State Ex Rel. Dussault v. Fox Missoula Theatre Corp. , 110 Mont. 441 ( 1940 )

This is an appeal from a judgment of the district court of Missoula county making permanent a temporary injunction which enjoined the defendants from operating and conducting a plan popularly known as "Bank Night." The plaintiffs' theory of the case is that the defendants were maintaining a nuisance as defined in section 11124, Revised Codes, and they sought to abate the nuisance.

The case was tried upon an agreed statement of facts. The essential parts of the plan, as we gather from the agreed statement, are as follows:

The defendant Fox Missoula Theatre Corporation operates two theaters in the city of Missoula, known as the Wilma and the Rialto. One Thomas C. Grindley, who is not a party to this suit, operates a theater known as the Community Theatre. Each week the defendant theater and Grindley deposit $100 apiece in a bank, which sum becomes a prize subject to drawing under the following conditions: The defendants maintain a register where people over sixteen years of age sign their names and set forth their addresses. Each registered name receives a number in regular order. In a second register, known as Register No. 2, the names are alphabetically arranged, retaining the same numbers they have in Register No. 1. Anyone so registered becomes eligible for the prize.

Once each week at the Wilma Theatre numbers corresponding to those set opposite the names of registered persons were placed in a box on the stage. A disinterested person, usually from the audience, drew at random from the box and the number drawn was read aloud. The person whose number was drawn was the winner of the prize. A period of two minutes was permitted for the person to appear and claim the prize. If the $200 award was not claimed within the allotted time, the money was added to the prize fund until it reached the sum of $500, at which time it was otherwise apportioned. At no time did a single award exceed $200. While it was not necessary for one to purchase a ticket for admission to the theater to become eligible to the drawing, this fact was not announced on the screen, radio or published in a newspaper, but such information was imparted by the door attendant each bank night and at the time of the drawing. On bank night all tickets are sold for the price charged adults, no children's tickets at the usual reduced price being sold. It is conceded by the parties that some theater patrons attend on bank night solely for the chance of winning a prize, while others attend solely for the purpose of seeing the picture.

It is admitted in the agreed statement that the plan was profitable for the theaters and that, if the money were not used for the prize, it would be otherwise used for advertising. On bank night the theaters joining in the plan were virtually filled to capacity with large numbers of persons standing on the outside.

The question for us to determine is whether or not the plan[1] constitutes a lottery under the laws of Montana. While there have been no decisions in our court on this subject, as it relates to so-called Bank Nights, our Constitution, Article XIX, section 2, reads as follows: "The legislative assembly shall have no power to authorize lotteries, or gift enterprises for any purpose, and shall pass laws to prohibit the sale of lottery or gift enterprise tickets in this state." In pursuance of such mandate in the Constitution, the legislature enacted section 11149, Revised Codes, reading 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." In State v. Hahn, 105 Mont. 270,72 P.2d 459, this court set out the three requisites of a lottery as the offer of a prize, its award by chance, and the giving of consideration for an opportunity to win the prize.

It appears that the defendants admit that all elements of a[2] lottery are present, except the requisite that there must be a valuable consideration paid for a chance to win a prize. The fact that the scheme was cleverly arranged apparently to avoid the stigma of the statute forbidding lotteries is no defense. Judicial scrutiny must pierce the veil of sham defense, whether it be the product of a mind ingenious or ingenuous, clever or crude.

Defendants, when they argue that the money put up by them for the gifts would otherwise be spent for advertising, step into their own deadfall. Why, then, do they not spend it for advertising? If spent for advertising the attraction for attending the show, and the appeal of the advertisement would be the picture shown, and not the gift offered. The purpose of the gift is a strong factor in determining the nature of the scheme. It would seem that on bank night the remote chance of a smile from lady luck or dame fortune is a greater attraction than the winsome ways of other stars.

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.

The recent work of Williams on Lotteries, in section 185, page 115, has this to say about consideration: "With respect to its office or function this term may denote the element of a consideration in a specific contract such as the purchase price in the buying of a lottery ticket. This is the narrow, technical use of the word. Or, it may have a wider meaning and refer to all or a portion of the element of consideration in the entire scheme or device. Here it may include all or a part of the consideration involved in all or a part of the contracts between the operator and the players. As to kinds of consideration, there are many, such as money or property paid or promised, time given, labor performed, services rendered, benefits conferred, losses sustained, and detriments endured."

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.

In State ex rel. Beck v. Fox Kansas Theatre Co.,144 Kan. 687, 62 P.2d 929, 109 A.L.R. 698, it was held under circumstances quite similar to those before us, that the benefit under the "bank night" plan in the way of increased gross receipts for paid admissions is sufficient consideration coming directly or indirectly from those entitled to chances generally to meet the element of consideration in the definition of a lottery. (See, also, Sproat-Temple Theatre Co. v. ColonialTheatrical Enterprise, 276 Mich. 127, 267 N.W. 602; SocietyTheatre v. Seattle, 118 Wash. 258, 203 P. 21.)

A further analysis of the question of consideration is found in Williams on Lotteries, supra, at page 132, which in several respects is pertinent to the problem before us:

"The Athens theatre has a show to exploit and seats to sell. It makes offers to the public upon certain terms and conditions which contemplate two classes of chances and the members of the public accept these terms and conditions without change. It is the theatre's game and the players have to accept the offers as they are made, if they accept at all.

"It is respectfully suggested that this scheme discloses six kinds of consideration connected with and included in the theatre's offer and the corresponding acceptance of the offer, namely:

"(a) The registrant's time, trouble and expense in going to and from the lobby of the theatre in order to register and receive his option number.

"(b) The registrant's subjection in the lobby to sales appeal of the theatre program by the flaming posters suggesting beautiful scenery, charming women, handsome men and thrilling music — a thing of value to the theatre.

"(c) The addition of registrant's name and address to the theatre's mailing list, a list which is of value and would cost considerable if made in some other manner.

"(d) The registrant's time, trouble and expense in going to and from the theatre in order to participate in the drawing at nine o'clock on ``bank night.'

"(e) The registrant's service to the theatre in ``broadcasting' notice of the scheme to his kin, comrades and acquaintances — a very valuable service since the use of the mails and radio is denied to ``bank night.'

"(f) The admission fee, which, in most cases, is paid by the registrant in order to see the drawing as it actually occurs and to participate most comfortably and advantageously in the distribution, if, as, and when it takes place.

"In view of this analysis several things are obvious, namely:

"(a) That there are two prerequisites for participation in the distribution of prizes: (1) Registration of name and address in a book in the theatre lobby, and (2) attendance at the theatre, either in or out, at nine o'clock sharp on ``bank night,' and that one of these prerequisites is absolutely worthless without the other.

"(b) That there is only one way for the registrant to see the drawing and get first hand information and thereby participate fully in what is done, and this way, this opportunity for visual participation, this chance de luxe, is sold to him in a 25 cent admission fee and all the hocus pocus that ``bank night' promoters can muster cannot obscure the fact.

"(c) That while consideration is present in the scheme in all the kinds and aspects shown in the foregoing analysis, that part which is made up of the stimulated admission fees actually and undoubtedly received by the theatre, is, in itself, sufficient to constitute the consideration comprehended by the anti-lottery statutes in any state in the Union.

"(d) That another kind of consideration involved in the acceptance which is in and of itself sufficient to supply the element of consideration in a lottery, is the presence of the registrants at the theatre, even on the outside, in response to the operator's offer.

"(e) That the plan of drawing from all registration numbers has the effect of playing the total registration against the attendance and thereby increasing the odds against the award and in favor of passing the prize for addition to the prize for the next Monday night. This, of course, increases the prize without increasing the admission and in so doing accelerates the gambling spirit. Here there is an increase in prize from $35.00 to $210.00 without any award at all. Thus there is no limit to the prize in the ``bank night' scheme and consequently no height to which the gambling fever may not rise under it."

While in the instant case, failure of a number holder to claim the prize will result in adding the prize to the next week's drawing without increasing the individual prize, yet the number of prizes that may be drawn is thereby increased, resulting in greater interest in attendance.

In describing a lottery our statute, supra, in conclusion uses these words: "Whether called a lottery, raffle, or gift enterprise, or by whatever name the same may be known." Apparently the legislature foresaw clever plans to evade the plain meaning of the law and confuse or befuddle the courts. As was done by this court in State v. Hahn, supra, we must here look to the substance as well as the form.

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. It is in effect a spawning ground for more unrestrained forms of gambling, appealing to juveniles as well as adults. That the scheme is artful and difficult of judicial capture is evidenced by the fact that sixteen jurisdictions have classified it as a lottery, and about nine have allowed it to depart with judicial blessing. Injunction lies to abate a nuisance such as we have here. (State ex rel. Stewart v.District Court, 77 Mont. 361, 251 P. 137, 49 A.L.R. 627.) Despite its attractive makeup, we believe the scheme must take its place in the limbo of lotteries.

Judgment affirmed.

ASSOCIATE JUSTICES ANGSTMAN and ERICKSON concur.