The scheme or device exposed in the record before us represents an unfair business practice. However, this fact does not condemn it as a lottery unless three essential elements appear, namely, (1) chance, (2) prize, and (3) consideration. Two — chance and prize — admittedly are present. A supposed absence of the third — consideration — as held by the majority, alone supports their conclusion. The statement in the prevailing opinion that the mere presence of the three elements, chance, prize, and consideration, is not sufficient to constitute a lottery is obiter dictum in view of their holding that there is here no consideration. If the dictum be the law, a no man's land of uncertainty prevails, and the question ever persists: When is a lottery not a lottery? Without aid of the test heretofore employed, that it is a lottery if the three elements, chance, prize and consideration appear in the transaction, the courts in each instance must supply the answer according as the judges may feel the scheme involved does or does not promote the evil aimed at.
I find no difficulty in seeing the consideration which stamps this scheme a lottery. The patrons drawn to the theater in the hope of gaining the prize money collectively furnish the prizemoney itself as well as a profit to the proprietor. Thus consideration *Page 267 arises as an inseparable incident to increased attendance.
Willis v. Young [1907] 1 K.B. 448, presents a device with similar earmarks. The proprietors of a weekly newspaper caused medals to be distributed gratuitously to the public. Each medal bore a distinctive number and the words, "Keep this it may be worth 100l. See the Weekly Telegraph today." The winning numbers, arbitrarily selected by the newspaper proprietors, were unknown to distributors of the medals, but were published weekly in the newspapers. It was not necessary that the holder of a medal should purchase a copy of the paper as a condition of receiving a prize. Indeed, no medal would be given out with the purchase of a paper, but could be had free for the asking. Information as to the winning numbers could be had without charge at the newspaper office. The object of the scheme was to induce persons to inspect or buy the paper and its circulation increased substantially during the time the scheme had been carried on. Lord Alverstone, Chief Justice, holding the scheme a lottery, said:
"I cannot entertain a doubt that the decision of the learned magistrate was wrong, and that the respondents ought to have been convicted of the offence charged. We are fully aware of the ingenuity of the gentlemen who originate these schemes, and of their advisers, and doubtless this will not be the last attempt to devise a scheme to keep outside the statute dealing with lotteries; I do not say to evade the statute, for a practice is either within a statute or not. Now it has been admitted by the respondents' counsel that if a coupon had been delivered with each medal, and a charge of a penny had been made, the scheme would undoubtedly have been a lottery, but it is contended that the fact that no charge was made for the medal made all the difference. In my opinion this Court would be stultifying itself were it to give any effect to the ingenious argument by which this ingenious device was supported. * * *"
"If this is an honest scheme, as I assume it to be, the suggestion is that there appear periodically in the paper announcements of the names of the prize winners, and that many hundreds of pounds are given away to them. The money for the prizes, however, comes out of the receipts of the respondents, and these in their turn come, to a considerable extent, from the people who buy the paper, although no doubt the advertisements may bring in a considerable sum. The persons who receive the medals therefore contribute collectively (though each individual may not contribute) sums of money which constitute the fund from which the profits of the newspaper, and also the money for the prize winners in this competition, come. I adopt the definitions of `lottery' which have been cited to us in the present case, and, looking at the real substance of the scheme, I think that it falls within the narrowest and most limited definition of a lottery, though it is not necessary for the purpose of our decision to go so far as that. If the scheme had been to deliver *Page 268 a medal with each copy of the paper to the person buying that copy, there could have been no question that it would have been a lottery; in the present case the mischief is really the same, and an inducement is held out to the same class of people to buy copies of the paper, and I am glad to say that I know of no statute, and of no judicial decision, which compels me to hold that this scheme is not a lottery."
Central States Theatre Corp. v. Patz (D.C.) 11 F. Supp. 566,568, is a case on all fours with the one in hand. The scheme was held to be a lottery. Judge Dewey spoke on the question of consideration as follows:
"Taking it by its four corners, which the plaintiff insists the court should do in determining the issues of the case, it is very apparent that the increase in the attendance is from those persons who are interested in the drawing and not in the picture, and that they have paid their entrance fee primarily in the hope of being successful on the wheel of fortune. It may be that this number is small in comparison to the whole, but, if it is a lottery as to a few, or a lottery comparatively small in its consideration, it is a lottery nevertheless."
See, also, General Theatres, Inc., v. Metro-Goldwyn-Mayer Distributing Corp. (D.C.) 9 F. Supp. 546, 549; Commonwealth v. Wall (Mass.) 3 N.E.2d 28; Society Theatre v. City of Seattle,118 Wash. 258, 203 P. 21, 22. Also see case notes, 48 A.L.R. 1115; 57 A.L.R. 424. In the Society Theatre Case last cited the Supreme Court of Washington said:
"But it is argued that the element of consideration does not appear because the patrons of the theaters pay no additional consideration for entrance thereto, and pay nothing whatever for the tickets which may entitle them to prizes. But while the patrons may not pay, and the respondents may not receive any direct consideration, there is an indirect consideration paid and received. The fact that prizes of more or less value are to be distributed will attract persons to the theaters who would not otherwise attend. In this manner those obtaining prizes pay consideration for them, and the theaters reap a direct financial benefit."
Judge Symes of the federal bench in our neighboring state of Colorado had no hesitancy in declaring a scheme similar to the one before us to be a lottery. In the General Theatres Case, supra, he said: "If a person on the outside held the winning ticket he was admitted free of charge into the theater and entitled to the automobile. This change, in my opinion, was one in form rather than in substance, and I still think it violates the statutes of the state as to those paying for their admissions. I do not feel this court has to determine that question, however, because the plan is one that is in its essence gambling. It appeals to the cupidity of the public and is opposed to public policy and good business ethics. Its success proves this." *Page 269
Seeing in the scheme reviewed all three essential elements, chance, prize, and consideration, I identify it as a lottery. The conclusion follows that the judgment of the district court discharging the defendants should be reversed. Because of a contrary conclusion by the majority, I dissent.