Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948)

MR. JUSTICE BURTON, with whom MR. JUSTICE DOUGLAS concurs, dissenting.

The two lower courts reviewed in detail the facts in this case. Both held that the predecessor of the present Postmaster General exceeded his authority in issuing his stringent order of October 1, 1945. The modification of that order on December 8, 1947, by the present Postmaster General, then serving as Acting Postmaster General, has restricted it to appropriate parties. It has not altered, however, the primary basis for the lower court’s injunction of November 27, 1945, against the enforcement of the order. That injunction was granted because the record failed to show evidence sufficient to justify the drastic administrative action taken in reliance upon the lottery and fraud sections of the mail and money order statutes. R.S. §§ 3929 and 4041, as amended, 26 Stat. 466, 28 Stat. 964, 39 U.S.C. §§ 259 and 732. This dissent protests the overruling of the conclusions of the lower courts on this issue, and seeks especially to discourage any increase, or even repetition, of the degree of censorship evidenced by this order.

The former Postmaster General applied here the drastic summary police powers entrusted to his office by Congress to deal with fraudulent swindlers using the mail in the conduct of lotteries or any other scheme for obtaining money by false or fraudulent pretenses. No charge of a lottery or scheme of chance was made the basis for the order before us. This particular puzzle and letter-writing contest, to which the order was limited, was a contest of the familiar type which offers prizes, and thereby seeks to attract protects for later sales. The sponsor candidly stated that this contest was conducted for advertising purposes, and it distributed to the contestants samples from a series of books published by its subsidiary, Literary Classics, Inc. The entrance fees of 15 cents, required to accompany the respective sets of puzzle solutions, might well add up to more than all the expenses of the program, including the substantial prizes, provided the responses were many. Such fees, however, would fail to meet those expenses if the responses were few. The financial success of the contest depended upon the number of volunteers choosing to enter it.

The District Court found:

These considerations . . . do not justify an inference of fraud. Under no circumstances therefore can the puzzle contest and its descriptive literature be considered a fraudulent device or strategem [stratagem] for obtaining money. The conclusion is inevitable that there is no evidence to support the finding of fact on which the fraud order is based, and that therefore the plaintiff is entitled to a permanent injunction against the enforcement of the order.

Read Magazine v. Hannegan, 63 F.Supp. 318, 322.

The Court of Appeals found:

Appellant does not claim that any statement in the advertisements was untrue, or that there was any departure from the procedure announced in the Official Rules of the Contest. There is no claim by him that the judging of the letters was to be other than bona fide, or that any contestant failed to receive the promised books. No contestant, so far as the record shows, complained of being misled or defrauded. In other words, the fraud order is not premised upon specific or affirmative misstatements, or upon failure to perform as promised, but is premised upon an impression which appellant says is conveyed by the advertisements as a whole. He derives the impression from the headlines in the advertisements and the comparative urgency which he finds in some of the expressions in them.

* * * *

To support appellant’s conclusion in this case, one must ascribe to the advertisements an impression directly contrary to the stated rules of the contest. One must thus assume that readers were led not to read the Rules, or were led to ignore them, or to misunderstand them, or to believe something else contrary to their statement. There is no evidence, we think, to support any of those assumptions. The Rules were legibly printed. They were emphasized, rather than minimized, in the text. They were clear to any reasonable mind. No contradictory expressions occurred elsewhere.

That this contest was an advertising device designed to promote the book publishing business of appellees must have been plain to the most casual reader. The advertisements specifically told him, "This contest with FACTS MAGAZINE as sponsor, being presented as a means of popularizing the Literary Classics Book Club." . . .

We fail to see that the letters which were written to the contestants who successfully solved the first series of puzzles cast any complexion upon the venture different from that cast by the original advertisements themselves.

* * * *

We think that the advertisements before us fairly urged contestants to read the Rules, and that the Rules stated fairly, in style of type, placement, and terms, what was proposed. That being so, and there being no ambiguity in or departure from the proposals stated, a finding of false pretenses, representations, or promises could not properly be made.

Hannegan v. Read Magazine, 81 U.S.App.D.C. 339, 158 F.2d 542, 544, 545, 546.

Not only do I fail to find adequate reason to overrule the findings and conclusions of the two lower courts, but, on examination of the record, I agree with them. I believe that the Postmaster General exceeded his authority when he applied his drastic censorship and fraud order to this particular program. There was no compulsion on anyone to enter this contest. Everyone who did so received, as advertised, certain reprints of classical literature, and, until the contest was stopped, each contestant had the advertised opportunity to win certain cash prizes.

Anyone who entered this contest to win substantial prizes by doing so little to win them should at least examine the exact terms of the contest and make himself responsible for meeting the rules prescribed by those offering to make the gifts he sought. The contestants rendered no services for which they had a right to compensation. They merely paid a small entrance fee. For that, they were entitled to have the contest conducted in accordance with the rules stated.

The findings of the lower courts make it clear that there has been no claim of failure or impending failure by the sponsor to carry out the terms of the contest. The record shows no complaint from any contestant. Nevertheless, the Postmaster General took it upon himself to stop the contest. On the evidence before him and before the courts, this was an abuse of his discretion. It was "palpably wrong, and therefore arbitrary." See Leach v. Carlile, 258 U.S. 138, 140.