The rule that one not within the class cannot raise objections
to the constitutionality of a statute on the ground of
discrimination against that class, applied to effect that one who
for more than five years has resided in the United States cannot
object that a state statute denies equal protection of the law
because it excludes those who have not so resided for that
period.
Protection of banking business, especially that transacted in
small amounts (
Noble State Bank v. Haskell, ante, p.
219 U. S. 104),
and with poor and ignorant immigrants on first arrival in this
country is within the police power of the state, and a state
statute imposing special and proper restrictions on those engaging
in that class of banking is not unconstitutional under the due
process or equal protection clauses of the Fourteenth Amendment
because it excepts from its provision other banks and bankers
engaged in other classes of banking business or conducting them
under other conditions.
The receipt of money by a bank where the depositor can withdraw
it when and in such sums as he pleases, although creating a debt,
is, in a popular sense, the receipt of money for safekeeping.
Where the subject is within the police protection of the state,
it is not for the court to determine whether the enactment is wise
or not; that is within legislative discretion.
Courts will presume from general knowledge of business affairs
that transmission of money through bankers is made by drafts, and
not by sending the identical currency.
Legislation which regulates business may well make distinctions
depend upon the degree of evil,
Heath Milligan Co. v.
Worst, 207 U. S. 338,
and, although where size is not an index, a law may not
discriminate between the great and the small, proper regulations
based thereon where size is an index of the evil to be prevented do
not offend the equal protection clause of the Fourteenth
Amendment.
There are always difficulties in drawing the dividing line
between that which is within and that which is without the
constitutional power of the states, and the question in each
specific case must be answered by the pertinent facts therein.
Page 219 U. S. 129
A state statute regulating the receipt of deposit of money is
not a burden on, or regulation of, interstate or foreign commerce
simply because such deposits are likely to be transmitted to other
state or foreign countries; the deposit is an independent
transaction preceding the transmission.
The provisions of the Private Banking Act of New York of 1910,
considered in this case, are not unconstitutional as depriving
persons engaged in the receiving and transmitting of small sums of
money of their property without due process of law or denying them
the equal protection of the law either on account of the
regulations to which such persons are subjected or by reason of the
exception of other classes of banks and bankers therefrom.
The facts are stated in the opinion.
Page 219 U. S. 134
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill in equity to prevent the carrying out of Chapter
348 of the Laws of New York for 1910, which forbids individuals or
partnerships to engage in the business of receiving deposits of
money for safekeeping, or for the purpose of transmission to
another, or for any other purpose, without a license from the
Comptroller. The requirements for obtaining the license, so far as
they affect the plaintiff, are that the applicant shall deposit
$10,000 with the Comptroller and present a bond with a penalty of
not more than $50,000 or less than $10,000, to be fixed by the
Comptroller, conditioned upon the faithful performance of the
duties undertaken. After notice shall have been posted for two
weeks, the Comptroller may approve or disapprove the application,
in his discretion, and licensees are to pay a fee of $50. § 25. The
license is revocable at all times by the Comptroller for cause
shown. § 26. Carrying on the business specified, or using the word
"banking" or "banker" on signs, letterheads, or advertisements in
connection with any business, without a license, is made a
misdemeanor. § 27. The foregoing provisions do not apply to any
corporation or "individual banker" authorized to do business under
the banking law, or to national banks; to any hotel keeper who
shall receive money for safekeeping from a
Page 219 U. S. 135
guest; to any express or telegraph company receiving money for
transmission; to individuals or partnerships where the average
amount of each sum received on deposit or for transmission in the
ordinary course of business shall have been not less than $500
during the fiscal year preceding an affidavit to that effect; or,
finally, to any individual or partnership filing a bond approved by
the Comptroller for $100,000 when the business is in a city having
a million inhabitants, or, if elsewhere, for $50,000; or money or
securities that the Comptroller approves. § 29
d.
The plaintiff alleges that he is a citizen of the United States,
and has been engaged in the business specified in the statute for
twenty years; that, by good reputation and considerable
expenditure, he has made his business of great value, and that it
chiefly consists in receiving deposits in very small sums from time
to time until they reach an amount sufficient to be sent to other
states, and mainly to foreign countries. The plaintiff further
alleges that he has not the means that would enable him to make the
deposit and give the bond required, and that the enforcement of the
law against him will compel him to close. He avers that the statute
is unconstitutional as against him under the Fourteenth Amendment
and under the commerce clause of the Constitution of the United
States. Article I, § 8. The bill was demurred to, and the demurrer
was sustained by the circuit court.
The first objection urged by the plaintiff in argument is to a
requirement that we have not mentioned -- that the applicant must
have been continuously for five years immediately preceding his
application a resident of the United States. As the plaintiff
alleges that he satisfies this requirement, he has nothing to
complain of. And therefore, without intimating any doubt as to the
validity of the clause, we pass at once to the matters in which he
is concerned.
Southern Ry. Co. v. King, 217 U.
S. 524,
Page 219 U. S. 136
217 U. S. 534.
As a preliminary to his argument, the plaintiff denies that he is
in any sense a banker, and even goes so far as to treat the receipt
of money for safekeeping or transmission within the meaning of the
act as a case of bailment, in which the very coins received must be
returned or sent on. Of course, this is not a true construction of
the statute, as is sufficiently indicated by the title "Private
Banking." The receipt of money by a bank, although it only creates
a debt, is in a popular sense the receipt of money for safekeeping,
since the depositor can draw it out again at such time and in such
sums as he chooses. It is safe to assume that the transmission of
money contemplated very generally is accomplished by a draft, and
practically never by sending on the identical currency received.
One form at least, of the business aimed at, and, on the face of
the bill, that carried on by the plaintiff, is a branch of the
banking business. Furthermore, it is a business largely done with
poor and ignorant immigrants, especially on their first arrival
here.
We presume that the money deposited with the plaintiff is not
drawn upon by checks, so that a part of the argument in
Noble
State Bank v. Haskell, just decided,
ante, p.
219 U. S. 104, may
not apply. On the other hand, experience has shown that the
protection of such depositors against fraud, which is the purpose
running through the statute, is especially needed by at least that
class of them with whom the persons hit by the statute largely
deal. The case cited establishes that the state may regulate that
business, and may take strong measures to render it secure. It also
establishes that the plaintiff has no such constitutional right to
carry it on at will as to raise him above state laws not manifestly
unfit to accomplish the supposed end, greatly in excess of the
need, or arbitrary and capricious in discrimination. The
quasi-paternal relations shown in argument and by
documents to exist between those following the plaintiff's calling
and newly arrived
Page 219 U. S. 137
immigrants justifies a supervision more paternal than is needed
in ordinary affairs. Whether the court thinks them wise or not,
such laws are within the scope of the discretion which belongs to
legislatures, and which it is usual for them to exert.
This appeal seems to have been taken upon the notion that the
plaintiff had a business which, under the Fourteenth Amendment, the
state could not touch. But, although cut off from that broad
proposition, his counsel presents other more specific objections to
the act with earnestness and force. It is said that, even if the
plaintiff could furnish the money and bond required, the
Comptroller might refuse a license upon his arbitrary whim. No
guides are given in § 25 for the discretion that he is to exercise,
and a provision in § 29
e that nothing in the article shall
be construed to require the Comptroller to make any inquiry as to
the solvency of any applicant is thought to exclude solvency as the
test, and to leave the matter at sea. We do not so understand the
purpose and purport of § 29
e, and should suppose that the
discretion to be exercised in the refusal to grant the license
under § 25 was similar to that exercised under § 26 in revoking
one, and that in each case the Comptroller was expected to act for
cause. But the nature and extent of the remedy, if any, for a
breach of duty on his part we think it unnecessary to consider, for
the power of the state to make the pursuit of a calling dependent
upon obtaining a license is well established, where safety seems to
require it, and what we have said before sufficiently indicates
that this calling is one to which the requirement may be attached.
See Gundling v. Chicago, 177 U. S. 183;
Lieberman v. Van de Carr, 199 U.
S. 552.
Again, it is argued that the statute makes unconstitutional
discriminations by excepting the classes mentioned in §
29
d above, especially those in whose business the average
amount of each sum received is not less than $500
Page 219 U. S. 138
and those who give a bond of $100,000 or $50,000. But the former
of these exceptions has the manifest purpose to confine the law as
nearly as may be to the class thought by the legislature to need
protection, and the latter merely substitutes a different form of
security, as it well may. "Legislation which regulates business may
well make distinctions depend upon the degree of evil."
Heath
& Milligan Mfg. Co. v. Worst, 207 U.
S. 338,
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. Where the
average amount of each sum received is not less than $500, we know
that we have not before us the class of ignorant and helpless
depositors, largely foreign, whom the law seeks to protect.
See
Musco v. United Surety Co., 196 N.Y. 459, 465;
McLean v.
Arkansas, 211 U. S. 539,
211 U. S.
551.
We come to the final objection -- that this statute is an
attempt to regulate commerce with other states. When, as in this
matter, the Constitution takes from the states only a portion of
their otherwise absolute control, there may be expected
difficulties in drawing the dividing line, because where it shall
be put is a question of more or less. The trouble is inherent in
the situation, but it is the same in kind that meets us everywhere
else in the law. The question is whether the state law creates a
direct burden upon what it is for Congress to control, and the
facts of the specific case must be weighed. In doing so, we recur
to what we have said above -- that we cannot regard the statement
of the plaintiff's business in his bill as describing the receipt
of bailments for the transmission of the identical objects received
to other states. Neither do we regard the law as having has such
bailments primarily in mind. Under the statement in the bill and
the words of the law, we must take it that the money received, even
when received for transmission, becomes the money of the
depositary,
Page 219 U. S. 139
and his obligation that of a debtor under contract to pay as may
be directed. Presumably the depositor retains the right to call for
his money himself, or to change any direction that may have been
given, until the money has left the "private banker's" hands. The
law, as was said of a similar one by the New York Court of Appeals,
was passed for the purpose of regulating and safeguarding the
business of receiving deposits which precedes, and is not to be
confounded with, the later transmission of money, although leading
to it.
Musco v. United Surety Co., 196 N.Y. 459, 466-467.
The fact that it is very likely to lead to it does not change the
result.
Diamond Glue Co. v. United States Glue Co.,
187 U. S. 611,
187 U. S. 616.
The case is similar in principle to
Ware v. Mobile County,
209 U. S. 405,
where the nearest cases on the other side are distinguished.
See further Williams v. Fears, 179 U.
S. 270. We are of opinion that the commerce clause of
the Constitution is not infringed, and, on the whole case, that the
decree of the Circuit Court was right.
Decree affirmed.