Case Title: WRG Enterprises, Inc. v. Crowell

Citation: 758 S.W.2d 214

Docket Number: 

State: tennessee

Court: Tennessee Supreme Court

Date: 1988-09-26T00:00:00Z

Document:
758 S.W.2d 214 (1988) WRG ENTERPRISES, INC., Plaintiff/Appellant, v. Gentry CROWELL, Secretary of State and W.J. Michael Cody, Attorney General of the State of Tennessee, Defendants/Appellees. Supreme Court of Tennessee, at Nashville. September 26, 1988. Harris A. Gilbert, Gilbert & Milom, Nashville, Errol Copilevitz, John P. Jennings, Jr., Copilevitz, Bryant, Gray & Jennings, P.C., Kansas City, Mo., for plaintiff/appellant. W.J. Michael Cody, Atty. Gen. & Reporter, Perry Allan Craft, Deputy Atty. Gen., Steven A. Hart, Mark Tyler Seitz, Asst. Attys. Gen., Nashville, for defendants/appellees. O'BRIEN, Justice. Plaintiff filed an application for a certificate of registration as a professional solicitor with the charitable solicitations division of the Secretary of State's Office. The application was denied. After appropriate hearings pursuant to the Administrative Procedures Act a complaint and petition for review were filed in the Chancery Court for Davidson County challenging the constitutionality of T.C.A. §§ 48-3-513(i) and 48-3-513(k). The foregoing statutes incorporate two (2) of the provisions of Tennessee's Solicitation of Charitable Funds Act, T.C.A. § 48-3-501, et seq. By agreement of the parties the case was submitted for decision in the trial court on the following written stipulation of facts: The chancellor upheld the constitutionality of the code sections in question. An appeal has been taken to this Court pursuant to T.C.A. § 16-4-108 with the sole issue being the constitutional validity of T.C.A. § 48-3-513(i) and § 48-3-513(k). The challenge mounted here is directed to purported violations of both the First and Fourteenth Amendments to the United States Constitution and Article I, Sec. 19 of the Tennessee Constitution. This Court has previously recognized that regulation of First Amendment rights is subject to exacting judicial review, as well as the duty imposed upon the State to demonstrate that any burden placed on Free Speech Rights must be justified by a compelling State interest. See Bemis Pentecostal Church v. State, 731 S.W.2d 897, 903 (Tenn. 1987). However, we reject appellant's assertion that the burden of proving the legitimacy of a statute challenged on First Amendment grounds rests on the statute's proponent. The authorities cited for this proposition are based on the imposition of injunctive restraint against free speech and the argument rests on the statement that "any system of prior restraints of expression comes to this Court bearing a heavy presumption against its constitutional validity." See Organization for a Better Austin v. Keefe, 402 U.S. 415, 91 S. Ct. 1575, 1578, 29 L. Ed. 2d 1 (1971); Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 83 S. Ct. 631, 639, 9 L. Ed. 2d 584 (1963). The burden of proof may be ameliorated to some extent by the strict scrutiny test imposed in First Amendment cases however that burden as well as the burden of persuasion remains with the *216 challenger. This rule prevails even though "A law that impinges upon a fundamental right explicitly or implicitly secured by the Constitution is presumptively unconstitutional." City of Mobile, Alabama v. Bolden, 446 U.S. 55, 100 S. Ct. 1490, 64 L. Ed. 2d 47 (1980). Nonetheless, statutes should be construed whenever possible so as to uphold their constitutionality. United States v. Vuitch, 402 U.S. 62, 91 S. Ct. 1294, 28 L. Ed. 2d 601 (1971). Also see Fritts v. Wallace, 723 S.W.2d 948, 949 (Tenn. 1987). We look first to the constitutionality of T.C.A. § 48-3-513. This code section spells out certain restraints imposed by the Solicitation of Charitable Funds Act and contains a series of regulatory provisions. Subsection (i) specifically mandates that "Telephone solicitations shall not be made by any professional solicitor or his agent, servant, or employee in any manner whatsoever." The United States Supreme Court decisions involving First Amendment limitations on prohibitions against the solicitation of contributions by charitable organizations have been synthesized in three recent cases. Village of Schaumburg v. Citizens for a Better Environment, et al, 444 U.S. 620, 100 S. Ct. 826, 63 L. Ed. 2d 73 (1980); Secretary of State of Maryland v. Joseph H. Munson Company, Inc., 467 U.S. 947, 104 S. Ct. 2839, 81 L. Ed. 2d 786 (1984); Riley v. National Federation of the Blind of North Carolina, ___ U.S. ___, 108 S. Ct. 2667, 101 L. Ed. 2d 669 (1988). There is not any specific reference to telephone solicitations by professional solicitors of contributions on behalf of charitable organizations in any of these three cases. Appellant informs us that there have been only two published cases which have directly considered that prohibition. The North Carolina Legislature enacted a statute making it a misdemeanor to solicit contributions for charities by telephone. In Optimist Club of North Raleigh v. Riley, 563 F. Supp. 847 (E.D.N.C. 1982) the federal district court, citing Village of Schaumburg v. Citizens, supra, struck down the statute, rejecting defendant's assertion that it was narrowly tailored to prevent fraud by regulating the type and manner of charitable solicitations. The court held: In Planned Parenthood League v. Attorney General, 391 Mass. 709, 464 N.E.2d 55 (1984), cert. denied 469 U.S. 858, 105 S. Ct. 189, 83 L. Ed. 2d 122 (1984), the Massachusetts Court reasoned as follows: In the three cases mentioned heretofore, Schaumburg involved an ordinance prohibiting door-to-door or on street solicitation of contributions by charitable organizations. Munson was a suit brought by a professional fund raiser for declaratory and injunctive relief challenging a twenty-five percent (25%) limit on charitable fund raising expenses imposed by a Maryland statute. Riley was initiated by a coalition of professional fund raisers, charitable organizations and potential charitable donors seeking injunctive and declaratory relief from a provision of the North Carolina Charitable Solicitations Act prohibiting professional fund raisers from retaining an unreasonable or excessive fee. In each *217 case the restrictive legislation was struck down by the courts. As we have noted none of the three dealt directly with telephone solicitation. However, in a discussion of compelled disclosure by professional fund raisers, the Riley court implicitly included solicitation by telephone within First Amendment proscription against legislative limitation on charitable contribution solicitation. The court said, "..., in the context of a verbal solicitation, if the potential donor is unhappy with the disclosed percentage, the fund raiser will not likely be given a chance to explain the figure; the disclosure will be the last words spoken as the donor closes the door or hangs up the phone." 108 S. Ct. at 2679. (Emphasis supplied). The State recognizes that both Schaumburg and Munson, supra, stand for the proposition that some charitable solicitations are so intertwined with speech that they are entitled to the strictest protections of the First Amendment. Fundamentally they rely on the dissenting opinion in Munson and the opinion of the chancellor in the court below to defend the code sections questioned here. They argue that although the chancery court agreed that the Telephone Solicitation Statute restricted protected speech, it upheld the statute as a valid time, place or manner regulation serving a significant governmental interest, leaving open ample opportunities for alternative channels of communications. The chancery decree stated in pertinent part: In regard to the chancellor's finding that the statutory prohibition on telephone solicitation by professional solicitors is a valid time, place or manner regulation serving significant governmental interests, we are persuaded by the reasoning of the Massachusetts court in Planned Parenthood, supra. Furthermore, there has been no showing that this appellant has engaged in fraudulent practices in this or any other State. Nor has there been any showing that the statute as written provides any direct deterrence to fraud in any respect. "Mere speculation does not constitute a compelling state interest." Consolidated Edison Company v. Public Service Commission of New York, supra. Prohibition of telephone solicitations is not the least restrictive means available to the State in seeking to protect its citizens from fraud. "Where, as here, a statute imposes a direct restriction on protected First Amendment activity, and where the defect in the statute is that the means chosen to accomplish the State's objectives are too imprecise, so that in all its applications the statute creates an unnecessary risk of chilling free speech, the statute is properly subject to facial attack." Munson, supra, 104 S.Ct. p. 2852. Commission of a fraudulent act is punishable as a felony and as a misdemeanor under T.C.A. § 48-3-515. The Charitable Solicitations Act requires that all charitable organizations provide information relative to their fund raising activities directly to the Secretary of State. T.C.A. § 48-3-504. It is clear that insofar as it prohibits telephone solicitations by professional solicitors T.C.A. § 48-3-513(i) is unconstitutional and in violation of the First and Fourteenth Amendments to the United States Constitution and Article I, §§ 8 and 19 of the Tennessee Constitution. In regard to the constitutional validity of T.C.A. § 48-3-513(k), this section provides: It is appellant's position that the solicitation of funds is a form of free speech subject to overbreadth analysis. It is argued that this particular code section is overbroad and violates constitutional provisions securing that right. The State on the other hand says that appellant's view that the statutory limitation on the fee of a professional solicitor impinges upon the free speech rights of charitable organizations is a fundamental misconception. They take the position that the percentage limitation operates only as a limitation upon the compensation of a professional solicitor in business for profit which satisfies a rational basis analysis. The State calls to our attention a number of cases which pre-date Schaumburg, Munson and Riley. We conclude that their earnest protestation in support of the statute is to no avail. In Munson, the court established the right of the professional fund raiser to bring the action although there was no claim that its own First Amendment right had been infringed by the challenged statute. It held that the Maryland act which prohibited a charitable organization from paying expenses of more than twenty-five percent (25%) of the amount raised in connection with any fund-raising activity was substantially overbroad and subject to facial attack. In this case the State also relies on the findings of the chancellor to sustain their position in reference to this challenge. The chancellor endeavored to distinguish the statutes at issue in Schaumburg and Munson from the Tennessee statute in these words: We do not interpret the decisions of the United States Supreme Court in that light. In response to similar assertions the Riley court had this to say: The Riley case stands for the proposition that a percentage based regulation upon the fees to be collected by professional solicitors is an unconstitutional invasion upon the First Amendment rights of charities and fund raisers alike. The Tennessee statute falls within the ambit of that proscription. T.C.A. § 48-3-513(k) violates the First and Fourteenth Amendments to the United States Constitution and sections 8 and 19 of Article I of the Constitution of Tennessee. The judgment of the chancery court is reversed. The case is remanded for any further proceedings necessary consistent with this opinion and for the collection of costs which are assessed equally between the parties. HARBISON, C.J., and FONES, COOPER and DROWOTA, JJ., concur.