Slovanian Literary & Social Ass'n v. City of Portland

COSHOW, J. The complaint -is probably demurrable. The defendants, however, answered and the cause was tried in the Circuit Court upon a demurrer to the answer. The defendants having submitted themselves to the jurisdiction of equity and — 347 — the suit having been determined upon the issues joined voluntarily by the parties, we deem it more satisfactory to determine the appeal upon the same issues. Upon a demurrer the complaint would have been construed strictly. After the decree, it will be construed as favorably to the plaintiff as its language will permit: 1 Pom. Eq. Juris., §§ 129, 130 (4 ed.). One of the objects of the plaintiff corporation is described as follows: “To provide amusement, entertainment and instructions for its members, including the providing of paraphernalia and apparatus therefor; to provide club conveniences, accommodation, and privileges for its members.” The objects thus expressed in the articles of incorporation of the plaintiff are not unlawful. They may not be only harmless, but also beneficial. At the same time, because of the tendency to become harmful, the police power of the state has always included regulations and supervision of amusements and places of amusements. It does not follow, therefore, because the objects of the plaintiff corporation are lawful within themselves, that the conduct of the plaintiff in providing amusements and maintaining places for its members to enjoy amusements is beyond the police power of the state. The character of a social club depends not upon its objects, as expressed in its articles of incorporation, so much as it depends upon the character, conduct and disposition of its members. An incorporated club in itself has no character, conduct or disposition. Whether a club is a proper association of persons united together for the purpose of healthful and — 348 — lawful purposes depends therefore more largely upon its membership than upon anything else. “It may fairly be presumed that the members of all bona fide social clubs are what the members of the appellee club are shown to be, and what many of them are personally known to the members of this court to be, viz., gentlemen of high moral standing, who would not intentionally violate any penal law of the state. But in this, as in most instances of malum prohibitum, the question is, was the forbidden act intentionally done? and not with what intent was it done.” State v. Country Club (Tex. Civ.), 173 S. W. 570, 576. See also Commonwealth v. Pomphret, 137 Mass. 564, 567 (50 Am. Rep. 340). A material inquiry in the suit before us is the personnel of the officers and members of the plaintiff corporation, and whether it is a club in good faith is a question for future inquiry. “One inquiry always is whether the organization is bona fide a club with limited membership, into which admission cannot be obtained by any person at his pleasure, and in which the property is actually owned in common, with the mutual rights and obligations which belong to such common ownership, under the constitution and rules of the club, or whether either the form of a club has been adopted for other purposes, with the intention and understanding that the mutual rights and obligations of the members shall not be such as the organization purports to create, or a mere name has been assumed without any real organization behind it.” Commonwealth v. Pomphret, 137 Mass. 564, 567 (50 Am. Rep. 340). One of the maxims of equity is: “Equity looks to the intent rather than to the form.” The plaintiff having elected to submit, its complaint to a court of equity, it will be governed by the rules of equity. — 349 — “The principle involved in this maxim, which is one of great practical importance, pervades and affects to a greater or less degree the entire system of equity jurisprudence, and is inseparably connected with that which forms the subject of the preceding section. In fact, it is only by looking at the intent rather than at the form, that equity is able to treat that as done which in good conscience ought to be done.” 1 Pomeroy’s Equity Jurisprudence (4 ed.), § 378. The personal element is always an important one to be considered in licensing or regulating certain callings, occupations, amusements and sports under the police power of the state: Gundling v. Chicago, 177 U. S. 183 (44 L. Ed. 725, 20 Sup. Ct. Rep. 633, see, also, Rose’s U. S. Notes); Hall v. Geiger-Jones Co., 242 U. S. 539 (Ann. Cas. 1917C, 643, L. R. A. 1917F, 514, 61 L. Ed. 480, 37 Sup. Ct. Rep. 217); Riley v. Chambers, 181 Cal. 589 (185 Pac. 855, 8 A. L. R. 418); Town of Sumner v. Ward (Wash.), 217 Pac. 502; State ex rel. Minces v. Schoenig, 72 Minn. 528 (75 N. W. 711); State v. Cohen, 73 N. H. 543 (63 Atl. 928). The ordinance does not impair the obligation of any contract. The state could not, if it would, bargain away its police power. The police power is the very essence of the sovereignty of the state. The famous case of Trustees of Dartmouth College v. Woodward, 4 Wheat. (U. S.) 518 (4 L. Ed. 629, see, also, Rose’s U. S. Notes), does not enunciate any such doctrine as contended for by plaintiff in this suit. In that case the State of New Hampshire undertook to take property from the trustees of Dartmouth College, incorporated while that state was a colony subject to the king of Great Britain and Ireland, and vest that property in others. This is — 350 — clearly shown by the masterful argument of Webster in page 572: • “That all property, of which the use may be beneficial to the public, belongs, therefore, to the public, is quite a new doctrine. It has no precedent, and is •supported by no known principle. Dr. Wheelock might have answered his purposes, in this case, by executing a private deed of trust. He might have conveyed his property to trustees, for precisely such uses as are described in this charter. Indeed, it appears, that he had contemplated the establishment of his school in that manner, and had made his will, and devised the property to the same persons who were afterwards appointed trustees in the charter. * * In such a case, no lawyer would or could say, that the legislature might divest the trustees, constituted by deed or will, seize upon the property, and give it to other persons, for other purposes. And 'does the granting of a charter, which is only done to perpetuate the trust in a more convenient manner, make any difference? Does or can this change the nature of the charity, and turn it into a public, political corporation?” Mr. Chief Justice Marshall, on page 636, said: “From the fact, then, that a charter of incorporation has been granted, nothing can be inferred, which chang’es the character of the institution, or transfers to the government any new power over it. The character of civil institutions does not grow out of their incorporation, but out of the manner in which they are formed, and the objects for which they are" created. The right to change them is not founded on their being incorporated, but on their being the instruments of government, created for its purposes. The same institutions, created for the same objects, though not incorporated, would be public institutions, and, of course, be controllable by the legislature. The incorporating act neither gives nor prevents this control. Neither, in reason, can the incorporat — 351 — ing act change the character of a private eleemosynary institution.” So, the plaintiff in this suit stands in no favored position by reason of having been incorporated. Its members are entitled to the same protection, have the same liabilities and are subject to the sáme control as they would be if they were not incorporated. No property is sought to be taken from them by the defendants, nor is their franchise as a corporation molested. No attempt is alleged to have been made or threatened to interfere with the corporate affairs of the plaintiff other than by arresting the proper officers for not procuring a license. This does not bring the plaintiff within the principles enunciated in the Dartmouth College case. The principal contention of the plaintiff is that the ordinance is invalid because it authorizes arbitrary authority on the part of the council and the administrative officers of the city to their granting or refusing a license. The cases principally relied upon by the plaintiff are State ex rel. Makris v. Superior Court, 113 Wash. 296 (193 Pac. 845, 12 A. L. R. 1428), and Seattle v. Gibson, 96 Wash. 425 (185 Pac. 109). It is not questioned by the defendants that if the ordinance vests in the council and the administrative officers of the city arbitrary discretion to their granting or refusing a license the ordinance is invalid. The cases relied upon by the plaintiff are distinguished in the later case of Town of Sumner v. Ward (Wash.), 217 Pac. 502. In the last-named case on page 504, the court said: “In support of his second contention, the appellant cites and relies upon the cases of Seattle v. Gibson, 96 Wash. 425 (165 Pac. 109); State ex rel. Makris v. Superior Court, 113 Wash. 296 (193 Pac. 845, 12 A. L. R. 1428), and Vincent v. Seattle, 115 Wash. 475 — 352 — (197 Pac. 618). But an examination of the several ordinances in question in these cases will show that they differ in a material respect from the ordinance here in question. In each of them the question whether a license should be granted to an applicant was left to some person or body of persons who had power either to grant or refuse it as he or they so willed, regardless of any other consideration. But it is not so with the present ordinance. Here the person having authority to issue the license (the town clerk) must do so unless he has good reason to believe that the applicant is dishonest or immoral and desires the license to enable him to practice some dishonest or immoral act. The ordinance thus does not grant to the clerk arbitrary power to grant or refuse the license at his discretion. He is bound to grant the license to every applicant, unless he finds him disqualified for the reasons stated in the ordinance. The fact of fitness is submitted to the judgment of the officer and it calls for the exercise of a discretion of a judicial nature, and the action of the officer may be reviewed in the courts for an arbitrary exercise.” The opinion then cites many other cases. The language last above quoted is very pertinent to the instant suit. An examination of the ordinance, assailed by the plaintiff, discloses that an application for a license must be made in writing. The application is then referred to the inspector of licenses, who must then refer the same to the chief of police for investigation. The chief of police then is required to investigate the facts stated in said application and within ten days return said application to the bureau of licenses showing the police record, if any, of the location, and of the individuals, officers or trustees named in said application, together with his recommendation. “The inspector of licenses shall thereupon transmit such application together with the report and — 353 — recommendation of the chief of police to the council for hearing and shall forthwith notify the applicant of the time and place of such hearing. At such hearing, if the council shall determine from such application and the report of the chief of police, or otherwise, that such club is a bona fide clubf and organized and conducted for a lawful purpose, and that the persons interested in the ownership thereof and the officers and trustees thereof are law abiding persons and persons who will operate and conduct such club in a lawful manner, such application shall be approved and such license shall be granted, otherwise it shall be denied.” We have attempted to show hereinabove, by respectable authority, that places of amusement may be regulated under the police power of the state. The personnel conducting and operating such a place is of primary importance. The mere fact that the plaintiff is a social club does not exempt it from proper police regulations. The question, whether or not the applicant is a law-abiding person, is a question of fact to be determined after investigation. The question, whether the club is a social club organized in good faith for innocent and lawful purposes, is a question of fact to be determined upon investigation. There are other elements of fact stated in the ordinance which are to be determined by the properly appointed authorities. The discretion required to be exercised in the ordinance is a judicial discretion and not an arbitrary discretion. After an investigation and determination of the facts, and after a hearing upon notice to the applicant, the council has no discretion in the matter, but must issue the license or refuse to issue the license according to the determination upon the facts ascertained. The council is not authorized to discriminate between applicants who — 354 — qualify under the terms of the ordinance. The case of Yick Wo v. Hopkins, 118 U. S. 356 (30 L. Ed. 220, 6 Sup. Ct. Rep. 1064, see, also, Rose’s U. S. Notes), is not in point. In that case the question was not so much whether the ordinance itself was invalid as it was the administration of the ordinance. This case has been cited and distinguished in this state in a number of cases: See Thielke v. Albee, 79 Or. 48 (153 Pac. 793); Portland v. Traynor, 94 Or. 418, 424 (183 Pac. 933, 186 Pac. 54, 6 A. L. R. 1410). See, also, Goytino v. McAleer, 4 Cal. App. 655 (88 Pac. 991), and Gundling v. Chicago, cited above. Neither is the ordinance invalid because it grants to administrative officers and the council judicial discretion to investigate and pass upon the facts necessary to be determined under the ordinance to either grant or refuse a license: White v. Mears, 44 Or. 215 (74 Pac. 931); Portland v. Traynor, 94 Or. 418 (183 Pac. 933, 186 Pac. 54, 6 A. L. R. 1410); Lieberman v. Van De Carr, 199 U. S. 552 (50 L. Ed. 305, 26 Sup. Ct. Rep. 144, see, also, Rose’s U. S. Notes); Hall v. Geiger-Jones Co., 242 U. S. 539 (61 L. Ed. 480, 37 Sup. Ct. Rep. 217); 2 Dillon, Municipal Corporations (5 ed.), 934, 940, § 598; Yew Bow v. Cleveland, 99 Ohio St. 269 (124 N. E. 132, 12 A. L. R. 1424); Mutual Film Corp. v. Industrial Com. of Ohio, 236 U. S. 230 (Ann. Cas. 1916C, 296, 59 L. Ed. 552, 35 Sup. Ct. Rep. 387, see, also, Rose’s U. S. Notes). It is alleged in the answer that Marko Pivac, the manager of the plaintiff corporation, prior to the incorporation of the plaintiff, conducted at the place now claimed as the home of the plaintiff corporation, to wit, 50 North Third Street, — 355 — “the business of selling fruit, tobacco, soft drinks and other commodities to the general public, and at the same place established a pool room for the use of the general public, and that the said Marko Pivac continued to operate said business and said pool room under a license from the city of Portland until about January 10, 1923, at which time his license to conduct said business and said pool room was revoked by the council of the city of Portland on account of said Marko Pivac having permitted said premises at 50 North Third Street to become a common nuisance and a place where intoxicating liquor was sold and to which numerous persons resorted for the purpose of drinking intoxicating liquor. * * “That on or about the 17th day of January, 1923, while said 50 North Third Street was being operated by the said Marko Pivac by virtue of said temporary restraining order, one George L. Burch, a special police officer in the employ of the city of Portland, entered said premises and purchased therein moonshine whiskey; that again on January 19, 1923, said officer entered said premises and purchased a pint bottle of moonshine whiskey; that again on January 20, 1923, the said George L. Burch entered said premises and purchased a pint of moonshine whiskey, said purchases having been made with marked money; that based upon said purchases, employees of said Marko Pivac were arrested and afterward pleaded guilty in the federal court to selling intoxicating liquor in said premises, and that subsequent thereto, to wit, on or about April 30, 1923, the said Marko Pivae dismissed said suit in the circuit court for Multnomah County, and pretended to close said premises to the public; that thereafter the said Marko Pivac and others organized said pretended club and proceeded to carry on said business at said 50 North Third Street. “That said club is not a bona fide organization nor is the same a bona fide private club, but was organized as aforesaid by the said Marko Pivac for the purpose of evading the laws of the state of Oregon and of the city of Portland, and for the purpose of — 356 — carrying on without a license the identical business for which the said Marko Pivac was refused a license by the council of the city of Portland, and for the purpose of continuing said illegal operations.” These allegations are admitted by the demurrer of the plaintiff and must be taken as true. Does the plaintiff come into court with clean hands? It would be very difficult to imagine any fouler business than that of bootlegging. If there is anything that more deeply and viciously stains the hands of a litigant than bootlegging under the laws of the land, we do not know what it is. Equity will never lend its aid to protect business conducted either singularly or collectively, whether incorporated or not, from the legal consequences of their criminal acts. “He who comes into equity, must come with clean hands, is an equitable maxim of universal application.” 1 Pomeroy’s Equity Jurisprudence (4 ed.), §§ 397, 402 and 404. From page 738, we quote as follows: “It says that whenever a party, who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.” In matters of this kind Marko Pivac, the manager of the plaintiff corporation, represents that corporation. It is of no avail for him to say that he is not the actor or party plaintiff. The plaintiff corporation can act only through its officers and agents. The members will not be allowed to hide behind the organization to violate the laws of the land and to conduct a nefarious and injurious business. — 357 — “The public authorities have no right to interfere with the festivities of a private club organized for a legitimate purpose and conducted in a manner not amounting to a nuisance or breach of the peace.” 11 C. J. 925, § 10; Cer Francais de L’Harmonie v. French, 44 Hun (N. Y.), 123; Fairmont Athletic Club v. Bingham, 61 Misc. Rep. 419 (113 N. Y. Supp. 905). The prohibition of unlawful search and seizure was vigorously enforced by the courts of the common law of England and that prohibition is incorporated in the federal Constitution and in the Constitution of the state. It will be vigorously enforced by th'e courts on all proper occasions. It does not follow, however, that citizens or other persons within the boundaries of the state would be allowed to organize a club for the purpose of violating the laws of the land. The police power of the state has been conferred upon the City of Portland within the corporate limits of that city. Section 34 of the charter of the City of Portland in effect July 1, 1913. This is a lawful delegation of police power: 28 Cyc. 693. It will not be presumed that the city or its officers will unlawfully exercise that power: 2 Dillon on Municipal Corporations (5 ed.), § 598. The famous case of Yic Wo v. Hopkins, 118 U. S. 356 (30 L. Ed. 220; 6 Sup. Ct. Rep. 1064, see, also, Rose’s U. S. Notes), is ample assurance that the courts will protect the plaintiff against an abuse of that power in the administration of the ordinance attacked. The plaintiff is not in a situation to attack the section of the ordinance providing for police inspection. No act of inspection under the ordinance is complained of by the plaintiff. The argument attacking that part of the ordinance is predicated exclusively upon what might be done. The illustrations used by the plaintiff show that at least the ordinance — 358 — is not discriminating against the plaintiff but will include all other clubs organized for a similar purpose. The evil which the ordinance was designed to combat is concrete and not theoretical. It must be interpreted in that light: People v. Milone, 119 Misc. Rep. 22 (195 N. Y. Supp. 488). From page 489 (195 N. Y. Supp.) of the last cited case we take the following language: “The defendant ran a licensed pool parlor. * * As to whether or not the search was unreasonable, within the meaning of the statute, depends upon the circumstances, and is not influenced by the fact that it was without warrant. A search without warrant may be reasonable and a search with warrant may be unreasonable. * * The evil which our enactment was designed to combat was, therefore, concrete rather than theoretical. The statute must be interpreted in that light. It must not be permitted to afford a haven of protection for crime, by embarrassing legitimate functioning of the police power. The danger in stating in theory a remedy for a concrete condition is that the theory is apt to run wild and outstrip the sound purpose which gave it life. The welfare and protection of law-abiding people should be neither sacrificed nor impaired by maudlin construction of a statute, designed to benefit rather than to work against the best interests of organized society. It has always been permissible for police officers, in performance of their official function, to follow criminals into their hiding places, and to search the latter for evidence to support conviction. As to whether such search and seizure are unreasonable, or should be under warrant, depends upon the circumstances.” As to whether or not the inspection authorized by the ordinance is unreasonable and therefore invalid will depend more largely upon the manner in which it shall be conducted and the purposes to be accomplished. In the instant case that question is a mooted one and we do not care to theorize or speculate upon — 359 — it. “Sufficient unto the day is the evil thereof.” Matthew vi:34. Respectable authority has upheld similar ordinances providing for police inspection: Salt Lake City v. Wight, 60 Utah, 108 (205 Pac. 900); People v. Milone, 119 Misc. Rep. 22 (195 N. Y. Supp. 488); Commonwealth v. Carter, 132 Mass. 12; State v. Armeno, 29 R. I. 431 (72 Atl. 216). Even if the section of the ordinance providing for police inspection when properly presented should be held to be invalid, it does not follow that the remaining provisions of the ordinance would be invalid: 19 R. C. L. 816; Parker v. Hood River, 81 Or. 707 (160 Pac. 1158); Barton v. Recorder’s Court of Vale, 60 Or. 273 (119 Pac. 349). It follows, therefore, from these considerations that the decree of the Circuit Court must be reversed and this suit be remanded for further proceedings consistent with this opinion. Reversed and Remanded. Rehearing Denied. McBride, C. J., and Bean and McCourt, JJ., concur.