Finster v. Keller

• Decision Date: 22 July 1971
• Citation: 96 Cal.Rptr. 241,18 Cal.App.3d 836
• Court: California Court of Appeals Court of Appeals
• Parties: John Alan FINSTER and Doris Effie, Plaintiffs, Appellants and Respondents, v. James Don KELLER, as District Attorney of San Diego County et al., Defendants, Appellants and Respondents. Civ. 10395.

Page 241

96 Cal.Rptr. 241

18 Cal.App.3d 836

John Alan FINSTER and Doris Effie, Plaintiffs, Appellants and Respondents, v. James Don KELLER, as District Attorney of San Diego County et al., Defendants, Appellants and Respondents.

Civ. 10395.

Court of Appeal, Fourth District, Division 1, California.

July 22, 1971.

Rehearing Denied Aug. 3, 1971.

Hearing Denied Oct. 6, 1971.

[18 Cal.App.3d 839] Hervey & Mitchell, and Edgar B. Hervey, San Diego, for plaintiffs, appellants and respondents.

James Don Keller, Dist. Atty., of San Diego County, and Richard H. Bein, Deputy Dist. Atty., Thomas C. Lynch, Atty. Gen., and Charles B. McKesson, Deputy Atty. Gen., Bertram McLees, Jr., County Counsel of San Diego County and Donald L. Clark, Deputy County Counsel, for defendants, appellants and respondents.

OPINION

WHELAN, Associate Justice.

John Alan Finster (Finster) and Doris Effie (Effie), plaintiffs, sought and were found by the trial court to have standing to seek declaratory relief whether a certain scheme for obtaining a possible large return of money for an insignificant investment is a lottery, within the definition of Penal Code section 319. They appeal from the judgment holding the scheme to be a lottery as a matter of law.

The action was against the District Attorney of San Diego County and the Attorney General of the State of California, in their official capacities (defendants).

Defendants have appealed from that portion of the judgment holding that a certain form which plaintiffs had obtained without cost and distributed gratis among the patrons of their business establishments was not a paper, device or paraphernalia whose presence in a room kept by either of the defendants would make such defendant offend against Penal Code section 337a, and was not subject to seizure under Penal Code section 335a. Defendants argue also they have established the affirmative of a special issue pleaded that distribution of such forms violates Penal Code section 322.

The scheme in question is one known as the 5--10, operated and managed by what is popularly known as the Caliente Race Track (Caliente) in Tijuana, Baja California, Mexico.

Under that scheme, one who wishes to participate attempts to select in advance the winners of the fifth through the tenth races to be run at Caliente on either Saturday or Sunday of each week; such participant or player must place the numbers of his selections in spaces afforded on a printed form. The numbers are those assigned on the day's program to horses whose names appear as entries on the program. He must also place in other spaces provided the number of an alternate selection in each of those six races. In person or otherwise he must turn in the form at Caliente before post time of the fifth race on the chosen day, accompanied by two dollars or any multiple thereof, and receive back a validated duplicate of the original which is retained by the Caliente management.

The rules governing the operation of the 5--10 are printed on the duplicate form that is to be filled in with the selected hoped-for winners. The forms are printed on special paper made by the National Cash Register Company and each double form bears a serial number. One part of the double form is sensitized so that the lower part receives the impressions of the numbers written on the upper part. The forms are furnished at the track by the management and are made easily available in large numbers. Only that form may be used and only that form is recognized by the Caliente management.

The player may fill in as many forms as he wishes with wholly different selections or with combinations of selected winners and turn in such forms with the required contributions.

Those payments are held by the Caliente management in what is called the 5--10 pool, and from it is deducted the track's percentage. The remainder is divided into two parts: 75% Is paid to the participant or divided among the participants who have picked six winning horses in proportion to the amount of their respective contributions. If no one has selected six winners, the winner's portion goes to that one or those with the largest number of winning horses; the other 25% Of the prize money is divided among those who have selected winning horses next greatest in number after the number of winning horses selected by those receiving the 75% Of the pool.

In the event a horse listed among the first choices should be scratched, the alternate horse in that race fills the place. If both should be scratched, the eligible horse next listed in the list of entries after the player's first selection fills the place.

There was testimony of experts that there are substantial elements of chance that even an informed and intelligent student of the form, pedigree, record and condition of horses entered in a certain race with relation to the length of the race, the rider, trainer, weight carried, number and quality of the other entries, probable condition of the track, and such other factors as might affect the outcome of the race, would be able to select the winning horses in six successive races.

Such a bettor, if he were accustomed to winning about 40% Of his wagers, would have about one chance in 250 of winning the 5--10.

An unskilled bettor who made his selections on some haphazard or arbitrary scheme, would have about one chance in 999,999.

Plaintiffs' arguments that the 5--10 scheme is not a lottery come under three headings.

It is argued first the requirement is not met that in a lottery an agreement, understanding, or expectation that the property be distributed by chance, since there is no showing the race track operators agreed or consented the pool would be distributed by chance, and the management must be a party to the agreement; since there is no meeting of the minds, there is no agreement.

The nature of the plan in its rules and its operation determines whether the distribution is by chance. The absence of any verbal declaration to that effect is of no consequence. There is no question as to the understanding of the manner in which the pool is to be divided. Chance determines the manner of division and the requirement of the statute is met.

The second argument is based upon section 19 of article IV of the California Constitution, which reads:

'(a) The Legislature has no power to authorize lotteries and shall prohibit the sale of lottery tickets in the State.

'(b) The Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results.'

The argument is two-pronged. One branch derives from the difference in language of the present section and that of section 26 of article IV of the 1879 Constitution which it replaced. The 1879 provision read:

'The Legislature shall have no power to authorize lotteries or gift enterprises for any purpose, and shall pass laws to prohibit the sale in this State of lottery or gift enterprise tickets, or tickets in any scheme in the nature of a lottery * * *'

It is argued that the present section is narrowly directed at what may be called the classical lottery; the 1879 provision, now eliminated, was intended to be more comprehensive in its proscription.

The present constitutional provision was adopted in 1966. By that time the earlier narrower meaning of lottery had been abandoned by the courts. ¹

In People v. Rehm, 13 Cal.App.2d Supp. 755, 758, 57 P.2d 238, 240, the court said 'Schemes, in which ratiocination was given a part in the hope that it would dress the chance up sufficiently so that it would not be recognized, have been discussed, however. * * * So it has been that contests wherein, seemingly, deductive reasoning would play a great part, have been held lotteries.'

The present constitutional provision, equally with the earlier provision, is directed at any scheme by whatever name it might be called that falls within the meaning of lottery in common usage.

Plaintiffs say correctly that not every game of chance is a lottery, and argue that if the 5--10 is a game of chance it is, nevertheless, not a lottery.

It is argued that because under subsection (b) of section 19 of article IV the Legislature has provided for wagering on the results of horse races and horse race meetings, no such wagering provided for by the Legislature can be a lottery.

We disregard the possible argument that subsection (b) is an exception to subsection (a) which states the Legislature has no power to authorize lotteries.

We note, however, that if it be arguable that all wagering on the results of horse racing is a lottery, the second paragraph of the section has equal standing with the first and to that extent might be considered as an exception thereto. ²

In fact the Legislature has provided for wagering on horse races under severe restrictions. With a limited exception, the wagers on each race must be pooled separately. The exception is for the 'daily double' selections for which there is a separate pool.

In theory, in the daily double the amount wagered by a player who has picked the winner of the first of the two races wins him a share of the pool for first place proportionate to the number of those picking the winner; that all such winnings remain in the pool to be divided after the second of the two reces among all who have picked the winners in both races. The result to each of the winners is much as if he had parlayed or re-bet upon the second race the proceeds from picking a winner in the first race. If either selection fails to win, the punter's entire wager is lost.

The argument proceeds that if the daily double is legal in California, it cannot be a lottery; if it is not a lottery then the 5--10 is not a lottery.

The argument is reinforced by reference to an opinion of the Attorney General (36 Ops.Atty.Gen. 150) that since the horse racing board and the Legislature had authorized the daily double a scheme known as Pic-Six also might be authorized. The Pic-Six scheme we...