Petition of Adamar of New Jersey, Inc.

• Decision Date: 19 January 1988
• Citation: 222 N.J.Super. 464,537 A.2d 704
• Parties: In the Matter of the Petition of ADAMAR OF NEW JERSEY, INC., Requesting a Declaratory Ruling Concerning the Off-Site Acceptance of Payments on Non-Returned Counter Checks, etc.
• Court: New Jersey Superior Court — Appellate Division

Page 464

222 N.J.Super. 464

537 A.2d 704

In the Matter of the Petition of ADAMAR OF NEW JERSEY, INC.,

Requesting a Declaratory Ruling Concerning the

Off-Site Acceptance of Payments on

Non-Returned Counter Checks, etc.

Superior Court of New Jersey,

Appellate Division.

Argued Nov. 9, 1987.

Decided Jan. 19, 1988.

Robert L. Hollingshead, Morristown, of appellants (Pitney, Hardin, Kipp & Szuch, attorneys; Robert L. Hollingshead, Elizabeth J. Sher and James A. Schragger, Morristown, on the joint brief with Mark H. Sandson, Atlantic City, for appellant Adamar of New Jersey, Inc., Hankin, D'Amato & Sandson, Atlantic City, attorneys; Brian D. Spector, Morristown, for appellants Trump Plaza Associates and Trump's Castle Associates, Ribis, McCluskey & Graham, Morristown, attorneys; Kenneth F. Oettle, Newark, for appellant GNOC, Corp., Sills, Beck, Cummis, Zuckerman, Radin, Tischman & Epstein, attorneys).

Robert J. Genatt, General Counsel, Trenton, for respondent New Jersey Casino Control Com'n (Robert J. Genatt, of counsel and on the brief).

Kevin F. O'Toole, Deputy Atty. Gen., for respondent Div. of Gaming Enforcement (W. Cary Edwards, Atty. Gen., attorney; Kevin F. O'Toole and Christopher Pitts, Deputy Attys. Gen., on the brief).

Before Judges J.H. COLEMAN, O'BRIEN and HAVEY.

The opinion of the court was delivered by

HAVEY, J.A.D.

In these consolidated appeals, five casino licensees ¹ challenge the Casino Control Commission's (Commission) denial of the casinos' application to collect outstanding counter checks "in the field" or at branch offices. We now affirm.

In 1980, several casino licensees sought to implement passive collection activities for accepting payments from patrons on outstanding patron counter checks at casino branch offices located within and outside New Jersey. "Outstanding counter checks," are patron gaming checks which have not yet been deposited in the bank for collection pursuant to N.J.S.A. 5:12-101(c). "Passive collection" is a procedure whereby a licensed casino employee is sent at the patron's request to a location other than the cashiers' cage for receipt of payment of a patron's gaming checks. The Commission notified the casino licensees that in order to implement branch office procedures for passive collection, the casinos would have to seek formal Commission approval. In response, the casinos submitted internal control procedures for branch office collection and were granted approvals, ratified by the Commission, on a case-by-case basis from 1983 to 1985. The casinos receiving approval were Atlantis, Sands, Golden Nugget, Resorts and Boardwalk.

In 1985, Adamar of New Jersey, Inc. (Adamar), doing business as the Tropicana Hotel and Casino, submitted procedures for "field" collections of outstanding counter checks at unspecified locations, including a patron's home or place of business. After the Division of Gaming Enforcement interposed an objection, Adamar petitioned the Commission seeking a declaratory ruling that off-site acceptance of payments on outstanding counter checks did not violate the Casino Control Act, N.J.S.A. 5:12-1, et seq., or its attendant regulations, N.J.A.C. 19:45-1.1, et seq. Under Adamar's proposed collection procedure, the patron would be given a receipt by the collecting employee but the original counter check would not be released from the cashiers' cage until the funds were received and accepted at the cage. It was stressed that the proposed collection activity would be instigated only on the initiative of the patron.

During the pre-hearing conferences, the present appellants intervened and joined Adamar's petition. After the hearing, the Commission denied the casinos' request to receive payments on outstanding counter checks either in the field or in branch offices. In denying the request, the Commission noted that under N.J.S.A. 5:12-101, the act's credit provision, there can be no "collection" on an outstanding counter check other than bank deposit for payment, except for redemption or consolidation of the check by the patron, and that the statute permits collection efforts only on returned counter checks. "Returned counter checks" are checks which are issued by a patron to a casino for gaming credit and which have been returned by a depository bank unpaid for insufficient funds. See N.J.S.A. 5:12-101(e). The Commission also reviewed the comprehensive regulations pertaining to receipt of cash or cash equivalents and redemption of outstanding counter checks, and concluded that such receipt and redemption must occur within the well-monitored casino cashiers' cage. Also, while acknowledging that the Commission and Division staff had approved collection procedures at branch offices and that it had ratified these procedures, the Commission determined it was empowered to reopen and vacate the approvals to protect the public interest and integrity of the casino industry. Finally, it granted the casinos' request to collect returned counter checks both in the field and at branch offices.

Appellants contend that disapproval of off-site collection of counter checks was overbroad and incorrect as a matter of law because: (1) neither the act nor the regulations prohibit passive collection on outstanding counter checks in the field; (2) such collection does not constitute "redemption" in violation of the act or regulations; (3) the prior case law relied on by the Commission is inapposite and unpersuasive, and (4) there is no logical distinction between collection of returned counter checks and outstanding counter checks. Appellants also challenge the Commission's revocation of prior approvals to collect outstanding counter checks at branch offices as being unfair and unreasonable.

Generally, we are not bound by an agency's determination of a strictly legal issue. Fedders Financial Corp. v. Taxation Div. Dir., 96 N.J. 376, 392, 476 A.2d 741 (1984); Mayflower Securities Co. v. Bureau of Securities, 64 N.J. 85, 93, 312 A.2d 497 (1973). However, we accord substantial deference to an interpretation of a statute or regulation by the agency responsible for enforcing it. Mortg. Bankers Ass'n v. N.J. Real Estate Com'n, 102 N.J. 176, 191, 506 A.2d 733 (1986); In re Appeal of Lembo, 151 N.J.Super. 242, 249, 376 A.2d 971 (App.Div.1977). Further, we must defer to the administrative agency's expertise in relation to technical matters. Riverside General v. N.J. Hosp. Rate Setting Com'n., 98 N.J. 458, 469, 487 A.2d 714 (1985).

Moreover, statutes and regulations promulgated thereunder must be read so as to implement the legislative intent permitted by statute. Foreign Auto Prep. S. v. N.J. Economic D. Auth., 201 N.J.Super. 428, 433, 493 A.2d 550 (App.Div.1985). In that regard, our Supreme Court has recognized "the strong state interest in promoting scrupulous conduct by the casino industry and regulatory officials." Greenberg v. Kimmelman, 99 N.J. 552, 560, 494 A.2d 294 (1985). Further, the Law Division in Playboy-Elsinore Assocs. v. Strauss, 189 N.J.Super. 185, 191, 459 A.2d 701 (Law Div.1983), noted that "practices and procedures involved with the extension of credit by the casinos are among the most sensitive aspects of casino operations."

Prior to the passage of the act, there was strong resistance to allowing credit to patrons at all. See Report and Recommendations of Casino Gambling by the Commission of Investigation of the State of New Jersey (April 1977). The SCI was concerned with the potential for illegal diversion of funds and "strong arm" methods of debt collection. Id. at 2-E to 3-E. The particularized sections of the act governing credit obviously responded to this opposition and must be read as intending to accomplish several purposes: to provide for a traceable, efficient "paper trail" of credit transactions; to prevent "skimming," and to require prompt deposits of credit checks thereby allowing regulators to monitor the collection of debts. See Playboy Elsinore Assocs., supra, 189 N.J.Super. at 191-192, 459 A.2d 701.

Thus, the act's credit provision, N.J.S.A. 5:12-101, narrowly circumscribes the manner by which credit shall be offered to patrons. Section 101(c) provides for the time and manner by which counter checks shall be deposited in the bank. The only exception to the check deposit obligation is redemption, partial redemption or consolidation by the patron. There is no provision for the collection of counter checks by casino personnel; "collection" activities are expressly limited to checks returned by banks without full or final payment. N.J.S.A. 5:12-101(e). Considering the legislative intent to carefully limit and control credit transactions, we agree with the Commission that it would be an abuse of the interpretative process to read section 101 as intending to allow collection of outstanding counter checks except as expressly provided therein.

We also agree with the Commission that the comprehensive attendant regulations require collection on outstanding counter checks to take place at the cashiers' cage. Appellants contend that N.J.A.C. 19:45-1.15(b)(1)(i) provides only that the duties of the cage personnel include receipt of payments for redemption but does not mandate receipt of payments at the cage. It notes the contrasting language under N.J.A.C. 19:45-1.25(e) which states that "[c]ash equivalents and casino checks ... shall only be accepted at the cashiers' cage by general cashiers" and argues that it was not the drafters' intent to restrict receipt of payments as they restricted acceptance of payment.

Appellants' argument ignores the overall regulatory scheme. The cashiers' cage has the responsibility for "the exchange, redemption and consolidation of patron checks received for the purposes of gaming," as well as of maintaining...