Case Name: STATE v. HERTZOG
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1912-07-12
Citations: 92 S.C. 14
Docket Number: 8251
Parties: STATE v. HERTZOG.
Judges: Mr. Justice Hydricic and Messrs. Circuit Judges Ernest Gary, Geo. E. Prince, Geo. W. Gage, R. W. Memminger, John S. Wieson, T. S. Sease, Frank B. Gary concur.
Reporter: South Carolina Reports
Volume: 92
Pages: 14–32

Head Matter:
8251
STATE v. HERTZOG.
1. Constitutional Law — Mechanic's Lien — Contracts—Laborers.— Section 338 of the Criminal Code, giving subcontractors, laborers and material men a lien on the money received by the contractor for building and repairing houses, and making it a misdemeanor for the contractor not to pay these persons out of the money, is not violative of that provision of the State Constitution prohibiting imprisonment for debt nor of those provisions of the State and Federal Constitutions prohibiting unreasonable discriminations.
Mn. Chief Justice Gary, with whom concurs Me. Justice Watts, thinks the second division of the section violates the provision as to imprisonment for debt, but that the first division is constitutional. Mr. Justice Fraser, Judge DeVore concurring, thinks it violates both constitutional provisions.
3. Mechanic's Lien — Contractor.-—-A contractor is not criminally liable under section 337 of the Criminal Code for failure to pay subcontractors, laborers and- material men out of the money received by him on a building contract.
Me. Chief Justice Gary and Mr. Justice Watts dissent.
3. Constitutional Law — Statutes—Appeal.—The point that section 338 of the Criminal Code as originally enacted in 1896 is unconstitutional in that the penal provision is not indicated in the title is not available here because not made on Circuit.
Before Robert Aldrich, J., Marlboro. November, 1911.
Modified.
Indictment against E. E. Hertzog and R. H. Rudisail. Defendants appeal on the following exceptions:
First. “Because the indictment contains three counts, two under the act of 1896, as amended by the act of 1897. And the third under the act making it a misdemeanor to dispose of property under a lien without the written consent of the lienee, and cannot be sustained as to the third count of the indictment for the reason that the special remedy provided by the acts of 1896 and 1897 is exclusive and must be pursued.
Second. “Because the indictment does not state facts sufficient to constitute an offense, as to the first and second counts, against the laws of South Carolina, in that the statute under which it is brought is in violation of article I, section 24, of the Constitution, which is as follows: ‘No person shall be imprisoned for debt, except in cases of fraud,’ in that the statute makes the mere failure of the contractor, erecting buildings, to pay laborers or persons furnishing materials received by him, a misdemeanor, without providing that the failure to pay must be fraudulent or that there must be fraud on the part of the contractor in failing to do so. The statute punishes a person by imprisonment for failing to pay a debt.
Third. “In that the said statute is in violation of article I, section 5, of the Constitution of South Carolina, which is as follows: ‘The privileges and immunities of citizens of this State and of the United States under this Constitution shall not be abridged, nor shall any person be deprived of life, liberty or property, without due process of law, nor shall any person be denied the equal protection of the laws.’
A. “In that contractors, building houses, are only made indictable for failure to pay over to laborers and material men money received by them, while all other contractors are exempt from indictment.
B. “The statute does not give equal protection to other kinds of laborers than laborers on buildings, and to other material men than those furnishing materials for buildings.
C. “The statute discriminates in favor of laborers on buildings and persons furnishing materials for buildings and against all other kinds of laborers and material men.
D. “The statute does not give the equal protection of the law to a class similarly situated, because all laborers are to be classed together, and all material men are to be classified together. Whereas, in the statute only laborers on buildings and persons furnishing materials on same are entitled to be paid, else the contractor makes himself criminally liable.
E. “All contractors belong to a class similarly situated. But this statute discriminates against contractors erecting buildings, makes them liable to indictment for doing that which other contractors may do with impunity.
Fourth. “The statute is in conflict with the 14th amendment to the Constitution of the United States, in that it does not afford equal protection of the laws.
Fifth. -“Because by the terms of the act the offense of breach of trust with fraudulent intent is not created, for the reason that the lien is created on the property of the contractor, and not on that of the laborer or person furnishing materials, and there could be no breach of trust in the using of money, which is his own property, by the contractor.”
Messrs. Townsend & Rogers and Nichols & Nichols, for appellants.
Messrs. Townsend & Rogers cite: The second section violates article II, section if, of Constitution: 74 S. C. 448. One section may he unconstitutional and the other enforced: 63 S. C. 77. The statute against selling property under lien is supported on the ground of fraud: 64 S. C. 209; 36 S. C. 497; 32 S. C. 126. The whole act violates section 24, article I, Constitution: 79 S. C. 9. The second section violates the State and Federal discriminatory constitutional provisions: 79 S. C. 9.
Solicitor I. Monroe Spears, D. D. McColl, Jr., I. W. LeGrand and I. K. Owens, contra.
Mr. McColl cites: Any violation of section 338, like that of 33f, involves the element of fraud: 68 S. C. 146; 64 S. C. 206; 36 S. C. 508. This section does not violate section 24 of article I of Constitution: 64 S. C. 207. Nor does it violate the discriminatory provisions of the State and Federal Constitutions: 63 S. C. 60, 425; 67 S. C. 35, 409, 481; 65. S. C. 459; 68 S. C. 140, 339; 69 S. C. 523; 73 S. C. 71, 140, 542, 550; 74 S. C. 207; 75 S. C. 62; 76 S. C. 278; 77 S. C. 165.
The case was argued during the November term, 1911, and during the April term, 1912, by order of the Court was reargued before the Court en Banc.
July 12, 1912.

Opinion:
The opinion of the Court was delivered by
Mr. Justice Woods.
This appeal is from an order of the Court of General Sessions refusing to quash an indictment against the defendant containing counts charging disposition by him of money subject to a statutory lien in violation of sections 337 and 338 of the Criminal Code. Section 337 is the familiar statute which in general terms made a criminal offense the disposition of any personal property upon which a lien exists without paying the lien debt or depositing the amount of it with the clerk of the Court.
The case turns mainly on the constitutionality of the penal provisions of section 338, which reads as follows: "It shall be the duty of any contractor or contractors, in the erection, alteration or repairing of buildings in the State of South Carolina, to pay all laborers, subcontractors and material men for their lawful services and material furnished out of the money received for the erection, alteration or repairs of buildings upon which said laborers, subcontractors and material men are employed or interested, and said laborers, as well as all subcontractors and persons who shall furnish material for said building, shall have a first lien on the money received by said contractor or contractors for the erection, alteration or repair of said buildings in proportion to- the amount of their respective claims. Nothing herein contained shall make the owner of the building responsible in any way: Provided, That nothing contained in this section shall be construed to prevent any contractor or contractors or subcontractors from borrowing-money on such contract.
"Any contractor or contractors or subcontractors who shall for other purposes than paying the money loaned upon said contract expend and on that account fail to pay to any or all laborers, subcontractors and material men out of the money received as provided in this section and as admitted by such contractor or contractors, or as may be adjudged by any Court of competent jurisdiction, shall be deemed guilty of a misdemeanor, and upon conviction, when the consideration for such work and material shall exceed the value of one hundred dollars, shall be fined not less than one hundred dollars nor more than five hundred dollars, or imprisonment not less than three months nor more than twelve months; and when such consideration shall not exceed the value of one hundred dollars, shall be fined not more than one hundred dollars or imprisoned not longer than thirty days: Provided, Said contractor or contractors or subcontractors may have the right of arbitration by agreement with said laborers, subcontractors and material men."
The specific charge against the defendant under this section is that as a contractor for the alteration and repair of certain buildings of W. S. Mowry he collected $1,733.12, and expended it for other purposes than paying the money loaned on the contract, and on that account failed to pay R. J. Easterling Company for material furnished to the amount of $606.62.
Defendant contends that the criminal enactment of section 338 is unconstitutional, in that (1) it provides imprisonment for debt without proof of fraud, and (2) it arbitrarily discriminates against contractors for buildings for creating a lien on money received by them, in favor of subcontractors, laborers and material men, and by making them criminally liable for failure to apply the money received on their contracts to the discharge of the lien, while no such burdens are imposed on other contractors.
If the Court can discern in the statute any reasonable meaning consistent with the Constitution, it must adopt that as the true meaning in order to uphold the statute. Taking the section in its entirety it cannot fairly be construed to provide for imprisonment for the mere failure to pay a debt. The first paragraph impresses on the money received by the contract a lien in favor of laborers, subcontractors and material men. The second paragraph enacts that if the contractor shall pay out the specific fund which has come into his hands and which must remain' there subject to the lien, for other purposes than paying the money loaned on his contract, and on that account fail to pay laborers, subcontractors and material men out of the money so subject to their lien, then he shall be deemed guilty of a misdemeanor. This being so, the natural and indeed the only reasonable construction of the statute is that it makes penal not the mere failure to pay a debt, but the disposition by the contractor of a specific sum of money held by him under a lien so as to defeat the lien. Under this construction the statute does not violate the constitutional inhibition against imprisonment for debt except in cases of fraud. On this point the case falls entirely outside the principle on which Ex parte Hollman, 79 S. C. 9, 60 S. E. 19, 21 L. R. A. N. S. 242n, was decided, and within the rule laid down in State v. Bardin, 64 S. C., 207, 41 S. E. 959.
Unsound also is the objection that the statute violates the fourteenth amendment of the Constitution of the United States and section 5, aricle I, of the Constitution of this State. The rules with respect to the legislative power under the fourteenth amendment have been thus restated by the Supreme Court of the United States in the recent case of Lindsley v. National Carbonic Gas Co., 220 U. S. 61, 55 L. Ed. 369: "1. The equal protection clause of the fourteenth amendment does not take from the State the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety, or because in practice it results in some inequality. 3. When the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest upon any reasonable basis, but is essentially arbitrary."
A like construction has been placed by this Court on section 5, article I, of the State Constitution, which on this point is like the fourteenth amendment of the Constitution of the United States. Simmons v. Western Union Tel. Co., 63 S. C. 430, 41 S. E. 521, 57 L. R. A. 607; Johnson v. Spartan Mills, 68 S. C. 339, 47 S. E. 695. The classification here is far from being arbitrary. Contractors for the erection, alteration and repair of buildings in the main do work on a much smaller scale than contractors for railroads or streets or other works. Many, if not the majority, of the former are men of small means, and generally their laborers, subcontractors and material men must be paid, if paid at all, from the funds received on the contract. Without casting about for other reasonable grounds of classification, it is enough to say that the defendant has not discharged the burden which the law places on him of showing that the classification is altogether arbitrary.
The motion to quash the third count of the indictment framed under section 337 of the Criminal Code we think should have been granted. Section 337 contains the general law for punishment of the offense of disposing of personal property under liens. Section 338, enacted later, contains the special provisions on the same subject applicable only to liens in favor of certain persons on certain moneys in the hands of contractors for the erection, repair and. alteration of buildings. Construing the two statutes together it is manifest that section 338 must be regarded as taking the special liens and the disposition of money subject to them out of the general pro vision of law contained in section 337, and providing a different and an exclusive punishment for the disposition of money subject to such liens, It follows that for the criminal disposition of money subject to the lien provided for in section 338, a contractor can be indicted only under that section.
The point that the statute now standing in the Criminal Code as section 338 was not enacted as required by the Constitution because the penal provision is a subject not expressed in the title of the act as passed in 1896, not having been made in the Circuit Court, is not available to the defendant in this Court.
The judgment of the Circuit Court is modified according to the views herein expressed.
Mr. Justice Hydricic and Messrs. Circuit Judges Ernest Gary, Geo. E. Prince, Geo. W. Gage, R. W. Memminger, John S. Wieson, T. S. Sease, Frank B. Gary concur.