.

Decided Jan. 28, 1963.

Nicholas Martini, Passaic, for appellant.

Thomas F. Tansey, Deputy Atty. Gen., for respondent (Arthur J. Sills, Atty. Gen., attorney).

Before Judges GOLDMANN, FREUND and FOLEY.

The opinion of the court was delivered by

GOLDMANN, S.J.A.D.

Cooley's Anemia Blood and Research Foundation for Children, Inc. (Foundation) appeals from a finding, determination and order of the Legalized Games of Chance Control Commission (Commission), dated February 6, 1962, suspending all outstanding bingo licenses issued to the Foundation for a period of 18 months and declaring it ineligible to apply for such a license for a like period. The order was stayed pending determination of the appeal. The Foundation also filed a supplemental notice of appeal from a subsequent Commission determination denying it permission to pay out of the net proceeds of its bingo games any part of the counsel fees and expenses incurred in connection with the appeal.

The Foundation had duly qualified as a charitable organization for a license to operate weekly bingo games at Passaic Auditorium, Passaic, N.J., for the period October 25, 1960 through February 28, 1961. Its later application to amend the bingo license was approved and resulted in additional weekly games for the period March 7 through June 27 and from September 5 through October 24, 1961.

On August 15, 1961 the Commission notified the Foundation that it would be required to show cause on September 26, 1961 why any outstanding licenses issued to it should not be revoked for a period up to 30 months. The ground for the proposed revocation was that the Foundation had filed false reports of bingo games played at the Passaic Auditorium on January 3, 10, 17, 24 and 31, and on February 7, 14, 21 and 28, 1961, in violation of N.J.S.A. 5:8--25 and 5:8--37 and of Rules 3, 5 and 12 of Part VI, and also Part IX of the rules and regulations of the Commission governing the conduct of bingo games.

N.J.S.A. 5:8--25 provides, in part, that charitable organizations may be licensed to conduct bingo games 'under such conditions and regulations for the supervision and conduct thereof as shall be prescribed by rules and regulations duly adopted from time to time' by the Commission, but only 'when the entire net proceeds of such games of chance are to be devoted to educational, charitable, patriotic, religious or public-spirited uses.'

N.J.S.A. 5:8--37 requires an organization conducting bingo games to file a duly verified statement with the municipal clerk within 15 days after the holding of any game. The report is to show the amount of the gross receipts derived from each game, including receipts from the sale of shares, tickets or rights in any manner connected with participation in said game or the right to participate therein. Further, the report must show each item of expense incurred or paid, and the name and address of each person to whom each such item has been or will be paid, with a detailed description of the merchandise purchased or the services rendered. In addition, the report must include the net profit derived from each game, the uses to which the net profit has been or is to be applied, and a list of the prizes offered and given, with their respective values. The organization is required to maintain such books and records as may be necessary to substantiate the particulars of each report.

Turning to the Commission rules and regulations alleged to have been violated by the Foundation, Rule 3 of Part VI provides:

The entire net proceeds of the games of chance must be devoted to authorized purposes. (See R.S. 5:8--25 as to Bingo and R.S. 5:8--51 as to Raffles).'

Rule 5 of Part VI provides:

'No commission, salary, compensation, reward or recompense may be paid to any person for holding, operating or conducting, or assisting in the holding, operating or conducting of a game of chance, except for bookkeepers or accountants who assist by rendering their professional services for an amount within the schedule of fees fixed by these rules. (See Schedule of Fees 'B') (See R.S. 5:8--26 as to Bingo and R.S. 5:8--52 to Raffles.)'

Rule 12 of Part VI provides:

'No item of expense shall be incurred or paid in connection with the holding, operating or conducting of a game of chance, except such expenses as are bona fide items of reasonable amount for goods, wares and merchandise furnished or services rendered, which are reasonably necessary to be purchased or furnished for the holding, operating or conducting of the game of chance. (See R.S. 5:8--34 as to Bingo and R.S. 5:8--61 as to Raffles.)'

The pertinent sections of Part IX, which the Foundation was charged with violating, are Rules 1 and 5. Rule 1 requires that reports of operations be in the form and contain the information called for by Form 8B--A, prescribed by the Commission for bingo games. Rule 5 provides:

'If a licensee fails to file a report within the time required, or if a report is not properly verified, or Not fully, accurately and truthfully completed, no further license shall issue to it, and any existing license shall be suspended until such time as the default has been corrected.' (Italics ours)

At the December 5, 1961 hearing, Norman D. Valentine, Executive Officer of the Commission, testified for the State. He said that a comparison of the reports filed by the Foundation with those of other organizations conducting bingo games in the area indicated that the Foundation's figures for the sale of extra bingo boards appeared to be lower than those of the other organizations. He had consequently assigned a team of investigators to audit the Foundation's games. The first audit was made March 7, 1961, and was followed by audits on March 14 and May 2 and 9, 1961. On each occasion the investigators counted the players, receipts from the sale of extra boards, and the total receipts from admissions, extra boards and specials.

Valentine testified that he had then analyzed the reports of operations filed by the Foundation for the weekly games from January 3 to February 28, 1961 (this was the period preceding the March 7 audit and during which the organization was charged with having filed false reports), and from the March 7 audit up to and including May 30, 1961. Valentine determined for each game the number of players, the receipts from the sale of extra boards, the average receipts per player from those sales, the total receipts, and the average receipts per player of that total. These figures were tabulated and also charted.

Valentine was asked whether he noticed anything unusual in comparing the figures for the games played before the audit of March 7 and those subsequent to the audit. He testified that the per player average receipts from the sale of extra boards from January 3 to February 28 was $1.63, with a low of $1.53 and a high of $1.70. After the audit, and for the period March 7 to May 30, the average was $1.97, with a low of $1.82 and a high of $2.10. As for the total receipts, which includes admissions, extra board sales and sale of specials, the average per player before March 7 was $3.30, with a low of $3.21 and a high of $3.39. After that date the average was $3.63, with a low of $3.48 and a high of $3.72. The statistical analysis was introduced as Exhibit S--4 in evidence. This exhibit shows that the average per player from the sale of extra boards was substantially higher for each game from March 7 through May 30, as to both the minimum and maximum figures, and the average for the period was 34cents higher than in the pre-audit period. The same is true with respect to the average total receipts per player: both the minimum and maximum average per game was higher in the post-audit period, and the overall average itself increased by 33cents.

The figures on Exhibit S--4 are not challenged, and this for the obvious reason that they were taken directly from the verified reports filed by the Foundation. A further examination of the figures on S--4 is revealing. For example, there were 356 players at each of the games played on January 24 and 31, 1961. They spent $590 on extra boards on January 24, and $586 on January 31. On March 14, 1961, subsequent to the audit, there were also 356 players present; however, they spent $748 for extra boards--a considerable increase. Again, on February 7, 1961 there were 420 players who paid $645 for extra boards. But on March 7, and May 30, 1961 there were only 404 players present, and yet they spent $823 and $822 for extra boards on those respective dates.

Valentine testified that the increase of some 30cents in the average receipts from the sale of extra boards per player, and in the average of total receipts per player, remained constant after March 7. He also testified regarding an analysis of the figures reported by two other organizations conducting bingo games at the Palace Theatre, Passaic, a comparable premises. Counsel for the Foundation objected to the use of these figures, but Valentine was allowed to testify as to whether they showed a constant average per player spent for extra boards, or any sudden increase or decrease. His analysis covered the same periods as for the Foundation, i.e., January 3-February 28 (pre-audit) and March 7--May 30, 1961 (post-audit). He said that the average spent per player at the games conducted by the other two organizations remained at a fairly constant average. In the case of one organization, the average per player for both extra boards and total receipts was slightly higher in the pre-audit period; in the case of the other it was slightly lower. Valentine was also permitted to testify over objection that an analysis of reports submitted by other...