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McCabe v. Director of New Jersey Lottery Commission

Decided: August 4, 1976.


Kimmelman, J.s.c.


Application has been made to the court for the entry of an "appropriate judicial order" permitting Patrick McCabe, the winner of $100,000 in the New Jersey lottery, to assign his winnings to a finance company and for an order directing the Lottery Commission to recognize and honor the assignment. The State Lottery Law, N.J.S.A. 5:9-1 et seq. , prohibits assignments of prizes except to the estate of a deceased prize winner and except pursuant to "an appropriate judicial order." N.J.S.A. 5:9-13. The legislation neither establishes nor defines the factors to be considered by a court in its consideration of the entry of "an appropriate judicial order." That deficiency gives rise to this litigation.

In 1973 plaintiff Patrick McCabe won $100,000 in the New Jersey lottery, to be paid to him at the rate of $10,000 a year for 10 years. To date four payments have been made, leaving a balance of $60,000 due McCabe from the Lottery Commission. Sometime in 1975 plaintiff Mildred McCabe, with her husband Patrick's consent, ventured into the restaurant business. In order to raise the capital required for this endeavor plaintiffs placed a second and third mortgage on their home and also found it necessary to borrow money from family and friends. The average interest rate on these obligations is claimed to be exorbitant. In order to

alleviate the mounting financial hardship, plaintiffs have attempted to secure another loan which would enable them to pay off their outstanding debts and to reduce the level of the interest charged. The McCabes have been successful in negotiating a loan application with Liberty Trading Co., a mortgage lending company authorized to do business in New Jersey, for a debt consolidation loan of $50,000 with interest at the rate of 10% a year. Under the terms of the proposed arrangement, on each May 16, the lottery prize payment date, the lender would receive the $10,000 prize payment in reduction of principal and interest until the loan is satisfied. The making of this loan is conditioned by the lender's requirement that plaintiff McCabe assign the lottery winnings to it as collateral.

In the absence of an appropriate court order, the Lottery Commission has indicated its refusal to recognize the assignment by McCabe to Liberty Trading Co. when and if made. Consequently, a complaint in this matter was filed seeking an appropriate court order sanctioning the assignment. The issue presented is one of first impression.

At the general election held in November 1969 the voters of New Jersey did approve an amendment to the Constitution by way of exception to the general prohibition against gambling of any kind by authorizing the Legislature to provide for a State lottery. N.J. Const. (1947), Art. IV, § 7, par. 2(C). Thereafter, the Legislature acted pursuant to the authorization. On February 16, 1970 the State Lottery Law became effective and, as above noted, § 13 provided:

No right of any person to a prize drawn shall be assignable, except that payment of any prize drawn may be paid to the estate of a deceased prize winner, and except that any person pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled. The director shall be discharged of all further liability upon payment of a prize pursuant to this section.

Undoubtedly, § 13 vests authority in the courts, given suitable or appropriate circumstances, to supersede the general prohibition against assignments and to direct the payment

of a winner's prize to someone else. Nevertheless, while the ultimate authority of this court under § 13 is not doubted the scope of its discretion under the circumstances here presented remains unclarified.

In the construction and application of § 13 the directive of Chief Justice Vanderbilt in Watt v. Franklin Mayor and Council , 21 N.J. 274 (1956) is apt:

In every case involving the application of a statute, it is the function of the court to ascertain the intention of the Legislature from the plain meaning of the statute and to apply it to the facts as it finds them. Carley v. Liberty Hat Mfg. Co. , 81 N.J.L. 502, 507 (E. & A. 1910). A clear and unambiguous statute is not open to construction or interpretation, and to do so in a case where not required is to do violence to the doctrine of the separation of powers. Such a statute is clear in its meaning and no one need look beyond the literal dictates of the words and phrases used for the true intent and purpose in its creation. But few statutes can boast of such clarity or stand that test through ...

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