United States v. McDonald

• Decision Date: 22 August 1893
• Citation: 59 F. 563
• Parties: UNITED STATES v. McDONALD et al.
• Court: U.S. District Court — Northern District of Illinois

59 F. 563

UNITED STATES v. McDONALD et al.

United States District Court, N.D. Illinois.

August 22, 1893

Thos E. Milchrist, U.S. Dist. Atty.

Collins Goodrich, Darrow & Vincent, and L. S. Metcalf, for defendants.

GROSSCUP District Judge, (charging jury orally.)

The statutes of the United States, gentlemen of the jury, provide that any person who shall knowingly deposit or cause to be deposited, send or cause to be sent, through the mails, any letter, postal card, or circular concerning any lottery so-called gift concert, or other similar enterprise, offering prizes dependent upon lot or chance, shall be guilty of a misdemeanor.

The indictment, in the first and second counts, charges these defendants with having deposited, or caused to be deposited, sent, or caused to be sent, through the United States mails, certain letters or envelopes concerning a lottery, and in the third count it charges the defendants with having sent, or caused to be sent, through the United States mails, certain papers, pamphlets, or circulars concerning a lottery.

The proof shows that two letters were sent through the department to the defendant George M. McDonald, president of the Guarantee Investment Company, asking him, in substance, for such printed matter as he might wish to send the writer concerning the business and purposes of his company; and, in response thereto, envelopes and printed matter were deposited in the mails, directed to the individuals by whom the information was asked. The proof also shows the responses were put in the mails by defendants, or by clerks under the direction of the defendant in the case, and in furtherance of a practice under which like circulars and literature were habitually sent through the mails by this company in response to inquiries.

If you are satisfied of these facts upon the proofs beyond a reasonable doubt, (and no contradiction of them is attempted by the defendants now on trial,) it will be your duty to find a verdict of guilty, provided the papers inclosed in these envelopes concerned a lottery, or enterprise similar to a lottery, or gift concert, offering prizes dependent upon lot or chance. What, then, is the scheme or enterprise which this printed matter is calculated to promote?

The Guarantee Investment Company is an incorporated organization under the laws of the state of Missouri, which empower it to issue bonds and securities, hold real estate, and make investments thereon. The whole purpose of the company, however, seems to be to issue so-called bonds. For this purpose it maintains an office in St. Louis, and has agents throughout the country to induce people to buy these bonds. To the applicants are issued bonds of the company, being issued in consecutive numbers from one upwards, in the exact order of the imprint chronologically, said to have been made by an electrical contrivance attached to a clock.

For these bonds the applicant has already paid $10, a portion of which goes to the agent as his commission, the remainder to the company for its maintenance, and he has agreed to pay each succeeding month, for each bond purchased, $1.25 more, the 25 cents to be retained by the company for its maintenance, and the $1 going into the treasury, or so-called trust fund, for the redemption of the bonds. The trust fund is also increased by certain fines imposed for deferred payments and other delinquencies. For this the applicants receive the promise of the company, embodied in the bond, that out of the redemption fund they will respectively receive, for each bond held, $1,000, the payment to be made in the following order:

First, bond No. 1, then bond No. 5, then bond No. 2, then bond No. 10, and so on, the priority alternating between the unpaid bonds bearing the lowest absolute number and the unpaid bond bearing the lowest number divisible by five, one class being known as numerals and the other class known as multiples. In instances where bonds have lapsed for nonpayment of premiums, the next lowest bond takes its place. The so-called trust fund is said to be kept in the treasury, excepting $100,000, which is deposited in the state of Missouri with some of the officers of that government. It seems to be no part of the scheme to invest this money, so as to enlarge the bulk by interest or other increment.

Now does this constitute a lottery? There is no doubt, gentlemen, upon the face of it, that it constitutes a cheat. The testimony shows that this company has been in existence now for two years, and has had 50,023 applications. According to the constitution of its organization, it has therefore received more than half a million dollars from the $10 preliminary fee. The testimony shows that it has paid out $206,000 from the so-called trust fund. If it had paid out all it received, as the constitution of the company required it to do, then it has received, as maintenance from the dues, more than $40,000. Therefore, after an experience of two years, the officers and the stockholders have received more than $500,000, and its so-called beneficiaries have received but $206,000. That is plunder of the public. It is said that this has been done fairly. The court, of course, is not sitting here to pass upon the fairness of any such transaction. Two hundred years ago, when coaches were robbed by highwaymen on the heaths of London, it was always said that the highwaymen acted with courtesy, but nobody but an ignorant fool returned to London without knowing he had been plundered. But that does not prove that it is a lottery. It may be a cheat, but we must ascertain by the legal canons and definitions whether it is a lottery. What is a lottery? The best definition I can find for it is this: Where a pecuniary consideration is paid, and it is...