TRADING STAMPS ‑- REDEEMABLE IN MERCHANDISE ‑- APPLICABILITY OF LICENSING REQUIREMENTS

TRADING STAMPS ‑- REDEEMABLE IN MERCHANDISE ‑- APPLICABILITY OF LICENSING REQUIREMENTS.

The licensing requirements of chapter 36.91 RCW apply to a retail store which (1) issues trading stamps redeemable in Washington in cash only, but (2) through its employees informs its customers that such stamps can be redeemed for merchandise in another state and (3) in which state they are in fact redeemable.

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                                                               November 29, 1961

Honorable John H. Happy
State Senator, 6th District
311 Paulsen Building
Spokane, Washington

                                                                                                                Cite as:  AGO 61-62 No. 80

Dear Sir:

            By letter previously acknowledged you have requested the opinion of this office on a question which we paraphrase as follows:

            Do the licensing requirements of chapter 36.91 RCW apply to a retail store which (1) issues trading stamps redeemable in Washington in cash only, but (2) through employees, tells its customers that such stamps can be redeemed for merchandise in another state where, in fact, they are so redeemable?

            We answer your question in the affirmative.

                                                                     ANALYSIS

            The facts as you have outlined them are these: Ordinary trading stamps are being distributed by various retail outlets on the basis of so many stamps per purchase.  As the stamps are distributed, the store employees tell the customers to save the stamps and take them to the Idaho redemption store and redeem them for merchandise premiums.

            We assume, for purposes of this opinion, that the stamps are in fact redeemable in Idaho for merchandise, and that the statements made by the employees constitute store policy, and confine our opinion to the facts as outlined here.

            Since a violation of the statute in question can result in penal  [[Orig. Op. Page 2]] sanctions it may be well to note here that such statutes are to be strictly construed.  However, our court inState v. Rinkes, 49 Wn. (2d) 664, 667, 306 P. (2d) 205 (1957) admonishes:

            "Strict construction of a penal statute means merely that the punitive sanctions must be confined to such matters as are clearly and manifestly within the statutory terms and purposes.  It does not mean that a forced, narrow, and overstrict construction should be applied to defeat the obvious intent of the legislature. . . ."

            The provisions of RCW 36.91.010 require:

            "Every person who uses, . . . in, with, or for the sale of goods, any trading stamps, . . . which entitle the purchaser to procure any goods free of charge or for less than the retail market price thereof, upon the production of any number of such trading stamps, . . . shall before . . . using the same obtain a separate license from the auditor of each county . . . in which such using shall take place."

            From the plain wording of the statute it is clear that the use of trading stamps redeemable for merchandise is prohibited unless the proper license is obtained.  It makes no mention of who must redeem the stamps in order for the provisions to apply, or where the redemption must take place.  The only condition other than being used, "with or for the sale of goods," is that the stamps "entitle the purchaser to procure any goods free of charge or for less than the retail market price."

            Very early the attorney general's office was called upon to construe this section, (§ 1, chapter 134, Laws of 1913, now RCW 36.91.010, supra) and in AGO 792 [[1915-16 OAG 282]]to the Prosecuting Attorney of Skagit County, A. R. Hilen, April 27, 1916, it was construed as prohibiting theuse of trading stamps in Washington redeemable in merchandise elsewhere, without the proper license.

            The precise question involved in AGO 792 [[1915-16 OAG 282]],supra, was this:  Could the retailer be held criminally liable for distributing coupons which were placed upon merchandise by the manufacturer and which were then redeemed out of state by the manufacturer?  This office interpreted the statute as applying as follows:

             [[Orig. Op. Page 3]]

            ". . . the use of any device which shall directly or indirectly enable the holders of coupons, secured with the sale of goods, to have the same redeemed in 'goods, wares or merchandise', either 'free of charge or for less than the retail market price thereof' would be a violation of the statute, although such coupons are also redeemable in cash."

            and:

            ". . . the retailer would be liable under the statute for the use of the coupons whether or not he has anything to do with redemption of the coupons . . ."

            The writer later qualified this conclusion by requiring "scienter" or knowledge that the coupons could be redeemed for merchandise, and then concluded:

            ". . . you are therefore advised that a retailer is subject to criminal prosecution for violation of the statute regardless of his participation in the redemption of the coupons."

            In 1939 the legislature amended the trading stamp statute by providing for an original package exception.  (See, RCW 36.91.040 and § 1, chapter 31, Laws of 1939.)  This was to protect the local merchants from the penalties of the act in cases in which they sold merchandise containing stamps placed in or on the cartons by the manufacturer.  The inescapable conclusion is that the legislature recognized that the statute prohibited theuse of stamps redeemable for merchandise regardless of where they were redeemed (unless licensed) and wished to make an exception to this prohibition.  Thus it excepted from the penalties of the act all stamps contained in or on a manufacturer's carton leaving all others subject to the provision.  This exception does not destroy the basic interpretation of RCW 36.91.010 as set forth in AGO 792 [[1915-16 OAG 282]], supra.  The exception covers only original package stamps and does not cover the facts under question here.

            We therefore conclude that the legislature must have intended that any retailer who issues trading stamps, with the express direction to his customers to redeem them for merchandise outside the state, where they are in fact so redeemable, should be subject to the licensing  [[Orig. Op. Page 4]] provisions of chapter 36.91 RCW.

            We hope the foregoing has been of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

BRUCE W. COHOE
Assistant Attorney General