The Splendid Mystery of the Lost Lottery Ticket
By John Norwood · July 12, 2013 · 2013 Ark. L. Notes
In categories: Government Practice, Property Law, Snapshot
Introduction: The case of the lost lottery ticket
In July of 2011 a woman (“Winner”) purchased an Arkansas lottery ticket at a convenience store in Beebe, Arkansas. Believing that the ticket was a loser she tossed the ticket into a trash bin inside the store.1 Not long thereafter another woman (“Finder”) scooped up the contents of the trash bin and later discovered that one of the tickets was a winner in the amount of $1 million. The Arkansas Lottery Commission issued her a check for $680,000 (her after tax share of the prize). After learning of what had transpired Winner claimed that she was the true owner of the winning ticket, and hence that the prize was hers.2 Not long thereafter other claimants appeared. The first of these was the manager of the convenience store (“Manager”) who claimed that above the trash bin was a sign that read “Do Not Take.” She argued that the trash bin was reserved for discarded losing lottery tickets, and therefore any tickets thrown into the bin constituted her personal property.3 The owner of the convenience store (“Owner”) also made a claim.4 In the ensuing lawsuit two lawyers from Searcy, Arkansas, one representing Finder and the other representing Winner, Manager, and Owner, battled it out in White County Circuit Court. Eventually the trial judge ruled in favor of Winner, holding that she was the purchaser and lawful owner of the winning ticket, and that Finder had not proven that Winner had abandoned her right to claim the prize money. But only three weeks later the trial judge threw out his ruling awarding the prize to Winner and set the matter for a jury trial.5) He also recused himself from the new trial, stating that his impartiality might reasonably be questioned in light of repeated negative comments made about him by the lawyer for Finder.6 But in May of 2013, just before the start of the jury trial, the case was settled. Neither of the lawyers would disclose the terms of the settlement, but proclaimed to be happy with the outcome. The settlement has left many with a sense of disappointment as now it will never be known who would have won had the case been litigated. Would the jury have determined that the lottery ticket was abandoned when thrown in the trash bin? The splendid mystery of this case provides an opportunity to review Arkansas cases dealing with lost, mislaid, and abandoned property.7
Lost, Mislaid, or Abandoned in Arkansas
The Arkansas Supreme Court has indicated that basic common law principles of found property apply in the state. In the 2001 case of Terry v. Locke, 37 S.W.3d 202 (Ark. 2001), the court stated that “we have not previously analyzed the various distinctions between different kinds of found property, but those distinctions have been made in the common law, and have been analyzed in decisions from other jurisdictions.”8 Decisions from Iowa and Oregon were specifically cited with favor.9 Also cited was the well known reference work American Jurisprudence, 2d. which divided found property into three classifications for purposes of determining the property rights of the finder:
Abandoned: when property is thrown away or its possession is voluntarily relinquished by the owner.
Lost: when the owner has involuntarily parted with the property due to accident or neglect.
Mislaid: when the owner has intentionally placed property in a particular location but has forgotten its whereabouts and thus failed to recover it.10
In the lottery case did Winner abandon the property (the ticket) when she threw it in the trash bin? No precedent even remotely similar to the lottery case exists in the state of Arkansas, but there are a number of interesting cases dealing with the issue of abandonment. An early Arkansas case in which the issue of whether property was abandoned is Eads v. Brazelton, 22 Ark. 499 (Ark. 1861). In this case the court dealt with the issue of a steamboat which had been sunk in the Mississippi River for 30 years. Should this property be considered abandoned? The court said yes, based on general principles of common law. The court stated that “property is said to be abandoned when it is thrown away, or its possession is voluntarily forsaken by the owner, in which case it will become the property of the first occupant.”11 However the “finder” is this particular case was held not to have established sufficient permanent possession over the still sunken boat to qualify as the first occupant.
In the 1935 case of Hall v. Walker, 86 S.W.2d 427 (Ark. 1935) the Arkansas Supreme Court considered a case involving machinery which was alleged to have been abandoned. Here a lessee had for several months leased land owned by the lessor, after which time the lease was terminated by mutual agreement. During the period of the lease certain machinery had been placed on the property for the purpose of operating a saw mill. When the lease was terminated the lessee removed much of the machinery but several items were left behind. The owner of the land repeatedly asked the (former) lessee to remove the property, but no action was taken. After five years of waiting the owner decided to wait no longer, and sold the machinery for an amount of either $15 or $25. At this point the former lessee sprung into action and demanded that the purchaser of the machinery return it to him, claiming to be the rightful owner. The court, citing a 1927 case (Hughes v. Cordell, 296 S.W.735, Ark. 1927), stated that “as to whether or not there has been an abandonment as a matter of fact, in any given case, is largely a question of intent to be determined, to be sure, by the conduct of the party charged with the abandonment.”12 The court declined to overturn the trial court’s finding of fact that the lessee had abandoned the property.
This is not the only Arkansas case in which a lessee was deemed to have abandoned property by leaving it on the premises after the lease was over. A much more recent dispute involving leases and abandonment was decided by the Arkansas Supreme Court in the 2007 case of Omni Holding and Development Corp. v. C.A.G. Investments, Inc., 258 S.W.3d 374 (Ark. 2007). In this case the court relied not only on general principles of common law but also on an Arkansas statute which states that any property left behind by a lessee at the end of a lease is to be considered abandoned.13
In a 1993 case the Arkansas Supreme Court considered a case involving the question of whether a car had been abandoned. In this case, Routh Wrecker Service, Inc. v. M.C. Wins, 847 S.W.2d 707 (Ark. 1993), a married couple sold their car to a “car broker” who then sold the car to a used car dealer by the name of M.C. Wins (referred to herein as (“Auto Dealer”). Auto Dealer took an “open title” to the car, meaning that there was no registration of change of title with the state. The car was stolen from the Auto Dealer lot and the next day was located by the police. Even though Auto Dealer had notified the police the previous day of the theft, the police apparently overlooked the information report and did not notify Auto Dealer. Instead they had the car towed by “Wrecker Service” to an impound lot, and Wrecker Service notified the married couple of the recovery of the car (as the couple was still listed as the owner by the Department of Motor Vehicles). The couple was told that they could redeem the car by paying the towing and storage charges, but the couple did not do so (probably because they no longer owned the car). In accordance with Arkansas law a proposed sale of the car to pay the towing and storage charges was sent to the couple, but this too was ignored. Approximately 7 months after the theft of the car it was sold at public auction to Red Oak Auto Clinic (“Red Oak”). A few months later Auto Dealer was sitting in his office when he noticed a car pull into the nearby McDonald’s which looked like the car which had been stolen from his lot almost a year earlier. Still having the keys, he walked over to the car and unlocked the car with the key. However, the ignition key would not work. He then entered the McDonald’s and asked who owned the car. A lady said that it was hers, and the police were called. The lady was allowed to drive off with the car, but Auto Dealer subsequently brought an action of replevin against Wrecker Service and Red Oak Auto Clinic. The trial court ruled in favor of Auto Dealer and Wrecker Service and Red Oak appealed.
The court held that under Arkansas law property which is “obtained by larceny, robbery, or burglary shall be restored to the original owner and no sale, whether in good faith on the part of the purchaser or not, shall divest the owner of his right to the property.”14 But another Arkansas statute provides that when a car is found abandoned on public property a towing storage firm may notify the registered owner and if the car is not reclaimed it may sell the car at public auction, deduct the charges, and pay the balance either to the rightful owner or the state, if the owner cannot be found.15 But was the car “abandoned?” The Supreme Court said “no,” reasoning as follows:
Property is abandoned when it has been thrown away, or its possession voluntarily forsaken by the owner. Eads v. Brazelton, 22 AR. 499 (1861). In sum, the prior statute provides that title to stolen property remains in the lawful owner, and the subsequent statutes provide that an owner may lose title to his automobile by abandoning it… the trial court correctly ruled that Wins (Auto Dealer) had not lost title and was entitled to an order of replevin.16
None of the Arkansas cases on abandoned property are sufficiently similar to the lottery case to allow one to predict with certainty whether an Arkansas court would consider the lottery ticket to have been abandoned. But was the ticket mislaid? There are a number of interesting Arkansas cases on the subject, but none involving facts similar to the lottery case. The leading Arkansas case on mislaid property was decided by the Arkansas Supreme Court in 2001. In Terry v. Lock, 37 S.W.3d 202 (Ark. 2001), two contractors were preparing the Best Western Motel in Conway for renovation. In the process of performing the work they were removing ceiling tiles in one of the rooms. Also present at the time was the owner of the motel, A.D. Lock. During this activity a cardboard box was noticed near the heating and air supply vent where it had been concealed. One of the contractors climbed a ladder to reach the box, and then handed the box to the other contractor. The box was filled with old, dry and dusty currency in various denominations. Mr. Lock took the box to his office and phoned the Conway Police Department. The investigating officer contacted Mr. Lock and the money was counted. The dollar value was determined to be $38,310. But who owns the money?
If the money is deemed to be “lost,” then under common law the finder of the property has title good as against all but the rightful owner. If the money is considered “mislaid” then the owner of the premises has a claim to the property superior to that of the finders.17 The Arkansas Supreme Court had no difficulty in finding that the money was mislaid, and not lost, resulting in a judgment in favor of Mr. Lock (the owner of the premises). Such was also the ruling of the trial court. The court stated that:
It is apparent that the box was not lost. The circumstances suggest that it was either abandoned property, mislaid property, or treasure trove. Considering all of the facts as presented, we cannot say that the trial court’s finding that the property was mislaid was clearly erroneous. Specifically, we hold that the trial court’s findings that ‘the money in controversy was intentionally placed where it was found for its security, in order to shield it from unwelcome eyes…’ and that the ‘money was mislaid (property)’ were not clearly erroneous.18
In arriving at this conclusion, the Arkansas Supreme Court noted the similarity of these circumstances to those in reported cases in Iowa and Oregon. In the Iowa case (Benjamin v. Lindner Aviation, Inc. 534 N.W.2d 400, Iowa 1995), a bank hired a contractor to perform a routine service inspection on an airplane which it owned, in the course of which the contractor removed a panel from a wing, discovering packets of money totaling $18,000 which had been hidden in the wing. Finding that the property was “mislaid,” the Iowa Supreme Court noted that “the bills were carefully tied and wrapped and then concealed in a location that was accessible only by removing screws and a panel. These circumstances support an inference that the money was placed there intentionally. This inference supports the conclusion that the money was mislaid.”19
In the Oregon case (Jackson v. Steinberg, 200 P.2d 376, Oregon, 1948) a chambermaid discovered $800 concealed under the paper lining of a dresser drawer. The court held that “from the manner in which the bills in the instant case were carefully concealed beneath the paper lining of the drawer, it must be presumed that the concealment was effected intentionally and deliberately…. Their considerable value, and the manner of their concealment, indicate that the person who concealed them did so for purposes of security, and with the intention of reclaiming them. They were, therefore, to be classified not as lost, but as misplaced or forgotten property…”20
An Arkansas case remarkably similar to the Oregon case is Franks v. Pritchet, 197 S.W.3d 5 (Ark. App. 2004). In this case a customer was staying at the Comfort Inn in Searcy, Arkansas. After staying in his room for three days the customer checked out, but returned to his room to retrieve his laundry. He then found paper money in plain view in the left part of the left drawer of his dresser. It was wrapped tightly with masking tape, with some of the bills showing. He immediately notified the hotel manager, who called the police. The amount of the found money was $14,200. The officer who took possession of the money testified that it had been intentionally and meticulously wrapped because all the bills faced in the same direction. Who gets the money, the customer or the owner of the motel? The trial court found that the money had been “mislaid,” so that the owner of the motel became the owner in the absence of the return of the true owner. This was affirmed by the Court of Appeals, which cited with approval the reasoning of the lower court judge:
It appears to me that the only way I can see this is that somebody put the money in the drawer. Again, it did not fall in the drawer. If they put the money in the drawer, they knew they put the money in the drawer. There is insufficient evidence to find that it’s abandoned property. The only conclusion then that I can reach is that it was mislaid property…21
There were two dissenting justices in the case. In the dissenting opinion the justices distinguished the case before them from Terry v. Locke, stating that:
In Terry the money was found to be mislaid because it had been intentionally placed above the ceiling tiles of a hotel room, a place where it could be expected to remain undiscovered until the owner could return and retrieve it. This element of secreting the property in a way that suggests the owner anticipated returning to retrieve it is found not only in Terry but in the cases upon which Terry relies… This element is completely lacking in the present case, where there was no effort to conceal the money beyond placing it in a drawer. In contrast to the situation presented in Terry, here the owner of the property could be virtually certain that the money would be discovered.22
The dissenting justices seemed to be arguing that the property, not being mislaid, was instead merely lost, meaning that the finder of the property (the customer) should be considered the rightful owner (absent the return of the true owner). But the dissenting opinion concluded by making the remarkable claim that “regardless of whether the money was placed in the motel room drawer intentionally, the true owner has abandoned his interest in it.”23 This suggestion that the money was in fact abandoned is one which is both surprising and difficult to understand. It essentially makes the claim that there exists in this world a person who would deliberately abandon over $14,000 in cash by leaving it in a motel room drawer, to be found by an exceedingly lucky individual unknown to his or her benefactor. Impressive generosity, indeed!24
Returning to the lottery ticket case, it appears unlikely that the ticket could possibly be considered to have been mislaid, nor was it lost. The question is whether or not under Arkansas law it should be regarded as abandoned property. No legal precedent in Arkansas provides a conclusive answer to this question. In the author’s view the abandonment argument is a persuasive one, even if it were to be proven that the ticket was abandoned by mistake by the “winner.” Under this analysis the “finder” would become the rightful owner of the lottery ticket. The claims of the manager and the owner, based on the “do not take” sign, would require convincing proof that the sign was conspicuous enough to suggest to a reasonable person that what appeared to be an ordinary trash bin was in fact something else entirely. On the whole, the “finder” would seem to have the strongest claim to the lottery ticket, but the out of court settlement of the case by all parties concerned leaves matters subject to perpetual speculation.
Winner claimed that she had the ticket scanned by a lottery commission scanner located in the store, and by that process determined that it was not a winner. The argument was made that the scanning mechanism had malfunctioned. This argument was vehemently rejected by the lottery commission, which tested the machine and determined that it was working perfectly. ↩
For purposes of discussion it is assumed that the winning ticket was one which had been purchased by “Winner” and then thrown in the trash can. In actual fact this was subject to dispute by the parties. Lottery tickets are devoid of any form of identification and there were numerous discarded tickets in the trash bin. A video in the store may or may not have supported Winner’s claim that she was in fact the purchaser of the winning ticket. ↩
Finder stated that she saw no such sign when she scooped up the tickets. ↩
The nature of this claim is unclear, but it is no doubt based on the argument that the owner of the store also owned the trash bin and all the contents therein. ↩
Why the trial judge chose to throw out his own ruling cannot be known for certain. What is known is that the case received considerable public attention, with the lawyer for the Finder appearing on The Today Show, and the judge’s decision being criticized by Judge Napolitano on a Fox News report. Several YouTube videos can be viewed on the matter. http://www.youtube.com/watch?v=PkI6RAbOfFU (Judge Napolitano) and http://www.youtube.com/watch?v=Kee9N66Iyts (interview with Winner ↩
The lawyer for Finder stated that all he had done was file a motion for the judge to recuse, and had not acted unprofessionally. ↩
This article will not address the equally interesting question of whether or not the “do not take” sign above the trash bin (if it in fact existed) established a legal claim to the ticket on the part of the manager or owner of the store. ↩
37 S.W.3d at 206. ↩
Benjamin v. Lindner Aviation, Inc., 534 N.W.2d 400 (Iowa 1995); Jackson v. Steinberg, 200 P.2d 376 (Ore. 1948). ↩
Abstracted from 1 AM.JUR.2d, Abandoned, Lost, Etc., Property, Sec. 18 (1994). ↩
22 Ark. at 509. ↩
86 S.W.2d at 428. ↩
In the Omni case the Arkansas Supreme Court was concerned mainly with whether there was a revocation of appellee’s corporate charter (in Louisiana). With regards to the issue of whether a lessee had abandoned equipment which had been left on the property after the termination of an at will lease the Supreme Court noted that the lessee had been ordered by a court to remove the property within one week and failed to do so (instead taking a trip to Greece). Furthermore, Arkansas statutory law states that “upon voluntary or involuntary termination of any lease agreement, all property left in and about the premises by the lessee shall be considered abandoned and may be disposed of by the lessor as the lessor shall see fit without recourse by the lessee.” Ark. Code Ann. Sec. 18-16-108. ↩
Ark. Code Ann. Sec. 16-80-103(a), referenced at 847 S.W.2d at 708. ↩
Ark. Code Ann. Sec. 27-50-1101. ↩
847 S.W.2d at 709. ↩
See Am Jur at Note 10. ↩
37 S.W.3d at 208. ↩
534 N.W.2d at 406, 407. ↩
200 P.2d at 378. ↩
197 S.W.3d at 9. ↩
197 S.W.3d at 10, Justices Baker and Hart, dissenting. ↩
Equally impressive is the degree of personal honesty and integrity shown by the finders in both the Franks and Terry cases, who duly reported their findings to the appropriate authorities. This does not appear to be required under Arkansas law. Under Ark. Code Ann. Sec. 5-36-105 (2011) a finder of lost property is required to make reasonable measures to restore the property to the rightful owner, but the statute does not specifically state that notification to the police is required. Furthermore, in most parts of the state lost property which has been turned over to the police office and gone unclaimed will not be returned to the finder, but will escheat to the state. ↩