Smith v. Williams

698 F.2d 611
CourtCourt of Appeals for the Third Circuit
DecidedJanuary 19, 1983
DocketNos. 82-3261 to 82-3263 and 82-3293
StatusPublished
Cited by6 cases

This text of 698 F.2d 611 (Smith v. Williams) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Williams, 698 F.2d 611 (3d Cir. 1983).

Opinion

OPINION OF THE COURT

SEITZ, Chief Judge:

I.

This controversy arises out of an illegal raffle conducted by Marion Smith and Evelyn Williams [Evelyn], As winner of that raffle, Keith Morgan received four sheets of official Virgin Islands lottery tickets. The dispute centers on title to ticket 13540, which won the grand prize of $100,000 in the official Virgin Islands lottery. Smith, Evelyn, Glenwood Williams [Glenwood], and the Government of the Virgin Islands appeal from the district court’s summary judgment in favor of Laurette Roach on behalf of her minor son Keith Morgan. This court has jurisdiction under 28 U.S.C. § 1291 (1964).

II.

The following facts are undisputed. Smith and Evelyn agreed to conduct a raffle to raise money for a personal trip. Virgin Islands law prohibits the operation of a raffle other than the official lottery of the Virgin Islands or one operated by permit. V. I.Code Ann. tit. 14 § 1222 (1964). Smith and Evelyn conducted their raffle without a permit and in violation of § 1222.

The price of a ticket in the Smith/Williams raffle was $1. The prize was four sheets of tickets in the official Virgin Islands lottery. Each sheet contained twenty identically numbered official lottery tickets, and each ticket could be sold separately for $1, providing the holder with a chance to win one twentieth of the grand prize. The tickets could also be sold in sheets of 20, and each sheet had a retail value of $20. Smith and Evelyn each agreed to contribute two sheets to the prize pool.

Around 5:00 pm on April 7, 1981, Evelyn went to Smith’s house to collect the two sheets of tickets that Smith had agreed to contribute. Before Smith gave her two sheets to Evelyn, she insisted that they compare the ending numbers of the tickets on the four sheets. The tickets on Evelyn’s sheets ended in 8 and 4. The tickets on Smith’s sheets ended in 5 and 0. Only after Smith determined that there was no duplication in the ending numbers did she give Evelyn her two sheets. Both Smith and Evelyn wrote down the numbers of the tickets on the four sheets. It is undisputed that Smith contributed ticket 13540.

Evelyn took Smith’s two sheets home and put them on top of her dresser with the two sheets that she had contributed. Evelyn’s husband, Glenwood was in the same room sorting his official lottery tickets. When he saw the sheet containing ticket 13540, he took it and substituted another sheet in its place.

Shortly after 6:00 pm that same evening, Evelyn took four sheets of tickets from the dresser, put them in an envelope, and sealed it. She then left the envelope at home and went to the bakery where she conducted the raffle around 6:30 pm. Keith Morgan’s name was drawn as winner, and that night Evelyn notified Laurette Roach that her son had won. Evelyn instructed Roach to pick up the tickets at the bakery the next day. This Roach did. Ticket 13540, of course, was not among the tickets in the envelope.

The results of the official Virgin Islands lottery were announced on April 9, 1981. Ticket 13540 won the grand prize of $100,-000. As soon as the results of the official lottery were announced, Smith called Evelyn to tell her that one of the tickets that she, Smith, had contributed to the prize pool had won the official grand prize.

Smith soon learned from the Williams that Glenwood, and not Morgan, held the winning ticket. Soon after Smith learned [613]*613this, she brought this action against Evelyn and Glenwood, joining Morgan as co-plaintiff and the Government of the Virgin Islands, as holder of part of the winnings, as co-defendant,

On summary judgment motions, the district court held that the prize agreement of the illegal raffle was enforceable, and that Morgan was the beneficiary of a valid express trust and thus had specifically enforceable rights in ticket 13540. Smith, the Williams, and the Government appeal this decision.

III.

A. Enforcement of the Prize Agreement

Smith, the Williams, and the Government argue that the prize agreement of the illegal raffle is unenforceable under the territory’s gambling laws. The district court held that although the legislature has prohibited the running of unlicensed private raffles, V.I.Code Ann. tit. 14 § 1222 (1964), and the selling of chances in such raffles, § 1223, it has not specifically prohibited the purchase of a ticket in an illegal raffle. Thus, the district court concluded that although a promise to conduct an unlicensed private raffle is always unenforceable, the promise to provide a prize to the raffle winner is not unenforceable unless against public policy. The district court held that in this case, enforcement of the prize agreement was not against public policy.

Smith, the Williams, and the Government argue that the district court erred when it held that Virgin Islands law does not prohibit the purchase of an illegal raffle ticket. They rely on V.I.Code Ann. tit. 14 § 1224 as well as sections 1221 through 1223. Section 1221 defines a lottery or raffle as a particular kind of game of chance, and sections 1222 and 1223 prescribe criminal penalties for conducting and selling tickets in raffles other than the official Virgin Islands lottery or those operated by permit.1 Section 1224 prohibits gambling in general and prescribes criminal penalties for conducting or playing any game of chance.2

Although it is clear that sections 1222 and 1223 do not prohibit the purchase of an illegal raffle ticket, Smith, the Williams, and the Government argue that such conduct is subject to the criminal penalties of the general gambling provisions of section 1224. We disagree.

Section 1224 is a penal statute that authorizes up to 180 days of imprisonment. Ambiguity concerning the applicability of a criminal statute is resolved in favor of lenity. United States v. Bass, 404 U.S. 336, 347-48, 92 S.Ct. 515, 522, 30 L.Ed.2d 488 (1972). We think that such an ambiguity exists where legislation dealing specifically with raffles at least suggests that raffles are not subject to the general gambling laws. Furthermore, the legislature of the Virgin Islands has chosen to allow private raffles operated by permit. Applying section 1224 to purchasers of illegal raffle tickets would thus subject to potential imprisonment those unlucky enough to purchase tickets from one who has failed to obtain a permit. We think that if the legislature intends such a result, it must manifest a clearer intent than this.

[614]*614Because Virgin Islands law does not specifically prohibit the purchase of an illegal raffle ticket or the purchaser from entering into a prize agreement with the seller, we must determine whether enforcement of that prize agreement would be contrary to public policy.

We agree with the district court that on balance public policy does not counsel against enforcing this prize agreement in favor of a raffle winner who participated in no illegal conduct. Restatement (Second) of Contracts § 178. Under Virgin Islands law, Smith and Evelyn are the only culpable parties. Their raffle was illegal only because they failed to obtain a permit.

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Smith v. Williams
698 F.2d 611 (Third Circuit, 1983)

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Bluebook (online)
698 F.2d 611, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-williams-ca3-1983.