State ex rel. Prout v. Nebraska Home Co.

• Decision Date: 19 November 1902
• Citation: 66 Neb. 349,92 N.W. 763
• Parties: STATE EX REL. PROUT, ATTY. GEN., v. NEBRASKA HOME CO.
• Court: Nebraska Supreme Court

66 Neb. 349

92 N.W. 763

STATE EX REL. PROUT, ATTY. GEN.,

v.NEBRASKA HOME CO.^a1

Supreme Court of Nebraska.

Nov. 19, 1902.

Syllabus by the Court.

1. To constitute a lottery, it is necessary that a prize be offered, and something of value be given for a chance to obtain the prize.

2. The prize may be anything of value. A preference or privilege in the distribution of a common fund among those entitled thereto may constitute a prize.

3. A scheme whereby a common fund is to be produced by the contributions of various parties, and afterwards distributed among the parties contributing thereto, and a valuable preference or privilege in the distribution thereof is made to depend upon chance, is a lottery, within the meaning of our statute prohibiting lotteries.

4. Contracts in which a corporation, in consideration of stated payments made to it, makes promises, which are the main inducement to such contract, and are impossible to perform, are unlawful, being against public policy.

5. A corporation, organized under the laws of this state, which is engaged in a business forbidden by statute, or unlawful as against public policy, may be deprived of its charter and dissolved by proceedings in quo warranto.

Quo warranto by the state, on the relation of the attorney general, against the Nebraska Home Company, to annul its charter. Judgment of ouster.Frank N. Prout, Atty. Gen., Norris Brown, Dep. Atty. Gen., and William Brandon Rose, Asst. Atty. Gen., for relator.

George A. Neal, Bartlett, Dundy & Martin, and Coffin & Clements, for respondent.

Norval Bros. and A. G. Wolfenbarger, amicus curiæ.

SEDGWICK, J.

This is an information in the nature of quo warranto to annul the corporate existence of defendant, and oust it of its corporate powers, franchises, and privileges. To the answer of the defendant the attorney general filed a general demurrer. The answer alleges that defendant has been and is entering into contracts with various parties in pursuance of its franchise. The terms of these contracts are set out in full in the answer. The principal questions presented and discussed by counsel are: First. Do these contracts contain the elements of a lottery? Second. Are they unlawful as against public policy? By the terms of the contract the company “agrees and undertakes to assist the said holder of this contract in purchasing and paying for a home.” The holder agrees to pay three dollars for the “company's services in registering and issuing each application and contract,” and “to pay to the company at the home office of the company in Omaha, Neb., one dollar and thirty-five cents each month, on or before the last day thereof, from the date hereof, until this contract shall mature as hereinafter described.” After the contract matures, the amount of the monthly payments is increased to $5.35, and they continue “until the holder shall have paid into the home fund, as herein provided, the total sum of one thousand ($1,000) dollars, or such fractional part of such sum as shall be furnished for him by the company. Five dollars of said sum of five dollars and thirty-five cents so paid shall be placed by the company in the home fund as hereinbefore described, and thirty-five cents thereof is in payment for the services of the company.” The contract also provides: “First. Said company shall number and date all contracts issued in regular numerical order as applications are received at the home office, and shall keep a record thereof, showing the date and serial number of each contract. Sixth. This contract shall be deemed to be matured, within the meaning hereof, when there shall be, over and above what is required to be paid out on contracts of lower serial number than this contract, either (1) an income of fifty ($50.00) dollars per month, due said home fund from contract holders; or (2) an amount of money in said home fund, which, when added to the income so due from contract holders for a period of twenty months, will equal one thousand ($1,000) dollars. Seventh. When this contract matures, the company agrees on each and every month thereafter, for twenty months, to pay out of the said home fund the sum of fifty ($50.00) dollars in assisting the holder to purchase a home, to pay off a mortgage on a home owned by the holder, or to erect a dwelling house on a lot belonging to a holder, as said holder may prefer. It is understood and agreed that the holder shall select property of the value of one thousand ($1,000) dollars on the basis of said payments thereon of fifty ($50.00) dollars per month, and thereupon the company shall immediately proceed to investigate title and value of the property, and, as soon as possible, notify the holder of its approval or disapproval of the holder's selection. If the company approves the selection, it shall immediately cause the property selected to be purchased, and put the holder in possession thereof, on the terms and conditions hereinafter contained.”

1. Does this scheme involve the elements of a lottery? To constitute a lottery, there must be a prize offered, and the payment of something for a chance to obtain it. The attorney general has furnished the court with an “expert's table,” which is derived from a computation based upon the issuing of contracts upon...