# Freedom Road Foundation v. Ohio Department of Liquor Control > Ohio Supreme Court · November 5, 1997 · 80 Ohio St. 3d 202 URL: https://www.frixlaw.com/law-library/cases/6776486 ## Case - **Full name:** Freedom Road Foundation v. Ohio Department of Liquor Control - **Court:** Ohio Supreme Court - **Decided:** November 5, 1997 - **Citations:** 80 Ohio St. 3d 202; 685 N.E.2d 522 - **Precedential status:** Published - **Opinion:** Dissent by Moyer - **Judges:** Cook, Douglas, Moyer, Only, Pfeifer, Resnick, Stratton, Sweeney, Syllabus - **Cited by:** 37 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/6776486 ## Opinion text Moyer, C.J., dissenting. I respectfully dissent from the majority’s conclusion that the record before us demonstrates that Ohio liquor permit owners or employees who participate in Freedom Road’s tip ticket scheme of chance as described by Freedom Road’s president are not “compensat[ed], directly or indirectly, for operating or assisting in the operation of any scheme or game of chance” as prohibited by R.C. 2915.02(D). Moreover, for the reasons which follow, I believe that the court of appeals correctly ordered a remand of this cause for further proceedings. I R.C. 2915.02 and Regulation 53 2 I am unable to concur in the conclusion of the majority that R.C. 2915.02(D) includes an element of a quid pro quo between the charitable organization itself *208 and permit holders or permit holder employees who sell Freedom Road tip tickets. The last sentence of R.C. 2915.02(D) provides, “No person shall receive any commission, wage, salary, reward, tip, donation, gratuity, or other form of compensation, directly or indirectly, for operating or assisting in the operation of any scheme or game of chance.” (Emphasis added.) This broad, inclusive language should be construed as it was intended so as to proscribe the receipt of any pecuniary benefit flowing to a person based on operation or assistance in a scheme of chance. Lindy Douglas, Freedom Road’s president, testified that permit holders benefit from selling the tip tickets in that sale of the tickets “keep[s] the customers in their bars” who otherwise might leave to engage in gambling at “the Eagles, Elks or Moose lodges or American Legions.” This evidence demonstrates that permit holders indirectly received a pecuniary benefit in the form of increased patronage, i.e., increased income, as a result of the sale of tip tickets on their liquor establishment premises. In my view, a bar owner who increases profits as a result of offering on-premises charitable gambling thereby indirectly receives a form of compensation for operating or assisting in that scheme. Thus that permit holder falls within the proscription of the quoted last sentence of R.C. *209 2915.02(D). Inclusion of a direct quid pro quo requirement unjustifiably diminishes the language “direct or indirect ” within the prohibition in R.C. 2915.02(D). I believe Douglas’s testimony is sufficient to support the conclusion of the trial court that R.C. 2915.02(D) was violated by the sale of tip tickets. Moreover, if selling Freedom Road tip tickets is an express or implied employment duty of permit holder employees, then those employees are in fact compensated for their assistance in operating the scheme of chance when they receive their pay from their employer. Freedom Road itself acknowledged that its tip ticket system constituted a scheme of chance as defined in the Revised Code (“a lottery, numbers game, pool, or other scheme in which a participant gives a valuable consideration for a chance to win a prize.” R.C. 2915.01[C].). R.C. 2915.01(E) defines “scheme or game of chance conducted for profit” as “any scheme or game of chance designed to produce income for the person who conducts or operates the scheme or game of chance * * R.C. 2915.02(A) provides, “No person shall * * * (2) [establish, promote, or operate or knowingly engage in conduct that facilitates any scheme or game of chance conducted for profit.” Thus, were Freedom Road not able to invoke the charitable organization exemption provided by R.C. 2915.02(D), its scheme of chance would clearly be illegal. However, Freedom Road, as a charitable organization, could legally conduct a tip ticket scheme of chance pursuant to R.C. 2915.02(D). Thus, it arguably could itself conduct a scheme of chance on liquor control premises by using its own volunteers to approach liquor premises patrons and solicit them to purchase the tip tickets. If, however, permit-premises employees were selling tip tickets not because they desired to volunteer a service for Freedom Road, but instead because selling the tickets was an express or implied duty of employment assigned for the purpose of increasing the income of the liquor establishment, then the employees would not be volunteers. I agree with the court of appeals that the record is insufficient to indicate whether the persons selling tip tickets were acting as employees of the permit holders or as volunteers. If it is true that those employees were not true volunteers, the employer permit holder directing their activities would itself be “conducting” the tip ticket scheme, and the scheme of chance would not be solely “conducted by a charitable organization” as required by R.C. 2915.02(D)(1), nor would the permit holder qualify for the statutory charitable organization exemption. Instead, the permit holder conducting the scheme would be committing a gambling offense in violation of R.C. 2915.02, and possession of the tip tickets on liquor premises would therefore fall within the proscription of Regulation 53. See, also, R.C. *210 2915.02(E), which prohibits a charitable organization from transferring its right to conduct a charitable scheme of chance. In determining whether permit holders themselves “conduct” the tip ticket scheme at issue, we look to R.C. 2915.01(T), where that term is defined in an inclusive manner to include backing, promoting, organizing, managing, carrying on, or preparing for the operation of a scheme or game of chance. Moreover, R.C. 2915.01(E) defines “scheme or game of chance conducted for profit” to include any such scheme “designed to produce income” for the person who conducts or operates the scheme or game. It is possible for more than one legal entity to be deemed to be “conducting” a single scheme of chance, and the testimony of Douglas shows that such a circumstance may well have existed in this case. The evidence in this case shows that Freedom Road itself did little more than periodically drop off new tip ticket supplies and pick up proceeds. On this record, in which Freedom Road’s supervision of actual day-to-day sales of tip tickets was minimal at best, I conclude that the evidence could support a conclusion that permit holders themselves illegally conducted, i.e., backed, promoted, organized, managed, carried on, or prepared, a scheme of chance for their own profit, and not for altruistic or charitable motives, whether or not Freedom Road also may be deemed to have conducted the scheme. It is appropriate to mention the scale of the tip ticket scheme at issue here. Douglas testified that, prior to 1994, tip ticket sales had generated revenues totaling as much as $40,000 a week from sales in nearly three hundred fifty liquor establishments. It is doubtful that the General Assembly intended to authorize a largely unregulated gambling scheme of this magnitude when it adopted the charitable organization exemption provision found in R.C. 2915.02(D). II Disposition Even assuming that the proposition of law set forth in the syllabus is correct, I do not believe that it is fully dispositive of the action before us. Rather, I would affirm the court of appeals’ remand of this cause for further proceedings. Unfortunately the combined decision and judgment entry issued by the trial court is ambiguous as to whether the court intended thereby to award a declaratory judgment or, rather, to deny a declaratory judgment and issue findings of fact and conclusions of law justifying that denial. The caption to its decision reads “Decision and Entry Denying Plaintiff Freedom Road Foundation’s Request for Declaratory Judgment and Permanent Injunctive Relief Filed on October 19, 1994.” (Emphasis added.) The trial court expressly stated in the *211 body of its opinion that “Freedom Road’s requests for a declaration and an injunction are DENIED.” Nevertheless, the opinion included findings of fact and conclusions of law, which might, in a general sense, be deemed declarations of law. Clearly, however, the trial court refused to grant Freedom Road the declaratory judgment it sought, that being a declaration that “its charitable fundraising activities are in compliance with R.C. 2915.02 and Regulation 53.” In either event, my review of the record leads me to conclude that the trial court entered final judgment adverse to Freedom Road based solely on its determination that participating permit owners/employees were not volunteers. It failed to discuss numerous other arguments the department had made, apparently deeming them to be moot, as to why the best exercise of the trial court’s discretion would be complete denial of declaratory judgment. Among those arguments were contentions that no true case or controversy existed between the parties and that issuance of a declaratory judgment was precluded by res judicata and estoppel doctrines. Moreover, I note that R.C. 2721.12 provides, “When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration.” Even assuming, arguendo, that a dispute subject to resolution through declaratory judgment existed between Freedom Road and the department as to whether or not Freedom Road’s actions were legal, it is clear that the interests of participating liquor permit holders were also very much at issue. Yet they were not joined as parties in the case at bar. The requirement of R.C. 2721.12 that all persons who will be affected by a declaratory judgment are to be joined as parties has been held to be a substantive jurisdictional requirement. Bretton Ridge Homeowners Club v. DeAngelis (1988), 51 Ohio App.3d 183 , 555 N.E.2d 663 . Under existing Ohio precedent, Freedom Road’s failure to join statutorily mandated parties in and of itself would have justified the trial court in refusing to enter declaratory judgment. In view of the majority’s rejection of the sole basis for the trial court decision, I believe the trial court should be given the opportunity to consider the department’s remaining arguments against entry of declaratory judgment. In effect, the majority has itself determined that a declaratory judgment should be issued, has formulated the terms of that declaratory judgment and has incorporated that declaration into syllabus law. The majority thereby encroaches upon the principle that issuance or denial of declaratory judgment is committed in the first instance to the sound discretion of the trial court, reversible only upon demonstration of an abuse of that discretion or error of law. I do not believe the court was bound to issue a declaratory judgment at the conclusion of the trial. As noted in 2 Anderson, Actions for Declaratory *212 Judgments (1951) 919-920, Section 383, “there is a distinction between the jurisdiction of a court to grant declaratory relief and the exercise of discretion pursuant to that jurisdiction. * * * [T]he final exercise of the court’s discretion either to declare rights and legal relations of the parties, or to decline to pronounce a declaratory judgment, cannot be anticipated in advance of the development of the proof.” Thus, even where a justiciable controversy exists, declaratory judgment may be refused if, in the exercise of a sound discretion, it appears that the determination is not proper under all of the circumstances. Id. On the record established in this case, the trial court might well yet determine it appropriate to deny declaratory judgment if given the opportunity. For the foregoing reasons I would affirm the judgment of the court of appeals and remand the cause to accord the trial court the opportunity to reconsider whether to issue a declaratory judgment. Pfeifer and Lundberg Stratton, JJ., concur in the foregoing dissenting opinion. . R.C. 2915.02 states: *208 “(A) No person shall do any of the following: « * * # “(2) Establish, promote, or operate or knowingly engage in conduct that facilitates any scheme or game of chance conducted for profit[.] “(D) This section does not apply to any of the following: “(1) Schemes of chance conducted by a charitable organization that is * * * [a recognized 501(c)(3) organization], provided that all of the money or assets received from the scheme of chance after deduction only of prizes paid out during the conduct of the scheme of chance are used by, or given, donated, or otherwise transferred to, any [recognized 501(c)(3) organization], and provided that the scheme of chance is not conducted during, or within ten hours of, a bingo game conducted for amusement purposes only pursuant to section 2915.12 of the Revised Code[.] «(2) * * * “No person shall receive any commission, wage, salary, reward, tip, donation, gratuity, or other form of compensation, directly or indirectly, for operating or assisting in the operation of any scheme or game of chance. “(E) Division (D) of this section shall not be construed to authorize the sale, lease, or other temporary or permanent transfer of the right to conduct schemes of chance or games of chance as granted by division (D) of this section, by any charitable organization that is granted that right.” (Emphasis added.) Ohio Adm. Code 4301:1-1-53 (“Regulation 53”) states: “(B) No person authorized to sell alcoholic beverages shall have, harbor, keep, exhibit, possess or employ or allow to be kept, exhibited or used in, upon or about the premises of the permit holder any gambling device * * * which is or has been used for gambling offenses * * *. « $ ‡ “(D) This rule * * * shall not prohibit the conducting of schemes of chance * * * by charitable organizations * * * so long as there is strict compliance with division (D) of section 2915.02 of the Revised Code.” --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6776486. Public record. Not legal advice.