State ex rel. Stafford v. Fox-Great Falls Theatre Corp.

• Decision Date: 19 December 1942
• Docket Number: 8306.
• Parties: STATE ex rel. STAFFORD, Co. Atty., et al. v. FOX-GREAT FALLS THEATRE CORPORATION et al.
• Court: Montana Supreme Court

132 P.2d 689

114 Mont. 52

STATE ex rel. STAFFORD, Co. Atty., et al. v. FOX-GREAT FALLS THEATRE CORPORATION et al.

No. 8306.

Supreme Court of Montana

December 19, 1942

Appeal from District Court, Eighth District, Cascade County; H. H Ewing, Judge.

Action by the State of Montana, on the relation of John D. Stafford County Attorney; Cleveland Hall, Chief Deputy County Attorney; Robert J. Nelson, Deputy County Attorney of Cascade County, State of Montana, against Fox-Great Falls Theatre Corporation and William Steege as manager thereof to enjoin the operation of an alleged lottery. From a decree for defendants, the plaintiffs appeal.

Affirmed.

ERICKSON and ANGSTMAN, JJ., dissenting.

R. V Bottomly, Atty. Gen., Fred Lay, Asst. Atty. Gen., and John D. Stafford, Cleveland Hall, and Robert J. Nelson, all of Great Falls, for appellants.

R. H. Glover, S. B. Chase, Jr., and John D. Stephenson, all of Great Falls, for respondents.

JOHNSON Chief Justice.

Plaintiffs appeal from a decree denying an injunction against defendants. The question is whether "Bank Night," or the awarding of prizes by chance, in the manner followed by the defendants, constitutes a lottery as defined and prohibited by section 11149, Revised Codes, as follows:

"A lottery is any scheme for the disposal or distribution of property by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining such property or a portion of it, or for any share or interest in such property, upon any agreement, understanding, or expectation that it is to be distributed or disposed of by lot or chance, whether called a lottery, raffle, or gift enterprise, or by whatever name the same may be known."

Since it is apparent that the plan constitutes the offer of a prize and its award by chance, the only question is whether the participants "paid or promised to pay any valuable consideration for the chance of obtaining" the prize.

The cause was submitted to the trial court upon the following agreed statement of facts: "The defendant, Fox-Great Falls Theatre Corporation, leases the buildings *** from the owners. The buildings each contain a moving picture theatre in the central portion of the building which the Fox-Great Falls Theatre Corporation operates, and additionally contain numerous store and office rooms which the Theatre Corporation subleases to various tenants.

Said defendant, Fox-Great Falls Theatre Corporation, on each Wednesday purchases a United States Government $50.00 Defense Bond, which it gives away Wednesday evening to any individual who has secured an identification card at any time within the past several years, and whose name is drawn by chance in a drawing held on the stage on Wednesday night. Such identification cards have been available for several years in the lobby of each theatre and also on the outside of the theatre at the front part thereof, on street corners and in various stores in the shopping district, and are and during all of that time have been available to any person who would take such a card. It is not necessary that a person purchase a ticket or be in the theatre to secure such a card or to win the defense bond. The winning number is announced from the stage by a loud speaker. This number in turn is announced by the ushers in the lobby of the theatre. Then the number is likewise announced by the doorman to the outside of the theatre so that anyone on the street within hearing distance may come forward and claim the award.

If the award is not claimed on Wednesday night, on the succeeding Wednesday night another $50.00 defense bond is added to it. An additional $50.00 defense bond is added each succeeding Wednesday night until the award is claimed by someone. The only requisites for obtaining the award are the following:

1. The person claiming the award must present an identification card containing the winning number and the person's name within one minute from the time the winning number is last announced.

2. Identification card must be presented personally by the individual who claims the award.

It is not necessary that the person claiming the award, if he should be outside of the theatre, purchase a ticket in order to gain access to the theatre for the purpose of claiming the award.

At various times awards have been won by persons who were not in attendance at the theatre on the evening of the award, but who were outside of and at some distance from the theatre when the award was announced.

The money that is used for the purpose of purchasing the defense bond is received from the rental of the store and office properties of the defendant corporation in the theatre buildings, and not from the sale of admission tickets to the theatre. The amount charged as rental is not increased or decreased by reason of such awards being taken from the rental fund.

The identification cards have been distributed to every one who would take them in the theatre, in the lobby of the theatre, in front of the theatre, on street corners within several blocks of the theatre, in various stores in the business center of Great Falls and in general to as large a number of persons in the community as reasonable facilities for distribution would permit."

Plaintiffs rely upon the decision of this court in State ex rel. Dussault v. Fox Missoula Theatre Corporation, 110 Mont. 441, 101 P.2d 1065, 1066, which case was similar to this case in all essential facts. In neither was it necessary to purchase a ticket of admission to participate in the drawing. The only noteworthy difference is that in the Dussault case the theatre had only one pocket-book, whereas it is stipulated here that: "The money that is used for the purpose of purchasing the defense bond is received from the rental of the store and office properties of the defendant corporation in the theatre buildings, and not from the sale of admission tickets to the theatre."

In the Dussault case, supra, this court, by a three to two decision, held the system a lottery upon the following reasoning:

"Defendants contend that there was no consideration paid for participation in the drawing, hence it was not a lottery. Where does the money come from for the gift? From the treasury of the theater. Where does the money come from for the treasury of the theater? From the customers who purchase tickets. Therefore the price paid for the ticket, in part, though disguised, later reappears as the gift. It enters the box office as Dr. Jekyll, and steps out as Mr. Hyde. ***

Where the theater uses a part of the price of the ticket for a plan such as we have here, it is pro tanto a reduction in the price for admission and an application of the amount of the reduction toward an accumulating prize. ***

The scheme is admittedly arranged for the purpose of attracting money to the theater, by offering a prize to a chance winner, even though the prize might occasionally be drawn by one who has purchased no ticket."

In the judgment in this case the learned trial judge, after reciting the agreed statement of facts, section 11149, Revised Codes, supra, and the first paragraph quoted above from the Dussault case, proceeded to say: "The Dr. Jekyll and Mr. Hyde feature in that case is eliminated in this case by the agreed statement of facts. It is agreed by the parties hereto that none of the money to purchase the prize comes from the box office receipts; that any person, without purchasing a ticket to the theatre, or without paying, or promising to pay, any valuable consideration may participate in the drawing." A decree was entered for defendants accordingly.

If the test adopted in the Dussault decision is correct and the sole question is whether the prize was purchased out of the "Jekyll and Hyde" fund to which the paid admissions have contributed, it is obvious that the judgment here must be affirmed, in view of the stipulation that no part of the prize comes from paid admissions. The Dussault decision was based upon that one theory, which admittedly does not apply here. But since in all other respects the cases are substantially similar it is necessary to re-examine that decision to see whether it was based upon the correct reasoning, and whether the result can be sustained upon any other reasoning which will apply to this case also.

By reason of the great diversity of constitutional and statutory provisions relating to the subjects, and because of the great variety of fact situations presented to the courts, it is impossible to lay down an absolute rule as to what constitutes the distinction between lotteries and gift enterprises, and what consideration is necessary to constitute the scheme a lottery. However, it seems clear that in general a plan is considered within a statute against gift enterprises if it involves an award by chance without the consideration necessary to constitute the scheme a lottery. Grimes v. State, 235 Ala. 192, 178 So. 73; Russell v. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E. 881, 12 Ann.Cas. 129. The statutes of some twenty states expressly outlaw gift enterprises, either by name or by definitions eliminating the necessity for consideration. The statutes of eighteen others do not define lotteries by stating what consideration, if any, is essential. The statutes of Montana and nine other states expressly include the payment of valuable consideration for the chances as a necessary element, and those are the only states whose decisions are in point here. They will be referred to later.

The question in both this and the Dussault cases is whether the participants paid any valuable consideration for the chance of obtaining the prize. In the Dussault case it was agreed that while the participants need not buy admission tickets the...