E. F. Ploner

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IN THE l\LATTER OF E. F. PLONER TRADING AS MICHIGAN CITY NOVELty CO:MP ANY COMPLAIKT, FINDINGS, AND ORDERS IN REGARD TO THE ALLEGED VIOLATION OF SEC, 5 OF AN ACT OF CONGRESS APPROVED SEPT, 26, 1914 Docket 5786. Com.plaint, June 1950-Decision, Ap1'. SO, 1952 Where an individual engaged in the interstate sale and distribution of push cards and punch boards which, bearing explanatory legends or space therefor were designed for use, and were used by the ultimate purchaser, in the sale of merchandise to the consuming public under plans whereby the purchasers of a punch or push who, by chance, selected concealed winning numbers became entitled to designated articles of merchandise at much less than their normal retail price, others receiving nothing for their money other than the push 01' punch- Sold and distributed such devices to dealers in candy, cigarettes, clocks, razors, cosmetics, clothing, and other articles, assortments of which, made up with said devices, were exposed and sold by their direct 01' indirect retailer purchasers to the purchasing public in accordance with the aforesaid sales plan; and thereby supplied to and placed in the hands of others means of conducting lotteries, games of chance or gift enterprises in the sale and distribution of their merchandise, contrary to an established public policy of the United States Government, and in violation of criminal law; and means for engaging in unfair acts and practices; With the result that many members of the purchasing public were induced by the element of chance involved to deal with retailers who thus sold or distributed their merchandise; many retailers were thereby induced to deal with' suppliers of such assortments; and gambling among members of the public was taught and encouraged:

Held That such acts and practices, under the circumstances set forth, were all to the prejudice of the public and constituted unfair acts and practices in commerce.

Before lll)'. William, L. Pack hearing examiner. lif1'. J. "tV. B1' ookjield, J1' for the Commission, Mr. F. W. James of Evanston, Ill., for respondent, CO:MPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that E. F. Ploner, an individual, trading and doing business as Michigan City Novelty Company, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in regard thereto would be in the public interest hereby issues its complaint, stating its charges in that respect as follows:

Complaint 48 F. T, C. PARAGRAPH 1. Respondent, E, F. Ploner, is an individual trading and doing business as l\iichigan City Novelty Company, with its office and principal place of business located at 410 Franklin Street l\iichigan City, Indiana.

Respondent is now, and, for more than three years last past, has been engaged in the sale and distribution of devices, commonly know11 as push cards and punchboards and in the sale and distribution of said devices to dealers in various articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia and to dealers in various articles of merchandise in the various States of the United States and in the District ofColumbia.Respondent causes and has caused said devices when sold to be transported from his place of business in the State of Indiana to purchasers thereof at their points of location in the various States of the United States and in the District of Columbia. There is now and has been for more than three years last past a course of trade in such devices by said respondent in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. In the COlu'se and conduct of his said business -as described in Paragraph One hereof, respondent sells and distributes, and has sold and distributed, to said dealers in merchandise, push cards and pnnchboards so prepared and arranged as to involve games or chance gift enterprises or lottery schemes when used in making sales of merchandise to the consuming public, Respondent sells and distributes and has sold and distributed many kinds of push cards and punchboards, but all of said devices inyolve tlle same chance or lottery featnres when used in connection with the sale or distribution of merchandise and vary only in detail.

:Many or said push cards and punchboards have printed on the faces thereof certain legends or instructions that explain the manner in which said devices are to be used or may be used in the sale or distribution of various specified articles of lllerchandise. The prices of the sales on said push cards and punchboarc1s vary in accordance with the individual device. Each purchaser is entitled to one punch ot' push from the push card or punchboard, and when a push or punch is made a disc or printed slip is separated from the push card or punchboard and a number is disdosed. The numbers are effectively concealed from the purchasers and prospective pure-hasers until a selection has been made and the push or punch completed. Certain specified numbers entitle purchasers to designated articles of merchandise. Persons securing lncky or ",inning numbers receive. articles of merchandise without additional cost at prices which are much MICHIGAN CITY NOVELTY CO. 1267 1265 Complaint less than the normal retail price of said articles of merchandise. Persons who do not secure such lucky or winning numbers receive nothing for their money other than the privilege or making a push or pnnch rro111 said card or board. The articles or merchandise are thus distributed to the consuming or purchasing public wholly by lot or chance, Others or said push card and punchboard dei\rices have no instructions or legends thereon but have blank spaces provided thereror. On those push cards and punchboards the purchasers thereor place instructions or legends which have the same import and meaning as the instructions or legends placed by the respondent on said push card and punchboarcl devices first hereinabove described, The only use to be made or said push carel and punchboard devices, and the only manner in which they are used, by the ultimate purchasers thereof~ is in combination with other merchandise so as to enable said ultimate purchasers to sell or distribute said other merchandise by means or lot or chance as hereinabove alleged. m. 0, :Many persons, firms and corporations who sell and distribute, and have sold and distributed, candy, cigarettes, clocks, razors cosmetics, clothing, and other articles or merchandise in commerce between and among the various States or the United States and in the District of Colmnbia, purchase and have purchased respondents' said push card and punchboard devices, and pack and assemble, and have packed and assembled, assortments comprised or various articles or merchandise together ,with said push cards and plUlchboard devices. Retail dealers "ho have purchased said assortments either directly 01' imli1'ectly hate exposed the same to the purchasing public and have sold or distributed said articles or merchandise by means of said push cards and punchboards in accordance with the sales plan as described in Paragraph Two hereor. Because or the element or chance involved in connection with the sale and distribution or said merchandise by means or said push cards and punchboards, many members or the purchasing public have been induced to trade or deal with retail dealers selling or distributing said merchandise by means thereof. As a result thereor, many retail dealers have been induced to deal ,yjth or trade with manufacturers, wholesale dealers and jobbers ,yho sell and distribnte said merchandise together with said devices.

PAR. 4, The sale or merchandise to the purchasing public through the use or, or by means or, sneh devices in the manner above alleged invohps a game or chance or the sale or a chance to procure articles or lnerchandjse at prices !Dueh less than the normal retail price thereor and teaches and encourages gambling among members or the public Decision 48 F. T. C.

all to the injury or the public. The use or said sales plan or methods in the sale or merchandise and the sale or merchandise by and through the use thereof, and by the aid or said sales plan or nlethod is a practice which is contrary to an established public policy or the Government or the United States and in violation or criminal laws, and constitutes un rail' acts and practices in said commerce. The sale or distribution or said push cards and punchboard devices by respondent as hereinabove alleged supplies to and places in the hands or others means or conducing lotteries, games or chance or girt enterprises in the sale or distribution or their merchandise. The respondent thus supplies to, and places in the hands or, said persons firms and corporations the means or, and instrumentalities ror, engaging in un rail' acts and practices within the intent and meaning or the Federal Trade Commission. Act.

PAR. 5. The aroresaid acts and practices or respondent as herein- .above alleged are. all to the prejudice and injury or the public and constitute unrair acts and practices in commerce within the intent .and meaning or the Federal Trade Commission Act. DECISION OF THE CO:lul\IISSION Pursuant to Rule XXII or the Commission s Rules or Practice, and .as set rorth in the Commission s "Decision or the Commission and Order to File Report or Compliance, dated April 30, 1952, the initial decision in the instant matter or hearing examiner "\Villiam L. Pack as set out as follows, became on that date the decision of the Commission.

INITIAL DECISION BY WILLIAM L. PACK, I-IEARING EXAl\IINER Pursuant to the provisions or the Federal Trade Commission Act the Federal Trade Commission on June 26, 1950, issued and subsequently served its complaint in this proceeding upon the respondent E. F. Ploner, individually and trading as :Michigan City Novelty Company, charging him with the use or unrair acts and practices in commerce in violation or the provisions or that Act. After filing his answer to the complaint, respondent filed a motion for leave to withdraw such answer and to substitute. thereror an answer admitting all of the material allegations or fact in the complaint and waving the taking of testimony and other procedure, the substitute answer reserving, however, the right of respondent to appeal rrom any .decision rendered in the proceeding by the hearing examiner and/or the Commission. The substitute answer was tendered on condition that the initial decision or the hearing examiner in the proceeding MICHIGAN CITY NOVELTY CO. 1269 1265 Fin(ling~ be deferred until the final determination by the Commission of another proceeding, that or Superior Products, Docket No. 5561. Respondent' motion being granted by the hearing examiner, the substitute answer was received and filed as a. part or the record in the proceeding. On January 29, 1952, the Commission rendered its final decision in the Superior Products case. Therearter, the present proceeding regularly came on ror final consideration by the hearing examiner, theretorore duly designated by the Commission, upon the complaint and substitute answer, all intervening procedure having been waived, and the hearing examiner, having duly considered the matter, finds that this proceeding is in the interest or the public and makes the rollowing findings as to the racts, conclusion drawn thererrom and order: FINDINGS AS TO THE FACTS P AR.AGRAPH 1. Respondent, E. F. Ploner, is an individual trading and doing business as :Michigan City Novelty Company, with his office and principal place or business located at 410 FrankEn Street, l\lichigan City, Indiana. Respondent is now, and ror more than three years last past has been, engaged in the sale and distribution or devices commonly known as push cards and punchboards to dealers in various articles or merchandise in commerce between and among the various States or the United States and in the District or Columbia, and to dealers in various articles or merchandise in the various States or the United States and in the District or Columbia. , to be Respondent. causes and has caused his devices, when sold transported rrom his place or business in the State or Indiana to purchasers thereor at their points or location in the various States or the United States and in the District or Columbia. There is now and has been ror more than three years last past a course or trade in such variousdevices by respondent in commerce between and among the States or the United States and in the District or Columbia. PAR. 2. In the course and conduct or his business as described in Paragraph One, respondent sells and distributes to such dealers in merchandise, push eards and punchboarc1s so prepared and arranged as to involve games or chance, girt enterprises or lottery schemes when used in making sales or merchandise to the consuming public, Respondent sells and distributes many kinds or push cards and punchboards, but all or them involve the same chance or lottery features when used in the sale or distribution or merchandise and vary only printed on the racein:Many ordetail.the push cards and punchboards have thereor certain legends or instructions which explain the manner in i270 FEDERAL TRADE COMMISSION DECISIONS Findings 4~ F, 1.', C. which the devices are to be used or may be used in the sale or distribution of various specified articles of merchandise. The prices of the sales on the push cards and punchboards vary in accordance with the individual device. Each purchaser is entitled to one push or punch from the push card or pnnchboard, and when a push or punch is made a disc or printed slip is separated from the push card or punchboard and a number is disclosed. The numbers are effectively concealed from purchasers and prospective purchasers until a selection has been made and the push or punch completeel. Certain specified numbers entitle purchasers to designated articles of merchandise. Persons securing lucky or winning numbers receive articles of merchandise without additional cost at prices .which are mucIlless than the normal retail price of the articles. Persons who do not secure such lucky or winning numbers receive nothing for their money other than the privilege of making a push or punch from the card or board. The articles of merchandise are thus distributed to the consl1lning or purchasing public wholly by lot or chance.

Others of the push cards and punchboards have no instructions or legends thereon but have blank spaces provided therefor. On those push cards and punch boards the purchasers thereof place instructions or legends which have the same import and meaning as the instructions or legends placed by respondent on the push cards and punchboards first described. The only use to be made of the push card and punchboard devices, and the only manner in which they are used by the ultimate purchasers thereof, is in combination ,with other ll1er- ~handise so as to enable such ultimate purchasers to sell or distribute such other merchandise by means of lot or chance as hereinabove set forth.

PAR. 3. Many persons, firms and corporations who sell and distribute candy, cigarettes, clocks, razors, cosmetics, clothing, and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia, purchase respondent' s push card and punchboard devices, and pack and assemble assortments comprised of various articles of merchandise together with such push card and punchboard devices. Retail dealers who have purchased such assortments either directly or indirectly have exposed them to the purchasing pu blie and have sold or distributed articles or merchandise by means of the push cards and punchboards in accordance with the sales plan described in Paragraph 1-"'0. Because of the element of chance involved in the sale and distribution of merchandise by means of such push cards and punchboards, many members of the purchasing public have been induced to trade or deal MICHIGAN CITY NOVELTY CO. 1271 1265 Order with retajJ elealers selling or distributing merchandise by means thereof. As a result thereof, many retajJ dealers have been induced to deal with manufacturers, wholesale dealers and jobbers who sell and distribute merchandise together with such devices, PAR. 4. The sale of merchandise to the purchasing public through the use of such'devices in the manner above described involves a game of chance or the sale of a chance to procure articles of merchandise at prices much less than the normal retail price thereof, and teaches and encourages gambling among members of the public. The use of such sales plan or method in the sale of merchandise is a practice which is contrary to an established public policy of the Government of the United States and in violation of criminal laws. The sale or distribution of such push card and punchboard devices by respondent as hereinabove described supplies to and places in the hands of others means of conducting lotteries, games of chance or gift enterprises in the s.ale or distribution of their merchandise. Resrmndent thus supplies to and places in the hands of others means and instrumentalities for engaging in unfair acts and practices within the intent and meaning of the Federal Trade Commission Act. CONCLUSION The acts and practices of respondent as hereinabove set out are all to the prejudice of the public and constitute unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER It is O1'dered That the respondent, E. F. Ploner, individually and trading as ~iichigan City Novelty Company or trading under any other name, and his agents, representatives and employees, directly or through any corporate or other device, do forthwith .cease and desist from:

Selling or distributing in commerce, as "commerce" is defined in the Federal Trade Commission Act, push cards, punchboards, or other lottery devices which are to be used or may be used in the sale or distribution of merchandise to the public by means of a game of chance gift enterprise, or lottery scheme.

ORDER TO FILE REPORT OF COl\IPLIANCE 1 t is ordered That the respondent herein shall, within sixty (60) days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in 1272 FEDERAL 'rI~ADE COMMISSION DECISION S Order 48 F. T. C.

which he has complied with the order to cease and desist (as required by said declaratory decision and order or Apri 30, 1952). Commissioner Mason concurring in the findings as to the facts and conclusion, but not concurring in the form or order to cease and desist for the reasons stated in his opinion concurring in part and dissenting in part in Docket 5203-Worthmore Sales Company. 1 See 46 F. T. C, 606, NORLON CORP. ET AL. 1273" Syllabus