CERTIFYING THE LAW
The Commonwealth has appealed from the ruling of the trial court which dismissed Count One of an indictment against appellee as failing to state facts constituting a violation of KRS 436.360. Certification of the law is sought pursuant to KRS 21.140 (3).
The language of Count One of the indictment is:
The appellee was named as the defendant in the caption of the indictment; KRS 436.360 was designated in the caption as the basis for Count One of the indictment.
Appellee made timely motion for a bill of particulars. RCr 6.22. The trial court sustained that motion and a bill of particulars was filed which stated, in pertinent part:
It was in face of the statements in the bill of particulars that the trial court ruled that no violation of KRS 436.360 was charged. The Commonwealth insists that the trial court's ruling was erroneous and asks that the law be so certified.
Section 226 of the Kentucky Constitution provides:
KRS 436.360 is a statutory enactment implementing Section 226 of our Constitution, and at the pertinent period in this case provided:
The plan or scheme charged against appellee is one which is often referred to as a "referral selling plan." The bill of particulars sufficiently identifies the charged conduct as being within the scope of the usual "referral selling plan."
In Sherwood & Roberts-Yakima, Inc., v. Leach, Wash., 409 P.2d 160, the Washington Supreme Court held that a "referral selling plan" was a lottery and contravened a Washington statute. The applicable statute substantially incorporated the familiar elements of a lottery scheme as including (1) the distribution of money or property — a prize, (2) chance, and (3) a valuable consideration paid or to be paid for the chance. In that case, as here, there was no issue concerning the presence of the "prize" and the "consideration." The chief bone of contention is whether the scheme includes "chance" as that term is understood incident to gaming law.
The argument was presented in Sherwood & Roberts-Yakima that "chance" did not appear in the plan, since the "skill" of the customer in selecting "live" prospects for "referral" removed the element of "chance." In rejecting that contention the Supreme Court of Washington said, in part:
In the same opinion, the Washington Supreme Court further stated:
We are persuaded to the view as ably expressed in the cited Washington decision. We have considered fully the decision of Yoder v. So-Soft of Ohio, Inc., Ohio, 202 N.E.2d 329, in which the Court of Common Pleas of Ohio, Stark County, reached an opposite result. However, we deem the reasoning of the Washington Supreme Court to comport with our view of the "referral selling plan" as opposed to the position adopted by the Ohio tribunal.
We do not regard it as essential to determine whether a "referral selling plan" is a "lottery" or a "gift enterprise." The cited constitutional provision as well as the pertinent statute refer to "lottery" and "gift enterprise" disjunctively, but neither undertakes a specific definition for "lottery" or "gift enterprise." It is significant that the Indiana Supreme Court stated, as early as 1881, that a "gift enterprise" was "* * * understood to be substantially a scheme for the division or distribution of certain articles of property, to be determined by chance, amongst those who have taken shares in the scheme, and the phrase has attained such a notoriety as to justify us in taking judicial notice of what is meant and understood by the use of it." Lohman v. State, 81 Ind. 15, 17-18. The "notoriety" mentioned by the Indiana court in 1881 doubtless had "crossed the river" by the time our present Constitution was adopted.
In Worden v. City of Louisville, 279 Ky. 712, 131 S.W.2d 923, this court discussed a "suit plan" as if it considered it to be a "gift enterprise" — if not a "lottery." It is true, as suggested by appellee, that the discussion in the Worden opinion was obiter dictum but the reasoning employed by the court there is apt here. In Worden the court pointed out that whether the scheme be considered a "lottery" or a "gift enterprise" it embodied all of the evil features of a lottery.
Neither are we impressed by the argument that the action of the 1966 General Assembly in amending KRS 436.360 demonstrates that the legislative branch of our government considered that "referral selling" was not within the inhibition of the existing statutory law. It is noted that by the 1966 amendment "referral selling" is specifically brought within the purview of KRS 436.360, but that action may as well indicate the desire of the legislature to remove all doubt of its intention as to indicate an expression of its belief that "referral selling" was exempted from the prohibition of the statute then in force.
It is our view that the trial court erred in dismissing Count One of the indictment, and the law is so certified.