Albert Lea Amusement Corp. v. Hanson , 1950 Minn. LEXIS 711 ( 1950 )

Thomas Gallagher, Justice.

Plaintiff seeks a declaratory judgment construing M. S. A. 614.01, which provides:

“A lottery is a scheme for the distribution of property by chance among persons who have paid, or agreed to pay, a valuable consideration for the chance, whether it shall be called a lottery, raffle, gift enterprise, or by any other name, and is hereby declared unlawful and a public nuisance.

“Every person who shall contrive, propose, or draw a lottery, or shall assist in contriving, proposing, or drawing a lottery, shall be punished by imprisonment in the state prison for not more than two years, or by a fine of not more than $1,000, or by both.”

Plaintiff, the operator of all commercial motion picture theaters in Albert Lea, for some years prior to the commencement of this action had adopted, evolved, and used a gift plan in connection with the theater business whereunder certain cash prizes were given to the holders of certain numbers each week. It is plaintiff’s contention that the plan under which it operated did not constitute a violation of § 614.01, but was entirely legal. Some time prior to this action, defendants, in their official capacity, notified plaintiff that unless it ceased to operate such gift plan, frequently designated as “bank night,” criminal proceedings under the foregoing statute would be instituted against it. Solely because of this threat, plaintiff discontinued the operation and commenced the present action. At the close of the testimony, the trial court made findings and ordered judgment in favor of defendants. Subsequently, upon plaintiff’s motion for amended findings or a new.trial, the trial court amended its findings, setting forth the facts in greater detail, but otherwise denied, plaintiff’s motion.

The plan evolved, the validity of which this court is now called upon to determine, as established by the findings of the trial court, is as follows:

“The Bank Night drawing was held on the stage of plaintiff’s New Broadway Theatre on Thursday night of each week. For about six weeks before the first drawing in December, 1934, the plan, including the first nine rules set forth in paragraph 10 (b) of the complaint, was extensively advertised locally by the general distribution of hand bills around the City, by posters outside the theatres, by motion picture trailers at the shows and by going from place to place, to homes, business houses, stores and hotels with a registration book and inviting people in general to register, explaining that it would not cost them anything. A registration book was thereafter kept on a table or stand in the lobby of the New Broadway Theatre with said first nine rules posted in plain view.

“Plaintiff furnished the prizes for such drawings at the rate of $50.00 each week until a maximum of $1,000 in prizes was offered. If no winner qualified at any given Bank Night drawing, the sum of $50.00 would be added by the theatre to the amount theretofore advertised to be given away, and such gross amount would constitute the prize offered at the drawing on Thursday night of the following week. The prize, if no winner thereof qualified, would accumulate from week to week until it reached the sum of $400. If no winner qualified for the prize when it reached $400, then a second prize would commence to accumulate at the rate of $50 per week until the second prize, if not won by a qualified winner, would reach a total of $400. Thereupon, if no award had taken place, a third prize would commence to accumulate at the rate of $50.00 per week until the third prize had reached a limit of $200.00. By that method it was possible, as oftentimes happened, to have three prizes, aggregating $1,000, offered on a given Bank Night; one prize for $400, a second for $400, and a third for $200. The gross sum of $1,000 was made the limit for the gross prizes.

“Commencing about 1942, Rule No. 10, set forth in the complaint, was added to the other nine rules. It was publicized by motion picture trailers at the shows and was prominently displayed at the table in the theatre lobby where registrations were made. It provided that any person could obtain an ‘absentee card’ (sometimes identified as a ‘Bank Night Identification Card’) by calling at the theatre during business hours of the day before Bank Night and until 4:00 P.M. of the day of Bank Night. Business hours, for such purposes, were from 1:30 P.M. to 4:00 P.M. and from 6:30 P.M. to about 11:00 P.M. These ‘absentee cards’ were placed on a table in the lobby of the theatre. A person executing the ‘absentee card’ left it on the table, and an attendant would from time to time gather these ‘absentee cards’ and file them alphabetically in a file kept for that purpose. At the time of the Bank Night drawings on the stage, this file was consulted, and, if the number drawn had been assigned to a person who subscribed to such an ‘absentee card’ so filed, such absentee winner would have 48 hours after the drawing and announcement of his name to call at the theatre, identify himself, and claim the prize. If the number of a person who signed an ‘absentee card’ was drawn, plaintiff attempted to locate such winner immediately after the drawing. If such winner was located, he was required, within 48 hours of the drawing at which his name was drawn, to identify himself as the winner and claim the prize, but he was requested to, and invariably did, come to the Bank Night drawing on Thursday evening of the succeeding week and receive his prize. After each drawing, the remaining ‘absentee cards’ were destroyed, and anyone wishing to again participate in the drawing by way of ‘absentee card’ was required to fill out another ‘absentee card’ within the time limited preceding the next drawing. Whereas registration was permanent in the sense that one registered but once, the ‘absentee card’ expired with each weekly drawing.

“A person could register without the purchase of an admission ticket. The registration book was kept on a stand in the outer lobby of the New Broadway Theatre, where any person not under 18 years of age might register at any time while the theatre was open.

“If a participant wished to be present in the theatre at the time of the drawing, he was required to purchase an admission ticket. A winner who stood in the lobby or on the sidewalk outside the theatre or who had executed an ‘absentee card’ could enter the theatre for the purpose of identifying himself and claiming the prize without purchasing an admission ticket.

“No registrations were made at the ticket window in connection with the purchase of admission tickets and no coupons, numbers, ‘absentee cards’ or other items connected in any way with the Bank Night drawings were handled at the ticket window.

“Persons wishing to participate in a drawing were required to sign a register. The signatures were posted in a permanent record book and a number was assigned to each signature. Tickets, or small cards, bearing these numbers were placed in a receptacle or drum. The original registrations were made upon ordinary composition books and the registrant had no connection with, or knowledge of, the posting in the permanent record books, the assignment of numbers, or the placing of the numbers in the drum. Registrations were listed in the permanent record books both serially and by alphabetical listing. No second registration by the same person was permitted.

“On Bank Night, at 9:00 o’clock P.M., this drum was’ placed on the stage of plaintiff’s New Broadway Theatre. A disinterested person, chosen from the audience, would draw one or more tickets from the drum, depending upon the number of prizes offered. This ticket so drawn would then be handed to another disinterested person, chosen from the audience, who would identify from the registration book, the name of the person to whom a number had been assigned. An attendant then would announce from the stage the name of the person whose number had been drawn. If the person was in the theatre and claimed the prize, it would be given to him.

“At the drawing, an employee on the stage checked the ‘absentee cards’, averaging about 500 to 700, each drawing; and if an absentee has won, announcement of that fact is made to the audience and that his prize will be awarded on the following Thursday night. Immediate attempt is then made by the management to locate such absentee and advise him he has won the prize. Approximately 25% to 30% of the winners during recent years used ‘absentee cards’ and did not attend the drawing or wait in the nearby street; and approximately 25% of the winners were persons waiting in the lobby or in front of the theatre at the time of the drawing. The name of the winner was also announced in the lobby of the theatre and out on the sidewalk in front of the theatre. Persons whose names were announced were requested to identify themselves within two and one-half minutes from the time of the drawing and the announcement of their names, except holders of ‘absentee cards’.

“(6) The prize or prizes offered by plaintiff at its Bank Night were paid, directly or indirectly, from paid admission receipts of ■the theatre. The plaintiff owns the theatres in Albert Lea and other theatres. It has a central bookkeeping division at the main office to which the receipts are sent and from which the Bank Night prizes are paid.

“(7) The purpose and accomplished result of plaintiff’s Bank Night scheme was, not only to advertise its Albert Lea theatres and attract patrons, but also, and more importantly, to increase the receipts from paid admissions to the theatres. While the increase in patronage was noted on other evenings throughout the week, the increase in paid admission attendance at the Broadway was greater on the drawing nights than on other nights of the week. The operation of plaintiff’s Bank Night scheme resulted usually in a full house of paid admissions at the Broadway on Bank Night, usually greater than on other nights except Saturdays and Sundays. As the amount of the prize offered increased, there was a corresponding increase in the Broadway attendance on Bank Night.”

As previously stated, based upon the foregoing facts, the trial court concluded that the plan as above outlined constituted a lottery within the meaning of § 614.01, which the court held to be valid and constitutional, and denied the injunctive relief sought by plaintiff.

This is an appeal from an order denying plaintiff’s motion for a new trial.

Under § 614.01, a lottery is defined as “a scheme for the distribution of property by chance among persons who have paid, or agreed to pay, a valuable consideration for the chance, * * (Italics supplied.) There have been a large number of decisions involving various forms of “bank night” and similar plans under statutory or constitutional provisions entirely dissimilar to the above definition of a lottery.² We shall not consider such cases, in view of the fact that we have previously construed § 614.01, and, since statutory provisions similar thereto have been construed by courts of other states, these latter opinions form the basis for our present determination.

A number of courts have upheld the validity of the present plan under similar statutory provisions. They have done so upon the theory that no statutory violation is established in the absence of a showing that consideration for the chance to participate was paid by any of the participants, either through ticket purchases or otherwise. In these cases, the fact that the plan is conducted so as to profit the theater owner is held to be of no concern, since the specific statutory prohibition is only against consideration being paid by the participants. See, People v. Cardas, 137 Cal. App. Supp. 788, 28 P. (2d) 99; State ex rel. Stafford v. Fox-Great Falls Theatre Corp. 114 Mont. 52, 132 P. (2d) 689; State v. Eames, 87 N. H. 477, 183 A. 590; People v. Shafer, 160 Misc. 174, 289 N. Y. S. 649. The reasoning supporting this line of authority is well expressed in the Eames case as follows (87 N. H. 479-480, 183 A. 591-592):

“* * * Although signing one’s name in a book or appearing at the theater within five minutes of the time of the drawing might be regarded as consideration, it cannot be called ‘pay’ without warping that word out of all recognition. For the purpose of creating a lottery, consideration must be something of value.

*****

“The second group of cases (and it is the larger) [upholding validity], appear to be supported by better reason. They hold that indirect benefit to the operator of the scheme, standing alone, is not enough hut that to constitute consideration, individual participants, by and large, must contribute value for the chance. * * * Participation must be free in actual fact, not in theory only, and giving away a few free chances will not save a scheme otherwise objectionable.”

There have been a number of decisions under similar statutes wherein plans similar to the instant one have been declared invalid because of evidence showing that the sponsor of the plan had increased his paid theater patronage as a result thereof, the latter being deemed sufficient consideration to render the plan invalid. State ex rel. Beck v. Fox Kansas Theatre Co. 144 Kan. 687, 62 P. (2d) 929, 109 A. L. R. 698; State ex rel. Draper v. Lynch, 192 Okl. 497, 137 P. (2d) 949; State v. Jones, 44 N. M. 623, 107 P. (2d) 321.

In other cases, the plan has been rejected because of a finding that participants, or some of them at least, paid a consideration for the right to participate in the chance to win a gift by the purchase from the sponsor of theater tickets with participation coupons, even though the plan provided for participation without charge, the latter fact being more or less concealed from the public. Blair v. Lowham, 73 Utah 599, 276 P. 292; State v. Danz, 140 Wash. 516, 250 P. 37, 48 A. L. R. 1109; State v. Schubert Theatre Players Co. 203 Minn. 366, 281 N. W. 369.

State v. Schubert Theatre Players Co. 203 Minn. 366, 281 N. W. 369, relied upon by respondents, commits this court to the theory expressed in the above cases which uphold the validity of plans under which the participants are not required to pay any consideration for the right to participate, even though the paid theater patronage of the sponsor may be increased as a result of such plans. There, we held that the plan submitted was invalid because a part of the group participating did so by virtue of the purchase of tickets to which were attached participation coupons rendering the holders eligible for the drawing, a factor entirely absent in the instant case. There, we held that since a part of the participants thereby actually paid for the chance of participating it was immaterial that under additional phases of the plan others might obtain such coupons in the lobby without charge, and, if successful, enter the theater without tickets to claim their gifts. There, however, we rejected the theory that the resulting increase in paid theater admissions from the plan was, in itself, sufficient to constitute consideration so as to render it invalid under the statutory definition. Therein we stated (203 Minn. 368, 281 N. W. 370):

“* * Of course a person may distribute or give away his property or money by lot or chance provided he does so without a consideration. But the moment some pay for the chance of participating in the drawing of the prize it is a lottery under the law, no matter how many receive a chance also to participate free and without any consideration. Whether the lottery is so conducted as to he profitable to the operator thereof is no concern of the law.” (Italics supplied.)

It is obvious that the distinctions between the plan in the Schubert case and the one now presented are of vital significance when the language of § 614.01 is considered. In the former, participants did pay for the chance to participate. In the latter, no consideration whatever passes from them to the sponsor of the plan for the right to participate.

Under the foregoing authorities, and in particular our position in the Schubert case, we believe that the plan submitted by plaintiff, as outlined in the trial court’s findings, does not constitute a lottery under § 614.01. Thereunder, the property which plaintiff distributes does not go to anyone by reason of payment for the right to participate in the drawing, since no payment is required for the privilege. Nor does any part of the entire group participating .pay any consideration for the chance to participate. Begistration in the lobby is the sole requirement for eligibility. No charge is made therefor. No ticket purchase is required in connection therewith. Only one registration is permitted each person. Presence within the theater gives no greater or additional opportunity for success. Tickets to the theater performance may be purchased, but no coupons of pm'ticipation m'e attached thereto, and the holders thereof remain ineligible to win a gift if they home not previously registered m the lobby.

A winning registrant may enter the theater without charge when his name is called from 'the loud-speaker outside the theater. At no stage of the proceedings does his status or the status of any part of the group of participants change from that of a free to that of a paid classification. There is no “moment” when “some pay for the chance of participating in the drawing of the prize,” as specified in the Schubert case. Presence in front of the theater is not required. Absentee cards may be signed without charge, giving any winner an additional 48 hours to claim his gift.

The. price of admission is the same on the night of a drawing as on other nights. The quality of the motion picture is not changed. The money used in the distribution of the gift is looked upon as an expenditure for advertising purposes. The evils present in gambling and lottery schemes which invite the purchase of numerous or costly chances by those eager to participate, with consequent waste of earnings or savings, are not present here. There is no cost for participation, no opportunity for waste of funds or effects. No harm to anyone has been suggested or revealed in the plan, unless there be something evil in the desire inherent in every human to obtain something for nothing. If the latter is true, then under the statute involved we must also condemn radio “give away” programs, free prizes at store openings, church-dinner door prizes, and gifts of like nature. We doubt that, in the absence of specific legislative direction, judicial sanction should be given to any such narrow concept of morality.

In its complaint, plaintiff seeks an order enjoining defendants, and each of them, from in any manner enforcing against plaintiff § 614.01 by reason of any act arising out of the aforesaid plan of bank night. Our decision has indicated that the plan adopted is legal. We feel that this opinion will remove any threat of interference with plaintiff’s plan which would necessitate injunetive relief. For that reason, we deem it advisable to omit any discussion of that issue at this time.

The order appealed from is reversed with directions to the trial court to make its conclusions of law and order for a declaratory judgment in accordance herewith.

2 These cases are included in the cases cited in footnotes 4 and-5 of the dissent, with the exception of State ex rel. Beck v. Fox Kansas Theatre Co. 144 Kan. 687, 62 P. (2d) 929, 109 A. L. R. 698; State ex rel. Draper v. Lynch, 192 Okl. 497, 137 P. (2d) 949; State v. Jones, 44 N. M. 623, 107 P. (2d) 324, which are based upon statutory provisions similar to M. S. A. 614.01. These cases are hereinafter referred to.