1. A Kansas statute making it a misdemeanor for any person to
engage "in the business of debt adjusting" except as an incident to
"the lawful practice of law" does not violate the Due Process
Clause of the Fourteenth Amendment, since States have power to
legislate against what they consider to be injurious practices in
their internal commercial and business affairs, so long as their
laws do not conflict with some specific federal constitutional
prohibition or some valid federal law. Pp.
372 U. S.
726-732.
2. The statute's exception of lawyers is not a denial of equal
protection of the laws to nonlawyers. Pp.
372 U. S.
732-733.
210 F. Supp. 299, reversed.
MR. JUSTICE BLACK delivered the opinion of the Court.
In this case, properly here on appeal under 28 U.S.C. § 1253, we
are asked to review the judgment of a three-judge District Court
enjoining, as being in violation of the Due Process Clause of the
Fourteenth Amendment, a Kansas statute making it a misdemeanor for
any person to engage "in the business of debt adjusting" except
as
Page 372 U. S. 727
an incident to "the lawful practice of law in this state."
[
Footnote 1] The statute
defines "debt adjusting" as
"the making of a contract, express, or implied with a particular
debtor whereby the debtor agrees to pay a certain amount of money
periodically to the person engaged in the debt adjusting business
who shall for a consideration distribute the same among certain
specified creditors in accordance with a plan agreed upon."
The complaint, filed by appellee Skrupa doing business as
"Credit Advisors," alleged that Skrupa was engaged in the business
of "debt adjusting" as defined by the statute, that his business
was a "useful and desirable" one, that his business activities were
not "inherently immoral or dangerous" or in any way contrary to the
public welfare, and that therefore the business could not be
"absolutely prohibited" by Kansas. The three-judge court heard
evidence by Skrupa tending to show the usefulness and desirability
of his business and evidence by the state officials tending to show
that "debt adjusting" lends itself to grave abuses against
distressed debtors, particularly in the lower income brackets, and
that these abuses are of such gravity that a number of States have
strictly regulated "debt adjusting" or prohibited it altogether.
[
Footnote 2] The
Page 372 U. S. 728
court found that Skrupa's business did fall within the Act's
proscription and concluded, one judge dissenting, that the Act was
prohibitory, not regulatory, but that, even if construed in part as
regulatory, it was an unreasonable regulation of a "lawful
business," which the court held amounted to a violation of the Due
Process Clause of the Fourteenth Amendment. The court accordingly
enjoined enforcement of the statute. [
Footnote 3]
The only case discussed by the court below as support for its
invalidation of the statute was
Commonwealth v. Stone, 191
Pa.Super. 117, 155 A.2d 453 (1959), in which the Superior Court of
Pennsylvania struck down a statute almost identical to the Kansas
act involved here. In
Stone, the Pennsylvania court held
that the State could regulate, but could not prohibit, a
"legitimate" business. Finding debt adjusting, called "budget
planning" in the Pennsylvania statute, not to be "against the
public interest," and concluding that it could "see no
justification for such interference" with this business, the
Pennsylvania court ruled that State's statute to be
unconstitutional. In doing so, the Pennsylvania court relied
heavily on
Adams v. Tanner, 244 U.
S. 590 (1917), which held that the Due Process Clause
forbids a State to prohibit a business which is "useful" and not
"inherently immoral or dangerous to public welfare."
Both the District Court in the present case and the Pennsylvania
court in
Stone adopted the philosophy of
Adams v.
Tanner, and cases like it, that it is the province of courts
to draw on their own views as to the morality,
Page 372 U. S. 729
legitimacy, and usefulness of a particular business in order to
decide whether a statute bears too heavily upon that business and,
by so doing, violates due process. Under the system of government
created by our Constitution, it is up to legislatures, not courts,
to decide on the wisdom and utility of legislation. There was a
time when the Due Process Clause was used by this Court to strike
down laws which were thought unreasonable, that is, unwise or
incompatible with some particular economic or social philosophy. In
this manner, the Due Process Clause was used, for example, to
nullify laws prescribing maximum hours for work in bakeries,
Lochner v. New York, 198 U. S. 45
(1905), outlawing "yellow dog" contracts,
Coppage v.
Kansas, 236 U. S. 1 (1915),
setting minimum wages for women,
Adkins v. Children's
Hospital, 261 U. S. 525
(1923), and fixing the weight of loaves of bread,
Jay Burns
Baking Co. v. Bryan, 264 U. S. 504
(1924). This intrusion by the judiciary into the realm of
legislative value judgments was strongly objected to at the time,
particularly by Mr. Justice Holmes and Mr. Justice Brandeis.
Dissenting from the Court's invalidating a state statute which
regulated the resale price of theatre and other tickets, Mr.
Justice Holmes said,
"I think the proper course is to recognize that a state
Legislature can do whatever it sees fit to do unless it is
restrained by some express prohibition in the Constitution of the
United States or of the State, and that Courts should be careful
not to extend such prohibitions beyond their obvious meaning by
reading into them conceptions of public policy that the particular
Court may happen to entertain. [
Footnote 4]
Page 372 U. S. 730
And, in an earlier case, he had emphasized that, 'The criterion
of constitutionality is not whether we believe the law to be for
the public good.' [
Footnote
5]"
The doctrine that prevailed in
Lochner, Coppage, Adkins,
Burns, and like cases -- that due process authorizes courts to
hold laws unconstitutional when they believe the legislature has
acted unwisely -- has long since been discarded. We have returned
to the original constitutional proposition that courts do not
substitute their social and economic beliefs for the judgment of
legislative bodies, who are elected to pass laws. As this Court
stated in a unanimous opinion in 1941, "We are not concerned . . .
with the wisdom, need, or appropriateness of the legislation."
[
Footnote 6] Legislative bodies
have broad scope to experiment with economic problems, and this
Court does not sit to
"subject the state to an intolerable supervision hostile to the
basic principles of our government and wholly beyond the protection
which the general clause of the Fourteenth Amendment was intended
to secure. [
Footnote 7]"
It is now settled that States
"have power to legislate against what are found to be injurious
practices in their internal commercial and business affairs, so
long as their laws do
Page 372 U. S. 731
not run afoul of some specific federal constitutional
prohibition, or of some valid federal law. [
Footnote 8]"
In the face of our abandonment of the use of the "vague
contours" [
Footnote 9] of the
Due Process Clause to nullify laws which a majority of the Court
believed to be economically unwise, reliance on
Adams v.
Tanner is as mistaken as would be adherence to
Adkins v.
Children's Hospital, overruled by
West Coast Hotel Co. v.
Parrish, 300 U. S. 379
(1937). Not only has the philosophy of
Adams been
abandoned, but also this Court, almost 15 years ago, expressly
pointed to another opinion of this Court as having "clearly
undermined"
Adams. [
Footnote 10] We conclude that the Kansas Legislature was
free to decide for itself that legislation was needed to deal with
the business of debt adjusting. Unquestionably, there are arguments
showing that the business of debt adjusting has social utility, but
such arguments are properly addressed to the legislature, not to
us. We refuse to sit as a "superlegislature to weigh the wisdom of
legislation," [
Footnote 11]
and we emphatically refuse to go back to the time when courts used
the Due Process Clause "to strike down state laws, regulatory of
business and industrial conditions, because they may be unwise,
improvident,
Page 372 U. S. 732
or out of harmony with a particular school of thought."
[
Footnote 12] Nor are we
able or willing to draw lines by calling a law "prohibitory" or
"regulatory." Whether the legislature takes for its textbook Adam
Smith, Herbert Spencer, Lord Keynes, or some other is no concern of
ours. [
Footnote 13] The
Kansas debt adjusting statute may be wise or unwise. But relief, if
any be needed, lies not with us, but with the body constituted to
pass laws for the State of Kansas. [
Footnote 14]
Nor is the statute's exception of lawyers a denial of equal
protection of the laws to nonlawyers. Statutes create many
classifications which do not deny equal protection; it is only
"invidious discrimination" which offends the Constitution.
[
Footnote 15] The business
of debt adjusting gives rise to a relationship of trust in which
the debt adjuster will, in a situation of insolvency, be
marshalling assets in the manner of a proceeding in bankruptcy. The
debt adjuster's client may need advice as to the legality of the
various claims against him remedies existing under state laws
governing debtor-creditor relationships, or provisions of the
Bankruptcy Act -- advice which a nonlawyer cannot lawfully give
him. If the State of Kansas wants to limit debt adjusting to
lawyers, [
Footnote 16] the
Equal Protection
Page 372 U. S. 733
Clause does not forbid it. We also find no merit in the
contention that the Fourteenth Amendment is violated by the failure
of the Kansas statute's title to be as specific as appellee thinks
it ought to be under the Kansas Constitution.
Reversed.
MR. JUSTICE HARLAN concurs in the judgment on the ground that
this state measure bears a rational relation to a constitutionally
permissible objective.
See Williamson v. Lee Optical Co.,
348 U. S. 483,
348 U. S.
491.
[
Footnote 1]
Kan.Gen.Stat.(Supp.1961) § 21-2464.
[
Footnote 2]
Twelve other States have outlawed the business of debt
adjusting. Fla.Stat.Ann. (1962) §§ 559.10-559.13; Ga.Code Ann.
(Supp.1961) §§ 84-3601 to 84-3603; Me.Rev.Stat.Ann. (Supp.1961) c.
137, §§ 51-53; Mass.Gen.Laws Ann. (1958) c. 221, § 46C;
N.J.Stat.Ann. (Supp.1962) 2A:-99A-1 to 2A:99A-4; N.Y.Penal Law
(Supp.1962) §§ 410-412; Ohio Rev.Code Ann. (1962 Supp.) §§
4710.01-4710.99; Okl.Stat.Ann. (Supp.1962) Tit. 24, §§ 15-18;
Pa.Stat.Ann. (Supp.1961) Tit. 18, § 4899; Va.Code Ann. (1958) §
54-44.1; W.Va.Code Ann. (1961) § 6112(4); Wyo.Stat.Ann. (1957) §§
33-190 to 33-192. Seven other States regulate debt adjusting.
Cal.Fin.Code Ann. (1955 and Supp. 1962) §§ 12200-12331;
Ill.Stat.Ann. (Supp.1962) c. 16 1/2, §§ 251-272; Mich.Stat.Ann.
(Supp.1961) §§ 23.630(1)-23.630(18); Minn.Stat.Ann. (1947 and 1962
Supp.) §§ 332.04-332.11; Ore.Rev.Stat. (1961) §§ 697.610-697.992;
R.I.Gen. Laws (Supp.1962) §§ 5-42-1 to 5-42-9; Wis.Stat.Ann. (1957)
§ 218.02. The courts of New Jersey have upheld a New Jersey statute
like the Kansas statute here in question.
American Budget Corp.
v. Furman, 67 N.J.Super. 134,
170 A.2d 63,
aff'd per curiam, 36 N.J. 129, 175 A.2d
622 (1961).
[
Footnote 3]
Skrupa v. Sanborn, 210 F.
Supp. 200 (D.C.D.Kan.1961).
[
Footnote 4]
Tyson & Brother v. Banton, 273 U.
S. 418,
273 U. S. 445,
273 U. S. 446
(1927) (dissenting opinion). Mr. Justice Brandeis joined in this
dissent, and Mr. Justice Stone dissented in an opinion joined by
Mr. Justice Holmes and Mr. Justice Brandeis. Mr. Justice Sanford
dissented separately.
[
Footnote 5]
Adkins v. Children's Hospital, 261 U.
S. 525,
261 U. S. 567,
261 U. S. 570
(1923) (dissenting opinion). Chief Justice Taft, joined by Mr.
Justice Sanford, also dissented. Mr. Justice Brandeis took no
part.
[
Footnote 6]
Olsen v. Nebraska ex rel. Western Reference & Bond
Assn., 313 U. S. 236,
313 U. S. 246
(1941) (upholding a Nebraska statute limiting the amount of the fee
which could be charged by private employment agencies).
[
Footnote 7]
Sproles v. Binford, 286 U. S. 374,
286 U. S. 388
(1932). And Chief Justice Hughes, for a unanimous Court, added,
"When the subject lies within the police power of the state,
debatable questions as to reasonableness are not for the courts,
but for the Legislature, which is entitled to form its own
judgment, and its action within its range of discretion cannot be
set aside because compliance is burdensome."
Id. at
286 U. S.
388-389.
[
Footnote 8]
Lincoln Federal Labor Union, etc. v. Northwestern Iron &
Metal Co., 335 U. S. 525,
335 U. S. 536
(1949).
Mr. Justice Holmes even went so far as to say that,
"subject to compensation when compensation is due, the
Legislature may forbid or restrict any business when it has a
sufficient force of public opinion behind it."
Tyson & Brother v. Banton, 273 U.
S. 418,
273 U. S. 445,
273 U. S. 446
(1927) (dissenting opinion).
[
Footnote 9]
See Adkins v. Children's Hospital, 261 U.
S. 525,
261 U. S. 567,
261 U. S. 568
(1923) (Holmes, J., dissenting).
[
Footnote 10]
Lincoln Federal Labor Union, etc. v. Northwestern Iron &
Metal Co., 335 U. S. 525,
335 U. S. 535
(1949), referring to
Olsen v. Nebraska ex rel. Western
Reference & Bond Assn., 313 U. S. 236
(1941). Ten years later, in
Breard v. Alexandria,
341 U. S. 622,
341 U. S.
631-632 (1951), this Court again commented on the
infirmity of
Adams.
[
Footnote 11]
Day-Brite Lighting, Inc., v. Missouri, 342 U.
S. 421,
342 U. S. 423
(1952).
[
Footnote 12]
Williamson v. Lee Optical Co., 348 U.
S. 483,
348 U. S. 488
(1955).
[
Footnote 13]
"The 14th Amendment does not enact Mr. Herbert Spencer's Social
Statics."
Lochner v. New York, 198 U. S.
45,
198 U. S. 74,
198 U. S. 75
(1905) (Holmes, J., dissenting).
[
Footnote 14]
See Daniel v. Family Security Life Ins. Co.,
336 U. S. 220,
336 U. S. 224
(1949);
Secretary of Agriculture v. Central Roig Ref. Co.,
338 U. S. 604,
338 U. S. 618
(1950).
[
Footnote 15]
See Williamson v. Lee Optical Co., 348 U.
S. 483,
348 U. S.
488-489 (1955);
Lindsley v. Natural Carbonic Gas
Co., 220 U. S. 61,
220 U. S. 78-79
(1911).
[
Footnote 16]
Massachusetts and Virginia prohibit debt pooling by laymen by
declaring it to constitute the practice of law. Mass.Gen.Laws Ann.
(1958) c. 221, § 46C; Va.Code Ann. (1958) § 54-44.1. The
Massachusetts statute was upheld in
Home Budget Service, Inc.,
v. Boston Bar Assn., 335 Mass. 228,
139
N.E.2d 387 (1957).