Mills Novelty Co. v. United States

GREEN, Judge. Plaintiff brings this suit to recover $92,-423.36 alleged to have been wrongfully assessed against it by reason of the manufacture and sale of certain coin-operated machines. It appears that the Commissioner of Internal Revenue held that the machines were taxable as “games” within the meaning of section 900, subdivision (5), of the Revenue [477] Act of 1918 (40 Stat. 1122),1 and the ease turns upon the construction of this provision which, in enumerating the articles taxable, includes a long list of articles used in sports and games, and separately as part of the taxable articles, “games and parts of games.” The machines involved in the case were operated by placing a coin in a slot, and were so designed that the operators thereby obtained a chance as against the owner of the machine of winning or losing through the operation. The details of how this was accomplished are not material in deciding the case, and we have not considered it necessary to set them out very fully in the findings. These machines did not vend any merchandise, and were sold to persons who placed them in stores, restaurants, and other public places to be used by the public. They were not sold to stores and establishments which specialized in the sale of sporting goods, and were not commonly or commercially regarded as sporting goods. It is contended on behalf of plaintiff that the machines in question were not “games or parts of games,” and are not made taxable by the statute. This renders it necessary to determine the meaning and construction of these words as used in the law. At the outset it may be said that, these words being preceded by a long list of articles used in various sports and games, the connection shows that the tax was intended to be levied, not upon the act of playing the game, but upon the articles used in playing it. The word “games” in its commercial sense means the article, articles, or apparatus used in playing games. Thus stores often advertise for sale “games of all kinds,” referring to such articles. The connection also shows very plainly that Congress used the words “games and parts of games” as a sort of “catch-all” or “basket clause,” that is, it was intended to eateh and bring within the revenue net all kinds of articles used in playing games whether they were included in the list that preceded or not. With this in mind, we will next consider whether the word “games” was intended to apply to the particular kind of machines which were in this ease subjected to the tax. At the outset it should be observed that these machines were a gambling device, and we do not understand that this is controverted by the plaintiff. The results obtained by the operators of the machine depended entirely upon chance; the operator being unable to influence or determine the outcome. The question therefore is ultimately whether a person that uses a gambling device of this kind in which he stakes the coin which he places in the machine against what chance may determine he will receive in return, if anything, is playing a game. It is obvious that the results are the same as they would be if the owner set in motion the machine upon receiving the eoin. If, instead of this automatic machine, the owner had had one of those gambling devices in which a wheel is used which revolves when set in motion by the owner, and by chance stops at a certain ■point, we think no one would contend that a game was not being played. We do not think it makes any difference under the law whether the one that takes the other side of the wager constructs a machine that will operate in his absence or operates it personally. Clearly the effect is the same. In Desgain v. Wessner, 161 Ind. 205, 67 N. E. 991, 992, a wrestling match was held to be a game, and the court quoted with approval from People v. Weithoff, 51 Mich. 203, 16 N. W. 442, 47 Am. Rep. 557, a definition of the word “game” as follows: “The word ‘game’ is very comprehensive, and embraces every contrivance or institution which has for its object to furnish sport, recreation, or amusement. Let a stake be laid upon the chances of the game, and we have gaming.” So a horse race has been also held to be a game, and colloquially we have the expression in relation thereto of “playing the races.” In the case last named pool tickets were sold on baseball games, and this was held to be gaming, as money was put at stake on the chances of the games, although neither the buyers of pool tickets nor those who sold them took any part in the ball games. In the instant case the operator staked money on the result of the operation of the machine. The machine was supplied . with money by the owner, and, if the operator was fortunate enough to have its revolutions result in his favor, money of the owner was [478] released and dropped into a receptacle where the party playing the machine eonld take it; otherwise the operator lost the coin which he had put in the machine. In operating the machine the user simply put up his money at long odds against the money of the owner of the machine. If we consider the shorter definition of the word “game” given in Webster — namely, a sport or diversion — we think it quite dear that those who operated the machines did so merely as a diversion. It is common knowledge that an element of chance has an attraction for many people who find a diversion in taking chances. Counsel for plaintiff cite many cases with reference to the construction of the statute, none of which seem to us to be applicable. Courts have always held that, where some apparatus is used for gambling purposes, so that one party may stake his money against that of another, a game is played and gaming carried on, and the fact that the owner of the machine was not present to lay down his wager in person seems to us to be immaterial. We have already shown that the word “games,” as used in the statutes, referred not to the contests but to the articles used in carrying them on. Counsel for plaintiff base part of their argument on the fact that section 900, subdivision (16), 40 Stat. 1122, imposes a tax upon “automatic slot-device vending machines * * * and * * * weighing machines.” Obviously plaintiff’s machines belong to neither class, and it is contended that, as two types of automatic slot-device machines are specified in subdivision (16) as subject to taxation, all other types of such machines are excluded. We do not think this follows where the machines under consideration, as in this ease, are constructed for an altogether different purpose and upon an altogether different plan, and, if taxed, are taxed upon an altogether different theory. Subdivision (16) imposes a tax upon the sale of a machine constructed for the purpose of automatically vending merchandise or ascertaining weight, and to the operation of which the element of chance does not enter. The .machines under consideration in the case at bar are so completely different as to belong, as we think, to an entirely different classification, although also operated by a coin in a slot. It is also argued on behalf of plaintiff that the fact that the machines in question were not commonly or commercially regarded as sporting goods shows that the statute does not apply, but the provision in the statute with reference to sporting goods is" in addition to the list preceding it, which included games and parts of games, and which obviously was inserted, not for the purpose of defining the meaning of the list that had preceded, but to make subject to the tax articles which might not be included, in the language previously used, such as some kinds of fishing tackle, boxing gloves, etc. It is immaterial that stores that specialize in sporting goods do not advertise or carry such machines as are involved in this suit. Naturally the owners thereof who desired to carry on -a strictly legitimate business would have nothing to do with a machine constructed solely for gambling purposes. In our opinion, the gambling machines involved in the ease were articles or apparatus used in playing a game as the word is used in the statute, and, if we are correct in this, it follows that the plaintiff was subject to the tax in controversy. It is accordingly ordered that plaintiff’s petition be dismissed. Footnotes [1] Sec. 900. That there shall be levied, assessed, collected, and paid upon the following' articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased— * * * (5) Tennis rackets, nets, racket covers and presses, skates, snowshoes, skis, toboggans, canoe paddles and cushions, polo mallets, baseball bats, gloves, masks, protectors, shoes and uniforms, football helmets, harness and goals, basket-ball goals and uniforms, golf bags and clubs, lacrosse sticks, balls of all kinds, including baseballs, footballs, tennis, golf, lacrosse, billiard and pool balls, fishing rods and reels, billiard and pool tables, chess and checker boards and pieces, dice, games and parts of games (except playing cards and children's toys and games), and all similar articles commonly or commercially known as sporting goods, 10 per centum.