NO. 3072

ARTICLE 1&15a,REVISED CIVIL STATUTES,HELD

UNCONSTITUTIONAL

Opinion construingArticle 1415a, Revised Civil Statutes, and holding:

Art. 1415a,R.C.S.,which requires commercial collegesorganized after its passage in 1929 to give a bond, and exempting from Its provisions all commercial collegesthen in existence, is unconstitutional.

OFFICE OF THE ATTORNEY GENERAL

July 13, 1939

Hon. Tom L. Beauchamp Secretary of State Austin, Texas

Dear Sir: OpinionNo. O-912 Re: Art. 1415a,R.C.S., which requires commercial collegesorganized after its passage in 1929 to give a bond, and exempting from its provisions all commercialcolleges then in existence, is unconstitutional.

Your letter of June 1, 1939 received. You submit the following question:

"Is that portion of Article 1415a unconstitutional in requiring a suretybond.to be executedby business colleges formed after the passage of said Act and exemptingbusiness colleges alreadg doing business from giving of suchbond?"

In order to properly construe saidprovision of the statute, we deem it wise to s!:ate the effect of the entire article from which the aboveprovision is taken.
Article 1415a of the Revised Statutes was passed in 1929.. .

Hon. Tom L. Beauchamp, 

### July 13, 1939,Page2.

Section 1 thereof provides that any person, partnership, association or corporationwhichmay desire to open a Commercial College, or to establish a branch college or school in this State for the purpose of teachingbookkeeping, stenography, typing, telegraphy, and other courseswhich are usually taught in Commercial Colleges, shall first apply to the Secretary of State for a permit.
Section 2 of said Articleprovides that before the Secretary of State shall issue suchpermit,he shall require a bond in the sum of ten thousand dollars, signedby a solventguaranty company,payable to the County Judge of the County in which the college is to be opened, 'conditionedthat the principal In said bond will carry out and complywith each and all contracts, eitherverbal or written,made and entered into by said college, or branch college or school,actingby and through its officers or agents, with any studentwho desires to enter such college and to take any course in commercialtraining, and to pay back to such studentall amounts collected for tuition and fees in case of failure on the part of the parties obtaining a permit from the Secretary of State to open and conduct a Commercial College or branch college or school, to complywith Its contracts to give the instructioncontracted for, and for the full period evidencedby such contract." Section 

### 3 of said Articleprovides that in any and all caseswhere the party receiving the permit fails to comply with any contractmade with any student,parents or guardian of such student, such studentor his parents or guardian shall have a cause of action against the sureties on the bond for the full amount of the paymentsmade to such person, with 109 interest from the date of the payment, and for reasonable attorney's fees for institutingand prosecuting such suit.
Section 

### 5 of said Articleprovid.es that the provisions of this Act shall not apply to any University, College or regular High School which has heretofore adopted or which may hereafter adopt one or more commercial coursesnor to any Commercial Collegeheretofore establIshed.

From a careful reading of said statute as a whole, it appears that a commercial college that was In existence at the time the law Iaras

passed is exempt from executing any bond; while a commercial college organizedthereaftermust execute the bond.
The Constitutionprovides that all persons have equal privileges and rights. No law can be passed whfch gives one class of persons an advantageover a similar class. Our courts have universallyheld that where the Legislature attenrgts to discriminate and exclude any class from the provisions of a law, there must be a reasonablebasis therefor.
The only basis for the discrimination in the statute inHon. Tom L..Beauchamp,July 

### 13, 1939, Page 3.

question Is one of time. A commercial college in existenceat the time the law went into.effect could contlntie in business for sn indefiniteperiod of time and violate any and all of its contracts that it saw fit. The only penalty that it would sufferwould be a suit at the hands of the Injuredparty;and upon a recovery it would be required to pay the judgment and 6s interest thereon. Under Article 1&15a, all those who engaged in the commercial collegebusiness after Its enactmentwere required to execute a ten thousand dollar bond, and In the event they failed to complywith their contract, the injuredparty could recoverhis damage,plus 10% interest,plus reasonable attorney's fees.
The commercial college In each instancewould be performing Identicallythe same class-of education,using the same grade of teachers,with the same qualificationsand having the same financial standingor backing, time alonebeing the factor on which the classificationwas built. No reason couldbe assignedwhy a commercial college that was existing in 1929 should be immune from a law which required those established after said date to execute a bond requiring the contractsmade with their students to be compliedwith.

In crder for the courts to sustain the constitutionality of any law, there must be such a reasonablebasis for the classlficatlon,that it will not violate the constitutionalprovisiti against granting exclusiveprivileges and immunities.
The question of class legislationhas been a source of much litigation in the United States. Generally speaking,the constitutionalityof a lawmust be governedby the peculiar facts, conditions, and circumstancessurroundingthe purpose to be accomplishedor the evil to be remedied. It would be useless, we think, to enter into an extended discussion of the various Acts by the legislativebodies and cite the various authorities,and attempt to reconcile same.
In Ex Parte Baker, 78 S.W. (2d)610, the Court of Criminal Appealsheld unconsitutionalan ordinance passed by the City of Temple, which in effectprohibited a person from selling goods upon the streets of Temple without first obtaining a license therefor, and exempting from the provisions of said ord~inance all those who had a permanentplace of business within said City.. The court stated:

"An ordinancewhich attempts to distinguish between persons engaged in the same or likebsiness merely on the basis of their residence or the location of their business house is in contraventionof Section 19, Article 1, of the Constitution,which read.8,'No citizenof this state shallbe deprived of life, liberty,property, privileges, or immunities, or in anymanner disfranchised, except by the due course of the law of the land."'Hon. Tom L. Beauchamp, July 

### 13, 1939, Page 4.

In Ex Parte Drelbelbls, 109 S.W. (2d)

### 476,the Court of CriminalAppeals held Invalid,because it violated the Constitution, an ordinancepassed by the City of Glen Rose under the terms of which said City levieda tax upon every temporary merchant doing business In the City and exempting therefrom all merchants who had been engaged in business for as much as twelvemonths prior thereto. The court stated:

"Thatthe ordinance in question Is dlscrlmlnatory Is clearlydemonstratedby the fact that a person who has been engaged In one of the designated businesses in said City for a year ormore is exempt from the payment of the tax, while anotherperson who has not been so engaged for such lengthof time Is subject to the payment of the tax, and for his failure to d.oso,punishableby fine, althoughboth partiesmay be engaged In the samekind of business, carrying the same kind and the ssme amount of merchandise. If this is not discrimination,then what is it?

"Anordinancewhich attempts to distinguish between persons engaged In the same or likebuslnesses,merely on the basis of the length of time each is engaged In the business, is In contravention of Sections 

### 3 and 19 of Article I of the Constltution."

In United States Automobile Service Club vs. Van Winkle, 274 Pac. 

### 308, the Supreme Court of Oregon held unconstitutional a statutewhich provided that no automobile service club could obtain a license to transactbusiness in that State without posting's twenty-five thousand dollar cashbond, because it exempted from the provisions thereof all automobile service clubs that had been in operation in Oregon for a period of more than fiveyears and that had a paid membership of more than five thousand within the state. The court stated:

"We canperceive no substantialdistinction between a corporationwhich has been engaged In business for more than fiveyears, and one which has been engaged in business for fouryears or between a corporationwhich_Jhas contractedwith more than five thousand persons and one which has contracted with only three thousand fivehundred persons. They are all engaged in the samepursuit, and at the same time and place and under identically similar conditions. They enter Into a form of contractwhich must first be approvedby the State InsuranceCommissioner, and they all engage to perform the same kind of service. What basis, therefore, can there be for any discriminationbetween them? The Act does not attempt to regulate the fees they are to charge,nor does it contain any reference to the extent of their obligations and liabilities. It recognizes only the length of time they have been engaged in business Andy

the volume of business transacted.. .

Hon. Tom L. Beauchamp, July 13, 1939, Page 5.
Neither of these thingsbears any relationshipto the objects and purposes of the statute. If any distinction Is to be made, itwould seem that the necessity for requiring a bond from the corporation doing the larger volume of business would be greater than from one doing a less volume. It Is elementary that persons engaged In the samepursuit at the same time and place and under like conditions are entitled to be governedby a general law applicableto all who are so engaged.

II

... In order that a statute-bevalid which contains a classificationof persona or things for the purpose of legislation, such classificationmust be a reasonable one andmust be based on real distinctions in the subjectmatter which bears some relationship to the objects sought to be accomplished by the statute.

,I

...The classificationprovided for by the Act is not founded upon any substantialdifferencebetween the two classesprovided for. It denies the plaintiff the equal protection of the law by imposing upon plaintiff a burden which Is not Imposed upon one of plaintiff's competitorswhich is engaged in the samepursuit at the same time and under like circumstances,and thereforeviolates the Fourteenth Amendment of the Federal Constitution. It also contravenes Article I, Section 20, in that it grants to others 'privilegesor immunitieswhich upon the same terms, shall not equallybelong to all citizens."
12 Am.Jur. 

### 165 tersely states the correct rule as follows:

"A statute containinga classificationwhich attempts to give an economic advantage to those engaged in a business at an arbitrary date as against all those who enter the industry after that date is not a regulation of a business in the interest of the public, and unless otherwise shown to affect the public welfare in a manner which will create some reasonable basis for the distinction, is arbitrary and unreasonable."
Since the Article gives to those who were engaged in the business of operating a commercial college at the time the law was passed privileges and immunitiesthat are not given to those who establish a commercial college after the Act was passed.,same is, in our opinion, unconst itu%ional.

Yours very truly

ATTORNEY GENERAL OF TEXASHon. Tom L. Beauchamx July 13, 1939, Page 6.

George W. Barcus

Assistant

GWB:PBP This opinionhas been considered In conference,approved, and ordered recorded.

W. F. Moore First Asslrtszk

Attorney General of Texas