SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3890-96T5
IN RE: THE PETITION OF
SINGER ASSET FINANCE COMPANY,
L.L.C., FOR AN ORDER ALLOWING A
TURNOVER OF BARRECA LOTTERY WINNINGS
PURSUANT TO N.J.S.A. 5:9-13.
__________________________________________________
Argued April 20, 1998 - Decided May 14, 1998
Before Judges Landau, Collester, Jr.(t/a),
and Bilder (t/a).
On appeal from Superior Court of New Jersey,
Law Division, Mercer County.
Clifford T. Rones, Deputy Attorney General,
argued the cause for appellant New Jersey
Division of State Lottery (Peter Verniero,
Attorney General, attorney; Joseph L.
Yannotti, Assistant Attorney General, of
counsel; Brian J. Litten, Deputy Attorney
General and Mr. Rones, on the brief).
Moira E. O'Connell argued the cause for
respondent Singer Asset Finance Company
(Catalano and O'Connell, attorneys; Ms.
O'Connell, of counsel and on the brief;
Margaret F. Catalano, also on the brief).
The opinion of the court was delivered by
BILDER, J.A.D. (retired and temporarily assigned on recall).
This case involves the voluntary assignability of state
lottery winnings. The sole issue is whether N.J.S.A. 5:9-13, a
section of the State Lottery Law, N.J.S.A. 5:9-1 to 5:9-25,
permits such assignments.
N.J.S.A. 5:9-13 provides:
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 prized 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.
On June 18, 1987 Caroline Barreca won a share in a prize of
over two million dollars in the New Jersey Lottery. As such she
became entitled to receive $63,500 each June for twenty years,
i.e., until June 22, 2006. On November 7, 1996 Ms. Barreca
entered into an agreement with petitioner Singer Asset Finance
Company, L.L.C. in which she agreed to assign to Singer $50,000
of the payments due June 22, 1999 and June 22, 2000 in return for
a present payment to her of $72,000. The agreement was
conditioned upon the entry of a court order "directing the State
Lottery to recognize [the agreement] and to make the Assigned
Payments, without reduction or set off (other than income tax
withholding), directly to [Singer]" and a "written
acknowledgement from the State Lottery *** confirming that [Ms.
Barreca] is the winner of [the assigned prize] and acknowledging
the State Lottery's unqualified agreement to make all of the
Assigned Payments to [Singer]."
Singer filed a petition in the Law Division in which it
sought to proceed summarily for an order to allow the turnover of
the assigned portion of Ms. Barreca's prize, an order which it
characterized as an "appropriate judicial order" permitted by
N.J.S.A. 5:9-13. Over the opposition of the Division of State
Lottery, on February 14, 1997 the Law Division entered an order
stated to be "entered pursuant to N.J.S.A. 5:9-13," requiring
that Singer's assigneeSee footnote 1 be paid the assigned portion of the
payments due to Ms. Barreca, ordering that taxes be withheld and
credited to Singer's assignee, and requiring the Division of
State Lottery to acknowledge in writing that it will
unconditionally pay the lottery prize payments in accordance with
the order. The Division appeals.
The issue is strictly a question of statutory construction. In the only published opinion concerning this issue, McCabe v. Director N.J. Lottery Commission, 143 N.J. Super. 443 (Ch. Div. 1976), Judge Kimmelman examined N.J.S.A. 5:9-13 and noted that, as an exception to the statutory general rule making the prizes unassignable, the phrase "appropriate judicial order" must be strictly construed so as not to run counter to the general statutory prohibition against assignments. Id. at 447-448. Reading the phrase in context with the other exception, the death of the prize winner, he concluded that a court order sanctioning an assignment of winnings was limited to circumstances of necessity. Id. at 448. We agree.
Absent a clear indication to the contrary, language in a statute is to be read in accordance with its plain and ordinary meaning. Service Armament Co. v. Hyland, 70 N.J 550, 556 (1976). Our duty is to construe and apply the statute as
enacted. We are not at liberty to presume the legislature
intended something other than what it expressed by its plain
language. This Court will not engage in conjecture or surmise
which will circumvent the plain meaning of the act. Gangemi v.
Berry,
25 N.J 1, 10 (1957). If a litigant is dissatisfied with
the manner in which the Legislature has spoken, its recourse lies
with that branch, not with this court. In Re Jamesburg High
School Closing,
83 N.J 540, 548 (1980). This is particularly
true where, as here, there is no helpful legislative history.
See Marotta v. Burgio,
185 N.J. Super. 172, 175-176 (Law Div.
1982).
As Judge Kimmelman correctly noted the disputed language
must be read in the context of the whole phrase --
No right *** shall be assignable, except that payment
*** 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
-- and not extended beyond its reasonable bounds. He was
applying a well established principle of construction which
instructs that general words following specific words are to be
construed to be limited by the preceding general words -- ejusdem
generis. See Denbo v. Moorestown Twp.,
23 N.J. 476, 481-482
(1957). Exceptions in a legislative enactment are to be strictly
construed in a manner consistent with the purpose of the law.
Service Armament Co. v. Hyland, supra, 70 N.J. at 558-559.
The Legislature has ordained that the prize rights shall not
be assignable and has thereafter carved out exceptions. Read
together it can be seen that the two exceptions relate to a
common problem -- extrinsic events necessitating a transfer of
the right to receive the moneys. The first exception deals with
the death of the recipient. The second exception, read in pari
materia, relates to other extrinsic events creating legal
necessity, e.g., spousal or child support, equitable
distribution. To read the second exception more broadly so as to
encompass any reason, voluntary as well as involuntary, as long
as there is a court order, as petitioner argues, would permit the
exception to overrule the legislative prohibition against
assignments -- an unreasonable result. See Beemer v. Solar Oil
Co. Sussex,
96 N.J. Super. 50, 58 (App. Div. 1967). Moreover, as
the Pennsylvania Supreme Court noted in construing a similar
statute, the provision for "an appropriate judicial order"
furnishes no standard for the court to follow in acting upon a
request for approval of a voluntary assignment. See Lotto
Jackpot won by Marianov,
533 Pa. 402, 406, 625 A.2d. 637, 639-640
(1993)(construing similar language in the Pennsylvania Lottery
Law). "The absence of a standard is an indication that the
construction of the statue permitting a right of assignment with
leave of the court is not what the General Assembly intended."
Id., 533 Pa. at 406, 625 A.2d. at 640.
Although novel to us, the construction of this statutory
language is not a novel question. Section 9-13 of the New Jersey
Lottery Law is not unique. The same or similar language is found
in the laws relating to lotteries conducted by other states. As
already noted, other courts have construed the same language to
bar voluntary assignments such as petitioner proposes. Singer
Friedlander v. State Lottery,
423 Mass. 562,
670 N.E 2d. 144
(1995); Lotto Jackpot Won By Marinov, supra; R&P Capital
Resources v. State Lottery,
31 Cal. App 4th 1033,
37 Cal. Rptr.2d 436 (1995); Walker v. Rogers,
272 Ill. App 3d. 86,
650 N.E 2d.
272 (1995); Converse v. Lottery Com'n,
56 Wash. App. 431, 783
P.2d. 1116 (1989); see also In re La. Lottery Grand Prize
Drawing,
643 So 2d. 843 (La. Ct. App. 1994); Meyers v. State
Lottery Com'n,
34 Ohio App 3d. 232,
517 N.E.2d 1029 (1986)See footnote 2;
contra Watson v. Lottery Bureau,
224 Mich. App. 878,
569 N.W.2d 878 (1997); but see B P 7 v. Michigan Bureau of State Lottery,
225 Mich. App. 811,
572 N.W.2d 663 (1997)(criticizing Watson).
The rationale for the interpretation which is here espoused
finds reflection in the decisions of these other courts.
[The statute's] general prohibition against assignments
is clear and unambiguous. It is the exception
permitting assignments "pursuant to an appropriate
judicial order" which is arguably ambiguous. However,
exceptions to the general rule, especially when the
general rule is unambiguous, should be strictly
construed with any doubts resolved in favor of the
general provision, rather than the exception.
[Converse, supra, 56 Wash. App. at 434, 783 P.2d. at
1118]
The plain language of [the section] that "[n]o right of any person to a prize shall be assignable" provides a
general prohibition against assignments. [The
assignor's] proposed construction would transform the
phrase "appropriate judicial order" to mean with leave
of the court. This interpretation would effectively
rewrite [the section] to have the exception swallow the
general prohibition. [Marianov, supra, 533 Pa. at 406,
625 A.2d. at 639]
[A] plain reading of [the section] indicates that the
voluntary assignment of winnings is prohibited. Clause
one ***, in clear broad language, absolutely prohibits
a lottery winner form assigning his prize winnings.
Clause two begins with the language, "Notwithstanding
any other provisions of the Section", which does
indicate that clause two is an exception to clause
one, but as other courts have noted, it is unusual for
an exception to completely negate the rule. Clause two
states that "any person pursuant to an appropriate
judicial order may be paid the prize to which the
winner is entitled." *** Because clause two is an
exception to the general rule prohibiting assignments,
it must be narrowly construed. We interpret clause two
as applying to judicial orders entered in separate
proceeding where disposition of a lottery prize is an
appropriate remedy, such as an order directing payment
of prize winnings to a former spouse as part of an
equitable distribution or spousal support in a marital
dissolution case, for a child support arrearage, or a
garnishment order allowing a debtor to satisfy a
judgment from a debtor-lottery winner. (citations
omitted) [Walker, supra,
272 Ill. App 3d. at 92-93,
650 N.E 2d. at 276]
If the 'appropriate judicial order' exception were
to freely permit voluntary assignments for any reason
with leave of the court, the exception would entirely
swallow the general rule that '[n]o right of any person
to a prize shall be assignable.' Such a construction
is contrary to the principle that statutory exceptions
should be construed narrowly....
Finally, plaintiff's interpretation is weakened by the fact that the statute provides absolutely no standards by which the Court could determine when it would be 'appropriate' for it to grant a judicial order allowing a voluntary prize assignment. A construction of [the section] which would grant the Court broad authority to allow or disallow assignments without any standards for making such decisions is not a reasonable construction and is therefore to be avoided. [Singer Friedlander, supra, 423 Mass. at 565-566, 670 N.E 2d. at 146 (citations omitted)]
In addition to its contention that the plain language of
N.J.S.A. 5:9-13 forbids voluntary assignments, the Division has
pointed out that the prohibition serves an important public
purpose by avoiding the administrative burden that would be
created by the need to recognize assignments. Although our
conclusion as to the plain meaning of N.J.S.A. 5:9-13 makes it
unnecessary to seek unstated legislative purposes, particularly
in the absence of any meaningful legislative history, it is
useful to note that judicial recognition has already been given
to the concept that a "clear legislative purpose [of the Lottery
Law] was to keep the administrative machinery geared for the
payment of winnings as simple and as efficient as possible."
Karafa v. N.J. State Lottery Comm.,
129 N.J. Super. 499, 504 (Ch.
Div. 1974).
As the Washington court noted in rejecting an assignability
interpretation, "nothing would prevent a lottery winner from
assigning his winnings to a number of parties, thereby burdening
the Lottery with the administrative expense involved in parceling
out the winner's annual payment to various assignees." Converse
v. Lottery Com'n, supra, 56 Wash. App. at 434, 783 P.
2d at 1118.
Such fractionalization is present in the proposed assignment,
which seeks to transfer the right to receive a portion of the
winner's share for only two of the entitlement years. Moreover,
an order such as that being appealed from can give rise to
serious legal problems for the Lottery Division should a prize
winner become in arrears of a child support order so that the
assigned right to a lottery prize becomes subject to the
withholding provisions of N.J.S.A. 5:9-13.5.
Finally, the Division contends that the general
assignability of prize winnings may, if sufficiently pervasive,
create an established market for such future benefits and raise
the specter of federal taxation of all lottery winnings based on
the present value on the date the prize is won, a consequence the
Division foresees as disastrous to the continuation of the
lottery program. The record is inadequate for us to fully
evaluate this contention but we recognize it as an issue within
the competence of the Division and appropriate for its concern.
Its view should be given considerable weight. See Metromedia,
Inc. v. Director, Div. of Taxation,
97 N.J. 313, 327 (1984).
It is apparently undenied that the Law Division has entered a substantial number of orders, perhaps as many as 200, permitting assignments such as that made by Ms. Barreca, and that the Division, while opposing those applications, has until now not appealed. Singer contends that the entry of these orders without appeal has established its legal right to obtain such assignments. It seeks to apply the principle of offensive collateral estoppel to bar the Division from contending that N.J.S.A. 5:9-13 forbids voluntary assignments. We are satisfied this contention should be rejected substantially for the reasons given by the trial judge in a written opinion of May 21, 1997,
incorporated by reference in his oral opinion of June 13, 1997.See footnote 3
As the trial judge correctly noted, the Division never acquiesced
but consistently opposed the applications; the determinations
permitting the assignments were inconsistent with the
determination made in McCabe v. Director N.J. Lottery Commission,
supra; and the issue is purely one of law which must be subject
to reconsideration by an appellate court. See Kortenhaus v. Eli
Lilly & Co.,
228 N.J. Super. 162, 165-166 (App. Div. 1988).
Moreover, we are satisfied that even if the Division had failed
to oppose the earlier applications, it could not have thereby
nullified a legislative enactment by acquiescence in its
violation. See Township of Fairfield v. Likanchuk's,
274 N.J.
Super. 320, 331-332 (App. Div. 1994).
It is important to note at this juncture that although the
Division is not precluded by the prior orders from asserting its
position that lottery winnings are non-assignable as to new
applications, as to past orders its failure to appeal makes those
orders final and enforceable by the assignee against the
Division. This is analogous to the "intermediate situation"
discussed by Justice (then Judge) Weintraub in Jantausch v.
Borough of Verona,
41 N.J. Super 89, 94-95 (Law Div. 1956),
aff'd, 24 N.J. 326 (1957).
Reversed.
Footnote: 1 Singer assigned its right to receive the moneys to an
entity entitled Lottery Receivables Trust I.
Footnote: 2 In passing on a lottery statute that did not contain an
express prohibition on voluntary assignment, the Vermont Supreme
Court noted that where a statute, like New Jersey's, bars such
assignment, "[i]n each instance, the [numerous appellate courts
interpreting the language have] adopted a narrow interpretation
of the [appropriate judicial order] language." Lemieux v. Tri-State Lotto Com'n,
164 Vt. 110, 666 A.2d. 1170, 1173 (1995).
Footnote: 3 In an oral opinion of June 13, 1997, the trial judge
incorporated by reference a more exhaustive written opinion of
May 21, 1997, filed in a matter entitled "IN THE MATTER OF THE
CONSOLIDATED PETITIONS FOR AN ORDER ALLOWING THE TURNOVER OF A
PORTION OF THE LOTTERY WINNINGS OF VARIOUS LOTTERY WINNERS."