Dream Home Contests Ltd. v. The Queen, [1960] SCR 414

Supreme Court of Canada

Dream Home Contests Ltd. v. The Queen, [1960] S.C.R. 414

Date: 1960-04-11

Dream Home Contests (Edmonton) Limited Appellant;

and

Her Majesty The Queen Respondent.

Ronald A. Hodges Appellant;

and

Her Majesty The Queen Respondent.

1960: February 5; 1960: April 11.

Present: Taschereau, Locke, Fauteux, Martland and Ritchie JJ.

ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION

Criminal law—Lotteries—Scheme whereby ticket purchaser most closely estimating value of house would receive same as prize—Retention of trust company to assist in conduct of scheme-operators deposited

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sufficient sum to guarantee prize awarded even if only one ticket sold—whether illegal lottery under s. 179(1) (e) of the Criminal Code, 1953-54 (Can.), c. 51.

The appellants conducted a scheme whereby any person buying a ticket for $1 would be entitled to submit an estimation of the value of a house and its contents, and the closest estimator would receive the house with its contents and the land on which the house would be transported. A trust company, engaged to assist in the conduct of the scheme, required, as a condition for providing its services, that the operators deposit a sum sufficient to assure payment for the house and to guarantee that the house would be awarded to the winner of the contest. The accused were convicted of conducting a scheme under s. 179(1) (e) of the Criminal Code. The conviction was affirmed by a majority in the Court of Appeal.

Held: The appeals should be dismissed.

Per Taschereau and Fauteux JJ.: Under s. 179(1) (e) of the Code, the element of chance is not essential. Consequently, following the decision of Roe. v. The King [1949] S.C.R. 652, the offence was committed even if skill had been the only factor that allowed the winner to determine the value of the house, since it was clear that the purchasers of tickets became entitled under the scheme to receive from the operators a larger sum than the amount paid because others had also paid money under the same scheme. The fact that the winner was to receive a house and not a "larger sum of money" or "amount of valuable security" did not prevent the application of the section, since the words "valuable security" are defined in s. 2(42) of the Code as including "a document of title to lands or goods wheresoever situate".

The argument that the house was to be conveyed, not by the promoters, but by the trust company, could not be accepted. Everything done by the trust company was done on behalf of the promoters.

Per Locke, Fauteux, Martland and Ritchie JJ.: The submission that by depositing a sufficient sum of money with the trust company, the prize would be awarded irrespective of whether or not any other tickets had been sold, could not be entertained. What constitutes the offence under s. 179(1) (e) is the conducting of a scheme by which a participant will receive, as in this case, a larger amount of valuable security than he paid because other persons have contributed to the scheme. The deposit with the trust company was only made by reasons of the fact that it was part of a scheme by which contestants would pay money to enter the contest. This brought the case squarely under the prohibition of the section.

APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division1, affirming the appellants' convictions under s. 179(1) (e) of the Criminal Code. Appeals dismissed.

J. W. McClung, for the appellants.

H. J. Wilson, Q.C., and J. W. Anderson, for the respondent.

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The judgment of Taschereau and Fauteux JJ. was delivered by

Taschereau J.:—Both appellants were charged under ss. 179(1) (a) and 179(1) (e) of the Criminal Code of Canada.

Under s. 179(1) (a) the charges read as follows:

THE INFORMANT SAYS THAT he has reasonable and probable grounds to believe and does believe that

DREAM HOME CONTESTS (EDMONTON) LIMITED

being a body corporate, between the 1st day of May A.D. 1959, and the 27th day of June A.D. 1959, at the City of Edmonton, Province of Alberta, did unlawfully advertise a scheme, to wit: the Dream Home Contest, for the purpose of disposing of property, to wit: the Fekete Dream Home, to be disposed of by a mode of chance, contrary to the provisions of Section 179(1) (a) of the Criminal Code.

THE INFORMANT SAYS THAT he has reasonable and probable grounds to believe and does believe that

RONALD A. HODGES

between the 1st day of May A.D. 1959, and the 27th day of June A.D. 1959, at the City of Edmonton, Province of Alberta, did unlawfully advertise a scheme, to wit: the Dream Home Contest, for the purpose of disposing of property, to wit: The Fekete Dream Home, to be disposed of by a mode of chance. Contrary to the provisions of Section 179(1) (a) of the Criminal Code.

The charges under 179(1) (e) read as follows:

THE INFORMANTS SAYS THAT he has reasonable and probable grounds to believe and does believe that

DREAM HOME CONTESTS (EDMONTON) LIMITED

being a body corporate, between the 1st day of April A.D. 1959, and the 27th day of June A.D. 1959, at the City of Edmonton, Province of Alberta, did unlawfully conduct a scheme by which a person upon payment of a sum of money shall become entitled under the scheme to receive from the said Company a larger amount of valuable security than the amount paid by reason of the fact that other persons have paid a sum of money under the scheme. Contrary to the provisions of Section

179(1) (e) of the Criminal Code.

THE INFORMANT SAYS THAT he has reasonable and probable grounds to believe and does believe that

RONALD A. HODGES

between the 1st day of April A.D. 1959, and the 27th day of June A.D. 1959, at the City of Edmonton, Province of Alberta, did unlawfully conduct a scheme by which any person upon payment of a sum of money shall become entitled under the scheme to receive from the person conducting the scheme, or any other person, a larger amount of valuable security than the amount paid by reason of the fact that other persons have paid a sum of money under the scheme. Contrary to the provisions of Section 179(1) (e) of the Criminal Code.

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The learned magistrate dismissed both charges under 179(1) (a) but convicted both defendants under 179(1) (e).

His reasons for dismissing the charges under 179(1) (a) were that under that section, a mixed element of chance and skill entered into the estimates made by those who purchased tickets, while the statutes in order to apply required exclusively a chance element. The magistrate based his opinion on the unanimous judgment rendered by this Court in, Roe v. The King2 where that precise point was definitively settled.

The Crown did not appeal this part of the judgment to the Appellate Division of the Supreme Court of Alberta, and it is therefore unnecessary to deal with it. But. the magistrate convicted both accused on the charge of violating section 179(1) (e), and the Appellate Division3 confirmed his finding, Mr. Justice Johnson dissenting.

We have now to deal only with the appeals of Dream Home Contests (Edmonton) Limited and Ronald A. Hodges, both convicted under s. 179(1) (e).

Section 179(1) (e) reads:

179. (1) Every one is guilty of an indictable offence and is liable to imprisonment for two years who

(e) conducts, manages or is a party to any. scheme, contrivance or operation of any kind by which any person, upon payment of any sum of money, or the giving of any valuable security, or by obligating himself to pay any sum of money or give any valuable security, shall become entitled under the scheme, contrivance or operation, to receive from the person conducting or managing the scheme, contrivance or operation, or any other person, a larger sum of money or amount of valuable security than the sum or amount paid or given, or to be paid or given, by reason of the fact that other persons have paid or given, or obligated themselves to pay or give any sum of money or valuable security under the scheme, contrivance or operation.

The scheme as engineered was as follows:—The appellants built a house called a "Dream Home" that was on display to the public on a lot situate at 117th Street and Jasper Avenue in Edmonton, Alberta. The accused issued a brochure showing who built the Home and giving the names of the 17 suppliers of materials and subcontractors. The contestants eligible to participate in the contest had to purchase a one dollar ticket, and were required to esti-

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mate the total retail value of this Dream Home with attached garage, including its furnishings, appliances, fixtures and appointments therein contained.

It was a condition of the contest that the contestant who most closely estimated the total retail value of the Dream Home, would be awarded the Home, and that it would be conveyed by the company to a permanent lot, in the subdivision of Lynnwood in the Townsite of Jasper Place. The retail value of the Dream Home was to be determined by the persons, firms or corporations supplying products and services in connection with the construction, furnishing, equipping and completing the Home as displayed.

The sealed estimates of retail value by those who had purchased tickets, were held "In Trust" by the Northwest Trust Company Limited until the close of the contest, which was December 30, 1959, at which time a committee appointed by the Trust company was to open the sealed estimates, and the contestant who most closely estimated the retail value of the Home would be the contest winner. Some 400,000 tickets were printed of which a substantial number were sold, and Home Contests (Edmonton) Limited and the other defendant Hodges, who is the main shareholder and manager of the said company, deposited with the Trust company $31,000 to be drawn against, as the building of the Home progressed.

I am quite satisfied that in order to determine the retail value of this Dream Home, much more than a mere element of chance was necessary. It was essential for the winner to have at least a fair knowledge of construction, of cost of materials, etc. etc., and skill was obviously a much more important factor than chance in determining the retail value of the Home.

But the law as it exists today is the same as that considered in Roe v. The King, supra. In that case, Roe had been prosecuted under the first part of s. 236(c) as it then existed, and secondly, under the second part of the same section added to the Criminal Code in 1935 (25-26 Geo. V, ch. 56, s. 3). Under the new Code of 1955, the corresponding sections are 179(1) (d) and 179(1) (e).

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In the Roe case it was held that the charge under the first part of the old s. 236(c) ought to be dismissed. It was found that there was a mixed element of skill and chance and that, therefore, there could be no offence.

But the Court held that under the second part of the former s. 236(c), now 179(1) (e), there is no reference to chance or to a mixed element of chance and skill, and that the receiving of money was not subordinated to either of these elements. Roe was found guilty because a larger sum of money was paid to the winner, by reason of the fact that other persons had paid money under the scheme.

In the present case, it seems clear to me that the purchasers of tickets who pay money, may become entitled under the scheme as they do, to receive from the person managing the operation, a larger sum than the amount paid, because others have also paid money under the same scheme. A ticket purchaser who happens to be the winner, as a result of his skilful guessing, even if the element of chance is entirely absent, receives a larger sum of money than the amount he has paid, because some others who have purchased tickets have also paid money under the same scheme. This is the gist of the offence. It may not be immoral but it is illegal.

In s. 179(1) (a) the element of chance is essential, but it is not in 179(1) (e). In Roe v. The King this Court has said:

This part of s. 236(c) now 179(1) (e) which stands alone, does not refer to chance, or to mixed chance and skill. The receiving of money is not subordinated to any of these elements. The larger sum of money is paid to the winner by reason of the fact that other persons have paid money under this scheme.

I think that this Court is bound by its own decision in the Roe case cited supra, and that the offence is committed, even if skill has been the only factor that allowed the winner to determine the retail value of the Dream Home.

It has been suggested that s. 179(1) (e) does not apply, because the winner here does not receive as contemplated by the Act a "larger sum of money" or "amount of valuable security" than the sum or amount paid or given. In the present case, the winner was to receive a house.

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This argument cannot stand in view of the fact that the words "valuable security" are defined in s. 2, subs. 42 of the Criminal Code, and include "a document of title to lands or goods wheresoever situate."

It has also been argued that the house was to be conveyed to the winner, not by the promoters of the scheme, but by the Trust company. I am satisfied that everything done by the Trust company was done on behalf of the promoters and that this argument cannot be accepted. As to the appellants' submission that by paying $31,000 to the Trust company, they assured the award of the prize to the successful estimator, irrespective of whether or not any tickets had been sold, I agree with what has been said by my brother Martland.

Both appeals should be dismissed.

The judgment of Locke, Fauteux, Martland and Ritchie JJ. was delivered by

Martland J.:—The appellant company is incorporated under the laws of the Province of Alberta. The appellant, Hodges, was a signatory of its Memorandum of Association and is its majority shareholder. In mid 1959, the appellant company caused to be erected a house, which was fully furnished, and which was on display at 117th Street and Jasper Avenue, in the City of Edmonton.

The appellant company advertised extensively a contest, which was to continue until the end of the year 1959, under the terms of which the house and its contents would be awarded to the contestant who submitted the closest estimate of the actual retail value of the house, including furnishings and fixtures. Entry into the contest could be effected by the purchase of tickets sold at $1 each. These tickets contained an estimate form and an entry blank. The appellant company had 400,000 tickets printed. At the time of the trial, some 1,400 had been sold. The winner of the contest would be entitled to receive, in addition to the house and its contents, a lot in the subdivision of Lynwood, in the townsite of Jasper Place, to which the house and its contents would be moved by the appellant company after completion of the contest.

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Arrangements were made by the appellant company to have the tickets widely distributed for sale in Edmonton and in Northern Alberta, by having sales effected through various community leagues and branches of the Canadian Legion.

The appellants approached Northwest Trust Company which agreed to receive sealed tenders from the contractors and suppliers in connection with the house which, taken together, would establish its total retail value. The trust company also agreed to receive, record, and dispose of the tickets to the ticket vendors upon the instructions of the appellant company. It also received the moneys derived from the sale of tickets, part of which was to be held by it in trust for the vendors of the tickets, and the balance in trust for the appellant company.

As a condition of providing these services, the trust company required the deposit by the appellant company of $31,000 to assure payment of certain expenditures, including the payment for the house. This was to ensure that the house would be awarded to the winner of the contest. Title to the house, to its contents, and to the lot, was taken in trust by the trust company.

The arrangements for the printing and distribution of the tickets, the arrangements with the trust company, and, generally, most of the arrangements in respect of the con- test, were effected for the appellant company by the appellant Hodges.

Both the appellants were charged under paras. (a) and (e) of subs. (1) of s. 179 of the Criminal Code. The charges under para. (a) were dismissed, but both appellants were convicted by the learned magistrate under para. (e). From these convictions, both appellants appealed, unsuccessfully, to the Appellate Division of the Supreme Court of Alberta,4 Mr. Justice Johnson dissenting. The present appeal relates solely to the convictions under para. (e), which provides as follows:

179. (1) Every one is guilty of an indictable offence and is liable to imprisonment for two years who

* * *

(e) conducts, manages or is a party to any scheme, contrivance or operation of any kind by which any person, upon payment of any sum of money, or the giving of any valuable security, or by

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obligating himself to pay any sum of money or give any valuable security, shall become entitled under the scheme, contrivance or operation, to receive from the person conducting or managing the scheme, contrivance or operation, or any other person, a larger sum of money or amount of valuable security than the sum or amount paid or given, or to be paid or given, by reason of the fact that other persons have paid or given, or obligated themselves to pay or give any sum of money or valuable security under the scheme, contrivance or operation;

The sole contention of each of the appellants is that no offence was shown because the winning estimator would not become entitled to a larger amount of valuable security because other persons had paid or obliged themselves to pay any sum of money. It was argued that the awarding of the prize was wholly exclusive of the participation in the contest of other unsuccessful estimators. The appellant's submission was that, by paying the $31,000 to the trust company, the appellant company had assured the award of the prize to the successful estimator, who would receive such prize irrespective of whether or not any other tickets had been sold.

The appellants seek to distinguish the decision of this Court in Roe v. The King,5 because of the fact that, in that case, which involved a contest to estimate the time for a barrel to float down the Red River from the international boundary to Winnipeg, the appellant had signed an admission that the winning estimators would receive a larger sum of money that that paid for their tickets because other non-winning estimators had contributed to the scheme. In the present case it is contended that the situation is different because the winning of the prize did not depend upon the sale of tickets to non-winning estimators.

A similar argument was made on behalf of the appellant in Rex v. Blain,6 a judgment of the Court of Appeal of Saskatchewan. In that case the contest involved the estimating of the actual time when the ice in the Saskatchewan River at Prince Albert would break up. Tickets were sold at fifty cents per ticket but the prize of $1,000 was donated by the Kinsmen Club of Prince Albert, who also paid the cost of operating the scheme, thus leaving the proceeds from the sale of the tickets available for charitable purposes.

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The accused, Blain, was the individual who had managed the scheme.

The conviction of the appellant was sustained by the Court of Appeal. In his judgment, at p. 151, Chief Justice Martin referred to the admission made by the appellant in the Roe case, and to the statement by Taschereau J. at p. 657 in that case, that the admission "brings the case within the prohibition of the statute".

Chief Justice Martin then goes on to say, and, I think, correctly:

This statement was not intended to mean that the only scheme which falls within the second part of sec. 236(1) (c) (the equivalent of sec. 179(1) (e) of the present Criminal Code) is one in which the larger sum comes from the proceeds of the sale of tickets to non-winning estimators. Moreover, the language of the section indicates that the prize need not come from moneys contributed by a limited class of persons. The larger sum of money may come from the person managing the scheme "or any other person" by reason of the fact that "other persons have paid or given … any sum of money … under such scheme".

It seems to me that what constitutes the offence defined in s. 179(1) (e) is the conducting of a scheme and the question to be determined, in this case, is whether, under the scheme, a participant will receive a larger amount of valuable security than he paid because other persons have contributed to the scheme. The deposit of the $31,000 with the trust company was a part of an overall scheme conducted by the appellants. That scheme, when examined as a whole, in my view, clearly contemplated, at its inception and throughout, that the award by the appellant company of the prize to the winning estimator would be made at the conclusion of the contest by reason of the payments for tickets of all the other non-winning contestants. The deposit of the funds with the trust company was only made by the appellant company by reason of the fact that it was a part of a scheme by which contestants would pay money to enter the contest. As Macdonald J. A. said, in his judgment in the Appellate Division:

The property to be won would be paid for initially by money which came from the appellants, according to the arrangement made with the trust company. But it seems to me there can be no doubt that under the scheme in question, the appellants sought not only to recoup themselves for their initial outlay but also to make a substantial margin of profit, depending upon the number of tickets sold. The number of tickets seized by the police demonstrates that many tickets had been sold to the public, so at the time of such seizure the scheme was well under way. It seems

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to me that it has been proved beyond any reasonable doubt that the winner would be entitled to receive from the appellant company "a larger … amount of valuable security than the sum paid" by him "by reason of the fact that other persons have paid … any sum of money under the scheme", namely, by the purchase of tickets. The facts proved in evidence beyond any reasonable doubt, in my view, bring the case squarely under the prohibition of the statute.

In my opinion, therefore, the appeals of both the appellants should be dismissed.

Appeals dismissed.

Solicitors for the appellants: Maclean & McClung, Edmonton.

Solicitor for the respondent: The Attorney-General for Alberta.