STATE v. FELTON No. 1.
80 S.E.2d 625 (1954)
239 N.C. 575
STATE v. FELTON.
Supreme Court of North Carolina.
March 17, 1954.
Lucas, Rand & Rose, Wilson, John B. McMullan, Elizabeth City, Wilton F. Walker, Jr., Currituck, and John G. Dawson, Kinston, as amici curiae.
As stated in the brief filed here by counsel appearing as amici curiae: "Thus it is seen that the case has come to this Court in such form as to test the constitutionality of the aforesaid Chapter 541 of the Session Laws of 1949. That is the single question involved."
A better perspective as to the applicable principles of law may be obtained by an analysis of the statute here under consideration, to wit, Ch. 541, 1949 Session Laws of North Carolina, entitled, "An Act Creating the Currituck County Racing Commission for the County of Currituck in the State of North Carolina and Providing for an Election Thereon", hereinafter referred to as the 1949 Currituck Act.
Section 1 creates the Currituck County Racing Commission, consisting of three members. The original members are to be appointed by the Member of the House of Representatives from Currituck County, for one, two and three years, respectively; and at the expiration of the first term of each member his successor is to be appointed for a term of four years by the Member of the House of Representatives from Currituck County and the two members whose terms have not expired, and so consecutively thereafter. Any vacancy shall be filled by the Member of the House of Representatives from Currituck County and the remaining members of the Commission. The salary of each commissioner is to be fixed by a committee of three, consisting of the Chairman of the Commission, the Chairman of the Board of County Commissioners and the Chairman of the Board of Education. A vote of any two of the three shall control. The Commission is directed to organize, elect a chairman, a vice-chairman and a secretary-treasurer. The secretary-treasurer is required to give a $5,000 bond and to "receive * * * disburse" the money of the Commission "by authority of the commission" and "under the provisions of this Act".
Section 2 vests in the Commission full authority "to grant to any person, firm, association, or corporation a franchise or privilege, franchises or privileges, for a term of years not exceeding twenty-five years, to construct, lease, maintain, operate, and own, or to exercise either of said privileges, a race course or driving park or appropriate facilities for pacing, running, and trotting races for horses or dogs, or for both horses and dogs, in the manner herein set forth." Section 2(a) provides that no franchise or privilege shall be granted unless and until the Commission is satisfied as to the financial ability and responsibility of "such person, firm, association, or corporation to comply with all the reasonable rules and regulations of the commission and to otherwise operate in accordance with such reasonable rules and regulations as the commission may from time to time prescribe". Section 2(b) provides that the holder of such franchise or privilege shall pay to the Commission "for each day or part of day during which races or racing is conducted a sum equivalent to ten per cent (10%) of the gross receipts derived from all sources or operations connected with or incident to the operation of such races or racing conducted during such day or part of day." The maximum payment to be required is $5,000 per day, "in addition to any tax as may be now or hereafter fixed by law on such gross receipts."
Section 3 provides that the net proceeds of the Commission's operations shall be disbursed by it as follows: 50% to the Currituck County School Fund; 25% to the Currituck County Welfare Fund; and 25% to the Currituck County General Fund.
Section 4 provides that under a franchise or privilege so granted, the holder thereof is fully authorized to acquire property, construct facilities, etc., for "pacing, running, and trotting races for horses or dogs, or for both horses and dogs, on property owned or leased" by it. Then follows the provision which provoked the controversy, to wit: "Such person, firm, association, or corporation is hereby expressly granted full authority and power to own or lease,
Section 4(a) provides that so long as the holder of the franchise, etc., complies with "the reasonable terms and provisions" thereof and "with such other reasonable rules and regulations as the said commission may promulgate from time to time and as may be set forth in its contracts", the franchise is irrevocable; "Provided, however, that no franchise granted to any person, firm, association, or corporation by said commission shall be assigned or transferred to any other person, firm, association, or corporation without the written consent of the commission; nor shall the commission grant a franchise or privilege to more than one person, firm, association, or corporation, it being the intention and purpose that the operations shall be under a single management." (Emphasis added.)
Section 5 provides that the Commission is authorized to adopt reasonable rules and regulations from time to time which it may "deem necessary to properly carry out the intentions of this Act". The violation thereof by the holder of the franchise or by any of its officers, agents or employees is declared to be a misdemeanor.
Section 6 provides that the Board of Commissioners of Currituck County shall order a special election, at which the qualified voters of Currituck County shall vote "For" or "Against" creating the Currituck County Racing Commission. The Act shall be in full force and effect if the majority of the qualified voters who vote at such election shall vote in favor of creating the Currituck County Racing Commission; otherwise, the Act shall not be in effect. However, should the voters fail to vote in favor of the creation of the Commission, other elections may be called by the Board of County Commissioners, successively, but not until six (6) months from the preceding election have expired; and if at any subsequent election so called and held, "a majority of the qualified voters who vote at said election shall vote in favor of establishing the Currituck County Racing Commission, then and in such event this Act shall be in full force and effect."
Section 7 provides that "All laws and clauses of laws in conflict with this Act are hereby repealed."
Section 8 provides that "This Act shall be in full force and effect from and after its ratification." It was ratified March 25, 1949.
The Bill of Information alleges explicitly that the betting on dog races in which the defendant participated was the pari mutuel system conducted by the Carolina-Virginia Racing Association, Inc., under franchise from the Currituck County Racing Commission, pursuant to the provisions of the 1949 Currituck Act. The defendant's position is that the franchise granted to the Carolina-Virginia Racing Association, Inc., pursuant to the statute under consideration, authorizes it to operate a pari mutuel system of betting on dog races at its dog race track; therefore, one who gambles at such dog race track by participating in such legalized pari mutuel system is not guilty of a criminal offense under the general laws of North Carolina relating to gambling.
While gambling per se is not a crime at common law, the General Assembly, in the exercise of the police power, can enact legislation making gambling a criminal
"3. Generally.—It is well settled that the police power of the state may be exerted to preserve and protect the public morals. It may regulate or prohibit any practice or business the tendency of which, as shown by experience, is to weaken or corrupt the morals of those who follow it or to encourage idleness instead of habits of industry. Whether gambling, in the various modes in which it is practiced, is demoralizing in its tendencies and, therefore, an evil which the law may rightfully suppress without interfering with any of those inherent rights of citizenship which it is the object of government to protect and secure is no longer an open question. Gambling is injurious to the morals and welfare of the people, and it is not only within the scope of the state's police power to suppress gambling in all its forms, but its duty to do so. In enacting legislation for this purpose, there is no invasion of constitutional rights, unless the restraints imposed are unreasonable. The courts are not concerned with the necessity for, or the wisdom of, a legislative enactment forbidding gaming transactions and wagers, provided it is a valid exercise of the police power." (Emphasis added.)
If this be a duty, the General Assembly, which largely controls the public policy of the State, has performed such duty well by the enactment of general statutes on the subject of gambling in its variety of guises and disguises, e. g., lotteries, punch boards, slot machines, betting on games of chance; and the violation of such a statute is a misdemeanor. Art. 37, Ch. 14, of the General Statutes. Construing the statutes presently designated G.S. § 16-1, G.S. § 16-2, and G.S. § 14-292, it was directly held in State v. Brown, 221 N.C. 301, 20 S.E.2d 286, 291, that "betting on horse racing, or, in fact, on any other sort of race," is an offense against the criminal law; and there the defendants were found guilty of maintaining a nuisance by using premises for the purposes of handling bets and wagers on the outcome of horse races run outside of North Carolina. What is said by Seawell, J., in State v. Brown, supra, is equally applicable to dog races.
The statute under consideration purports to authorize the grant of a franchise for the maintenance and operation on the dog race track premises what are generally known as "Pari Mutuel Machines or Appliances" or "Pari Mutuel Systems" of the kind employed and in use at recognized racing courses in America; provided, however, that said Pari Mutuel Machines and Appliances, or Pari Mutuel Systems, shall be operated only within the enclosure of said race course and only on days or parts of days when races are being conducted. It will be observed that the statute does not speak of "betting" or "wagering" or "gambling." Therefore, unless "Pari Mutuel Machines or Appliances" or "Pari Mutuel Systems" of the kind employed and in use at recognized racing courses in America ex vi termini constitute a scheme or system whereby the participants place bets on the outcome of the races in a manner such as to constitute gambling under the general laws the 1949 Currituck Act affords no color of protection whatever to the Carolina-Virginia Racing Association, Inc., or to the defendant. We accept the view, upon which the defendant must rely, that a pari mutuel system is well recognized as a system having no other purpose than that of providing the facilities by means of tickets, machines, etc., for placing bets, calculating odds, determining winnings, if any, whereby participants bet on the outcome of the races. State ex rel. Sorensen v. Ak-Sar-Ben Exposition Co., 118 Neb. 851, 226 N.W. 705; Pompano Horse Club v. State, 93 Fla. 415, 111 So. 801, 52 A.L.R. 51; Donovan v. Eastern Racing Ass'n, 324 Mass. 393, 86 N.E.2d 903, 906; City of Portland v. Duntley, 185 Or. 365, 203 P.2d 640, 644; Feeney v. Eastern Racing Ass'n, Inc., 303 Mass. 602, 22 N.E.2d 259; Wise v. Delaware Steeplechase & Race Ass'n, 2 Terry 182, 41 Del. 182, 18 A.2d 419; Utah State Fair Ass'n v. Green, 68 Utah. 251, 249 P. 1016, 1028.
In our view the constitutionality of the 1949 Currituck Act must be considered in relation to these provisions of our fundamental law, set out under the caption "Declaration of Rights", of the Constitution of North Carolina, viz.:
Article I, Section 7, which provides: "Exclusive emoluments, etc. No person or set of persons are entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services."
Article I, Section 31, which provides: "Perpetuities, etc. Perpetuities and monopolies are contrary to the genius of a free State, and ought not be allowed."
In State v. Fowler, 193 N.C. 290, 136 S.E. 709, 710, the defendant was indicted and convicted in Polk County under the general criminal statutes of the State relating to the possession of intoxicating liquor and was sentenced to imprisonment under such statutes. He appealed on the ground that, while the sentence was authorized by the general criminal statutes on the subject, a public-local act, applicable only to Polk and four other named counties, provided that upon conviction for the first offense the maximum punishment was a fine of $100. In holding that the publiclocal act was in violation of Art. I, sec. 7, and in sustaining the sentence under the general criminal statutes, the Court, speaking through Justice Adams, said: "There are Constitutions which provide in express terms that general laws shall have a uniform operation. Ours embodies the principle in the following language: `No man or set of men are entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.' Const. art. 1, § 7. This provision, we think, is a guaranty that every valid enactment of a general law applicable to the whole state shall operate uniformly upon persons and property, giving to all under like circumstances equal protection and security, and neither laying burdens nor conferring privileges upon any person that are not laid or conferred upon others under the same circumstances or conditions. 6 R.C.L. 369, § 364; 36 Cyc. 992; 12 C.J. 1187, § 955; 16 C.J. 1352, § 3189; State v. Bargus, 53 Ohio St. 94, 41 N.E. 245, 53 Am.St.Rep. 628; Jones v. [Chicago, R. I. & P.] R. Co., 231 Ill. 302, 83 N.E. 215, 121 Am.St.Rep. 313; Cooley's Con.Lim. 554 et seq."
By way of answer to the contention that this was a valid exercise of the police power of the State, Justice Adams said: "But the statute under consideration cannot be sustained on the ground that it was enacted in the exercise of the police power. The question is whether it shall supersede `the law of the land'—the general public law which was designed to operate without exception or partiality throughout the state. It is needful to remember that the indictment was drafted under the general law, and that the decisive question is whether offenders in the five counties referred to may lawfully be exempted from the punishment prescribed by the general law; whether they shall be subject only to a fine when the offenders in ninety-five other counties may be punished by imprisonment. In our judgment, this part of section 2 is neither equal protection of the laws nor the protection of equal laws (Connolly v. [Union Sewer] Pipe Co., supra [
In J. O. Plott Co. v. H. K. Ferguson Co., 202 N.C. 446, 163 S.E. 688, 691, an act relating only to Buncombe County and providing that certain provisions should be deemed written into private construction contract bonds executed in that county by corporate sureties different from those required by the general laws relating to the subject, was held unconstitutional on the ground that it conferred special privileges on residents of Buncombe County and imposed on corporate sureties in respect of such bonds executed there obligations not imposed in other counties or on individuals. In J. O. Plott Co. v. H. K. Ferguson Co., supra, the Court expressly followed the reasoning in State v. Fowler, supra, particularly in relation to Art. I, sec. 7. In the opinion of Clarkson, J., in J. O. Plott Co. v. H. K. Ferguson Co., supra, we note the following: "In 6 R.C.L. part § 437, at pp. 441, 442, the law is thus stated: `Due process of law and the equivalent phrase, law of the land, have frequently been defined to mean a general and public law operating equally on all persons in like circumstances, and not a partial or private law affecting the rights of a particular individual or class of individuals, in a way in which the same rights of other persons are not affected.'
"Cooley's Const.Lim., vol. 1, note, under Powers Legislative Department May Exercise, page 261: `Gambling cannot be made a crime everywhere except "within the limits or enclosure of a regular race course." State v. Walsh, 136 Mo. 400, 37 S.W. 1112, 35 L.R.A. 231; see also Alexander v. [City of] Elizabeth, 56 N.J.L. 71, 28 A. 51, 23 L.R.A. 525.'"
These cases, State v. Fowler, supra, and J. O. Plott Co. v. H. K. Ferguson Co., supra, are cited with approval in later cases, including Hendrix v. High Point, T. & D. R. Co., 202 N.C. 579, 163 S.E. 752; Edgerton v. Hood, 205 N.C. 816, 172 S.E. 481; State v. Harris, 216 N.C. 746, 6 S.E.2d 854, 128 A.L.R. 658; State v. Glidden Co., 228 N.C. 664, 46 S.E.2d 860; Duncan v. City of Charlotte,
The defendant cites as in conflict with State v. Fowler, supra, and decisions based thereon, certain earlier decisions, including State v. Muse, 20 N.C. 463; State v. Joyner, 81 N.C. 534; State v. Stovall, 103 N.C. 416, 8 S.E. 900; State v. Moore, 104 N.C. 714, 10 S.E. 143; State v. Barringer, 110 N.C. 525, 14 S.E. 781; State v. Barrett, 138 N.C. 630, 50 S.E. 506, 1 L.R.A.,N.S., 626; Brunswick-Balke-Collender Co. v. Mecklenburg County, 181 N.C. 386, 107 S.E. 317.
We have not overlooked the decision of the Supreme Court of the United States, decided January 11, 1954, in Salsburg v. Maryland,
It would seem that State v. Fowler, supra, and J. O. Plott Co. v. H. K. Ferguson Co., supra, would constitute ample authority for a decision that the 1949 Currituck Act is unconstitutional. However, in view of the earlier decisions cited by defendant as being in conflict and noted above, it is urged that the decisions in State v. Fowler, supra, and J. O. Plott Co. v. H. K. Ferguson Co., supra, should be re-considered. There appears to be no necessity for doing
It should be noted that grants of well-defined monopolistic rights to regulated quasi-public utilities, including the power of eminent domain, under the public law, are upheld as being "in consideration of public services" within the terms of Art. I, sec. 7, of the Constitution of North Carolina. Indeed, such corporations have become known as "public service corporations". State ex rel. Utilities Comm. v. State (State ex rel. Utilities Comm. v. Southern Bell Telephone and Telegraph Company),
It should be noted that it has been held consistently that acts of the General Assembly giving special privileges to private corporations by way of charter provisions or otherwise violate the provisions of Art. I, sec. 7. A. H. Motley Co. v. Southern Finishing & Warehouse Co., 124 N.C. 232, 32 S.E. 555; A. H. Motley Co. v. Southern Finishing & Warehouse Co., 122 N.C. 347, 30 S.E. 3; Meroney v. Atlanta Building & Loan Ass'n, 116 N.C. 882, 21 S.E. 924; Rowland v. Old Dominion Building & Loan Ass'n, 116 N.C. 877, 22 S.E. 8; Staton v. Norfolk & C. R. Co., 111 N.C. 278, 16 S.E. 181, 17 L.R.A. 838; Simonton v. Lanier, 71 N.C. 498. See also, Edgerton v. Hood, supra, and Cowan v. Security Life & Trust Co., 211 N.C. 18, 188 S.E. 812, 110 A.L.R. 338.
Counsel appearing amici curiae, with prodigious research and great learning, have brought to our attention the historical background and origin of the language of Art. I, sec. 7, and contend persuasively that a county is a subdivision of the State and is not "a man or set of men" within the meaning of Art. I, sec. 7. However, the 1949 Currituck Act, as pointed out below, confers special privileges upon a private corporation, not upon Currituck County as a political subdivision of the State. Upon close scrutiny of the 1949 Currituck Act, we find:
1. Under Section 1, after the original three members of the Commission are appointed by the Member of the House of Representatives from Currituck County, all later appointments are to be made by the Member of the House of Representatives from Currituck County and the two members of the Commission whose terms have not expired, making apparent the possibility of self-perpetuating membership on the Commission.
2. Under Section 6, provision is made for an original and, if necessary, successive elections, at intervals of six months, for the purpose of voting the Act "in" without any provision whatever, once it becomes effective, for an election for the purpose of voting the Act "out."
3. The franchise granted by the Commission to Carolina-Virginia Racing Association, Inc., is irrevocable, for a period of twenty-five years, except for failure to pay 10% of its gross receipts from all its operations and for failure to comply with "the reasonable rules and regulations of the Commission." To what subjects do such rules and regulations relate? Do they concern the percentage the Carolina-Virginia Racing Commission, Inc., is to be allowed to deduct from the money bet on the races as its charge, commission or fee for operating the pari mutuel gambling establishment? Do they relate to the price of admission to the race track grounds? Do they relate to the conduct of patrons? Do they relate to the manner in which the races are run? It is interesting to notice that Section 5 provides that the violation of the rules and regulations by the holder of the franchise or by any of its officers, agents or employees is declared to be a misdemeanor. What kind of misdemeanor could they and they alone commit? Are
4. The language of the statute has the plain meaning, confirmed by the prompt award of the franchise, that such franchise is to be granted only to one private "person, firm, association, or corporation"; and the proviso in Section 4 states, in express terms: "nor shall the commission grant a franchise or privilege to more than one person, firm, association, or corporation, it being the intention and purpose that the operations shall be under a single management."
5. The separate, exclusive privileges are not granted to Currituck County as a political subdivision of the State but under a twenty-five year irrevocable franchise to one private corporation, which has bought this separate, exclusive privilege, not available to any other person, firm, association or corporation of Currituck County or elsewhere in North Carolina.
6. The general statute law as to gambling continues to apply in Currituck County. The 1949 Currituck Act does not purport to legalize a particular type of gambling, i. e., betting on dog or horse races in Currituck County. Only the Carolina-Virginia Racing Association, Inc., and its patrons, may violate the general criminal laws of the State relating to gambling. Furthermore, betting on the Currituck dog races may not be done legally by Currituck County residents or other residents of North Carolina except on the race track premises in Currituck County.
We have examined the decisions from other jurisdictions brought to our attention. Suffice it to say that none involves the constitutionality of a statute containing provisions analogous to the 1949 Currituck Act.
Solely to clarify the question before us, and without intimating decision on questions not before us, we observe:
1. The question is not whether the General Assembly can enact a statute legalizing gambling in a single county, applicable alike to all persons within the county.
2. The question is not whether the General Assembly can enact a statute legalizing a particular type of gambling in a single county, applicable alike to all persons within the county.
3. The question is not whether the General Assembly can enact a statute authorizing the governing board of a county or other governmental unit or agency to operate either on a statewide basis, or within a county or other restricted portion of the State, a system of pari mutuel betting on dog races, lotteries, or other types of gambling.
The one question before us is whether a statute that authorizes a commission, with provisions making possible a self-perpetuating membership, to grant, in consideration of a percentage of the gross receipts, an exclusive franchise irrevocable for a period of twenty-five years to a private corporation to operate in Currituck County a system of pari mutuel betting on dog races, exceeds the constitutional power of the General Assembly
We must conclude that the 1949 Currituck Act violates Art. I, sec. 7, and Art. I, sec. 31, of the Constitution of North Carolina. It is in conflict with that fundamental democratic principle: "Equal rights and opportunities to all, special privileges to none."
The 1949 Currituck Act presents the same situation as would exist if the General Assembly were to attempt, directly or indirectly, to grant to a private person, firm, association or corporation in one of the more populous counties, e. g., Mecklenburg, Guilford, Forsyth or Wake, the exclusive right to operate a lottery where persons could legally participate on the licensee's
We state without elaboration that the special, exclusive privileges granted to this private corporation under the 1949 Currituck Act are not "in consideration of public services" within the meaning of Art. I, sec. 7. We assume that the taxpayers of Currituck County have reaped financial benefits from the operation of the pari mutuel gambling establishment, operated as a feature, if not the feature, of the race track. No doubt more money has been available for county purposes and less taxes have been required. It is not unusual that a monopoly should yield large returns. The franchise holder pays 10% of gross receipts for his privileges with a maximum of $5,000 for any one day. This goes to the County, after deduction has been made for the salaries and other expenses of the Commission. It would seem that this rather unimpressive fraction of gross revenue is little enough to pay for such special privileges. The lure of "easy money" makes a strong appeal. But the lure of "easy money" is not calculated to build the moral fibre of the citizenship of Currituck County. The incentive to achievement by working rather than by possibility of winning without working is the basis for stability, self-reliance and character.
Counsel appearing as amici curiae suggest that the Carolina-Virginia Racing Association, Inc., is virtually an employee of the county, operating the establishment primarily for the county's benefit. We cannot accept this view. The County's right to participate in the gross revenues is fixed and limited by statute. Beyond this statutory percentage, the private franchise holder is on its own. We forego a discussion in detail of the interesting suggestion as to the employer-employee, master-servant, relationship. Suffice it to say that one of the evil and demoralizing influences of organized gambling, legalized or unlawful, is its insidious tendency to infiltrate and to control those agencies of government charged with the duty either of controlling or of suppressing its operations. When revenues from gambling operations become a substantial part of the public revenues of a county, the task of cutting loose requires a major and difficult operation. No idea of controlling gambling is apparent from a reading of the 1949 Currituck Act. The reverse is true. The more extensive the gambling operations become, the greater the revenues to Currituck County and the greater the revenues to the holder of the franchise. Neither an individual nor a community can gamble his or its way to an enduring prosperity.
Counsel appearing as amici curiae, while devoting their argument principally to the constitutional question, make the point that the bill of information was properly quashed because it did not express the charge against the defendant in a plain, intelligible and explicit manner as required by G.S. § 15-153. We think the bill of information charges in plain and unmistakable terms that the defendant and others on the date alleged unlawfully and wilfully bet and wagered on dog races under the pari mutuel system of betting and wagering operated by the Carolina-Virginia Racing Association, Inc., under its franchise granted pursuant to the 1949 Currituck Act.
For the reasons stated the defendant's motion to quash should have been overruled. Accordingly, the judgment of the lower court is
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