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socrateaser, Lawyer
Category: Legal
Satisfied Customers: 38910
Experience:  Retired (mostly)
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Whether USA, Georgia State has power to interfere private contract

Customer Question

Whether USA, Georgia State has power to interfere private contract between enterprise ?
Submitted: 4 years ago.
Category: Legal
Expert:  socrateaser replied 4 years ago.
No government agency can retroactively invalidate a contract, except where legislation or common law already exists to make the contract subject to invalidation.

"If the thing provided for by the legislature be within their general competence, and yet be the very thing expressly excluded by a particular contract, it is plain that, as to the parties to that contract, the law is unconstitutional and void, because it impairs the obligation of their contract." Atlantic Loan Co. v. Peterson, 181 Ga. 266 (1935).

Hope this helps.
Customer: replied 4 years ago.
in hb487 bill they stated we have to split profit in 50/50 is that legal?
Expert:  socrateaser replied 4 years ago.
Can you provide a link to the Bill and to the specific numbered section of your concern?

Customer: replied 4 years ago.
13 HB 487/AP
H. B. 487
- 28 -
954 (2) Provide, within five business days of receipt, 47.5 percent of the net receipts to the
955 location owner and location operator for the cost associated with allowing the Class B
956 machines to be placed; and
957 (3) Provide, within five business days of receipt, 47.5 percent of the net receipts to the
958 operator holding the Class B master license for the cost of securing, operating, and
959 monitoring the machines.
960 (b) In each fiscal year after the implementation and certification required by subsection (a)
961 of this Code Section, the corporation's share shall increase 1 percent, taken evenly from the
962 location owner or location operator and the operator, to a maximum of 10 percent.
963 (c) The corporation shall require location owners and location operators to place all bona
964 fide coin operated amusement machine proceeds due the corporation in a segregated
965 account in institutions insured by the Federal Deposit Insurance Corporation not later than
966 the close of the next banking day after the date of their collection by the retailer until the
967 date they are paid over to the corporation. At the time of such deposit, bona fide coin
968 operated amusement machine proceeds shall be deemed to be the property of the
969 corporation. The corporation may require a location owner or location operator to establish
970 a single separate electronic funds transfer account where available for the purpose of
971 receiving proceeds from Class B machines, making payments to the corporation, and
972 receiving payments for the corporation. Unless otherwise authorized in writing by the
973 corporation, each bona fide coin operated amusement machine location owner or location
974 operator shall establish a separate bank account for bona fide coin operated amusement
975 machine proceeds which shall be kept separate and apart from all other funds and assets
976 and shall not be commingled with any other funds or assets. Whenever any person who
977 receives proceeds from bona fide coin operated amusement machines becomes insolvent
978 or dies insolvent, the proceeds due the corporation from such person or his or her estate
979 shall have preference over all debts or demands. If any financial obligation to the
980 corporation has not been timely received, the officers, directors, members, partners, or
981 shareholders of the location owner or location operator shall be personally liable for the
982 moneys owed to the corporation.
Expert:  socrateaser replied 4 years ago.
This is not an ordinary contract between private persons or the state. This is a statute that controls what is ordinarily an illegal activity (gambling). To the extent that you have an existing contract which is not subject to termination or modification by the state lottery commission, then a legislative change that would cause you to have to relinquish proceeds from a lottery where the numbers have already been drawn, then the law would be unenforceable and unconstitutional.

But, to the extent that the law operates prospectively, to future lotteries and proceeds not yet collected, there is no impairment of the contract, because your rights to those proceeds have not yet vested.

In plain English: (1) past lottery proceeds are yours according to the existing contract; (2) future lottery proceeds can be modified by legislative act.

Hope this helps.
Customer: replied 4 years ago.
Relist: Incomplete answer.
Expert:  socrateaser replied 4 years ago.
What more would you like to know?
Customer: replied 4 years ago.
class b master licensee holder is a private enterprise. i m a private businessmen. if i would like to have different contract with class b master licensee? y is tht not possible. for example it's look like if tomorrow government pass the law for cocacola that they will get 50% profit of my cocacola sales....????
Expert:  socrateaser replied 4 years ago.
I completely understand your annoyance about this law. However, I tried to explain previously that this is not an ordinary contract. It's an agreement with the state to operate what is ordinarily an illegal enterprise: gambling. CocaCola is not an illegal enterprise. It's just a soft drink. You cannot compare the operation of a lottery machine with a soft drink vending machine. The legal differences are enormous.

The first sentence of HB 487 explains the legislature's position: O.G.C.A. 50-27-70 provides "(a) The General Assembly finds that the ability to operate a bona fide coin operated amusement machine business in this state constitutes a privilege and not a right."

As a privilege, rather than a right, the State of Georgia can maintain absolute control over what lottery machine operators can and cannot do.

Once again, I completely understand the annoyance. But, the reality is that were it not for the state legislature permitting the lottery machine operation in the first place, you wouldn't be able to obtain any revenue from the machines, because they would be just as illegal as a slot machine.

There's no point in fighting this, because you will lose. Every state's laws are practically identical when it comes to lottery operations. You must either play by the state's rules, or you cannot operate a lotto machine.

Please don't punish me for explaining this to you. I have no power to change the law. All I can do is explain to you what the law is, or is not. If I could provide you with a solution that would permit you to overthrow the law, I would do so. But, it is beyond my power -- and beyond the power of any lawyer. There is no constitutional impairment of your rights.

Hope this helps.
Customer: replied 4 years ago.
i have no problem with georgia lottery i m concern with class b licensee.
Expert:  socrateaser replied 4 years ago.
Okay, I'll try to argue your case, since that's what you're apparently looking for.

In ULTRA TELECOM, INC. v. STATE, 701 S.E.2d 144 (2010), the GA Supreme Court held that bona fide amusement devices were not illegal gambling devices subject to condemnation by law enforcement. The state legislature, in response, has enacted HB 487, and now claims that ownership of such devices are a privilege rather than a right.

The constitution does not permit the state to take private property for a public purpose without paying just compensation. However, if the state does pay just compensation, then it is free to take. In the case of HB 487, the state is effectively taking the vested right of every GA citizen to operate bona fide amusement devices without paying a specific amount of the proceeds over to the state. You could argue that the new law is thus unconstitutional, because the state has not paid any compensation for the taking of your vested interests in these devices.

Of course, if the state were to actually pay you fair value for your amusement devices, then it would be able to control the use of the devices going forward. But, perhaps, if you were to win a ruling in the GA Supreme Court, the state would decide that the cost of condemning all of the devices and paying just compensation is too great, and thus decide to leave the current laws as the were before HB 487.

I hope you can put together a large group of business persons to mitigate your litigation costs, because this case will be expensive to fight.

Please let me know if I can be of further assistance.
Customer: replied 4 years ago.
well its too late right now but i will get back to u with more questions tomorrow thanks for your reply but i m not done yet...
Expert:  socrateaser replied 4 years ago.
Until then...

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