Dacy v. Gors

471 N.W.2d 576, 1991 S.D. LEXIS 89, 1991 WL 94345

• Court: South Dakota Supreme Court
• Decided: June 5, 1991
• Docket: 17505, 17508
• Status: Published

Opinions

MILLER, Chief Justice.

This is an original mandamus proceeding commenced seeking to require a circuit judge to grant an application for a preliminary injunction and to require that certain disputed lottery proceeds be deposited with his court pending final determination of the litigation below. This court issued an alternative writ of mandamus requiring the circuit judge to enter an order temporarily requiring the deposit of funds into court to be placed in interest-bearing accounts and further directed him to show cause why the writ should not remain in effect until the litigation below is completed on its merits. This court has now received extensive briefs and heard the argument of the litigants at the hearing on the alternative writ. For reasons set forth below, the alternative writ will be quashed and the order maintaining the status quo vacated.

FACTS

“Mr. G’s” is a convenience store in Gregory, South Dakota, operated by Dacshutz, Inc., a South Dakota corporation. The owners of Dacshutz, Inc. are Michael and Diane Dacy, and Scott M. and Julie A. Anshutz. Dacshutz, Inc. entered into an extensive agreement with the South Dakota Lottery to sell Lotto America tickets. The specific provisions of the agreement are not particularly relevant in these proceedings.

On Thursday, April 4, 1991, an employee of “Mr. G’s” printed a Lotto America ticket for a customer who then refused to pay for it because it was not the specific type of ticket he wanted. (This was a $5.00 ticket eligible for the Lotto America drawings on April 6, 10, 13, 17, and 20,1991. Apparently the customer wanted five $1.00 tickets for the April 6 drawing.) The employee then placed the ticket on the lottery ticket terminal in hopes of selling it to another customer.¹

A Lotto America drawing was held on April 6, 1991. The next day at approximately 8:30 a.m., Ionia Klein, an employee of “Mr. G’s,” noticed the lotto ticket lying on top of the Lotto America ticket terminal. Upon examination of the lotto ticket, she noticed that the numbers corresponded with the winning numbers randomly selected at the Lotto America drawing the previous evening. She also noticed that the lotto ticket had not been signed. Klein then claims to have purchased the lotto ticket by taking $5.00 from her purse and placing it in a separate cash box maintained by Dacshutz, Inc. for money paid for the purchase of Lotto America tickets. Klein then signed the lotto ticket with her name on the line provided on the back of the ticket.

On Monday, April 8, 1991, Klein presented the ticket to the South Dakota Lottery, which then proceeded to determine if the ticket was valid and if Klein was entitled to receive the proceeds. On April 9, 1991, upon completion of the investigation by the South Dakota Lottery, its Executive Director, Susan Walker, officially determined that Klein was entitled to the prize money of $12.4 million to be paid in twenty annual installments.

On Wednesday, April 10, “negotiations” over the proceeds of the lottery ticket began between the owners of “Mr. G’s” and Klein. Included in these discussions were accusations of theft of the lottery ticket by Klein. There were also efforts to reach a settlement agreement. Klein ultimately refused the settlement.

On April 11, 1991, Dacys, Anshutz’, and Dacshutz, Inc. commenced an action in circuit court against Klein, asserting that they were the owners of the lottery ticket. The complaint sought declaratory relief of their ownership rights and damages for Klein’s alleged fraud and conversion. These owners of “Mr. G’s” also sought an injunction requiring that the first year’s proceeds of nearly $630,000 of the lottery winnings be deposited into court pending a determination of the true ownership of the ticket. - After a four-hour evidentiary hearing, Circuit Judge Gors denied the request for a temporary injunction. He later entered extensive written findings of fact and conclusions of law. Among other things, Judge Gors concluded that plaintiffs had not shown irreparable harm or a reasonable probability of success on the merits.

Upon appropriate application, this court entered an order preserving the status quo in the circuit court action and exercised original jurisdiction by issuing the alternative writ of mandamus referred to earlier, and which we now quash.

DECISION

Before proceeding further with this opinion, some preliminary comments are appropriate. This case has fostered much media attention and various correspondence to members of this court from private citizens taking varied positions. It seems clear to us that there is a vast misunderstanding of the precise legal issue presented before this court at this time.

WE ARE NOT DECIDING WHO OWNS THE LOTTERY TICKET OR WHO GETS THE LOTTERY PRIZE!! That will be decided later at the trial court level. THE SOLE ISSUE BEFORE THIS COURT IS WHETHER CIRCUIT JUDGE GORS SHOULD BE MANDATED TO ISSUE A TEMPORARY INJUNCTION TO REQUIRE THE DEPOSIT OF THE FIRST YEAR’S LOTTERY WINNING PROCEEDS DURING THE PENDENCY OF THE LITIGATION. We hold that we cannot and should not order Judge Gors to do so.

Under Article V, § 5 of the South Dakota Constitution, this court has authority to issue, hear and determine any original or remedial writs. By rule of this court, codified at SDCL 15-25-1, the exercise of such original jurisdiction “is reserved for the consideration of matters of prerogative, extraordinary, and general concern.”

SDCL 21-29-1 provides:

The writ of mandamus may be issued by the Supreme and Circuit Courts, to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins as a duty resulting from an office, trust, or station; or to compel the admission of a party to the use and enjoyment of a right or office to which he is entitled, and from which he is lawfully precluded by such inferior tribunal, corporation, board, or person.

Further, it “must be issued in all cases where there is not a plain, speedy, and adequate remedy, in the ordinary course of law.” SDCL 21-29-2.

“The purpose of mandamus is to compel affirmative action[.]” State ex rel. Caldwell v. Skinner, 59 S.D. 68, 72, 238 N.W. 149, 151 (1931). “[MJandamus [is an] extraordinary remed[y] and apt for use by this court in proper cases in the exercise of its general superintending control over inferior courts and for the purpose of preventing injustice by acts of such courts[.]” State v. Knight, 52 S.D. 572, 581, 219 N.W. 258, 261 (1928). See also Marbury v. Madison, 1 Cranch 137, 2 L.Ed. 60 (1803).

For a party to prevail and “be granted a writ of mandamus ‘ “... he must have a clear legal right to have a service performed by the party to whom he seeks to have the writ directed.” ’ ” S.D. Trucking Ass’n v. S.D. Dept. of Transp., 305 N.W.2d 682, 684 (S.D.1981) (quoting Bandy v. Mickelson, 73 S.D. 485, 488, 44 N.W.2d 341, 342 (1950) (quoting from Bailey v. Lawrence County, 2 S.D. 533, 537, 51 N.W. 331, 332 (1892). “If the service or action which one seeks to compel is discretionary the proper exercise of such discretion will not be interfered with. This is not to say there is no checks on such discretion.” S.D. Trucking Ass’n, at 684.

“... The discretion must be exercised under the established rules of law, and it may be said to be abused within the foregoing rule where the action complained of has been arbitrary or capricious, or based on personal, selfish, or fraudulent motives, or on false information, or on a total lack of authority to act, or where it amounts to an evasion of a positive duty, or there has been a refusal to consider pertinent evidence, hear the parties when so required, or to entertain any proper question concerning the exercise of the discretion, or where the exercise of the discretion is in a manner entirely futile and known by the officer to be so and there are other methods which if adopted would be effective.”

Id., at 684 (quoting State v. Richards, 61 S.D. 28, 38-39, 245 N.W. 901, 905 (1932).

As noted previously, petitioners requested Judge Gors to issue a preliminary injunction. Pursuant thereto, a hearing was held on April 19, 1991. At the hearing, there was testimony from five witnesses. The transcript of the hearing contains 119 pages. At the conclusion of the hearing, Judge Gors denied petitioners’ request for a preliminary injunction. Certainly, the issuance or denial of an injunction is discretionary with a trial court. Losee v. Hettich, 74 S.D. 461, 54 N.W.2d 353 (1952).

“Whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.” Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981) (en banc). See also Gross v. Connecticut Mut. Life Ins. Co., 361 N.W.2d 259 (S.D.1985); Olson v. Cass, 349 N.W.2d 435 (S.D.1984).

It is obvious from reading Judge Gors’ findings of fact and conclusions of law that he considered each and every one of the foregoing criteria and factors.² He made specific findings and conclusions as they relate to the same.³ Quite appropriately, in that preliminary injunction proceeding, he made no judicial determination of the ownership of the lottery ticket. That must be done at the trial on the merits. Also, we cannot, at this juncture, make a final determination of ownership of the lottery ticket. Typically in mandamus proceedings, courts do not consider questions as to the ownership of property. Gregory v. Blanchard, 98 Cal. 311, 33 Pac. 199 (1893); State v. Cruise, 111 Neb. 114, 196 N.W. 116 (1923); Gilliam v. Harris, 203 Va. 316, 124 S.E.2d 188 (1962); May v. Whitlow, 201 Va. 533, 111 S.E.2d 804 (1960); 55 C.J.S. Mandamus § 57 (1948). Any ultimate determination of ownership by this court may only be made on direct appeal following the trial court’s final judgment.

The dissents principally assert that Klein will not prevail on the merits. Those assertions are premature at best. The trial court has entered findings of fact which we cannot say are clearly erroneous. The principle assertions of petitioners sound in fraud and deceit, which raise questions of fact to be resolved by a jury. McKinney v. Pioneer Life Ins. Co., 465 N.W.2d 192 (S.D.1991); Laber v. Koch, 383 N.W.2d 490 (S.D.1986); Commercial Credit Equipment Corp. v. Johnson, 87 S.D. 411, 209 N.W.2d 548 (1973). Further, since we believe questions of fact remain: “It [is] necessary, therefore, that the rights of the parties should be determined by a judgment of the court in an ordinary action, and not in the first instance by mandamus.” Stanley County v. Jackson County, 36 S.D. 350, 154 N.W. 806 (1915); Custer County Bank v. Custer County, 18 S.D. 274, 278, 100 N.W. 424, 425 (1904); Bailey, supra. “We are of the opinion that the ends of justice will be better [served] by having this cause ... first tried in the circuit court[.]” Oss v. State Depositors’ Guaranty Fund Commission, 48 S.D. 258, 259, 204 N.W. 21, 21 (1925). Finally, whether we agree with Judge Gors’ findings and conclusions is immaterial. The crucial question, as stated earlier, is whether he abused his discretion under the facts of the case. Losee, supra.

“The term ‘abuse of discretion’ refers to a discretion exercised to an end or purpose not justified by, and clearly against, reason and evidence.” Gross v. Gross, 355 N.W.2d 4, 7 (S.D.1984); Rykhus v. Rykhus, 319 N.W.2d 167 (S.D.1982); Herndon v. Herndon, 305 N.W.2d 917 (S.D.1981); Davis v. Kressly, 78 S.D. 637, 107 N.W.2d 5 (1961); Root v. Bingham, 26 S.D. 118, 128 N.W. 132 (1910). Specifically, when “reviewing matters involving judicial discretion [the test] is ‘whether we believe a judicial mind, in view of the law and the circumstances, could reasonably have reached that conclusion.’ ” Myron v. Coil, 82 S.D. 180, 185, 143 N.W.2d 738, 740 (1966) (emphasis added); Slagle & Co. v. Bushnell, 70 S.D. 250, 16 N.W.2d 914 (1944).

We believe that Judge Gors, in light of the evidence before him, did not abuse his discretion. Since the granting or denial of a preliminary injunction rests within the sound discretion of the trial court, Losee, supra, and we find no abuse of that discretion, mandamus will not issue. S.D. Trucking Assn, supra. Therefore, the Alternative Writ of Mandamus is hereby quashed.⁴

HENDERSON and AMUNDSON, JJ., concur. WUEST and SABERS, JJ., dissent.

1 . The Retailer Manual issued by the South Dakota Lottery Commission states:

"Lotto tickets refused by a customer, for any reason, or printed in error, should be sold to another customer. There are many cases in other lotteries of such tickets becoming winning tickets.”

(Emphasis in original.)

2 . He specifically concluded that plaintiffs have not shown: (1) a reasonable probability of success on the merits, (2) that Klein threatens or is about to remove or dispose of her property with intent to defraud creditors because plaintiffs are not her creditors, but rather persons seeking money damages in a tort action, (3) that irreparable harm will result to them if the preliminary injunction is not granted and that they do have an adequate remedy at law. The conclusions also hold that when balancing the equities and harm between the parties, the hardship to Klein would far outweigh potential harm to plaintiffs and that the public interest weighs against issuance of the injunctive relief because Klein has been determined by South Dakota Lottery to be entitled to the lottery ticket proceeds.

3 . Additionally the trial court found that Klein was not prohibited by Dacshutz, Inc. from purchasing Lotto America tickets and that SDCL 42-7A-33 authorizes her to purchase them. Judge Gors found that there are viable jury issues as to the ownership and sale of the ticket.

4 . "We deem it important to emphasize ... in this highly publicized dispute that we are reviewing the [refusal to] grant[] a preliminary injunction, not making a final decision on the merits.” Los Angeles Memorial Coliseum Commission v. National Football League, 634 F.2d 1197, 1200 (9th Cir.1980) (emphasis in original).