AGO 1961 No. 54 - Aug 11 1961
TRADING STAMPS ‑- REDEEMABLE IN CASH ‑- SUBJECT TO REGULATORY PROVISIONS OF CHAPTER 19.84 RCW.
(1) Trading stamps redeemable in cash only are not subject to the licensing provisions of chapter 36.91 RCW.
(2) Trading stamps redeemable in cash only are subject to regulatory provisions of chapter 19.84 RCW.
(3) A plan whereby a customer secures trading stamps with the value marked on each stamp in mills, which are redeemable upon presentment irrespective of the number of stamps presented, does not violate the provisions of chapter 19.84 RCW.
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August 11, 1961
Honorable Frank Connor
State Senator, 33rd District
408 ‑ 20th South
Cite as: AGO 61-62 No. 54
By letter dated June 29, 1961, you have requested our opinion on the following question:
"Is the issuance of trading stamps which are redeemable exclusively in cash, governed by either Chapter 36.91 or Chapter 19.84 of the Revised Code of Washington? More specifically, the question is whether there is anything unlawful in the following transactions: A trading stamp company licenses a retail merchant doing business in the State of Washington to issue the company's trading stamps to the merchant's customers. Each stamp has printed on its face its value in mills, which value constitutes a fraction of a cent. The stamps are issued to their customers, usually at the rate of one stamp for each ten cent purchase. The customers are given stamp collectors books into which they may paste the stamps. After they have filled at least one such collectors book (usually containing 1200 stamps), the customers may redeem the said filled [[Orig. Op. Page 2]] book in cash for the face value of the stamps contained therein."
Your letter, therefore, presents three basic questions:
1. Are trading stamps, redeemable in cash only, subject to the licensing provisions of chapter 36.91 RCW?
2. Are such stamps subject to the regulatory provisions of chapter 19.84 RCW?
3. If the answer to question 2 is in the affirmative, is the present plan, as outlined above, violative of chapter 19.84 RCW?
We answer your first question in the negative and your second question in the affirmative. The answer to your third question is given in the analysis.
It has consistently been held in prior opinions of this office that trading stamps redeemable exclusively in cash are not subject to the licensing provisions of chapter 36.91 RCW. See AGO 57-58-215, addressed to yourself, August 20, 1958, AGO 49-51-443 to Senator Albert Rosellini, February 2, 1951, and AGO 2064 to Honorable Charles Denney, April 4, 1928 [[1927-28 OAG 643 to Prosecuting Attorney, Snohomish County]]. Copies of the last two opinions are enclosed for your April 4, 1928. Copies of the last two opinions are enclosed for your convenience. The reason for the holding of these opinions is that these licensing provisions apply expressly and exclusively to trading stamps and similar devices entitling the purchaser ". . . to procure any goods free of charge or for less than the retail market price thereof . . ." (See RCW 36.91.010) (Emphasis supplied.) These opinions further hold that cash does not come within the term "goods," as the latter term is used in these provisions.
Your second question is also answered by previous opinions of this office. See AGO 57-58 No. 215, and AGO No. 2064, supra. These opinions hold that trading stamps, whether redeemable in cash only, or in some other thing of value, are subject to the regulatory provisions of chapter 19.84 RCW. Each section of that chapter refers to trading stamps entitling the holder to procure ". . .money or goods, wares or merchandise . . ." (Emphasis supplied), whereas chapter 36.91 RCW, supra, refers to stamps entitling the holder to "goods," and makes no mention of money.
As to the third question, the main requirements of chapter 19.84 RCW were summarized in AGO 57-58 No. 215 as follows:
"(1) Each [stamp] must have printed or written upon its face its redeemable value in cents. (RCW 19.84.010)
[[Orig. Op. Page 3]]
"(2) They [the stamps] must be redeemable in money . . . at the value in cents printed upon the face thereof. (RCW 19.84.020 and 19.84.030)
"(3) It shall not be necessary for the holder thereof to have any stipulated number of the same before demand for redemption may be made and granted. (RCW 19.84.020 and 19.84.030)"
In order to determine whether the first requirement would be complied with we must first determine whether printing on the face of a stamp its value inmills would constitute substantial compliance with the requirement that the stamp must have printed upon its face its redeemable value in cents. InSouthern Service Co. v. Los Angeles County, 82 P. (2d) 397 (1938), appeal dismissed on other grounds 15 Cal. 1, 97 P. (2d) 963 (1940), the supreme court of California considered an analogous situation. There the statute provided:
". . . 'Levy of taxes. The county board of supervisors shall, not later than the first day of September, fix the rates of county and district taxes designating the number of cents levied for each fund upon each one hundred dollars of assessed value of the county for the current fiscal year to raise the amount of the estimated expenditures as finally determined, less the total of the estimated revenues * * *'." (p. 402)
The court treated that statute in the following fashion:
"The county contends that section 3714 is controlling and requires application of an even cent formula in the fixing of school rates; that the word 'cents' as used in the section means one hundredth of a dollar, not including fractions of cents. Plaintiff, on the other hand, asserts that the word 'cents' is used as an expression of value and includes fractions or multiples of the unit of value, as well as the unit itself. The latter construction of the word is the correct one." Ibid.
Although a tax statute was involved in the Southern Service Company case and a regulatory statute is involved in the instant case, we have no difficulty in reaching a similar result. Our conclusion is buttressed by the rule that a penal statute must be strictly construed. Hence, the first requirement would be substantially complied with if the stamp had printed upon its face the value in mills.
In dealing with the second and third requirements it will be convenient to restate a part of the plan outlined in your question. "The customers [[Orig. Op. Page 4]] are given stamp collectors books into which they may paste the stamps. After they have filled at least one such collectors book (usually containing 1200 stamps), the customers may redeem the said filled book in cash for the face value of the stamps contained therein." (Emphasis supplied.) The second requirement would be met, in this particular instance, in that the stamps are redeemable in money at their face value. However, there would be a violation of the third requirement if a customer had to collect a stipulated number of stamps, such as 1200, before being able to redeem them. But if in practice a customer may redeem in any number, without having a stipulated number of stamps, even though a stamp book containing a certain number of places for stamps were provided for his convenience, we feel that the third requirement would be met.
We trust that the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
TIMOTHY R. MALONE
Assistant Attorney General