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DONALDSON V. READ MAGAZINE, INC., 333 U. S. 178 - Volume 333 - 1948 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 333 > DONALDSON V. READ MAGAZINE, INC., 333 U. S. 178 (1948) > Full Text
DONALDSON V. READ MAGAZINE, INC., 333 U. S. 178 (1948)
Donaldson v. Read Magazine, Inc.
333 U.S. 178
81 U.S.App.D.C. 339, 158 F.2d 542, reversed.
Page 333 U. S. 179
In 1945, respondents, to promote sales of their books, put on a nationally advertised project known as the Facts Magazine Hall of Fame Puzzle Contest. The
Page 333 U. S. 180
Postmaster General, after a hearing, found "upon evidence satisfactory to him" that the "puzzle contest" was
Page 333 U. S. 181
the grounds that there was no substantial evidence to support the Postmaster General's findings of fraud, and that the statutory provisions under which the order was issued authorize the Postmaster General to act as a censor, and hence violate the First Amendment. The District Court issued a temporary restraining order, but directed that, pending further orders, respondents should deposit in court all moneys and the proceeds of all checks and money orders received through the mails as qualifying fees for the Hall of Fame Puzzle Contest. After a hearing, the respondents' motion for summary judgment was granted on the ground that the findings were not supported by substantial evidence. 63 F.Supp. 318. The United States Court of Appeals for the District of Columbia affirmed on the same ground, one judge dissenting. 81 U.S.App.D.C. 339, 158 F.2d 542. We granted certiorari.
The case has been twice argued in this Court. Briefs of both parties on the first argument dealt only with the question of whether the Postmaster General's findings of fraud were supported by substantial evidence. But, assuming validity of the findings, questions arose during the first oral argument concerning the scope of the fraud order. That order had included a direction to the New York postmaster to refuse to deliver any mail or to pay any money orders to Facts, its officers and agents, including its editor in chief, who was also editor of Read. The two monthly magazines, both published in New York, had an aggregate circulation of nearly five hundred thousand copies. We were told the total deprivation of the right of Facts and of the editor of the two magazines to receive mail and to cash money orders would practically put both magazines out of business. See Milwaukee Publishing Co. v. Burleson, 255 U. S. 407. Furthermore, the order was of indefinite duration, and Facts and its affiliates have made a business of conducting contests to promote the circulation of books
Page 333 U. S. 182
and magazines. The order, if indefinitely enforced, might have resulted in barring delivery of mail and payment of money orders in relation to other nonfraudulent contests, as well as legitimate magazine business. All of the foregoing raised questions about the validity and scope of the original order, if unmodified, which we deemed of sufficient importance to justify further argument. For that reason, we set the case down for reargument, requesting parties to discuss the validity and scope of the order, and whether, if invalid by reason of its scope, it could be so modified as to free it from statutory or constitutional objections. [Footnote 1]
Page 333 U. S. 183
First. Respondents' contention that the Postmaster General was without power to modify the order by elimination of Facts magazine, its editor, and its officers and agents is based almost entirely on their two other grounds for asserting invalidity of the order. Of course, if the order were wholly invalid as to all of the respondents for these reasons, it could not have been validated
Page 333 U. S. 184
merely by eliminating some of them from its terms. But, laying aside respondents' other contentions for the moment, we have no doubt as to the Postmaster General's authority to modify the fraud order.
Furthermore, the modification here involved was for respondents' benefit; it gave them a part of the very relief for which they prayed. It removed the ban against delivery of mail and payment of money orders to their magazine, its editor, and its agents -- a ban which we were told would have done them irreparable injury if left in effect. The possibility that another order might be entered against the eliminated respondents is too remote to require us to consider the original order as though the modification had never been made. See United States v. Hamburg-American S.S. Co., 239 U. S. 466, 239 U. S. 475-476.
Page 333 U. S. 185
There were sentences in the respondents' advertisements and communications which, standing alone, would have conveyed to a careful reader information as to the nine-dollar fees and the letter essay feature of the contest. Had these sentences stood alone, doubtless the
Page 333 U. S. 186
fraud findings of the Postmaster General would not have been justified. But they did not stand alone. They were but small and inconspicuous portions of lengthy descriptions used by respondents to present their contest to the public in their advertisements and letters. In reviewing fraud findings of the Postmaster General, neither this Court nor any other is authorized to pick out parts of the advertisements on which respondents particularly rely, decide that these excerpts would have supported different findings, and set aside his order for that reason. We consider all the contents of the advertisements and letters, and all of the evidence, not to resolve contradictory inferences, but only to determine if there was evidence to support the Postmaster General's findings of fraud. Leach v. Carlile, 258 U. S. 138, 258 U. S. 140.
Respondents' advertisements were long; their form letters to contestants discussing the contest, its terms, and its promises were even longer than the advertisements. Paradoxically, the advertisements constituted, at the same time, models of clarity and of obscurity -- clarity in referring to prizes and to a "puzzle contest," obscurity in referring to a remote possibility of a letter-essay contest. In bold type, almost an inch high, their advertisements referred to "$10,000 FIRST PRIZE PUZZLE CONTEST." Time after time, they used the words "puzzle" and "puzzle contest." Conspicuous pictures of sample "puzzles" covered a large part of a page. Rebus "puzzles" Nos. 1 to 4 of the contest were there. An explanation of what each represented appeared above it. The first, it was explained, represented "the inventor of the phonograph and electric light," the second "a Republican President who became Chief Justice of the Supreme Court." The last two contained equally helpful clues to the "puzzles." The advertisements left no doubt that the contest presented an opportunity to win large prizes in connection
Page 333 U. S. 187
"Indeed, the advertisement is by no means a model of clarity and lucidity. It is diffuse and prolix, and at times somewhat obscure. Many of its salient provisions are printed in rather small type. An intensive and concentrated reading of the entire text is indispensable in order to arrive at an understanding of the entire scheme. Nevertheless, a close analysis of this material discloses the complete plan. Nothing is omitted, concealed or misrepresented. There is no deception. The well founded criticisms of the plaintiffs' literature are a far cry from justifying a conclusion that the announcement was a fraud on
Page 333 U. S. 188
the public. . . . The conclusion is inevitable that there is no evidence to support the finding of fact on which the fraud order is based, and that therefore the plaintiff is entitled to a permanent injunction against the enforcement of the order."
Advertisements as a whole may be completely misleading although every sentence separately considered is literally true. This may be because things are omitted that should be said, or because advertisements are composed or purposefully printed in such way as to mislead. Wiser
Page 333 U. S. 189
v.Lawler, 189 U. S. 260, 189 U. S. 264; Farley v. Simmons, 69 U.S.App.D.C. 110, 99 F.2d 343, 346; see also cases collected in 6 Eng.Rul.Cas. 129-131. That exceptionally acute and sophisticated readers might have been able by penetrating analysis to have deciphered the true nature of the contest's terms is not sufficient to bar findings of fraud by a factfinding tribunal. Questions of fraud may be determined in the light of the effect advertisements would most probably produce on ordinary minds. Durland v. United States, 161 U. S. 306-313-314; Wiser v.Lawler, supra, at 189 U. S. 264; Oesting v. United States, 234 F. 304, 307. People have a right to assume that fraudulent advertising traps will not be laid to ensnare them. "Laws are made to protect the trusting, as well as the suspicious." Federal Trade Comm'n v. Standard Education Society, 302 U. S. 112, 302 U. S. 116.
In 1872 Congress first authorized the Postmaster General to forbid delivery of registered letters and payment of
Page 333 U. S. 190
money orders to persons or companies found by the Postmaster General to be conducting an enterprise to obtain money by false pretenses through the use of the mails. 17 Stat. 322-323, 39 U.S.C. § 732. In the same statute, Congress made it a crime to place letters, circulars, advertisements, etc., in the mails for the purpose of carrying out such fraudulent artifices or schemes. 17 Stat. 323, 18 U.S.C. § 338. In 1889, Congress declared "nonmailable" letters and other matters sent to help perpetrate frauds. 25 Stat. 874, 39 U.S.C. § 256. In 1895 the Postmaster General's fraud order powers were extended to cover all letters or other matters sent by mail. 28 Stat. 964, 39 U.S.C. § 259. And Congress has passed many more statutes, such, for illustration, as the Securities Act of 1933, 48 Stat. 77, 906, 15 U.S.C. § 77e, and the Federal Trade Commission Act, as amended, 52 Stat. 114, 15 U.S.C. § 52, to protect people against fraudulent use of the mails.
All of the foregoing statutes, and others which need not be referred to specifically, manifest a purpose of Congress to utilize its powers, particularly over the mails and in interstate commerce, to protect people against fraud. This governmental power has always been recognized in this country, and is firmly established. The particular statutes here attacked have been regularly enforced by the executive officers and the courts for more than half a century. They are now a part and parcel of our governmental fabric. This Court, in 1904, in the case of Public Clearing House v. Coyne, 194 U. S. 497, sustained the constitutional power of Congress to enact the laws. The decision there rejected all the contentions now urged against the validity of the statutes in their entirety, insofar as the present contentions have any possible merit. No decision of this Court, either before or after the Coyne case, has questioned the power of Congress to pass these
Page 333 U. S. 191
An additional argument urged by respondents is that the fraud order statutes, as interpreted and applied by the Postmaster General in this case, violate some of the constitutional provisions above mentioned. We consider this suggestion only in connection with the modified order. Its future effect is merely to enjoin the continuation of conduct found fraudulent. Carried no further than this, the order has not even a slight resemblance to punishment -- it only keeps respondents from getting the money of others by false pretenses, and deprives them of a right to speak or print only to the extent necessary to protect others from their fraudulent artifices. And, so far as the impounding order is concerned, of course, respondents can have no just or legal claim to money
Page 333 U. S. 192
The two lower courts reviewed in detail the facts in this case. Both held that the predecessor of the present Postmaster General exceeded his authority in issuing his stringent order of October 1, 1945. The modification of that order on December 8, 1947, by the present Postmaster General, then serving as Acting Postmaster General, has restricted it to appropriate parties. It has not altered, however, the primary basis for the lower court's injunction of November 27, 1945, against the enforcement of the order. That injunction was granted because the record failed to show evidence sufficient to justify the drastic administrative action taken in reliance upon the lottery and fraud sections of the mail and money order statutes. R.S. §§ 3929 and 4041, as amended, 26 Stat. 466, 28 Stat. 964, 39 U.S.C. §§ 259 and 732. This dissent
Page 333 U. S. 193
protests the overruling of the conclusions of the lower courts on this issue, and seeks especially to discourage any increase, or even repetition, of the degree of censorship evidenced by this order.
Read Magazine v. Hannegan, 63 F.Supp. 318, 322.
Page 333 U. S. 194
"To support appellant's conclusion in this case, one must ascribe to the advertisements an impression directly contrary to the stated rules of the contest. One must thus assume that readers were led not to read the Rules, or were led to ignore them, or to misunderstand them, or to believe something else contrary to their statement. There is no evidence, we think, to support any of those assumptions. The Rules were legibly printed. They were emphasized, rather than minimized, in the text. They were clear to any reasonable mind. No contradictory expressions occurred elsewhere."
"That this contest was an advertising device designed to promote the book publishing business of appellees must have been plain to the most casual reader. The advertisements specifically told him, 'This contest with FACTS MAGAZINE as sponsor,
Page 333 U. S. 195
being presented as a means of popularizing the Literary Classics Book Club.' . . ."
"We think that the advertisements before us fairly urged contestants to read the Rules, and that the Rules stated fairly, in style of type, placement, and terms, what was proposed. That being so, and there being no ambiguity in or departure from the proposals stated, a finding of false pretenses, representations, or promises could not properly be made."
Anyone who entered this contest to win substantial prizes by doing so little to win them should at least examine the exact terms of the contest and make himself responsible for meeting the rules prescribed by those offering to make the gifts he sought. The contestants rendered no services for which they had a right to compensation. They merely paid a small entrance fee. For that, they were entitled to have the contest conducted in accordance with the rules stated.
Page 333 U. S. 196
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