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Paterson Publishing Co. v. New Jersey Bell Telephone Co.

Decided: May 7, 1956.

PATERSON PUBLISHING COMPANY, INC., PLAINTIFF-APPELLANT,
v.
NEW JERSEY BELL TELEPHONE COMPANY, DEFENDANT-RESPONDENT



For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Jacobs, J.

Jacobs

This is an appeal from an order of the Board of Public Utility Commissioners which declined to direct the New Jersey Bell Telephone Company to reinstate the telephone services formerly rendered to the Paterson Publishing Company. We certified under R.R. 1:10-1.

In July 1954 three telephone lines were installed at 20 Church Street, Paterson, for Secretarial Office Services which was represented as a public secretarial business. In August 1954 the Telephone Company installed a monitor switchboard with five trunks and operator's head set, eight extensions, five head sets, five voice recorder connectors, and another line which did not go through the switchboard. In November 1954 the telephone facilities were transferred to Paterson Publishing Company which disseminates racing information and offers public secretarial services. In December 1954 the Telephone Company installed five additional lines, making 11 in all at the 20 Church Street premises of Paterson Publishing Company. After receiving communications from the Prosecutor of Passaic County, the Telephone Company served notice that it would disconnect the telephone facilities of Paterson Publishing Company because they were being used for purposes of aiding and abetting illicit gambling on horse races in violation of law and the Telephone Company's tarriff regulations. A similar notice was sent to Atlantic Television Corporation (a wholly-owned subsidiary of Service Television Company) for which corporation

the Paterson Publishing Company was disseminating racing information. Thereafter the Paterson Publishing Company and the Atlantic Television Corporation sought relief in the Chancery Division. Judge Grimshaw permitted the Atlantic Television Corporation to retain one telephone for its television repair business but denied all other prayers for preliminary relief. On March 18, 1955 he denied in toto the Paterson Publishing Company's application for preliminary relief and on March 22, 1955 the Appellate Division took like action. In the meantime both companies had applied to the Board of Public Utility Commissioners for orders compelling the restoration of their telephone service. After full hearings their applications were denied by the Board for reasons expressed in formal decisions. By stipulation the record in the Atlantic Television Corporation's proceeding before the Board has been made part of the Paterson Publishing Company's matter which is the only one before this court for determination.

A fair reading of all of the testimony establishes beyond question that Paterson Publishing Company was an integral part of an operation which encompassed the three corporate entities (Atlantic Television Corporation, Service Television Company and Paterson Publishing Company) and entailed the dissemination of racing information primarily for the use of bookmakers. Service Television Company issued a sporting sheet for which it charged $50 per week. This contained racing information and predictions and entitled the subscribers to obtain telephone information from Paterson Publishing Company as to the winners of races which had recently been completed. In addition, Service Television Company furnished a special service to any customers who wanted flash information as to the result of a race within a minute or two after it had been run. The charges for this special service were $15 for the first result and $10 for each subsequent result with a maximum charge of $50 per day per customer. These charges were paid to Service Television Company which had made arrangements through Paterson Publishing Company for the furnishing

of the flash information. Paterson Publishing Company acquired the information largely by long distance telephone calls to a corporation in Delaware and then transmitted it directly to Service Television Company's customers in response to their telephone calls.

Testimony by the dominating official of Service Television Company and Atlantic Television Corporation indicated that the sporting sheet was usually mailed in care of general delivery because the real addresses of the customers were unknown; indeed, in many instances, the real names of the customers were likewise unknown. Payments for the flash information were made in the form of Western Union money orders and they were in large and varying amounts; e.g., the record indicates that F. J. Sullivan paid $675 during February 1955 and $500 during the following month; that E. Bello paid $420 during February 1955 and $220 during the following month; and that G. Gustin paid $490 during March 1955. Mr. McMahon, a qualified representative of the Thoroughbred Racing Protective Bureau, testified that he could see no reason for anyone wanting flash information of the type being disseminated except "bookmakers and past posters." He defined a past poster as "a person who cheats the bookmaker by obtaining the official result of a race and then with that knowledge making a bet with the bookmaker who does not know yet what the official result is." He stated that he had never heard of a legitimate horse owner subscribing to a flash service such as that offered by Service Television Company and he readily distinguished its service from that rendered by newspapers and other traditional media which simply furnished delayed racing information to the general public for nominal charge.

Despite its cost, most of the racing customers of Service Television Company subscribed to the flash service. As explained by Mr. McMahon, some persons will place their bets only with bookmakers who will let them know immediately which horse won so that they will be in a position to determine how much to bet on the next race. It is conceivable, as Paterson Publishing Company suggests, that there may

be instances where a person wholly unconnected with illicit gambling operations will want immediate information as to the outcome of a race and will be willing to pay a very substantial charge for such information. But such instances would undoubtedly be isolated and no legitimate business could operate profitably on their foundation. Upon the evidence in the instant matter, we have no hesitancy in finding that the business of Paterson Publishing Company was primarily set up to serve bookmakers and their patrons and that during its operation it in fact did serve such persons. Upon this finding it is entirely clear that the order of the Board of Public Utility Commissioners declining to direct the reinstatement of the telephone services formerly rendered to Paterson Publishing Company must be sustained. See N.J.S. 2 A:146-3; State v. Western Union Telegraph Co., 12 N.J. 468, 481 (1953), appeal dismissed 346 U.S. 869, 74 S. Ct. 124, 98 L. Ed. 379 (1953); McBride v. Western Union Tel. Co., 171 F.2d 1 (9 Cir. 1948); Tracy v. Southern Bell Telephone & Telegraph Co., 37 F. Supp. 829 (D.C.D. Fla. 1940); Hamilton v. Western Union Telegraph Co., 34 F. Supp. 928 (D.C.N.D. Ohio 1940), appeal dismissed 118 F.2d 902 (6 Cir. 1941); Howard Sports Daily v. Weller, 179 Md. 355, 18 A. 2 d 210 (1941); Taglianetti v. New England Tel. & Tel. Co., R.I., 103 A. 2 d 67 (1954); Application of Annette, 74 N.Y.S. 2 d 330 (Sup. Ct. 1945), affirmed 273 App. Div. 997, 79 N.Y.S. 2 d 896 (1948), leave to appeal denied 298 N.Y. 931, 82 N.E. 2 d 44 (1948); Tela-News Flash v. District Attorney, 197 Misc. 1015, 96 N.Y.S. 2 d 338 (Sup. Ct. 1950), affirmed 277 App. Div. 1119, 101 N.Y.S. 2 d 245 (1950), leave to appeal denied 302 N.Y. 951, 98 N.E. 2 d 709 (1951); Martinelli v. New York Telephone Co., 205 Misc. 503, 129 N.Y.S. 2 d 411 (Sup. Ct. 1954).

Bookmakers and those who aid and abet them are equally condemned by the policy of our law. See N.J.S. 2 A:112-3; N.J.S. 2 A:85-14; State v. Morano, 134 N.J.L. 295, 301 (E. & A. 1946). Where a telephone company knows or has ...


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