United States v. McGuire , 64 F.2d 485 ( 1933 )

MANTON, Circuit Judge

(dissenting).

The appellants have been convicted on two counts. Tho first charges that they knowingly caused to be taken and received, at Middletown, N. Y., by one George Finn, on May 1,1931, a book of 32 tickets allegedly purporting to be lottery tickets and to represent chances, shares, or interest in a lottery which had theretofore been transported by common carrier from Pennsylvania to New York, violating section 237 of the U. S. Cr. Code (U. S. C. title 18, § 387 [18 USCA § 387]). The second count charges a conspiracy to knowingly cause the same tickets to be deposited with the common carrier for interstate carriage. It charges the commission of overt acts in the furtherance of the conspiracy. The conspiracy charged was to commit the offense mentioned in the first count. U. S. Cr. Code § 37, U. S. C. title 18, § 88 (18 USCA § 88). It appears that for the years prior to 1926, appellants Mann and Ilering had been active in the affairs of the Fraternal Order of Eagles, the latter as editor of the magazine published by that older and the former as an officer in the order. In 1926, Mann entered into a contract with the Board of Grand Trustees to conduct the affairs of the department of bazaars, fairs, and like attractions. The contract provided that he should assume direction and control of this department for a period of ten years. His compensation was fixed at 40 per cent, of the net profits, 60 per cent, to be retained by the several subordinate aeries of the Eagles. On October 1,1926, Mann entered into a contract with Hering transferring a third interest to him. This contract was for ten years. Until December, 1928, when the contract with the trustees was amended for the purpose of permitting Mann to utilize the services of independent promoters, the results were negligible. In December, 1930, McGuire became interested in the plan of fund-raising campaigns to be conducted under the auspices of the subordinate aeries of the order throughout the country. A conference took place on December 29 and 30, 1930, at which Mann, McGuire, and the former’s lawyer participated, and it was agreed that McGuire would train a staff of representatives to solicit the various subordinate aeries throughout the country to enter into contracts with the bazaar department of the order for the holding of frolics and dances. The plan of the venture was that each member of the subordinate aeries received a book of 32 tickets to be sold to the public at 50 cents each. Out of the procs'eds of each book or portion thereof sold, tlie subordinate aeries received 25 per cent, plus an agreed contribution toward the expenses of the affair. The balance was remitted by the secretaries of the subordinate aeries to whom the members were to make returns to- the bazaar depa rtment of the order. Each member of the order who sold a complete book of tickets was to receive a merchandise prize of the retail value of $18, and the secretaries received compensation for extra services to be performed in connection with their activities. Cash awards of $60,000 were to be made in connection with the venture. After all the expenses including the printing, transportation charges, and field expenses, as well as the cost of the merchandise pi’izes, were defrayed, the net profits were to be divided between Maun and McGuire. Hering would be entitled to one-third of Mann’s share of the profits by reason of his contract, and would share one-third of the losses, if any. Mann’s counsel, at the conference referred to, advised him that the .enterprise" was lawful. McGuire opened headquarters at Kansas City and began a fund-raising campaign.

The tickets were printed at Scranton, Pa. They were shipped, when printed, to- Philadelphia, where they were placed in packages with certain literature, and consigned to individual members of the participating subordinate aeries through the Railway Express Agency. On their face the tickets entitled the purchasers to admission to a designated frolic and dance to be held under the auspices of the local subordinate aeries. When the ticket was sold, the purchaser wrote his name and address on the stub pertaining to the ticket so purchased; the stub being retained by the member who sold the ticket, the tickets themselves stating that the awards thereon referred to would he made August 12, .193!, and nothing more. On July £>, 1931, about a month after the last book of tickets was shipped in interstate commerce, a circular letter was issued to the officers and members of tlie subordinate aeries which had participated in the fund-raising campaign from the headquarters of the bazaar department bearing a mimeograph signature of Mann. It stated that the delegates of the subordinate aeries during the week of August 91, 1931, would meet at the Grand Aerie Convention at Toledo, Ohio, and there as members of the committee would take charge of making the awards. A number of witnesses, who served as representatives of the bazaar department of tlie order, testified that they informed the membership of the subordinate aeries when questioned that the making of the awards would bo left to the committee, and this was done at McGuire’s instruction. On the evening of August 12, 1931, the delegates to the Grand Aerie Convention assembled on a steamer for an excursion, and during the course of that night the awards were made by a drawing of the stubs of the tickets which had been sold by the membership of the order from a receptacle. The person whose name and address appeared on the first stub received the first prize, and this continued until 180 awards were made.

Appellant Bering’s only connection appears to have been entering into the contract of October 1,1926, with Mann. In March or April, Hering came to Kansas City at Mann’s request for a consideration of meeting the liabilities on the contract, if it became necessary. No one testified as to what transpired at this meeting except a witness testified that “in a cursory sort of way, we [Hering and the witness, before and after the meeting] discussed the possibilities of its [the frolic and dance venture] being successful.” A witness said that he mot Hering at South Rend in July, 1931, and discussed in “a brief sort of way” this matter; that the $230,000 in checks received by Mann were deposited in the “Contingent Reserve” account kept under the contract between Mann and Hering, and that the latter received from this account $60,000 in 1931 and $7,500 in 1932. He drew no money from that account prior to July 1, 1931. Hering was on the boat at Toledo before the drawing took place. In any event, there was no evidence to warrant submitting Hering’s guilt to the jury.

The court permitted evidence of events subsequent to the receipt of the ticket to show their purport. The prosecution is predicated upon the tickets purporting to be lottery tickets or to represent chances, shares, or interests in a lottery or similar, gift enterprise. The purport of the tickets must necessarily he ascertained within the four corners of the tickets. Francis v. United States, 188 U. S. 375, 23 S. Ct. 334, 335, 47 L. Ed. 508; France v. United States, 164 U. S. 676, 17 S. Ct. 219, 41 L. Ed. 595. The Francis Case did not in any way involve the question of whether or not the purport of documents could be shown by independent evidence, for it involved only the question of whether or not the government could by independent evidence, as it was required to, show that the lottery had not yet been held. The Supreme Court held in the France Case that the statute applied only to a lottery to be held and not to a lottery that had been held. After the decision in the France Case, the statute in questioned' had to be read as if the words “to be held” had been inserted .after the words “lottery, gift enterprise, or similar scheme.” When the Francis Case arose, it was obviously necessary for 'the government to allege and prove, as a material part of its ease, that the lottery, in that ease, was one that had not already been held, and in fact in the Francis Case the government so alleged. There was no question in that case as to whether or not the government could, by independent evidence, show that the documents purported to be lottery tickets. The court below, at bar, stated that the Francis Case held “that the purport of documents can be shown by independent evidence,” and proceeded to do so, basing this primarily upon the statement that the District Court in the Francis Case had said: “Their purport may be shown outside of the papers.” In the Supreme Court (Francis Case) Justice Holmes said:

“The assumption has been that the slips carried from Kentucky to Ohio were papers purporting to be or represent a ticket or interest in a lottery. But in our opinion these papers did not purport to be or do either. A ticket, of course, is a thing which is the holder’s means of making good his rights. The essence of it is that it is in the hands of the other party to the contract with the lottery as a document of title. It seems to us quite plain that the alternative instrument mentioned by the statute, viz., a paper representing an interest in a lottery, equally is a document of title to the purchaser and holder — the thing by holding which he makes good his right to a chance in the game. But the slips transported, as we have pointed out, were not the purchasers’ documents. It is true that they corresponded in contents, and so in one sense represented or depicted the purchasers’ interests. But ‘represent’ in the statute means, as we already have said in other words, represent to the purchaser. * * * The function of the slips might have been performed by descriptions in a book, or by memory, if the whole lottery business had been done by one man. They as little represented the purchaser’s chances as the stubs in a check book represent the sums coming to the payees of the cheeks.”

A review of what the proof shows transspired prior to the receipt of the tickets by Finn demonstrated that they were not in fact lottery tickets and did not represent chances in a lottery. The court below submitted the case to the jury as if the question was not one of the purport of the tickets, but what they were in fact and were known and intended to be by the appellants after the time of their transportation in interstate commerce. The tickets were shipped in a book of 3-2 to be sold by the recipient and to be accounted for to the secretaries of the subordinate aeries. If anything, Finn, the recipient of the tickets, took them from interstate commerce as the agent of the lottery and not as a purchaser. As stated, upon their face and when received, they did not represent chances or interests in awards any more than a bundle of unissued and unsigned certificates would show a property interest. It was not until after the interstate transportation had been completed and after the tickets had passed beyond the power of Congress to legislate respecting their use or control that they were in any sense used to represent chances in a lottery. United States v. Wade (D. C.) 59 F.(2d) 831.

Section 213 of the U. S. Cr. Code (18 US CA § 336), excludes lottery matter from the mail. It is broader in scope than the interstate lottery carriage statute (U. S. Cr. Code § 237 [18 USCA § 387]). It provides that no lottery ticket or part thereof, or paper, certificate, or instrument purporting to be or to represent a ticket, etc., in a lottery shall be deposited in the mail. The interstate lottery statute does not bar from interstate shipment lottery tickets or parts thereof, but is limited to “any paper, certificate, or instrument purporting to be or to represent a ticket,” etc., in a lottery. The mailing statute bars both lottery tickets and tickets purporting to be lottery tickets. The interstate commerce statute bars only such tickets as purport to be lottery tickets. The distinction is clear and unambiguous, and the eases relied upon involving the mail statute (MacDonald v. United States, 63 F. 426 (C. C. A. 7); United States v. Fulkerson (D. C.) 74 F. 619; United States v. Wallis (D. C.) 58 F. 942) are not applicable.

The reason why Congress made this distinction between the two statutes probably was that the power of Congress to prohibit interstate shipment of lottery matter was under the commerce clause and was in some doubt. In the Lottery Case, 188 U. S. 321, 23 S. Ct. 321, 326, 47 L. Ed. 492, tho court had before it a statute which was limited, as is section 237 of the Criminal Code, to a prohibition against papers purporting to represent lottery tickets. The tickets transported, tho court said, “Upon their face they showed that the lottery company offered a large capital prize, to be paid to the holder of the ticket winning the prize at the drawing advertised to he held at Asuncion, Paraguay.” The majority of the Supreme Court (in 1963) decided that the statute was within the legislative powers of Congress under tho commerce clause. In 3909' Congress passed the present law. It may well have had power to extend the scope of its prohibition to papers which while in interstate commerce were apparently not lottery tickets, but which would become such lottery tickets after the interstate carriage had ceased. But it did not do so.

That I think is tho situation at bar. On the other hand, it has long been recognized that Congress had tho power to establish post offices and the plenary power to keep the mails freo from objectionable matter. Ex parte Jackson, 96 U. S. 727, 24 L. Ed. 877. The aid which Congress could give the states in suppressing lotteries under the commerce clause was assistance in preventing distribution of tickets or lottery information. That this was the intent of Congress was clear from the opinion of the majority in the Lottery Case, supra. Only by forbidding interstate carriage and deterring express companies could Congress help, and, before a crime was committed, it must be clear that the ticket was in fact a lottery ticket. This must be judged solely by what transpired before sending and what appeared on the face of the ticket when sent. Under this statute, Congress did not penalize the interstate transportation of lottery tickets as well as papers purporting to be lottery tickets, hut significantly limited the application to papers purporting to be lottery tickets. The statute is highly penal, rendering its violators subject to fine and imprisonment (France v. United States, 164 U. S. 676, 17 S. Ct. 219, 41 L. Ed. 595), and tho courts must construe it strictly. The statute does not cover the tickets sent to Finn. We must not construe the statute so as to extend it by judicial interpretation. Prussian v. United States, 282 U. S. 675, 51 S. Ct. 223, 75 L. Ed. 610.

If, as the prevailing opinion holds, the first count charging the substantive offense must be reversed, a conviction for conspiracy to violate the statute forbidding the transportation of lottery tickets should likewise he reversed. If any crime has been committed, it is a violation of the state law and not the national law.

The judgments should be reversed.