In this case, as the statute shows on its face that the subject
regulated needed to be regulated for the protection of the public
against fraudulent practices to its injury, this Court is not
prepared to declare that the state has acted beyond its power or
the necessities of the case.
While it is the duty of the federal courts to protect federal
rights from infringement, they should not strike down a police
regulation of a state that does not clearly violate the federal
Constitution; they cannot overthrow police legislation because they
consider it unwise or inexpedient.
House v. Mayes, ante,
p.
219 U. S. 270.
Although the due process clause of the Fourteenth Amendment
secures liberty of contract, it does not confer liberty to
disregard lawful police regulations of the state established by the
state for all within its jurisdiction.
Page 219 U. S. 286
A classification of persons keeping places where stocks, bonds
and such commodities as grain, petroleum and cotton are dealt in
for future and not actual delivery is a reasonable one, and not a
denial of equal protection of the laws.
The fact that commodities in course of transportation in
interstate commerce are dealt in at certain places does not render
a state police statute regulating sales, and imposing stamp tax on
records of transactions thereat, which is otherwise valid, an
unconstitutional regulation of interstate commerce.
Hatch v.
Reardon, 204 U. S.
502.
It is not a violation of the due process or equal protection
clause of the Fourteenth Amendment or an unconstitutional
regulation of interstate commerce for a state to prohibit the
keeping of a place where purchases or sales are made of stocks,
bonds, petroleum, grain, cotton, etc., on margins or otherwise, not
paid for or delivered at the time, without record of sale and stamp
tax, by a statute applicable to all persons keeping such places,
and so
held as to the Missouri statute to that effect of
March 8, 1907.
The facts, which involve the constitutionality of a statute of
Missouri prohibiting the keeping of places for dealing in stocks,
bonds and commodities for future delivery except under certain
conditions, are stated in the opinion.
Page 219 U. S. 289
MR. JUSTICE HARLAN delivered the opinion of the Court.
This is an indictment in the criminal court of Jackson County,
Missouri, against the plaintiffs in error, Broadnax and Essex. It
is based on a statute of Missouri, approved March 8th, 1907
(Mo.Sess. Acts 1907, pp. 392, 393; Mo.Rev.Stat. 1909, §§ 10,228 and
10,230), which declares it to be
"unlawful for any corporation, association, copartnership, or
person to keep, or cause to be kept, in this state any office,
store, or other place wherein is permitted the buying or selling
the shares of stocks or bonds of any corporation, or petroleum,
cotton, grain, provisions, or other commodities, either on margins
or otherwise, where the same is not at the time actually paid for
and delivered, without at the time of the sale the seller shall
cause to be made a complete record of the things sold, the
purchaser, and the time of delivery, in a book kept for that
purpose, and at the time the seller shall deliver to the purchaser
a written or printed memorandum of said sale, on which he shall
place, or cause to be placed, a stamp of the value of twenty-five
cents, which the seller shall purchase of the state auditor, and
have on hand before might result to the injury or inconvenience
duty of the state auditor, upon the passage of this act, to have
printed or engraved stamps for this purpose, of such design as he
may select, and on application and
Page 219 U. S. 290
payment for said stamps, to immediately furnish the same to the
applicants applying therefor: Provided, further, and it shall be
unlawful for the purchaser to receive the memoranda aforesaid until
it bears the stamp above provided for. § 2. The fund arising from
the sale of the stamps provided for in § 1 of this act shall, in
the hands of the State Auditor, constitute a road fund, and it
shall be the duty of the said auditor to distribute said fund
annually to the counties in the state and the City of St. Louis, in
the same proportion and in like manner as the state school funds
are now distributed by him. § 3. Any person, whether acting
individually or as a member, or as an officer, agent, or employee
of any corporation, association, or copartnership, who shall be
guilty of violating any of the provisions of section one shall,
upon conviction thereof, be fined in any sum not less than fifty,
nor more than one thousand dollars, and in addition thereto may be
imprisoned in the county or city jail for a period of not less than
thirty days, nor to exceed one year."
The indictment charges that the defendants, being officers and
agents of the Board of Trade of Kansas City, Missouri, did at a
time specified, willfully and unlawfully keep and caused to be kept
a place, commonly called the trading floor of the Board of Trade of
Kansas City, wherein was permitted the buying and selling of grain,
provisions, and other commodities, on margins and otherwise, and
where, at the time of such sales, so permitted, the grain,
provisions, and other commodities so sold, were not actually paid
for and delivered, and at such time and place the sellers, or any
of them, of the grain, provisions, and other commodities, so sold
on margins and otherwise, did not then and there cause to be made a
complete record of the commodities sold and the time of delivery in
a book kept for that purpose, and at said time and place neither
the sellers, nor any of them, delivered to the purchasers
Page 219 U. S. 291
a written or printed memoranda of said sales, on which they, the
sellers, or any of them, had placed or caused to be placed a stamp
of the value of twenty-five cents, which they had purchased of the
state auditor, and had on hand before making such sales; contrary
to the statutes, etc.
The defendants demurred to the indictment on the ground, among
others, that the statute was in violation of the Fourteenth
Amendment, as well as of the commerce provision of the Constitution
of the United States. The demurrer was overruled and the defendants
excepted. A jury was waived, and the case was tried by the
court.
Before the introduction of evidence, the defendants objected to
any proof, resting their objection upon these grounds: 1. that the
statute was discriminatory, abridged the privileges and immunities
of citizens of the United States, deprived defendants of their
property without due process of law, and denied to them the equal
protection of the law, contrary to the provisions of the Fourteenth
Amendment of the Constitution of the United States; 2. that it was
an unwarranted attempt to regulate interstate commerce.
The objection was also made that the statute was in violation of
certain alleged provisions of the Constitution of Missouri. But
with the latter ground we have, for obvious reasons, no concern on
this writ of error from the state court. The above objections to
the evidence were overruled, the defendants duly excepting.
For the purpose of the case, and subject to such objections as
might be thereafter stated, facts were admitted which brought the
case within the provisions of the statute and the averments of the
indictment.
The defendants objected to these facts as incompetent and
inconsistent with the Constitutions both of the United States and
of Missouri. The objections were overruled and the defendants
excepted. To the above statement
Page 219 U. S. 292
of admitted facts this was added:
"A substantial part of the sales aforesaid being of grain,
provisions, and other commodities which were at the time of sale,
in course of transportation as articles of interstate
commerce."
The state objected to the facts just stated as incompetent and
irrelevant. The objection was overruled, and the state
excepted.
The result of the trial was a judgment that the defendants were
guilty, and they were fined each $50. Motions for a new trial and
for the arrest of judgment having been severally denied, the case
was taken by appeal to the Supreme Court of Missouri, where the
judgment of the trial court was affirmed.
The assignments of error present the same questions of
constitutional law that were raised by the defendants' demurrer and
objections to evidence.
The words of the statute show that the keeping of a place where
corporate stocks and bonds, as well as grains, provisions, and
other commodities were bought and sold, but not paid for at the
time, without a complete record of the transaction (including a
minute of the time of delivery) in a book kept for that purpose,
and without the purchaser receiving a printed or written memorandum
of the sale, needed to be regulated, so as to protect the public
against unfair or fraudulent practices that might result to the
injury or inconvenience of the general public. We are not prepared
to hold that the state in this matter has exceeded the bounds of
reason, or has legislated beyond the necessities of the case, or
has arbitrarily interfered with the course of ordinary business
among its people. While it is the duty of the federal courts, if
their jurisdiction be lawfully invoked, to see to it that the
constitutional rights of the citizen are not infringed by the state
or by its authorized agents, they should not strike down an
enactment or regulation adopted by the state under its police
power, unless it be clear that the declaration
Page 219 U. S. 293
of public policy contained in the statute is plainly in
violation of the federal Constitution. Much may be done by a state
under its police power which many may regard as an unwise exertion
of governmental authority. But the federal courts have no power to
overthrow such local legislation simply because they do not approve
it, or because they deem it unwise or inexpedient. What we have
said in
House v. Mayes, ante, p.
219 U. S. 270, as
to the nature and extent of the police power of the state is
applicable to this case, and need not be here repeated.
Suffice it on this point to adjudge, as we now do, that the
federal Constitution does not prevent the enforcement by the state
of the provision making it unlawful to keep or cause to be kept in
the state an office, store, or
place, where things are
omitted to be done which the statute requires to be done at the
time bonds and stocks and commodities are sold and bought
in
such place. The defendants were indicted and found guilty of
keeping and causing to be kept such a
place as the statute
forbade to be kept or caused to be kept. We do not perceive that
any right secured by the Fourteenth Amendment is or has been
thereby violated. We could not adjudge otherwise without declaring
that the statute was so unreasonable and so far beyond the
necessities of the case as to be deemed a purely arbitrary
interference with lawful business transactions. We are unwilling to
so adjudge. Much was said at bar about the "liberty of contract."
In a large sense, every person has that liberty. It is secured by
the provision in the federal Constitution forbidding a state to
deprive any person of liberty or property without due process of
law. But the federal Constitution does not confer a liberty to
disregard regulations as to the conduct of business which the state
lawfully establishes for all within its jurisdiction.
It is contended that the statute is in violation of the
Fourteenth Amendment in that the classification of subjects
Page 219 U. S. 294
within the limits of the authorities levying the stamp tax is
not a true classification. Construing the statute, the state court
said:
"In our opinion, this law clearly embraces every class, whether
it be corporation, association, either voluntary or otherwise,
partnership, or person which furnishes a
place for dealing
in sales of stocks, bonds, etc., upon margins or otherwise, where
the same are not at the time actually paid for and delivered, and
embraces all classes who may deal in such places so furnished. It
is clear that the character of business which is treated of by the
statute is fully recognized as a separate and distinct business
from all other classes. That the statute embraces every class,
whether it be corporation, association, partnership, or person who
may furnish a place or who may deal in transactions in such places,
there can be, in our opinion, no sort of doubt; therefore, we
conclude that, so far as the class of persons to whom this law is
made applicable, whether natural or artificial, this statute
embraces the entire class, and is not subject to the objection that
it singles out a part of a legal class upon which the license or
stamp tax is imposed, and exempts others of the same class.
Manifestly, the selection of the business calling and the class
pursuing such calling were proper and appropriately selected by the
legislature of this state in dealing with that subject."
Of course, we take the statute as a local law to mean what the
court says it means. Nor is there any force in the objection that
the classification, as shown by the statute, is arbitrary and
unreasonable. The same methods and means are applied equally to all
of the same class.
Kentucky Railroad Tax Cases,
115 U. S. 321,
115 U. S. 337;
Magoun v. Illinois Trust & Savings Bank, 170 U.
S. 283;
Barbier v. Connolly, 113 U. S.
27,
113 U. S.
32.
Again, it is said that the statute, by its necessary operation,
is a regulation of interstate commerce. Not so. It might suffice,
in the present case, to say that, under
Page 219 U. S. 295
the facts admitted, there is no reason whatever to invoke the
commerce clause of the federal Constitution. All that the
defendants offered to show in this connection was that a
substantial part of the sales referred to were of grain,
provisions, and other commodities which were at the time of sale in
course of transportation as articles of interstate commerce. With
this state of facts and
no more before it, the supreme
court of the state said:
"The requirements of the statute now under consideration have no
bearing or influence whatever upon property sold. It is addressed
to those furnishing the
places, as well as those who deal
in the transaction
in such places. In other words, in
sales of property in the manner and
at the places pointed
out by the statute, it is required, where a sale is made in
the manner contemplated by that statute, that the seller shall make
a memorandum of such sale and place upon such memorandum a
twenty-five cent stamp. We repeat that transactions of this
character have no influence whatever upon commerce between
different states, and, as was in substance said by the Supreme
Court of the United States [
Hatch v. Reardon, 204 U. S.
152], sales of this character do not contemplate or have
anything to do with the transportation of property from one state
to another, as in the drummer cases, and the mere fact that the
parties to such sale, or either one of them, happens to be a
resident of another state, in no way, legally or practically,
affects the transaction, and falls far short of subjecting such
transaction to condemnation for the reason that it interferes with
interstate commerce. Our conclusion upon this proposition is that
this statute in no way interferes with interstate commerce, and
should not be held invalid for that reason."
We add that the indictment deals with the
place where
sales, such as the statute describes, are made. The offense is
complete under the statute, by the keeping of such a place, and
that occurs before any question of interstate
Page 219 U. S. 296
commerce could arise, so far as this record discloses.
We do not perceive that any error of law was committed by the
state court, and its judgment is
Affirmed.