Read Magazine v. Hannegan

• Decision Date: 15 November 1945
• Docket Number: Civ. A. No. 30926.
• Citation: 63 F. Supp. 318
• Parties: READ MAGAZINE, Inc., et al. v. HANNEGAN.
• Court: U.S. District Court — District of Columbia

63 F. Supp. 318

READ MAGAZINE, Inc., et al. v. HANNEGAN.

Civ. A. No. 30926.

District Court of the United States for the District of Columbia.

November 15, 1945.

John W. Burke, Jr., and Lamar Hardy, both of New York City, and Homer Cummings and William Stanley, both of Washington, D. C., for plaintiffs.

Edward M. Curran, U. S. Atty., and Daniel B. Maher, Asst. U. S. Atty., both of Washington, D. C., for defendant.

HOLTZOFF, Justice.

This is an action against the Postmaster General for an injunction restraining the enforcement of a so-called "fraud order" issued by him against "Facts" Magazine and certain of its editors. The matter came on to be heard on the plaintiffs' motion for a preliminary injunction. At the conclusion of the hearing, the court indicated that it would advance the action for an immediate trial on the merits and that in the meantime the temporary restraining order, previously issued by another justice of this court, would be continued, subject to certain limitations needed to safeguard the rights of the Government. Counsel for the Government thereupon stated that since all of the pertinent facts were presented in the papers before the court and were not in dispute, he was willing to submit the case for a determination on the merits forthwith and to that end would file a motion for a summary judgment. Counsel for the plaintiffs acquiesced in this suggestion. Accordingly, both parties filed motions for summary judgment. The case will be disposed of on these motions. This procedure is appropriate in a case in which the evidentiary facts are not substantially in dispute, and the conflict arises only concerning the ultimate conclusions to be drawn from uncontroverted facts, Fox v. Johnson & Wimsatt, 75 U.S.App.D.C. 211, 218, 219, 127 F.2d 729; Otis & Co. v. Pennsylvania R. Co., D.C., 61 F.Supp. 905.

The plaintiff, Read Magazine, Inc., is the publisher of a magazine known as "Facts". In April 1945, the magazine published an advertisement inviting the public to participate in a puzzle contest. The Postmaster General ruled that the contest was a fraudulent scheme and on October 1, 1945, acting under Sections 3929 and 4041 of the Revised Statutes, U.S.C.A., Title 39, Secs. 259 and 732,¹ issued a "fraud order" against the magazine and certain of its editors. The order forbid the Postmaster at New York to pay any postal money order drawn to the order of Puzzle Contest, Facts Magazine; Contest Editor, Facts Magazine; Judith S. Johnson, Contest Editor; Miss J. S. Johnson, Contest Editor; Contest Editor; Facts Magazine; and Henry Walsh Lee, Editor in Chief, Facts Magazine; and instructed him to return to the Postmasters at the offices at which they were originally mailed all letters and other mail matter directed to any of the above-mentioned persons or concerns. The mail matter thus returned was to be delivered to the senders thereof with the following words written or stamped on the outside: "Fraudulent: Mail to this address returned by order of Postmaster General". The order further provided that if there was nothing to identify the senders, the mail matter should be sent to the dead letter branch. This action to enjoin the enforcement of the fraud order was brought by the publishers and editors of the magazine and corporations affiliated with the publishers.

The advertisement of the puzzle contest comprised a detailed set of rules. In brief, the contest was to be conducted in the following manner. A group of 80 puzzles, divided into 20 series of four puzzles each, was to be offered for solution. Each entrant was required to pay the sum of fifteen cents on submitting the solutions for each series. In other words, each entrant had to pay in the aggregate the sum of $3 as a fee for his participation in the contest. In case of a tie, an additional group of 80 puzzles was to be solved by the contestants who had not been eliminated. Again, the second group of puzzles was to be divided into 20 series of four puzzles each, and the sum of fifteen cents had to accompany the solution of each series, or in the aggregate a further sum of $3. If there was a tie at the second stage, the same process was to be repeated, with a further sum aggregating $3 to be paid by each contestant. At this third and final stage, however, each competitor would be required to submit, in addition to his solution of the puzzles, a letter on the subject "The Puzzle I Found Most Interesting and Educational in this Contest". If a tie still persisted, the prizes were to be awarded on the basis of the merits of the letters. There were to be 500 cash prizes, aggregating the sum of $17,500. The first prize was to be the sum of $10,000. The purpose of the contest was to advertise a series of books published by the plaintiff, Literary Classics, Inc. At each stage of the contest, each successful competitor was to receive a book published by this plaintiff, said to be worth $3. In each instance the book was a reprint of a well known classic.

The Act under which the Post Office Department acted is a beneficent measure intended to protect the public against fraudulent stratagems and artifices. Its efficacy is found in the fact that it can be used to suppress such schemes summarily and expeditiously, by barring the guilty party from the use of the mails. The history of the administration of the statute indicates that it has been instrumental in protecting the public from imposition by rogues and swindlers. The effectiveness of the statute, however, is due to its exceedingly drastic character, resulting from both the nature of the remedy and the summary manner in which it can be invoked by administrative action.

It seems reasonable to assume that the law was originally directed against schemes that were palpably dishonest and concerns that were obviously fraudulent. To deny to such a person the use of postal facilities is just retribution. A different problem arises, however, when it is attempted to apply this drastic remedy to a borderline case, or to a legitimate concern which is engaged in a business that is admittedly lawful, with the exception of one of many activities. The effect of a fraud order is to stop all mail directed to the person or concern named in it. It necessarily comprehends both mail relating to legitimate business as well as that affecting the fraudulent activities. It even applies to purely personal and social correspondence, including that from members of one's family. It deprives the person affected by the order of the right of access to the principal channel of communication with other members of society. In effect he becomes an outcast or outlaw, and is completely isolated, so far as concerns ordinary and usual means of communication. Such an order results in ignominy and humiliation. Its consequences may be disastrous and even catastrophic.

In Pike v. Walker, 73 App.D.C. 289, 291, 121 F.2d 37, 39, Groner, C. J., pointedly remarked: "Whatever may have been the voluntary nature of the postal system in the period of its establishment, it is now the main artery through which the business, social, and personal affairs of the people are conducted and upon which depends in a greater degree than upon any other activity of government the promotion of the general welfare. Not only this, but the postal system is a monopoly which the government enforces through penal statutes forbidding the carrying of letters by other means."

Recently the same court observed that modern mail service "is a highway over which all business must travel". Esquire, Inc., v. Walker, App.D.C. 151 F.2d 49, 51.

A serious question of statutory construction may perhaps be lurking in this case, namely, whether it was the intent of the Congress that this statute should be applicable against a concern or a person pursuing some activities that are admittedly honest and lawful, in addition to the scheme branded as dishonest, or whether it was intended to be limited to persons and concerns who engage solely in fraudulent activities. If the former construction is to be adopted, the result is to cut-off a person from receiving any proper mail, or from having any lawful means of communication in respect to his legitimate activities, if he is found guilty of engaging in some other endeavor which is deemed to be fraudulent. This outcome would be a modern form of outlawry, which seems contrary to our fundamental ideals of justice.

The Supreme Court stated in United States v. Kirby, 7 Wall. 482, 486-487, 19 L.Ed. 278: "All laws should receive a sensible construction. General terms should be so limited in their application as...