Source: https://www.legalcrystal.com/case/99205/morey-vs-doud
Timestamp: 2017-07-23 09:23:55
Document Index: 396995431

Matched Legal Cases: ['§ 1253', '§ 32', '§ 34', '§ 34', '§ 31', '§ 218']

Morey Vs Doud - Citation 99205 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Morey Vs. Doud - Court Judgment	LegalCrystal Citationlegalcrystal.com/99205CourtUS Supreme CourtDecided OnJun-24-1957Case Number354 U.S. 457AppellantMoreyRespondentDoudExcerpt:
morey v. doud - 354 u.s. 457 (1957)
the illinois community currency exchanges act provides for the licensing, inspection, bonding, and regulation of "currency exchanges" engaged in the business of issuing or selling money orders. it forbids them to do business on the premises of any other business, but it exempts from all of its provisions money orders sold or issued by the american express co., an old, established, worldwide enterprise of unquestioned solvency and high financial standing, which..... Judgment:
application of the Act to appellees denies them the equal protection of the laws guaranteed by the Fourteenth Amendment. Pp.
354 U. S. 458
(a) The Equal Protection Clause does not require that every state regulatory statute apply to all in the same business, but a statutory discrimination must be based on differences that are reasonably related to the purposes of the statute.
(b) Moreover, a discrimination cannot be justified by different business characteristics when it has no reasonable relation to those differences.
354 U. S. 466
(c) The discrimination in favor of the American Express Co. here involved does not have a reasonable relation to the purposes of the Act, or to different business characteristics. Pp.
(d) The effect of the discrimination here involved is to create a closed class by singling out American Express money orders for exemption from the requirements of the Act. Pp.
354 U. S. 467
(e) The exemption of its money orders gives the American Express Co. important economic and competitive advantages over appellees. Pp.
354 U. S. 468
(f) Taking these factors in conjunction, application of the Act to appellees deprives them of equal protection of the laws. P.
354 U. S. 469
(g) This case need not be remitted to the Illinois courts for a determination whether the exception can be severed from the Act under its severability clause, because the Supreme Court of Illinois has indicated rather clearly that the exception is not severable. Pp.
This case concerns the validity of a provision in the Illinois Community Currency Exchanges Act, as amended, [
] excepting money orders of the American Express Company from the requirement that any firm selling or issuing money orders in the State must secure a license and submit to state regulation. The objection raised is that this exception results in a denial of equal protection of the laws, guaranteed by the Fourteenth Amendment to the Constitution of the United States, to those who are subjected to the requirements of the Act. For the reasons hereafter stated, we hold that the Act is invalid as applied to them because of this discriminatory exception.
and Derrick, their agent. The partnership has an exclusive right to sell "Bondified" money orders in Illinois, directly or through agents. [
] It contemplates selling these money orders in Illinois through agents principally engaged in operating retail drug or grocery stores. Derrick is the proprietor of a drug store in Illinois, and operates a "Bondified" agency in that store.
After hearing evidence, the District Court dismissed the complaint on the ground that it lacked jurisdiction to determine the constitutional question in the absence of an authoritative determination of that question by the Supreme Court of Illinois.
Doud v. Hodge,
127 F.Supp. 853. On appeal, this Court held that the District Court erred in dismissing the case for lack of jurisdiction, and remanded it to the District Court.
the Act violated the Equal Protection Clause, and that appellees were entitled to the relief sought. 146 F.Supp. 887. [
] The decree enjoined appellants from enforcing the Act against appellees so long as they engage only in the business of issuing and selling money orders. The case came here on direct appeal under 28 U.S.C. § 1253, and we noted probable jurisdiction.
352 U.S. 923.
This Act and its amendments provide a comprehensive scheme for the licensing and regulation of currency exchanges. The operation of a community currency exchange without a license is made a crime. § 32. An applicant for a license must submit specified information and pay an investigation fee of $25. § 34. A license cannot be issued unless the State Auditor determines that its issuance will "promote the convenience and advantage of the community in which the business of the applicant is proposed to be conducted. . . ." § 34.1. [
] A surety bond of between $3,000 and $25,000, and an insurance policy of between $2,500 and $35,000 must be
"'Community currency exchange' means any person, firm, association, partnership or corporation, except banks incorporated under the laws of this State and National Banks organized pursuant to the laws of the United States, engaged at a fixed and permanent place of business, in the business or service of, and providing facilities for, cashing checks, drafts, money orders, or any other evidences of money acceptable to such community currency exchange, for a fee or service charge or other consideration,
or engaged in the business of selling or issuing money orders under his or their or its name, or any other money orders
United States Post Office money orders,
American Express Company money
order[s]
Postal Telegraph Company money orders, or Western Union Telegraph Company money orders), or engaged in both such businesses, or engaged in performing any one or more of the foregoing services."
(Emphasis supplied.) § 31. [
In determining the constitutionality of the Act's application to appellees in the light of its exception of American Express money orders, we start with the established proposition that the "prohibition of the Equal Protection Clause goes no further than the invidious discrimination."
. The rules for testing a discrimination have been summarized as follows:
Hartford Steam Boiler Inspection & Insurance Co. v. Harrison,
301 U. S. 462
The purpose of the Act's licensing and regulatory provisions clearly is to protect the public when dealing with currency exchanges. [
] Because the American Express Company is a worldwide enterprise of unquestioned solvency and high financial standing, the State argues that the legislative classification is reasonable. It contends that the special characteristics of the American Express Company justify excepting its money orders from the requirements of an Act aimed at local companies doing
local business, [
] and that appellees are in no position to complain about competitive disadvantages, since the "Fourteenth Amendment does not protect a business against the hazards of competition," citing
That the Equal Protection Clause does not require that every state regulatory statute apply to all in the same business is a truism. For example, where size is an index to the evil at which the law is directed, discriminations between the large and the small are permissible. [
] Moreover, we have repeatedly recognized that "reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind."
. On the other hand, a statutory discrimination must be based on differences that are reasonably related to the purposes of the Act in which it is found. [
, involved a state statute which required motor vehicles, operating on local highways as carriers for hire, to furnish bonds or insurance policies for the protection of the public against injuries received through negligence in these operations. Acts Fla. 1929 c. 13700. The Act excepted motor vehicles carrying specified products. This Court held that
the exception violated the Equal Protection Clause, since the statutory purpose of protecting the public could not reasonably support a discrimination between the carrying of exempt products like farm produce and of regulated products like groceries. "Such a classification is not based on anything having relation to the purpose for which it is made."
Of course, distinctions in the treatment of business entities engaged in the same business activity may be justified by genuinely different characteristics of the business involved. [
] This is so even where the discrimination is by name. [
] But distinctions cannot be so justified if the "discrimination has no reasonable relation to these differences."
301 U. S. 463
. In that case, this Court held that a state statute which permitted mutual insurance companies to act through salaried resident employees, but which excluded stock insurance companies from the same privilege, violated the Equal Protection Clause.
The principles controlling in the
are applicable here. The provisions in the Illinois Act, such as those requiring an annual inspection of licensed community currency exchanges by the State Auditor, make it clear that the statute was intended to afford the public continuing protection. The discrimination in favor of the American Express Company does not conform to this purpose. The exception of its money
The effect of the discrimination is to create a closed class by singling out American Express money orders. The singling out of the money orders of one company is, in a sense, the converse of a case like
Cotting v. Kansas City Stock-Yards Co.,
183 U. S. 114
See also, McFarland v. American Sugar Refining Co.,
case this Court held that a regulatory statute that in fact applied to only one stockyard in a State violated the Equal Protection Clause. Although statutory discriminators creating a closed class have been upheld, [
. The statute involved in that case granted a differential from the regulated price at which dealers could sell milk to those dealers in a specified class who were in business before April 10, 1933.
Unlike the American Express Company, appellees and others are barred from selling money orders in retail establishments. Even if competing outlets can successfully be established as separate businesses, their ability to secure licenses depends upon a showing of "convenience and advantage." Perhaps such a showing could not be made because the unregulated American Express Company had already established outlets in the community. And even if licenses were secured, the licensees would be required to pay licensing and investigatory fees and purchase surety bonds and insurance policies -- costs that the American Express Company and its agents are not required to bear. [
] The fact that the activities of the American Express Company are far-flung does not minimize the impact on local affairs and on competitors of its sale of money orders in Illinois. This is not a case in which the Fourteenth Amendment is being invoked to protect a business from the general hazards of competition.
Taking all of these factors in conjunction -- the remote relationship of the statutory classification to the Act's purpose or to business characteristics, and the creation of a closed class by the singling out of the money orders of a named company, with accompanying economic advantages -- we hold that the application of the Act to appellees deprives them of equal protection of the laws. [
a procedure is otherwise appropriate, [
] we doom it unnecessary here, since the Supreme Court of Illinois has indicated rather clearly that the exception is not severable. [
] The State also contends that appellees do not come into court with clean hands and have not demonstrated the imminence of irreparable injury, and hence that they are not entitled to equitable relief. These arguments are adequately disposed of in the opinion of the District Court. [
In so holding, the District Court declined to follow the Supreme Court of Illinois in sustaining the Act against a similar attack.
McDougall v. Lueder,
389 Ill. 141, 58 N.E.2d 899. It accepted instead the precedent of a three-judge Federal District Court in Wisconsin which had held unconstitutional an identical provision of a Wisconsin statute. St.1947, § 218.05.
Currency Services, Inc., v. Matthews,
90 F.Supp. 40.
See Gadlin v. Auditor of Public Accounts,
414 Ill. 89, 110 N.E.2d 234.
Appellees do not question the exception from the Act of the money orders of the United States Post Office, the Postal Telegraph Company, and the Western Union Telegraph Company. In
Currency Services, Inc. v. Matthews,
90 F.Supp. 40, 43, a three-judge District Court upheld the exception of these money orders from a similar Wisconsin statute. The court concluded that the State was without authority to regulate the sale of the United States Post Office money orders, and that the exception of Western Union money orders was reasonable, since that company was regulated both by the Federal Communications Commission and by a state commission. It noted that the Postal Telegraph Company has merged with the Western Union Telegraph Company.
See McDougall v. Lueder,
389 Ill. 141, 149-150, 58 N.E.2d 899, 903-904;
Willis v. Fidelity & Deposit Co.,
345 Ill.App. 373, 384-385, 103 N.E.2d 513, 518-519.
389 Ill. 141, 151, 58 N.E.2d 899, 904.
See Engel v. O'Malley,
219 U. S. 138
(exception of businesses in which the average sum received for safekeeping or transmission was more than $500 from licensing requirements intended to protect the small depositor);
see also New York, N.H. & H. R. Co. v. New York,
(exception of railroads less than 50 miles in length from a statute regulating the heating of railroad passenger cars and the placing of guards and guard posts on railroad bridges);
(exception of hotels with less than 50 rooms from a statute requiring hotelkeepers to take certain fire precautions).
See German Alliance Ins. Co. v. Lewis,
(exception of farmers' mutual insurance companies doing only farm business from a statute establishing rate regulation for fire insurance companies);
(different regulatory requirements for reciprocals and mutual companies).
See Erb v. Morasch,
(exception of a named railroad from an ordinance limiting the speed of trains in a city);
cf. Williams v. Mayor,
See Watson v. Maryland,
(exception of physicians who practiced prior to a specified date and treated at least 12 persons within a year prior thereto from examination and certificate requirements);
166 La. 776, 117 So. 827,
279 U.S. 812 (exception of existing business establishments from a zoning restriction);
(exception of carriers which had furnished adequate, responsible and continuous service over a given route from a specified date in the past from the requirement of showing public convenience and necessity to secure a license).
See Currency Services, Inc. v. Matthews,
90 F.Supp. 40, 44, note 2, to the effect that costs such as these may be prohibitive.
Wedesweiler v. Brundage,
297 Ill. 228, 130 N.E. 520, the Supreme Court of Illinois held that the Equal Protection Clause was violated by a statute which excepted express, steamship and telegraph companies from its prohibition against the transmission of money to foreign countries by natural persons, firms or partnerships. That court concluded that the discrimination
297 Ill. at 237, 130 N.E. at 523.
See also State on inf. of Taylor v. Currency Services, Inc.,
358 Mo. 983, 218 S.W.2d 600.
case was distinguished by the Supreme Court of Illinois in
389 Ill. 141, 150, 58 N.E.2d 899, 904, on the ground that in the earlier case the regulated firms were "in direct competition" with the excepted companies. Apparently the court treated the regulated firm in the
case as not being in direct competition with the American Express Company, since the firm was engaged in the business of cashing checks, as well as in that of selling money orders, while the American Express Company merely sold money orders. Such a distinction is not involved in the facts of this case, and we express no opinion on it.
See Guinn v. United States,
238 U. S. 380
389 Ill. 141, 151, 58 N.E.2d 899, 904, the Supreme Court of Illinois stated that
As the question of severability is a question of state law, the judgment of the Supreme Court of Illinois is binding here.
Chas. Wolff Packing Co. v. Court of Industrial Relations,
See Doud v. Hodge,
146 F.Supp. 887, 889-890.
of unquestioned solvency and high financial standing." I cannot agree with the Court that this exemption denies actual and potential competitors of the American Express Company equal protection of the laws within the meaning of the Fourteenth Amendment. Only recently, this Court held that "[t]he prohibition of the Equal Protection Clause goes no further than the invidious discrimination."
. And here, whatever one may think of the merits of this legislation, its exemption of a company of known solvency from a solvency test applied to others of unknown financial responsibility can hardly be called "invidious." Unless state legislatures have power to make distinctions that are not plainly unreasonable, then the ability of the States to protect their citizens by regulating business within their boundaries can be seriously impaired. I feel it necessary to express once again my objection to the use of general provisions of the Constitution to restrict narrowly state power over state domestic economic affairs. [
I think state regulation should be viewed quite differently where it touches or involves freedom of speech, press, religion, petition, assembly, or other specific safeguards of the Bill of Rights. It is the duty of this Court to be alert to see that these constitutionally preferred rights are not abridged. [
] But the Illinois statute here
my dissents in
320 U. S. 462
332 U. S. 79
Cf. Tigner v. Texas,
83 U. S. 81
Cf. Kotch v. Board of River Port Pilot Comm'rs,
332 U. S. 647
The controlling importance of the difference in approach to a problem arising under the Equal Protection Clause is sharply illustrated by one's view of the decisions in cases like
. The Court relies on them. For me, they are false leads. Both these decisions prevailed by the narrowest margin; both evoked powerful dissents; both manifest the requirement of nondiscriminatory classification as an exercise in logical abstractions. They breathe the spirit of decisions like
, which were respectively overruled in
. The last two cases heeded the admonition that
Louisville and Nashville R. Co. v. Barber Asphalt Co.,
In regulating its banking facilities, Illinois was drawing on one of the oldest and most far-reaching of legislative powers. The public needs to be protected in the issuing and selling of money orders, and people with limited means are especially to be safeguarded. If Illinois chose, the State itself could take over the money order business.
See Noble State Bank v. Haskell,
. Just as it was found that there was nothing in the Constitution of the United States to bar a State from engaging in the businesses of manufacturing and marketing farm products and of providing homes for its people,
, so, surely, there is nothing to prevent Illinois from engaging in this business directly, or through a money dispensary similar to the mode by which some States engage in the liquor business. I know of nothing in the Fourteenth Amendment that would bar the State from discharging its responsibility to
But it is suggested that the American Express Co. may not continue to retain "its present characteristics," while sellers of competing money orders may continue to be subject to the Act, even though their characteristics become "substantially identical with those the American Express Co. now has." What is this but to deny a State the right to legislate on the basis of circumstances that exist because a State may not, in speculatively different circumstances that may never come to pass, have such right? Surely there is time enough to strike down legislation when its constitutional justification is gone. Invalidating legislation is serious business, and it ought not to be indulged in because, in a situation not now before the Court nor even remotely probable, a valid statute may lose its foundation. The Court has had occasion to deal with such contingency more than once. Regulatory measures have been sustained that later, in changed circumstances, were found to be unconstitutional.
with Newton v. Consolidated Gas Co.,
and Block v. Hirsh,
with Chastleton Corp. v. Sinclair,
207 U. S. 355
-356. It is true, no doubt, that, where size is not an index to an admitted evil, the law cannot discriminate between the great and small. But, in this case, size is an index.
. Neither the record nor our own judicial information affords any basis for concluding that Illinois may not put the United States Post Office, the Western Union Co., and the American Express Co. in one class and all the other money order issuers in another. Illinois may not the less relieve the American Express Co. from regulations to which multitudinous small issuers are subject because that company has its own reliabilities that may well be different from those of the United States Post Office and the Western Union Telegraph Co. The vital fact is that the American Express Co. is decisively different from those money order issuers that are within the regulatory scheme.
Sociologically, one may think what one may of the State's recognition of the special financial position obviously enjoyed by the American Express Co. Whatever one may think is none of this Court's business. In applying the Equal Protection Clause, we must be fastidiously careful to observe the admonition of Mr. Justice Brandeis, Mr. Justice Stone, and Mr. Justice Cardozo that we do not "sit as a super-legislature." (
their dissenting opinion in the ill-fated case of
296 U. S. 441
See also Asbury Hospital v. Cass County,
326 U. S. 207
326 U. S. 214
-215.)