Untitled Texas Attorney General Opinion ( 1952 )

Auwrrnr 1,. TEXAS
PRICE DANIEL
ATTTORNEY
GENERAL
Mar& 7, 1952
Hon. Elmer Mcvey Opinion No. V-1420
County Attcmey
Freestone~County Re: Le+ty of “Appreclatlon
Falrf l&d, Texas a retail trade pro-
motion enterprise,under
Dear Sir: submitted'facts.
You h&e requested the .oplnionof this office
concerning the lega;lty,under the Texas anti-lbtteyy
laws, of a retail sales promotloa'enterpi4aecalled
"AppreciationDay."
_-
Acqo~ing to the lnfoimatloncodaIn@ la the
~descrlptlveolrculars submltt&d with your request, the.L
plan operates through local nieehants vho contribute to
a central;fund called the "ComMnltg Treasure Cheat.'!.'
These merchants distribute "TreasureCheat Coupons," each
of which la marked In denoml~ationsranging froiu5% to 56$.r
The coupons We given to customers wlth.each pui?chase; and
they are punched 80 aa to Indicate denomlnat1oti,'according
to the amount of the purchase. W1th.a purohaee worth from
254 to gg#, a customer may receive a 5s coup&. The per-
centage denomination Indicated on the coupon le Increased
according to the value of the purchase, up to a maxi
of 50$, which requires a purchase of $25.00 or more. The
coupons are signed and placed ln a box In each store, and' i *
these In turn are placed ln a ejeneralcontainer f5om vhlch
the winner Is drawn on weekly Appreciation Days. The
holder of the winning coupon 18 awarded the percentageOf
the "TreasureC&eet" fund vhlch la indlca'ted on hla coupon.
The\submlttedfacts reflect that although the
coupons are distributed prlmaril~~~uljon
the basltiof spur-
chase8 ,fromthe pfirtlclpatlngfirms, a number of'ooup6ne
are alao made available to non-patrons.
Section 47 of Article TII of the Constltutlon.of
Texas reads aa followe.:
,,
Hon. Elmer McVey, page 2 (V-1420)
;.
?he Leglalatimeshall pass laws pro-
hlbltlng the eatabllshmentof lotteries and
gift enterprise8 In thla State, a8 well as
the sale of ticket8 In ~lotterles,gift enter-
prlsea oti.otherevaelonf~lnv~lVlngthe lot-
tery prlnolple, establishedor exletlng In
,... other S~tatee."
! Article 654, Vetion's Penal Code, the Texas
anti-lotteryt&at&e, protides:
"If/any person shall eatabllaha.lottery
or dfiipoeeof any estate, real or per8ona1,
by lottery, he shall be fined not lees than
one hundred nor more than one thousand dollars; .
Or If any perscm shall'sell,.offerfor sale or
keep for ale any tioket or pert ticket la any
lottery, he shall be fined 'not'
less than ten
nor more than fifty dollers..?
There is no .Texasstatute &l&h deflii~e~ a lot-
tery, but the courts~~haveconsistentlyadoptea the follow-
.lng~defJnltlon:' A lottery.18'a.achem for the dl&trlbutlon
.of prlad by lot or e&an00 amoag~pers~pr, vhohave -*-id,Tr
vho-have%greed to pay, a valuable oonsideratlonfor the
.opportunltyto win these avards. City of Wink v. Griffith
AmuseisentCo., I.29Ta. 40 llO,S.W.2d695 (1936).;54 C.J.S.
Lotteries; Sec.'1-j 26 Tex. Jur. 409, 410, Lotteries,
Thus It Is-apparentthat every lottery oonelets Of
88enttil eleIUent8,88 fOllOW8: (1) pitie j (2) ChsWe;
and (3) conelderatlon.
The elements of prlae and &%I& are obviously
present'Inthe fact situation whloh'youljresent. Cash
prices atieawardqd gegkly oa.the basis of's simple drawing.
The only question for our datermlnatlon,then, Is whether
a considerationla to be paid for the .prlvllegeof &~OIIWt-
lng for the prlses.
There are many authorities,beth ln Texas and
In other jurisdictions,whloh deal v&th.the queetlon of
consideration.%mlott6rieei~Ho unifoirarule is bollowed
by the co&s Qf other states, an&their'~declslou8~a+eIn
Hon. Ehner’NoVey,page 3 (V-1420)
confl1at.l Siuce the holding iu eaah 0868 depends to a
large extent upon the facta of the pimticular SitUatiOn
before the oourt, witShould briefly ermine the facts of
8one of the leading Texas dealielonsr
motion plau knovn 81) "Aoah'bArk.” -%mre the merchante~paid
license fees to a promoter for the jwkillege of pfwtlolpat-
1143In the program. The promter dlstrlbu$ed cards to the
merchants, who In turn gave thoa to their ouetomers in ex-
change fo? box tops aad other evidences of pU??ChaSeSmade at
their reapeatlvs stores, Provisionva8 aleo made for the
diStrlbut&m of Card8 to thOsQ who did not make purchases at
t&e pBrtisi~titlg establislmmltr. There OardS entitled their
holders to ohaacee for 6 prise. The Court held this plan to
be a lothwy. The license foes paid b the merchants con-
stituted aonelderationmoving lndlrmt 3y frpm the contestants
to the promotor,thecourt reaeomed, ar&dthe merchant8 re-
oelved their oousldrrrtlcm in the foma of aUvertlalng and
InareaseUpatronago,
In F rrrton
Ass+lon, Zi?% 2d S&'{T%!%?!~e~~,si!a;~:p of
6em oe rktloa &&or8 dirtributodohences on an automo-
bile among their onsthrs. A nrmbrrtOS tlokets were also
given to peraonn rho msde no puro~aea. ,Xt was held that
the pureha!me ooastltutedthe oona&der&tionfurnished by the
ourtommr+ for the ohance of seeuriag tha prize, therefore
the plan was a lottery. The fact that 8ome of the chances
i?ere given to non-ptmhasere ~88 held not to change the le-
gal effect of the sohome a8 8 whole4 In this oonnectlon,
the Court, at p l27, said:
.
Hon. hr l(cVey,. psge 4 (V-1420)
II
. While de&lerS, uneer the ne* plan,
. .
distributed tickets to noncustomers88 veil 86
to customers, It aeenm that the aoheme w&8 to
distribute tickets, ln the a6it~ to aWtomer8,
-as the evidence ~dlecloeesth8t oaly 8 fev,,neg-
liglble In number, t?eregiven to pOrSOaS.Ot&r
tttsll'eost~mers. That the giving Of tiOket8,
.-audae dr8Ylxigt3 8M ~diEtributIQa or prises,
were lndwements to patron&go and uuque#tiOna-
. bPy lured owtomers, IS shorn iron the very
ee;tlefao',orybusiness result8 tb8t followed.
PeeQ,luge thus indwed we8 the oonsider8tion
that peased from the tloket holder for.-the oh8noe
reoeivod, In that the grioe .psid, rheterer it
08~. the 8wunt belag amuterisl, ooostitutedthe
~8ggrugoteprloe for thu muruhe@Ise 'orsumloe
&md.the tloket th8t represeated8,eh8EQe tQ Win
the prlse; 3.nother word@, for Qae undiv1de.d~ .
prioe both rerepureh8wd, the mero~ndl8e, or
8ervlae, and tloket, thu tio,ket bolq 88 mmh
lmq#lt~8e~thoughprlouu uop8rately. . . . ."
Varlotui“‘Bank Alto" ~o~te8tt hold by.mtlon pit-
turethuaters #8ve.beeo ooneider&dby the $e%es Qoorte end
elmtautoIthQut'uxceptloathera p3.e~ h8v~beea held'to be
~lot~~~~.d~~;ta~~t~~~t-tbst--lrothgctro~'&U&~.~OU~~t~~
o? the the&tea% were 8lloved t6~~p8rtIoIgsk. The dlstribu-~
tioa~f "frdd?~oliauaus~ w&o ocmeldarudbat 8~8ubbteFme which.
In 0 J OM 08ser'~lifIth f
g8S.U.Zd 844 Clv.~Aop. 19 1
lu@. -This dealslou, however, ,%a
areatlrely different tram tho#o y@u PMront and 08anot be
~eda~8tr~llInghere.
T h a rit islrld~at thdir 'kh the purewe or
WI80 oonetifoter the.oorrrldmtiol vhloh la neoe8-
a8ryl8 8 1Qttory where the pur~h884seatltlm the garQhaser
to r OhMoo .et tbe~grI$0. The uloruot.of aoru~iuqr8tion is
n~trrr~cr~b'Berely bea&UW the m&zWh8& hiriwli doerrnot
a the 808rd8, but tog#hur r;tth thO.OthWO mkO6 8 CQQ-
tHMtIOnto600latre1f!md iror,vhg+tho prIsor8re
. .
Hon. El~e;ri%cVeg,pELge5 \V-1423)
distributed. And If the ohances are distributed upon th.e
the fact that "free" chance& are also
baSi8 of puroha(lee)~,
given avay do68 not change the legal affect of the SClleUe.
These principle8have not bean overturned by
the recent decision In Brlce v. S~ta
r tr 242 S.W.2d-433
(Tex. Srlm. 1951)~..There, nono o t l ohanoes for the
awards were ~dlstrlbutedoa the be818 of pu&KLSeS from the
donor. The gene~ralpub116 V&B Invited to Peglater for the
contest, end .&pparentlyno favorlt188,rv8sshorn customers.
The court &$d, In effect, that the element of consldera-
tion was ndt added by mere prospect of increased patronage.
i+eviou~~oplnlon8of this offloe are In aocord with this
result. ~See Attly ,&n. Op. V-l@/ (1947). See'alao Att'y
Oen. op. 0-2309 (1940).
In then-pastthis offI. haa.be& called-upon'tn
'zonsiderthe legalltjrof 8 amber of promotion plane based
up+ thenlottery principle. In Attommy ffeneral'sOpinion
0-2ti3 (.1940)the plan Involved vaa~ldentlc8lvlth'tilatIn.-
valvedwhere. The fact6 Involved in that opinlonrefl&t:
"The miwchants of 'Cleburnewant offlclal
rullng,regardlnga trades day plan called
.~Appreclatlon Day.' The p&&n operates by.mer-.
chants vho pay to a common fund called Appre-
ciation Day. These merchants give couwna
..called%-easure Cheat' coupons,.vhlchompnn
-ccM%ln marking@ from 5 to 5054. After puri
chase~~~&remade 1~ these participatingfirms
the customer Is given a coupon which is punched
from any~dehomlnatlonfrom -9 5 tb 5O$. The
custom to be,gqmerally foi$ch?irgd,
that a CustOmr
who purclases from 256 to 9gQin a partldiwt-
ing Store 18 given a 5% punched COup0nj.a pur-
chase of l.OO to 1.99, a 10% COUpOIlj a
chase OS 02.00 to f2.99, 8 20% coupon; a r3.00
to $3.99, 8 30% coupon, a 4400 to 4.90; a 40%
coupon, and e~purchaee of %,5.00 to d10.00, a'
50% coupon.
'The ouetomer then algae his or her niune
and address on the back of'the coupon, drop8 it
In a box, On 'Drawing'day the tickets or oou-
pane are placed in a general container from which
is dP8lin8 vlnnlng ticket, The pereon whose name
Is drawn la awarded the 5,,lo, 20, 30, 40, and 50%
of the tr8deS day fund money dependins on the per-
centage of the coupon which 18 drava.
. . .
-
.
eon. m.mer ~cvey; page 6 (V-1420)"
In holding'thlsplan to'be S lottery in viola-
tion of AzWcle 654, V.P.C., it was sal&:~
"This departmeat.haaon.aume;oueooca-
slonti.plrssed.oathe questlixrdt'vh&her or
not v&rtous nteroantlls advertl8ing schemes
,co&%tute B 3rotterg; -andvltfioutwxceptlon
.has.so-brand~:them~wheo the elemetitsof
ohwoe, prize aad oonslderatloahave,been
found ko:be preseat:
.&-
II . . .
%.
“For the reamns~ sot .?ort&la Oplnidne
bndxuiderthe
&mi O-1174, 0-2t?teb~~aaC~O-2563,~ '
aalor~uile8 them-o~~tad,~lt1s oilroplaioa
.a&-you 8~8 reepeutf'ully.advPee&thst the mer-
~atiZe~sdvertlelng -sohSny ~worIba& ‘in.your
Uppreci-stloa
-,letter, Day,' oanstltutes.a
lottery as IS.eotieniae&byArtiblb~654of the.
Pear&Code-oi'Texw.'
I
More reeetly, a baslee+Uy similar plea known -
as. i'Bonanaan
was held to be a lottery, ,Att'yQen. Op.
V-238 (1947). We believe these ti&nlciasoontrol the
problem.beforeus. ,_
In the "AppreoiatlonPeg" plan, 4s de&rLbed
la jour request,,lt appears that o sub'stantial portion
of.,thechanoea for averds me to be distributedupon the
basis of piwchases from the merghsote~whopartloipate in
the plan,.aad the slse of the aiff+rd ~a8to such ohanaes
depends.upoathe value~ol,$hepurchase.,This constitutes
a valuable consideration moving. Sropr the ooatesfantswho
.mke parahases to the do,pii~of theiprlre &ad, uader the
authorltip8olted above,~‘that eleneat is aot removed by
the QLstributioaoi a number oi "free' ohsrrdeson request.
It Is our oplaloa, therefore, that"the "Appreo&atlonDay"
plan outline&la your request ooastitutesa lottery pro-
hlbltdd by Arttile 654, Veraonfe Pea81 Code.
Hdn. Elmer MoVey, page 7 (v-1420)
SUMMARY
A retail sales Fomotion plan, know
as "AppreciationDay vharein prlses are
distributed on the basis'of a drawing of
coupons given to et&e patrons vlth pur-
chases of merchandise and servioe, is 8
lottery and prohibitedby Article 654;
V.P.C.
APPROVED:'". Yours verg,truly,
Ned McDanle& PRICE DANIEL
State Affala~ Dlvlslon Attorney General
E. Jaoobson~
Reviewing Asslstant
Caivln B. t&wood, Jr.
Charlea D, Mathevs Assistant
First Asslstimt
.
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