In People v. Lavin, 179 N.Y. 164, 71 N.E. 753 (1904), the Appellate Division of the New York Supreme Court held that a scheme where 100 cigar bands could be sent in with a guess as to the number of cigars which would be taxed during a specific month, where those with the closest guesses would receive cash prizes of up to $5,000, was an illegal lottery.Summary of this case from Schwartz v. Upper Deck Co.
Argued June 2, 1904
Decided August 5, 1904
William Travers Jerome, District Attorney ( Howard S. Gans and Samuel H. Guggenheimer of counsel) for appellant.
John W. Ingram for respondent.
The relator, the publisher of a trades newspaper known as the "United States Tobacco Journal," was arrested on a warrant issued by one of the justices of the Special Sessions of the city of New York, which charged him with a violation of section 327 of the Penal Code in having advertised a lottery within this state. The complaint and depositions on which the warrant was issued showed that the relator published the following advertisement:"The United States Tobacco Journal. SAVE CIGAR BANDS. Another free Distribution of $142,500.00 Will be made in December, 1903 Based on the Month of November, 1903 TO SMOKERS OF (Here follow the names of thirty brands of cigars.)
"How many cigars (of all brands, no matter by whom manufactured) will the United States collect taxes on during the month of November, 1903?
(Cigars bearing $3.00 tax per thousand).
"The persons who estimate nearest to the number of cigars on which $3.00 tax per thousand is paid during the month of November, 1903, as shown by the total sales of stamps made by the United States Internal Revenue Department during November, 1903, will be awarded as follows:
To the (1) person estimating the closest ..... $5,000 in cash. To the (2) persons whose estimates are next closest ($2,500 each) ...................... 5,000 " To the (5) persons whose estimates are next closest ($1,000 each) ...................... 5,000 " To the (10) persons whose estimates are next closest ($500.00 each) ..................... 5,000 " To the (20) persons whose estimates are next closest ($250.00 each) ..................... 5,000 " To the (25) persons whose estimates are next closest ($100.00 each) ..................... 2,500 "
To the (50) persons whose estimates are next closest ($50.00 each) ....................... $2,500 in cash. To the (100) persons whose estimates are next closest ($25.00 each) ....................... 2,500 " To the (2,000) persons whose estimates are next closest ($10.00 each) ....................... 20,000 " To the (3,000) persons whose estimates are next closest ($5.00 each) ........................ 15,000 " To the 30,000 persons whose estimates are next closest we will send to each one box of 50 "Cremo" Cigars (value $2.50 per box) ........ 75,000 35,213 ________ 35,213 persons ................................ $142,500
"Every 100 Bands from Above-named Cigars will Entitle you to Four estimates.
"(One band from "Florodora" Cigars or one band from "Florodora Operas" counting as two bands from the other cigars mentioned; and no less than 100 bands will be received at any one time for estimates.)
"Information which may be of value in making estimates: The number of cigars now bearing $3.00 Tax per thousand, for which stamps were purchased, appears below:
1900. 1901. 1902.
January ..... 422,512,494 488,806,638 496,983,717 February .... 394,440,344 417,196,433 445,495,483 March ....... 436,122,097 445,641,761 516,599,027 April ....... 427,952,558 481,870,212 516,835,163 May ......... 456,509,855 553,187,580 523,035,907 June ........ 473,591,527 500,693,908 532,151,477 July ........ 457,642,572 501,318,407 571,866,633 August ...... 483,551,833 485,441,753 565,974,550 September ... 474,787,902 501,800,523 575,804,470 October ..... 532,205,063 574,551,047 628,881,303 November .... 508,258,250 529,308,500 562,444,393 December .... 467,092,208 479,312,170 ...........
"Only Cigar Bands are Good for Estimates. Send Nothing but Cigar Bands Under this Offer.
"In case of a tie in estimates, the amount offered will be divided equally among those entitled to it. Distribution of the awards will be made as soon after December 1st, 1903, as the figures are obtainable from the Internal Revenue Department of the United States for November, 1903.
"Write your full name and Post Office address plainly on packages containing bands. The postage or express charges on your package must be fully prepaid, in order for your estimate to participate.
"All estimates under this offer must be received on or before October 31st, 1903, by the
"Florodora Tag Company, Jersey City, N.J.
"Send each estimate on a separate piece of paper with your name and address plainly written on each.
"You do not lose the value of your bands. Receipt will be sent you for your bands, and these receipts will be just as good as the bands themselves in securing Presents illustrated in our Catalogue.
"Handsomely illustrated 80-page catalogue (page 7 in. x 10 in.) showing 11 Presents exactly as they are, and with beautiful embossed cover lithographed in 10 colors and gold, will be mailed to any address upon receipt of 10 cents, or ten tags, or 20 cigar bands."
On his arrest the relator sued out a writ of habeas corpus, and on the return thereto was discharged on the ground that the scheme advertised by him was not a lottery within the definition of the Penal Code, and that hence no crime was charged against him. The order of discharge was affirmed by the Appellate Division by a divided court, and from that order this appeal is taken.
Doubtless the purpose of the Florodora Company in establishing the system of competition for prizes detailed in the advertisement was to increase the sale of its various brands of cigars. For that purpose it was justified in using any innocent or legal means to attract customers, and even the legislature could not, under the guise of enacting a police regulation, interfere with this liberty. ( People v. Gillson, 109 N.Y. 389. ) But the prohibition and regulation of gambling in all forms and lotteries of every kind are unquestionably valid exercises of legislative power, and if the scheme established by the advertiser was in effect a lottery, the fact that the dominant purpose was merely to increase the advertiser's business does not save it from condemnation. A lottery is defined by the Penal Code (sec. 323) 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, whether called a lottery, raffle, or gift enterprise or by some other name." By section 327 advertising a lottery is made a misdemeanor. That the scheme provides for the distribution of property is apparent on its face. That the persons among whom the distribution is to be made pay a valuable consideration for the chance when they purchase the cigars, the bands on which entitle them to compete for the prizes is settled by authority. ( Hull v. Ruggles, 56 N.Y. 424. ) Therefore, the only question presented by the case is whether the distribution is made by chance or not.
It is not necessary to enter into a very elaborate discussion of what constitutes chance. Nearly all people at this day believe (however inconsistent their conduct at times may be with such belief) that the laws of nature are uniform and that all phenomena or occurrences are the necessary effect of antecedent causes operating according to fixed laws. "It is strictly and philosophically true in nature and reason that there is no such thing as chance or accident; it being evident that these words do not signify anything really existing, anything that is truly an agent or cause of any event; but they signify merely men's ignorance of the real and immediate cause." But though nothing occurs in the world as a result of chance, the occurrence may be a matter of chance to the observer from his ignorance of antecedent causes or of the laws of their operation. If one is told to draw from a box of which he is informed simply that it contains black balls and white balls, it is to him a matter of equal chance whether he draws a black one or a white one, and this though in fact the box contains ninety-nine of one kind and one of the other. Nor would the chances to him be at all changed if he were told that there were ninety-nine of one kind and one of the other unless he was told of which color the ninety-nine were. Therefore, that may be a matter of chance to one man which is not a matter of chance to another, and with different men the chances of the occurrence of any event may differ greatly. It may be said that an event presents the element of chance so far as after the exercise of research, investigation, skill and judgment we are unable to foresee its occurrence or non-occurrence or the forms and conditions of its occurrence.
The learned judge who wrote for the majority of the Appellate Division said of the contest or competition presented in this case: "It is manifestly impossible for any one to ascertain or know in advance the number of cigars in a given month upon which the Government will attach revenue stamps of the denomination of three dollars per thousand. The period for presenting estimates closed on the last day of the month preceding that for which they were to be made, and obviously there are many other elements of chance that render it difficult for any one to make any estimate that will approximate accuracy." The correctness of this statement cannot well be questioned. He thought, however, that knowledge of the condition of the tobacco trade, the importation of cigars and similar matters not stated in the advertisement would enable those possessing the information to estimate more accurately than others ignorant of these conditions. From this the learned judge concluded that the distribution would not depend exclusively on chance, but, to some extent at least, be affected by the exercise of judgment, and that, therefore, the scheme did not constitute a lottery.
Pure chance is defined by Black in his Law Dictionary to be "the entire absence of all means of calculating results," and if to constitute a lottery it is necessary that the distribution should be purely by chance without any other element affecting the result, as has been held in a number of jurisdictions ( Caminador v. Ulton, 60 L.J. 116 ; Hall v. Cox, L.R. [1 Q.B.D. 1899] 198; Regina v. Dodds, 4 Ont. Rep. 390; Regina v. Jamieson, 7 id. 149; U.S. v. Rosenblum, 121 Fed. Rep. 180; People v. Elliott, 3 L.R.A. 405; Opinions of U.S. Attorneys-General, vol. 19, p. 681), then it may be conceded that the scheme before us is not a lottery. Our statute, however, does not provide that the distribution must be by pure chance or by chance exclusively, but by chance. The construction of this term has been presented in several states in which the statutes imposed penalties for betting on games of chance not inflicted on other modes of gaming. The earliest case on this subject is that of State v. Gupton (8 Iredell, 271), where the distinction between games of chance and those of skill was fully discussed. It was there said: "We believe that in the popular mind the universal acceptation of a `game of chance' is such a game as is determined entirely or in part by lot or mere luck, and in which judgment, practice, skill or adroitness have honestly no office at all or are thwarted by chance. As intelligible examples the games with dice are determined by throwing only, and those in which the throw of the dice regulates the play, or the hand at cards depends upon a dealing with the face down, exhibit two classes of games of chance." On the other hand, games of chess, checkers, billiards and bowling were held to be games of skill. This distinction has obtained in all those jurisdictions where the definition of the term "game of chance" has been material under their statutory law. ( Wortham v. State, 59 Miss. Rep. 179; Eubanks v. State, 5 Mo. 450; Harless v. U.S., 1 Morris [Iowa], 169; Glascock v. State, 10 Mo. 508.) Throwing dice is purely a game of chance, and chess is purely a game of skill. But games of cards do not cease to be games of chance because they call for the exercise of skill by the players, nor do games of billiards cease to be games of skill because at times, especially in the case of tyros, their result is determined by some unforeseen accident, usually called luck. The test of the character of the game is not whether it contains an element of chance or an element of skill, but which is the dominating element that determines the result of the game. This is in harmony with the views expressed in our own decisions, though the exact question has not been before us. In People ex rel. Lawrence v. Fallon ( 152 N.Y. 12) it was held that the award of a prize or stakes for the successful competitors in a horse race was not a lottery. Judge MARTIN there said: "There is certainly a great difference between a contest as to the speed of animals for prizes or premiums contributed by others and a mere lottery, where the controlling, and practically the only element, is that of mere chance alone. A race or other contest is by no means a lottery simply because its result is uncertain or because it may be be affected by things unforeseen and accidental." Equally we think that a lottery does not cease to be such and becomes a mere contest because its result may be affected, to some slight extent, by the exercise of judgment.
As already said, the cases cited by the learned judge at the Appellate Division support his conclusion. In the last English case ( Hall v. Cox, supra), a prize to the subscriber to a newspaper who should approximate most closely the number of deaths in London during a specified week was held not to be a lottery. In Regina v. Dodds ( supra) it was held that the award of a prize to the person who should most closely estimate the number of beans in a glass jar was dependent on the exercise of skill or judgment and not on chance. These decisions proceeded on the ground that to constitute a lottery the distribution must be exclusively by chance. On the other hand, in Hudelson v. State ( 94 Ind. 426) a precisely similar scheme, the award of a prize to the person who should estimate most closely the number of beans in a glass globe, was held to be a lottery. The court there said: "An expert mathematician might more nearly fix the size of the globe than an entirely uneducated person. And so he, and persons of better judgment, might more nearly fix the number of beans in the globe than persons of less judgment; yet the exact number would be a mere matter of guessing. That anyone should guess the correct number would be a matter of the merest chance, because there are no means of attaining to a certainty." So far as the cases in the Federal courts are concerned it is not necessary to refer to them as they have been in effect overthrown by the recent decision of the Supreme Court of the United States in Public Clearing House v. Coyne, Postmaster ( 194 U.S. 497). That was an action to restrain the postmaster of the city of Chicago from interfering with the plaintiff's mail. The plan for the payment of money by the subscribers and its distribution at a subsequent period among those who kept up their membership is so elaborate and complicated as not to permit the presentation of even its general outlines. For information as to its character reference must be had to the case as it appears in the reports. All that can be said of it here is that every member who continued to be such at the period of distribution was entitled to a return of his payments with certain accretions, depending upon the number of persons he had induced to join and the number who had dropped out prior to the time of the distribution. The postmaster-general impounded the plaintiff's mail on the theory that it was engaged in a scheme for obtaining money under false pretenses. His action was upheld by the Supreme Court, but the majority placed their decision on the ground that the scheme was a lottery. The court, through Mr. Justice BROWN, said: "It is true, as urged by the counsel for complainant, that in investing money in any enterprise the investor takes the chance of small profits, or even of failure, as well as the hopes of large profits; but such enterprises contemplate the personal exertions of the investor, or of his partners, agents or employes, while in the present case his profits depend principally upon the exertions of others, over whom he has no control and with whom he has no connection. It is in this sense the amount realized is determinable by chance."
If we examine the plan of distribution advertised, the number and character of the persons who were invited to compete for the distribution as well as the event by which the distribution was to be determined, we think it perfectly clear that the dominating and controlling factor in the award of the prizes is chance. We well know that in many lines of trade and business there are experts who are able, by the possession of information and the exercise of judgment, to forecast within limits the output of the products of the trade. Success in business may depend in no small degree on the accuracy of such forecast. So also there are expert statisticians, both in government employ and in that of private commercial houses, who are known for their ability to predict the probable yield of the crops that will be harvested during the current year. If the contest for a prize was to be had among experts, the award of the prize, despite the many elements affecting the result which no one could foresee, might be held dependent on judgment and not on chance. But the competition before us is not at all of that character. The scheme contemplates over thirty-five thousand competitors. From the table given in the advertisement it appears that the quantity of cigars stamped varies from month to month in the same year as greatly as forty millions and between a month of one year and the corresponding month of the next year as greatly as ninety millions; and that the number stamped in the month immediately previous to that for which an estimate is called was five hundred and sixty-two millions. It would seem perfectly clear that if several experts should agree in estimating the output within five millions, or one per cent of the number actually stamped, it would show a remarkable accuracy in their methods of calculation. Yet, with thirty-five thousand competitors the probabilities are overwhelming that the first prize will be won by a very much closer approximation. If the difference between the estimate which won the first prize and that which secured the second prize should be only ten thousand or even only a hundred thousand, would any one deny that the result occurred through "pure chance" as defined, and that it did not proceed from the possession of superior information or the exercise of greater judgment or skill? While the advertisement probably does not give information of every factor which may influence the result that competitors are asked to forecast, it does give the principal data requisite for making an estimate. It was not desired to obtain estimates from those qualified for the work by experience and judgment and thus make it a contest of skill or knowledge; on the contrary, it was sought to eliminate as far as practicable the elements of knowledge and judgment, and by giving the general statistics of the subject make the contest as fair a gamble for the advertiser's customers as possible. We think the distribution in this case is controlled by chance within the meaning of the statute and that, therefore, it is illegal. The scheme certainly falls far within the requisites of a lottery as defined by the Supreme Court of the United States in the Public Clearing House case, under a statute very similar to our own.
The orders of the Special Term and Appellate Division should be reversed and the relator remanded to custody.
PARKER, Ch. J., O'BRIEN, BARTLETT, MARTIN, VANN and WERNER, JJ., concur.