On the basis of the authorities, the only question for this court to review in the instant case is whether there was any substantial evidence to sustain the administrative determination that the publishers and editors of Facts Magazine were conducting or operating a scheme or device for obtaining money through the mails by means of fraud, or false pretense, representations or promises. As the facts are not in dispute, the answer to the question depends upon an examination of the advertisement and other literature emanating from the editors of the magazine.
The Postmaster General found three objections to this material. The first objection was that the contest was denominated a 'puzzle contest' in large type, while a reading of all the Rules of the contest printed in small type disclosed that if a number of contestants were tied after two stages of elimination, it would be necessary for the remaining competitors to submit letters in addition to solving puzzles. The Post Office Department took the position that this feature of the contest changed its nature from that of a puzzle contest to what might presumably be called a letter-writing contest and that, therefore, to denominate it a puzzle contest was a misnomer amounting to a fraud. This dispute seems, however, to be solely over nomenclature. The nature of the contest could be ascertained from reading the entire advertisement.
The second objection was that it did not clearly appear from the advertising matter that a contestant might be obliged to remit an aggregate amount of $ 9 in order to remain in the contest to its final stage. It was merely stated in the announcement that the sum of 15 cents had to accompany the solution of each set of puzzles. The sum total of $ 9 could be easily reached, however, by a multiplication of the figures appearing in the advertisement.
The third objection was that it was represented to the public that the contestant might become a prize winner merely by submitting correct solutions to the first group of 80 puzzles. The official rules of the contest, however, printed in small type in the body of the advertisement contained an express statement that a large number of entrants was expected and that ties between successful competitors were likely.
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 the public. Similar animadversions may be directed against the typical insurance policy, bill of lading, or express receipt. Some of the vital terms of most of these documents are generally printed in small type and couched in phraseology that is difficult for the average holder of the instrument to comprehend. These considerations, however, do not justify an inference of fraud. Under no circumstances, therefore, can the puzzle contest and its descriptive literature be considered a fraudulent device or strategem for obtaining money. 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.
As in this case this Court sits as a court of equity, it is not amiss to consider and weigh the equities involved. The undisputed facts are that over 189,000 persons entered the contest at its inception. Approximately 35,000 persons were left after the unsuccessful competitors were eliminated at the first stage. Eight thousand more were eliminated at the second state, and 27,000 entrants still remain at the third and final stage of the contest. Eventually a considerable number of them would become entitled to receive valuable cash prizes, if the contest is carried to a conclusion. Each of these persons has already paid entrance fees aggregating at least $ 6 and has spent considerable time and effort, which may have been arduous, in solving 160 puzzles. To foreclose the plaintiffs by administrative fiat from carrying the contest to a final termination would seem unfair and inequitable to these 27,000 members of the public, who still remain in the contest and who have invested time, effort, and money.
If we consider the matter from the standpoint of the plaintiffs, we find that although they have received over $ 760,000 in entrance fees, they have expended or have become obligated to expend, a sum aggregating in excess of $ 935,000. This total comprizes the aggregate cash value of the prizes, amounting to $ 105,000, the cost of the books that have been distributed, as well as other items of expense in conducting the contest, such as the printing, advertising, postage and other overhead disbursements. Every competitor who has submitted solutions to all the puzzles at either the first or second stage of the contest has received a book, which is a reprint of a well-known classic. Many have received two books. It is quite apparent that the magazine initiated the contest not as a profit-making scheme, but for the purpose of advertising its many publications. In the light of all of these facts and especially because the fraud order did not become effective until after the second stage of the contest had been conducted, it seems inequitable to prevent the contest from proceeding to a final termination.
The plaintiffs' motion for summary judgment is granted. The defendant's motion for summary judgment is denied. Judgment for plaintiffs granting permanent injunction.