Opinion
No. 23158
Decided December 23, 1931.
Criminal law — Gambling — Adams' Animal Auction for Horses and Dogs — Sections 13062 and 13063, General Code — Quo warranto — Nonresident corporation, authorized to do business in Ohio, operating scheme.
The operation of the scheme known in this record as "Adams' Animal Auction for Horses and Dogs" violates the penal provisions of Sections 13062 and 13063, General Code, and the wilful, habitual and persistent operation of such scheme by a corporation incorporated under the laws of another state and authorized to do business in the State of Ohio under favor of Sections 178 and succeeding sections, General Code, requires the ouster of such corporation from its franchise to do business in the state.
ERROR to the Court of Appeals of Clermont county.
This was an original action in quo warranto in the Court of Appeals of Clermont county, Ohio, instituted on relation of the prosecuting attorney of that county, and sought the ouster of the Falls Cities Amusement Company from its franchise to do business in Ohio. That court, upon hearing, refused to issue the writ. The cause is in this court upon a petition in error.
The cause was submitted to the Court of Appeals upon the pleadings and an agreed statement of facts. The agreed statement of facts, which includes quotations from the petition of the relator, is as follows:
"It is agreed by and between the relator and respondent as follows:
"The relator, Forrest E. Ely, is the duly elected, qualified, and acting prosecuting attorney of the county of Clermont and state of Ohio.
"The Falls Cities Amusement Company was organized under the laws of Indiana for the purposes set forth in its charter and made application for authority to the secretary of the state of Ohio and was granted authority to do business as a foreign corporation within the state of Ohio, certificate of secretary of state marked Exhibit 3 and authority marked Exhibit 4, and made part hereof. That said corporation acquired by lease land and buildings in Batavia township, Clermont county, Ohio, upon which was established and constructed a race track, grand stand, dance and exhibition building and other structures necessary for its corporate purposes, to wit: to exhibit, auction, and offer for sale dogs of various breeds and maintain kennels and in connection therewith, to hold speed contests to be participated in by selected dogs.
"That the defendant by newspaper and other public notice announced that as, 'Clermont Dog Mart,' it would open its grounds to the public on the Ohio pike, four miles west of Bethel, Ohio, State Road No. 125, Friday, June 26, 1931, at 1:30 p. m.
"Relator says that he is not informed of the duration of the operation of said Clermont Dog Mart and has no means of knowing same, but that pursuant to said notice on June 26, 1931, the defendant did in and upon the promises above described exhibit, auction, and offer for sale certain dogs to the public and in addition thereto did enter in five events certain specified dogs in contests of skill, speed, and power of endurance; that the dogs so participating in said contests were entered by the owners with the defendant at a specified sale price; before said contest or race the ownership of each of such dogs was offered to the public.
"The defendant announced its plan through the medium of a pamphlet entitled 'The Three A. System, Adams Animal Auction for Horses or Dogs,' which it distributed among those attending said exhibition, a copy of which is hereto attached and marked 'Exhibit A.'
"This relator represents that in the conduct of the exhibition herein above referred to, the defendant maintained certain equipment, operating apparatus, books, papers and other devices for recording the alleged purchase of the interests acquired in such dogs as were offered for sale, which purchases were evidenced by bill of sale, or tickets, of which originals are attached marked 'Exhibit B.'
"It is further admitted that the conduct of the auction, sale and exhibition was carried on in the manner and form set out in 'Exhibit A,' hereto attached.
"It is further agreed that some of the interests sold in the dogs, 'Exhibit B' being a specimen of such interests, were redeemed at the conclusion of the exhibition at greater and lesser values than that paid by the respective purchasers before the exhibition, which was dependent upon the rules set forth in 'Exhibit A,' especially Sub-section D of Section 2 thereof.
"It is further agreed by and between the parties that the foregoing was all the evidence offered by the parties or either of them, the plaintiff or defendant, and it is agreed that the case is hereby submitted to the court on this agreed statement of facts, which is hereby approved by both parties."
The Falls Cities Amusement Company was incorporated under the laws of the state of Indiana. Article 3, "Object," of the articles of incorporation of the Falls Cities Amusement Company, reads:
"The object of said corporation shall be to own and maintain a place of amusement and recreation for the citizens of Jeffersonville, Indiana, and surrounding communities, including an amusement park, theater and a place of contest for skill of man and animals, games of sport, exhibits of farm implements and privilege of buying, selling, and leasing real estate, and to build and rent houses, and to own, construct and maintain buildings, and such other business as may be required in connection with said company."
The exhibits are:
"Exhibit. "Clermont Dog Mart "Operated by "The Fall City Amusement Company "Announces the opening of its park and kennels on the Ohio Pike 4 miles West of Bethel (State Road 125) Friday, June 26th, 1931 1:30 P. M. "Program will consist of exhibition, auction and sale of dogs of various breeds"In addition to the above there will be five speed contests participated in by selected dogs — the first event taking place at 2:00 P. M. — others following as soon as convenient and to avoid unnecessary delay.
"General Admission 50c — General Admission 50c." "Exhibit A. "The Three A System "Adams Animal Auction "For Horses or Dogs "Copyright 1930 by Falls Cities Amusement Company "Jeffersonville, Indiana."1. The business of The Three A. System shall consist of the sale of horses or dogs of all descriptions and the racing of horses or dogs for public entertainment or amusement. The facilities necessary for the conduct shall consist of a spacious park in which shall be constructed a grand stand and race track suitable for the racing of horses or dogs with appropriate kennels or barns as the occasion demands. Patrons of the park which might more properly be termed a mart shall be charged an admission fee. Any person desiring to file an application for the sale of any horse or dog may do so by entering into a contract with the management of the mart, whereby he authorizes and empowers the management to sell at public auction such animals for a fixed commission. The contract shall be accompanied by a power of attorney to some person connected with the management of the mart authorizing and empowering him to execute a bill of sale and sell such animals in pursuance of the terms of said contract on occasions when said mart is open for business. The patrons thereof in addition to the auction conducted. thereat shall be entertained by competitive racing of horses or dogs having aptitude for racing.
"2. Dogs or horses with an aptitude for racing shall be entered with the management of said mart at a specified sale price and before any race of such animal is conducted they shall be offered for sale by a competent auctioneer who shall fully state all the conditions of said sale and offer such animals entered in each race, at least five (5) minutes before the same, for sale at public auction in the following manner:
"(a) The entire ownership, one-half ownership and one-fourth ownership shall be offered in the order named. If such animals do not sell at such auction for the entrance value fixed by their owner, then the auctioneer may announce that a lesser interest of specific amounts will be offered for sale at booths or stalls erected for that purpose to any patrons desiring to purchase such lesser interest and such patrons purchasing lesser interests shall be issued a bill of sale for a part interest in such animal upon the following conditions:
"(b) That within four (4) hours after said auction is conducted the purchaser shall have the option of submitting a bid or bids for the entire out-standing interest held by other patrons of the mart or surrender such bill of sale to the management of the mart in consideration of the payment to him of a sum equal to the appraised value of the animal designated in such bill of sale. Said appraised value to be determined by a board of appraisers, one of whom shall be appointed by the management of said mart; one by the owner of such competing animal and a third by any patron of said mart.
"(c) Such bids shall be submitted to the secretary in writing within said period of four (4) hours after such auction is conducted and the remaining outstanding interest shall be sold, to the highest bidder for cash.
"(d) The board of appraisers in fixing said appraisement shall take into consideration the fact that a winning animal is more valuable than one losing. The value so fixed by them shall be determined to some extent by the relative positions of the competing animals and all bills of sale shall be redeemable in cash whether on animals winning or losing.
"3. If the owners of any animals with an aptitude for racing have prior to the formulation of entries for such race executed notes secured by first or second chattel mortgage or both, such first or second chattel mortgage, a one-half, one-fourth or lesser interest therein may be offered for sale at auction, and if such animals do not sell at such auction for the amount of said first or second mortgage lesser interests in the first mortgage and lesser interests in the second mortgage, subject to the first mortgage, may be offered for sale to the patrons of said mart under the same conditions specified in Subdivision No. 2.
"4. If first or second chattel mortgage exists on any of the animals offered for sale, as provided for in Section No. then the interest in such animal shall be sold subject to said first or second mortgage or both as the case may be.
"5. The owner of any animal in which a lesser interest is sold or the owner of a first or second mortgage on any animal a lesser interest in which is sold reserves the right to purchase any such lesser interest and in the event he holds a bill of sale for same, he may reserve the right to complete the entire interest in said animal or in said first or second mortgage or both by bidding upon the same in writing with the secretary in all respects as any other patrons of the mart may bid.
"6. Upon the booths at which the lesser interests hereinbefore mentioned are offered for sale there shall be designated in legible figures and letters, first: the amount of the interest offered for sale; second: the extent of an interest offered for sale.
"7. The bill of sale which shall be delivered to the patrons purchasing the same for a lesser interests shall be substantially the following forms:
"Bill of Sale in Competing Animal"For a sum equal to the face value hereof the undersigned hereby sells and transfers to the holder hereof a like interest in the dog whose name appears on a program issued by the undersigned (of even date) opposite a number corresponding to the number hereon. The interest herein sold to be held subject to a first and second mortgage. This contract is made and the holder of this bill of sale accepts the same subject to the following condition: such holder within four (4) hours from the acceptance of this contract shall either purchase the entire interest in said dog or surrender this bill of sale at the appraised value thereof as disclosed by an appraisal made by three (3) competent appraisers.
"____________________,
"Fac Simile Signature.
"For a sum equal to the face value hereof the undersigned hereby sells, and transfers to the holder hereof a like interest in a first mortgage on the dog whose name appears on a program issued by the undersigned (of even date) opposite a number corresponding to the number hereon. This contract is made and the holder of this bill of sale accepts the same subject to the following condition: such holder within four (4) hours from the acceptance of this contract shall either purchase the entire interest in said mortgage or surrender, this bill of sale at the appraised value thereof as disclosed by an appraisal made by three (3) competent appraisers.
"____________________,
"Fac Simile Signature.
"Bill of Sale in Second Mortgage."For a sum equal to the face value hereof the undersigned hereby sells, and transfers to the holder hereof a like interest in a second mortgage on the dog whose name appears on a program issued by the undersigned (of even date) opposite a number corresponding to the number hereon. The interest herein sold to be held subject to a first mortgage duly recorded. This contract is made and the holder of this bill of sale accepts the same subject to the following condition: such holder within four (4) hours from the acceptance or this contract shall either purchase the entire interest in said dog or surrender this bill of sale at the appraised value thereof as disclosed by all appraisal made by three (3) competent appraisers.
"____________________,
"Fac Simile Signature.
"Bill of Sale in Competing Animal and in First and Mortgages on Second Said Animal."For the sum indicated on the face hereof, the undersigned hereby sells and transfers to the holder hereof a like interest in the dog whose name appears on the program issued by the undersigned, (of even date) opposite a number corresponding to the number hereon, together with an interest of like amount in a first and second mortgage on said dog.
"This contract is made and the holder of this bill of sale accepts the same subject to the following conditions. Such holder within four hours from the acceptance of this contract shall either purchase the entire interest in said dog and mortgages or surrender this bill of sale at the appraised value of said dog and mortgages as disclosed by an appraisal made by three competent appraisers.
"Fac Simile of signatures,
"______________________.
"______________________.
"______________________.
"8. The management of the Mart shall make and fix charges against the owner of all horses or dogs quartered in the stables or kennels thereof at figures corresponding with the convenience and quality of quarters so offered."
"Exhibit B."2 First
"4961 "Jeffersonville Dog Mart "Jeffersonville, Ind."2 Four Nine Six One
"O. H."Printed on Back:
"For the sum indicated on the face hereof the undersigned hereby sells and transfers to the holder hereof a like interest in the dog whose name appears on a program issued by the undersigned (of even date) opposite a number corresponding to the number hereon. The interest herein sold to be held subject to a first and second mortgage duly recorded. This contract is made and the holder of this bill of sale accepts the same subject to the following condition: such holder within four hours from the acceptance of this contract shall either purchase the entire interest in said dog or surrender this bill of sale at the appraised value thereof as disclosed by an appraisal made by three competent appraisers.
"Copyrighted by J.H. Adams.
"Jos. H. Adams."
"Exhibit 3. "(copy) "State of Ohio."Filed: 6-23-1931.
"Corp. No. 147057.
"Vol. P. Page 606.
"It is hereby certified that — The Falls Cities Amusement Company which appears from the papers filed in this office on the twenty-third day of June, A.D. 1931, to be a foreign corporation for profit, organized and existing under the laws of the state of Indiana, with its principal office or place of business in Ohio located at Tobasco, has complied with the requirements of law to authorize it to do business in the state of Ohio, and that the business of such corporation to be transacted therein is such as may be lawfully carried on by a domestic corporation incorporated for such or similar business.
"This certificate is issued pursuant to Section 178 of the General Code of Ohio.
"Witness my hand and the seal of the secretary of state, at the city of Columbus, this twenty-third day of June, A.D. 1931.
''[Seal.] Clarence J. Brown,
"Secretary of State."
"Exhibit 4. "(Copy) "State of Ohio."Filed: 6-23-1931.
"Corp. No. 147057.
"Vol. Q. Page 493.
"Department of State."I, Clarence J. Brown, secretary of state of the state of Ohio, do hereby certify that The Falls Cities Amusement Company, a foreign corporation for profit, organized and existing under and by virtue of the laws of the state of Indiana with its principal office or place of business in Ohio, which appears from the papers filed in this office on the twenty-third day of June, A.D. 1931, to be located at Tobasco, has complied with the laws of the state of Ohio, and is authorized to do business therein. The amount of the fair asset value of its authorized capital stock is $143,750.00, and the proportion thereof represented in Ohio is .032258.
"This certificate is issued pursuant to Section 184 of the General Code of Ohio.
"Witness my hand and the seal of the secretary of state, at the city of Columbus, this twenty-third day of June, A.D. 1931.
"[Seal.] Clarence J. Brown,
"Secretary of State."
The corporation, having complied with the laws of the state of Ohio with respect to foreign corporations desiring to do business in Ohio, was authorized by the secretary of state of Ohio to do business in Ohio.
Mr. Forrest E. Ely, prosecuting attorney, and Mr. Hugh C. Nichols, for plaintiff in error.
Mr. J.W. Heintzman, Messrs. Pogue, Hoffheimer Pogue, Mr. Carl Z. Garland and Mr. Harry Britton, for defendant in error.
The Court of Appeals based its judgment upon its interpretation of the agreed statement of facts as falling short of showing a violation of the penal laws of the state, pursued wilfully, habitually and persistently; and in view of the stipulation of the duration of time consumed and the number of transactions constituting the wilful, habitual and persistent violation of law, the conclusion of that court is not illogical.
In the presentation of the case here, however, counsel for the defendant in error requested that the cause be considered as though the operation of the so-called "mart" under the Three A System had been wilfully, habitually and persistently pursued for a long period of time, and expressly waived any claim of failure of proof in respect to the length of time the "mart" had been conducted, or the number of races run or the number of so-called sales of dogs made.
One Joseph H. Adams claims to be the author of the scheme, detailed in a pamphlet distributed to his patrons and appearing in the statement hereto as Exhibit A, and thinks so well of it that he has applied for and received from the United States Patent Office a copyright thereon.
The scheme purports to have for its object the sale of horses and dogs at auction and the racing of horses and dogs for public entertainment.
The transactions here under consideration relate to dogs only. The pamphlet asserts that the plant should properly be termed a "mart."
The first paragraph of the pamphlet describing the scheme provides for the sale, at auction, of "any" horse or dog, in the way sales at auction are usually conducted; that is, the animal is offered for sale at the price the buying public determines it is worth.
Reserving our opinion as to why the first paragraph appears in the pamphlet as a part of the scheme at all, there is nothing about that paragraph which requires the further consideration of the court. None of the balance of the pamphlet relates to "any" horse or dog, but relates only to horses and dogs having "an aptitude for racing," and detail's a scheme purporting to be for the sale of such animals at auction only in connection with the racing of such animal, and provides as a condition to entering such animal in a race that it must be entered at "a specified sale price." The pamphlet does not disclose whether the owner of the animal has the privilege of specifying such price, or whether that right is reserved to the operator of the "mart." It is significant, however, that the word "price" is used, instead of "value," and it is the apparent intention of the author of the scheme that the "specified price" be an arbitrary price.
The scheme as disclosed by the pamphlet offers to the patrons of the "mart" not an opportunity to purchase animals "having an aptitude for racing," upon the judgment of value pronounced by the bidding public, but an opportunity to purchase such an animal only at a specified arbitrary price, which price need have no relation to actual value, and then provides, if no one bids the arbitrary fixed price for the whole of such animal, or a half or a fourth thereof, then a wholly different plan for acquiring an "interest" in such animal be offered. The purchaser is directed to go to booths provided by the operator of the "mart," where he may buy tickets of such operator at any price he may desire to invest, upon the top front of which ticket is printed in large letters the word "First," and a number which corresponds with the number given the animal on the race program, the name of the "mart," two initials, the purpose of which is not disclosed, and two figures indicating the sum paid therefor; and on the back, in fine print (5 point, or pearl type), is printed what the agreed statement of facts states is as follows:
"For the sum indicated on the face hereof the undersigned hereby sells and transfers to the holder hereof a like interest in the dog whose name appears on a program issued by the undersigned (of even date) opposite a number corresponding to the number hereon. The interest herein sold to be held subject to a first and second mortgage duly recorded. This contract is made and the holder of this bill of sale accepts the same subject to the following condition: such holder within four hours from the acceptance of this contract shall either purchase the entire interest in said dog or surrender this bill of sale at the appraised value thereof as disclosed by an appraisal made by three competent appraisers.
"Copyrighted by J.H. Adams.
"Jos. H. Adams."
It is not entirely clear whether, if a purchaser should bid and pay "the specified sale price" of the entire animal, he would thereby obtain control of the animal; but the possibility of the happening of any such contingency is obviated by the process of fixing such "specified sale price" without reference to the animal's actual value. It affirmatively appears that a purchaser of anything less than the entire animal does not thereby obtain control over the animal — nor does he if he purchase at a booth a title to any portion of such animal, or to anything which may ripen into a title to any specified fraction of such animal — except upon the performance of certain named conditions, the performance of which is wholly impracticable, and if not under every circumstance utterly impossible it is always in the power of the operator of the mart to make such performance impossible.
The provision purporting to be for the sale of interests in two promissory notes, secured one by a first mortgage upon the animal entered in the race and one by a second mortgage upon such animal, is, if possible, even less plausible. We do not have a copy of the face of such tickets and do not know whether or not they bear the words "Second," "Third," and all three corresponding to the printing on the back of the tickets which we do have; but we infer that corresponding to the words appearing upon the ticket purporting to be issued to the purchaser of an interest in the animal himself, which bears the word "First," such tickets do bear the word "Second," corresponding to the purported purchase of an interest in the first mortgage, and the word "Third," corresponding to the purported purchase of an interest in the second mortgage, and the words "First, Second and Third," corresponding to the purported purchase of an interest in the bill of sale, the first mortgage and the second mortgage.
While the pamphlet is designed to create the impression that the tickets sold at the booth represent certain fractional parts of a definite whole, to wit, the fractional part of the specified entrance price, the face value of the first mortgage or the face value of the second mortgage, or the aggregate value of all three, a careful analysis of the language discloses that such tickets in fact bear no relationship to such fixed price or face value for any purpose. The tickets purport, according to the pamphlet, to bear some relation to an appraisement value, made after the race is run, with reference to which the pamphlet specifically provides:
"(d) The board of appraisers in fixing said appraisement shall take into consideration the fact that a winning animal is more valuable than one losing. The value so fixed by them shall be determined to some extent by the relative positions of the competing animals and all bills of sale shall be redeemable in cash whether on animals winning or losing."
From this it becomes manifest that the only things the tickets can relate to are the number of tickets sold in each race, the amounts paid therefor, the character of the tickets and the positions in which the competing animals finished the race.
The appraisement of the animals by the appraisers appointed, one by the operator of the "mart," one by the owner of the animal, and the third by no one knows who, is but a device to translate the pool accumulated from the sale of the various forms of tickets — which correspond in fact, although not in form, to the four kinds of pari mutuel tickets (in the vernacular, to win, to place, to show, and across the board) — into a valuation of the various competing dogs for the purpose of a redistribution of the pool according to the relative positions in which such animals finished, the larger proportion going to the holders of tickets upon the animals that have finished the race in the position named by the purchaser at the time of the purchase as indicated on the ticket.
The pamphlet detailing the scheme is not capable of an interpretation with reference to "animals having an aptitude for racing" that the sale of such animals or any interest therein is any part of its purpose.
Manifestly the scheme was devised and the pamphlet printed for the self-serving purpose of affording its author or operator a defense in a court of justice where the legality of the operation of the scheme is being questioned. It not only falls short of accomplishing such purpose in this cause, but, like the monster of Frankenstein's creation, it affords the very evidence which requires a judgment of ouster.
The operation of the scheme clearly violates Sections 13062 and 13063, General Code, and it being stipulated that the operation of the scheme was wilful, habitual and persistent, a case of misuse of its franchise to do business in the state of Ohio is made against the defendant in error. The judgment of the Court of Appeals will be reversed and a judgment of ouster entered.
Judgment reversed and judgment of ouster entered.
MARSHALL, C.J., JONES, MATTHIAS, DAY, ALLEN and KINKADE, JJ., concur.