Case Name: Sanning v. City of Cincinnati
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1909-11-09
Citations: 81 Ohio St. 142
Docket Number: No. 11692
Parties: Sanning v. City of Cincinnati.
Judges: Crew, C. J., Spear, Davis, and Price, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 81
Pages: 142–159

Head Matter:
Sanning v. City of Cincinnati.
Chattel mortgage and salary loan brokers — May be licensed, when— Ordinance requires, detailed record of loans — Not violative of Section 14 of-Bill of Rights — Not unreasonable — Section 1536-100, Revised Statutes.
1. The state may, in the exercise of the police power, license and regulate chattel mortgage and salary loan brokers; and it may-delegate authority to do so to municipal corporations.
2. An ordinance under the power conferred by Section 1536-100, Revised Statutes, to regulate and license chattel mortgage and salary loan brokers, requiring every person engaged in such business to file with the auditor of the city, weekly, a detailed record of every loan made during the week preceding, to remain there as a permanent record open to the inspection of the • mayor and chief of police, is not violative of Section 14 of the Bill of Rights, which provides, “The right of the people to be secure in their persons, houses, papers, and possessions against unreasonable searches and seizures shall not be violated; and no warrant shall issue, but upon probable cause, supported by oath or affirmation, particularly describing the place to be searched and the person and things to be seized,” and is not unreasonable.
(No. 11692
Decided November 9, 1909.)
Error to the Circuit Court of Hamilton county.
The plaintiff in error, L. H. Sanning, was arrested in the city of Cincinnati under a warrant issued by the clerk of the police court, charging hipi with engaging in the business of salary loan broker and failing to file with the city auditor a record of each and every loan made during the week preceding, as required by Section 5 of an ordinance of the city. He filed a motion to quash the affidavit and warrant which was overruled, .and he then filed a demurrer, which was overruled, and on the trial at the close of the state’s evidence, he moved to discharge the defendant and dismiss the prosecution, which motion was overruled.
On trial in the police court he was found guilty and fined twenty-five dollars and costs. He then filed a motion in arrest of judgment, and for a stay of execution, which motion was overruled, and he then filed a motion for a new trial, which motion was overruled, and upon his application he was then given ten days within which to present his bill of exceptions, and within that time a bill of exceptions was allowed and signed and ordered to be made part of the record.
On leave, a petition in error was filed in the court of common pleas, and upon the hearing the judgment was affirmed. Error was then prosecuted in the circuit court where the judgment was again affirmed, and error is now prosecuted in this court.
Messrs. Bates & Meyer, for plaintiff in error.
As we paid our license and are simply refusing to make the daily reports of our customers .to the auditor, wé may not be in a position to attack the whole ordinance as void, or as a sham exercise of a taxing power, intended like many of our licenses to raise money for other purposes.
The question in our .case is the right to compel us by Section 5 of the ordinance to divulge to the auditor transactions, as to which most borrowers are very sensitive, considering them almost as confidential and private as their testamentary dispositions ; and with the result, to us, of an immediate destruction of the business.
Morton v. Macon, 111 Ga., 163, 36 S. E. Rep., 627, shows at length that a power to license is not a power to destroy. Dillon on Municipal Corporations, Section 357.
While the police power of a city is of course only that which is granted, the police power whether of state or city is not arbitrary nor unlimited, but is confined to protecting or promoting the public health or safety and must be reasonably calculated to attain its ostensible purpose. Reduction Co. v. Reduction Works, 126 Fed. Rep., 29, 61 C. C. A., 91; Frorer v. People, 141 Ill., 171; Railway Co. v. Jacksonville, 67 Ill., 37; State v. Schmuck, 77 Ohio St., 438; Young v. Commonwealth, 101 Va., 853, 45 S. E. Rep., 327; State v. Vandersluis, 42 Minn., 129; Lappin v. District of Columbia, 22 App. D. C., 68; People v. Barrien Circuit Judge, 124 Mich., 664; People, ex rel., v. Warden, 157 N. Y., 116; In re Preston, 63 Ohio St., 428.
No excuse for this ordinance can be legally'made on the ground that lenders of small sums on chattel security may often be usurers and that the ordinance is therefore in aid of the state laws. Cities are not authorized to go to the aid of state laws. Freund on Police Power, Section 142, p. 133. This principle is well set forth in the following case condemning an ordinance requiring a daily record and report of each transaction by dealers who buy and re-pack loose cotton, by reason of the frequent thefts of loose cotton (like our statute Section 4390 as to pawnbrokers). Long v. Taxing District, 7 Lea (75 Tenn.), 134.
If a calling is legitimate, interferences with it, not required by the public health, morals or safety, are not authorized by the police power. State v. Gardner, 58 Ohio St., 599; Miller v. Crawford, 70 Ohio St., 207, nor merely because it may be thought undesirable or even in a way harmful. Chicago v. Netcher, 183 Ill., 104, 55 N. E. Rep., 707, 75 Am. St. Rep., 93, 48 L. R. A., 261; Young v. Commissioners, 101 Va., 853, 45 S. E. Rep.; 327; State v. Ramseyer, 75 N. H., 31, 58 Atl. Rep., 958; State v. Dodge, 76 Vt., 197, 56 Atl. Rep., 983; People v. Zimmerman, 102 App. Div., 103, 92 N. Y. Supp., 497; State v. Dalton, 22 R. I., 77, 46 Atl. Rep., 234, 84 Am. St. Rep., 818, 48 L. R. A., 775; Ex parte Hutchinson, 137 Fed. Rep., 950; Greensboro v. Ehrenreich, 80 Ala., 579; Fisher Co. v. Woods, 187 N. Y., 90; People v. Budd, 117 N. Y., 1.
The business of lending money on furniture or salaries is as legitimate as any other. The only abuse to which it is liable is under the usury laws; and any supposed omission of the legislature to guard adequately against this does not authorize a city to repair the omission. Morton v. Macon, 111 Ga., 162, 36 S. E. Rep., 627; Hyland v. Sharp, 88 Miss., 567, 41 So. Rep., 264.
The right of privacy has of date years grown out of the unredressed residue of the law into a recognized right. Pavesich v. Insurance Co., 122 Ga., 190, 50 S. E. Rep., 68.
The ordinance in question in our case, in requiring so-called chattel and salary loan brokers to furnish daily reports to the police of each loan, with the names of the borrowers, relates to a matter in which the community has no legitimate interest and is therefore a most unwarranted assumption of municipal power having no reference to the public welfare, whose effect is to prohibit under the guise of regulation, and the ulterior' object of which, whateyer it may be, is not at all its ostensible purpose.
The well settled right to require reports from pawnbrokers rests on wholly different grounds, for the pawnbroker (unlike Us) always receives possession of the chattel, hence his shop may be the resort of thieves and a hiding place for the fruits of crime; and even here a city could not require the reports without special legislative authority. Shuman v. Ft. Wayne, 127 Ind., 109, 26 N. E. Rep., 560, 11 L. R. A., 378; Long v. Taxing District, 7 Lea (75 Tenn.), 134.
City ordinances which sought to compel dealers to make such reports have been annulled by the courts. City of Clinton v. Phillips, 58 Ill., 102, 11 Am. Rep., 52; Long v. Taxing District, 7 Lea, 134; State v. Itzcovitch, 49 La. An., 366, 21 So. Rep., 544, 62 Am. St. Rep., 648, 37 L. R. A., 673.
Mr. Edward M. Ballard, city, solicitor, and Mr. 'Albert IT. Morrill, for defendant in error.
When considering the limitations placed' upon the exercise by the state of its police power, it must be borne in mind that no one holds his property or his right to engage in a given occupation so - absolutely as to' be exempt from regulation which, considered from a reasonable viewpoint, tends to secure the equal rights of all and the general good of the public. People v. Budd, 117 N. Y., 1; Tiedeman on Limitation of Police Power, 194.
' We take it as well established that no court, appellate or otherwise, will or is called upon to profess ignorance of that which is well known, and nothing is more generally or better known than this, to-wit, that the business in which the plaintiff in error is engaged, commonly called that of a “salary loan shark,” is inherently oppressive, is fraught in its very nature with grave abuses, is the means of inflicting unnecessary misery and unhappiness, and leads, through the individual, to the members of society at large, producing in the latter a dangerous and unsound economic condition and this condition leads, in turn, to' added poverty and improvidence, entailing upon the state as a consequence, additional burdens of varied sorts. Rodge v. Kelly, 88 Miss., 209; Woodson v. Hopkins, 85 Miss., 171.
We see, then, that without doubt both the supreme legislative and judicial authority of the state of Ohio has seen fit to class the business of this plaintiff in error with the business of pawnbrokers and other businesses, which are, or may become injurious to the public welfare and are therefore subject to regulation. Section 1536-100, Revised Statutes; Marmet v. State, 45 Ohio St., 63. This being the case, a judicial decision sustaining the validity of the regulation of the business of pawnbroker at once becomes in point and is valuable in construing a regulation governing the business of salary loan broking.
The business of pawnbroking has from time immemorial been the subject of various and sundry regulations, many of them of exactly the same nature as the one to which the plaintiff in error takes exception in the present case. Launder v. Chicago, 111 Ill:, 291.
We further find that the right to make such regulations as the one in question here, governing pawnbrokers, is universally conceded by the courts throughout the United States. Kansas City v. Garnier, 57 Kans., 412; Grand Rapids v. Brandy, 105 Mich., 670; St. Joseph v. Levin, 128 Mo., 588; Kuhn v. Chicago, 30 Ill. App., 203.
While the right of the state to prohibit occupations is undoubtedly' limited to those which are actually harmful, yet the right of the state to require licenses and to regulate is not restricted to those occupations which are immoral, vexatious or injurious to society but it extends to all occupations of every kind, except where the power of the state to exact the license or to impose the regulation is expressly limited by the constitution of the United States or by the constitution of the state itself. Building & Loan Assn. v. Stewart, 109 Ga., 80; Braun v. Chicago, 110 Ill., 186; Price v. People, 193 Ill., 114; Slaughter-House Cases, 16 Wall., 36; State v. Tolman, 106 La., 666; State v. Knox, 52 Mo., 418; Morton v. Macon, 111 Ga., 162; Ex parte Mirande, 73 Cal., 365.
In various other jurisdictions there is abundant authority for the regulation of businesses which in themselves are not harmful by the enactment of requirements more onerous than the one with which we are concerned in the present case. State v. Dubarry, 46 La. An., 36; Mayor v. Yuille, 3 Ala., 137; Municipality v. Dubois, 10 La. An., 56; Warren v. Geer, 117 Pa. St., 207; Buffalo v. Schleifer, 21 N. Y. Supp., 913; Rosenbaum v. Newbern, 32 L. R. A.; 123; Monroe v. Lawrence, 44 Kans., 607; Kiel v. Chicago, 69 Ill. App., 685; San Luois Opispo Co. v. Greenberg, 120 Cal., 300.
There is nothing unreasonable in requiring persons engaged as pawnbrokers, junk and secondhand dealers and kindred occupations to keep a record of their purchases and sales and to furnish a statement thereof to the police department. Similar requirements have been sustained in Grand Rapids v. Braudy, 32 L. R. A., 116; Commonwealth v. Leonard, 140 Mass., 473.

Opinion:
Summers, J.
Paragraph 30 of Section 1536-100, Revised Statutes of Ohio, provides as follows: "All municipal corporations shall have the power to regulate and license chattel mortgage and salary loan brokers. In the granting of any license a municipal corporation may exact and receive such sums of money as the council shall deem proper and expedient.
"In the trial of any action brought under the power of licensing herein given, the fact that any party to such action represented himself or herself as engaged in any business or occupation, for the transaction of which a license may be required or as the keeper, proprietor or manager of the thing for which a license may be exacted, or that such party exhibit a sign indicating such business or calling, or such proprietorship or management, shall be conclusive evidence of the liability of such party to pay the license therefor."
The ordinance is as follows:
"(No. 1671. Passed December 3, 1906.)
"To Regulate and License Chattel Mortgage and Salary Loan Brokers.
"Be it ordained by the Council of the City of Cincinnati, State of Ohio.
"Sec. 1. No person, firm or corporation shall within the city of Cincinnati, engage in the business of a chattel mortgage loan or salary loan broker, or engage in the business of loaning money secured by mortgage, bills of sale or other contracts involving' as security the forfeiture of rights in personal property, or upon assignments, bills of sale or other conveyance of salary or wages, without first having obtained a license from the auditor of said city so to do.
"Sec. 2. The auditor of said city shall issue to any person, firm or corporation a license as provided for in Section 1 for the period of one year, upon payment to the city of Cincinnati of the sum of two hundred and fifty dollars ($250.00) upon condition that the books and accounts of such licensee shall be open at any time to inspection by said auditor; provided, however, that said license shall expire on the 31st of December of the year in which issued, but said auditor may issue a license to any such person, firm or corporation who engages in business after the first of January for a period less than a year, upon payment of a proportionate amount of said sum.
"It shall be the duty of the auditor to examine the books and accounts of such licensees at least once every year.
"Sec. 3. Every such person, firm or corporation so licensed shall give to each pledgor, mortgagor or assignor, a card upon which shall be written in ink, typewritten or printed the name of the person, firm or corporation making said loan, the name of the pledgor, mortgagor or assignor, the article or articles pledged, mortgaged or assigned, unless there be more than fifteen of said articles, in which case a general description thereof shall be sufficient ; the amount of the loan, the amount of interest charged, the amount of expense charged exclusive of interest and the time for which each of said charges are made; the date when the loan is made and the date when payable, and shall also give the pledgor, mortgagor or assignor, a receipt for each payment of principal, interest or any other charge made on said loan and shall also give the pledgor, mortgagor or assignor, and if any payment shall consist of principal and interest, or any other charge, said receipt shall specify the amount of each.
"Sec. 4. No such person, firm or corporation so licensed shall receive as security for any indebtedness any chattel mortgage, bill of sale or assignment, or any other conveyance of any personal property, salary, or wages, signed in blank, but all blank spaces shall be filled in with ink, or typewritten, with the proper words and figures; and if said conveyance shall be for salary or wages, the name of the person, firm or corporation by whom the person making the conveyance is employed shall also appear on said paper.
"Sec. 5. Every such person, firm or corporation shall, on or before ten o'clock a. m. on each and every Wednesday, file with the auditor of the city of Cincinnati a true record of each and every loan made during the calendar week immediately preceding. Said record shall be made upon cards or blanks furnished by said auditor, and shall consist of the name of the person, firm or corporation making the loan, the name of the pledgor, mortgagor, or assignor, a specific description of the article or articles pledged, mortgaged or assigned, the amount loaned, the rate of interest, the amount charged for interest and the time for which said interest charge is made, the amount of expense charges, exclusive of interest, and the time for which said expense charge is made, and the date when said loan is payable. Such record so filed with the auditor of the city shall remain in the office of said auditor as a permanent record, open to the inspection of the mayor or the chief of police of said city.
"Sec. 6. No such person, firm or corporation shall make a loan to a married man upon the security set forth in Section 1 unless the application for said loan and the conveyance of the chattels or salary shall be signed by the wife of said applicant.
"Sec. 7. Any person or persons, either as principal agent, officer or employe of any other person, or any firm or corporation who violates any of the provisions of this ordinance, or any person or persons, firm or corporation who shall carry on the business of a chattel mortgage or salary loan broker, or loan money as set forth in Section 1 without first obtaining a license as provided therein, shall, for the first offense, be fined not less than twenty-five dollars ($25.00) nor more than two hundred dollars ($200.00) and the costs of prosecution, and for the second and any subsequent offense shall be fined not less than, one hundred ($100.00) nor more than five hundred dollars ($500.00), and it shall be the duty of the auditor, upon the second conviction of any such person, firm or corporation holding a license issued under this ordinance to forthwith revoke said license."
The principal question is, whether the business of a chattel mortgage broker, or salary loan broker, is one that may be subjected to license and regulation by the state in the exercise of police power, and, if so, whether the power to license and regulate the business may be delegated by the state to municipal corporations, and whether Section 5 of the ordinance prescribes reasonable regulations.
The term police power has been much employed in recent years, and many attempts have been made to define it, but it is said to be incapable of definition. The term is not used in the constitution. The police power is included in the legislative power, but there are in the constitution express limitations upon some of the powers comprised in the legislative power, and the term police power is used to designate that power from others and is helpful in ascertaining its scope and the limitations upon it.
All of the legislative power of the state is vested in .the general assembly. Baker v. Cincinnati, 11 Ohio St., 534, 542. State v. Frame, 39 Ohio St., 399, 407. But it is a delegated power and is limited by the scope of the purposes for which it was granted, as well as by the express limitations of the constitution. The Cincinnati, W. & Z. Railroad Co. v. The Commissioners of Clinton County, 1 Ohio St., 77, 84, 86. The purpose for which it was granted is indicated by the opening declaration, "We, the people of the State of Ohio, grateful to Almighty God, for our freedom, to secure its blessings and promote our common welfare, do establish this 'Constitution." And Section 20 provides, "This enumeration of rights shall not be construed to impair or deny others retained by the people; and all powers, not herein delegated, remain with the people."
Chief Justice Shaw said, in Commonzvealth v. Alger, 7 Cush., 53, "Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient."
In Chicago, B. & Q. Ry. Co. v. Drainage Commissioners, 200 U. S., 561-592, Mr. Justice Harlan says: "We hold that the police power of the state embraces regulations designed to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals or the public safety." And in Frisbie v. United States, 157 U. S., 160, Mir. Justice Brewer says: "While it may be conceded that, generally speaking, among the inalienable rights of a citizen is that of the liberty of contract, yet such liberty is not absolute and universal. It is within the admitted power of government to restrain some individuals from all contracts, as well as all individuals from some contracts. It may deny to all the right to contract for the sale of lottery tickets; to the minor the right to assume any obligations, except for the necessaries of existence, to the common carrier the power to make any contract, relieving himself from negligence; and, indeed, may restrain all engaged in any employment from any contract in the course of that employment which is against public policy. The possession of this power by government in no manner conflicts with the proposition that, generally speaking, every citizen has a right freely to contract for the price of his labor, services or property." In Phillips v. State of Ohio, 77 Ohio St., 214-216, where the constitutionality of .statutes regulating junk dealers and dealers in secondhand articles is considered, Davis, J., says: "It is almost an axiom that anything which is reasonable and necessary to secure the peace, safety, morals and best interests of the commonwealth may' be done under the police power; and this implies that private rights exist subject to the public welfare." And again, "the general power of the legislature to determine what is necessary for the protection of the public interests béing clear, judicial inquiry is necessarily limited to determining whether a particular regulation is reasonable, impartial and within the limitations of the constitution. The legislature is the judge of the mischief and the remedy, and of what shall be state policy, subject to the restrictions just mentioned."
The right to labor, to contract, to do business or to engage in any of the common occupations of life is one of the inalienable rights of the citizen, (Butchers Union Slaughter-House and Live-Stock Landing Company v. Crescent City L.-S. L. & S.-H. Company, 111 U. S., 746, Mr. Justice Bradley, 762, M1* Justice Field, 756) and may be regulated, therefore, by the state only to promote the public welfare, and this brings us to the question, what possible public good can be subserved by regulating brokers in chattel mortgages and in salary loans, and if the business is subject to regulation under the police power, are the provisions of the ordinance unreasonable?
Usury laws are of ancient origin, and while the utility of such legislation is still open to question, such laws are in force in this state, and in a majority of the states, and we think it too late to question the power of the state to enact them. One of the ways in. which such laws are circumvented "is by a commission to a broker. The class that obtain such loans comprises the most needy and improvident, and consequently the most susceptible to fraud and extortion, and surelv legislation to prevent such evasions, or fraud and extortion, may rest upon the same grounds as usury laws. And it would not be profitable to consume space by setting forth the almost numberless instances of laws imposing restraints upon the right to contract or regulations of occupations, or of the conduct of business that have been upheld by the courts.
The legislature may delegate to municipal corporations the right to exercise the police power to effect the purposes of its organization, but the extent of the grant and the reasonableness of its exercise are questions for the courts.
In Stoutenburgh v. Hennick, 129 U. S., 141, 147, Chief Justice Fuller says: "It is a cardinal principle of our system of government,' that local affairs shall be managed by local authorities, and general affairs by the central authority; and hence while the rule is also' fundamental that the power to make laws cannot be delegated, the creation of municipalities exercising local self government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribe local regulations, according to immemorial practice, subject of course to the interposition of the superior in cases of necessity." In the present case the grant is in general terms, so that the question arises as to the reasonableness of the regulations prescribed by Section 5 of the ordinance. The authority given is to regulate and license chattel mortgage and salary loan brokers. The ordinance is so entitled, but its provisions are more comprehensive and embrace persons engaged in the business of loaning money upon chattel mortgages, or other personal property as security, and most of the regulations prescribed relate to such trans actions rather -than to those of brokers. But we do not think it necessary, in the present case, to consider the validity or the invalidity of the ordinance in these respects for' the plaintiff in error obtained a license and objects only to the requirements of the fifth section. His objections to these requirements are that compliance would destroy his business, because borrowers of this class are so sensitive in respect to publicity that they will forego a loan rather' than expose their necessities to , the public; and that it invades the right of privacy. The requirements of the fifth section are not much more exacting, and will not give as much publicity as do most registration acts, and compliance with them will not destroy the business if it is legitimate. Publicity is recognized as one of the most effective preventatives of many harmful practices. If some such ordinance had been in force in Venice, Shy lock never would have stipulated for the pound of flesh. We do not think the requirements are unreasonable.
The only provision of the constitution that occurs to us upon which is based the contention that the ordinance invades the right of property, is Section 14 of the Bill of Rights, which provides: "The right of the people to be secure in their persons, houses, papers and possessions, against unreasonable searches and seizures shall not be violated; .and no warrant shall issue, but upon probable cause, supported by oath or affirmation, particularly describing the place to be searched and the person and things to be seized." The search or seizure there referred to, is' a search or seizure under authority of law. The ordinance in question makes no provision for a warrant nor does it prescribe anything within the spirit of that declaration and inhibition historically considered. In Marmet v. State, 45 Ohio State, 63-69, where the constitutionality of a license law was under consideration, Spear, J., said of a similar objection, that if it made the law void then a like infirmity attached to many other laws then in force.
Objection was made to a similar requirement respecting pawnbrokers, in St. Joseph v. Levin, 128 Mo., 588, and it was held that the ordinance did not violate a similar requirement of the constitution of that state, or the fifth amendment to the Constitution of the United States. And in Launder v. Chicago, 111 Ill., 291, a similar requirement respecting pawnbrokers was held not unreasonable.
Having found the power to exist in the state, its delegation to the municipality, and the objectionable regulation, prescribed by the ordinance, not unreasonable, the judgment is
Affirmed.
Crew, C. J., Spear, Davis, and Price, JJ., concur.