Humes v. City of Ft. Smith

ROGERS, District Judge (after stating the facts as above). In the view which the court takes of this case, it is no-t important to determine all the questions discussed by counsel. The defendant insists that the court is without jurisdiction, because the amount in controversy does not exceed the sum of $2,000; that is to say, that the amount which the complainant would have to pay for license to conduct his business does not amount to that sum. Jurisdiction is not determined in that way. Jurisdiction is determined by the value of the right to be protected, or the extent of the injury to be prevented, by the injunction. Railway Co. v. McConnell, 82 Fed. 65. Nor does the court think that the purpose and object of the injunction is to prevent criminal prosecutions. The bill was filed before any criminal prosecutions were instituted, and the object and purpose of the hill is to declare void the ordinance of the defendant city, and thereby prevent the destruction of, or at least great injury to, this business. The complainant insists that the ordinance is in violation of section 5, art. 16, of the constitution of Arkansas, which is as follows; “Sec. 5. All property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as tlie general assembly shall direct, making the same equal and uniform throughout the state. No one species of property from which a tax may be collected shall be taxed high [863] er than any other species of property'of an equal value, provided the general assembly shall have power, from time to time, to tax hawkers, peddlers, ferries, exhibitions and privileges in such maimer as may he deemed proper.” A proviso follows in this section, which it is unimportant to set out. The complainant also insists that the ordinance is in violation of the fourteenth amendment to the constitution of the United States. The view I am constrained to take of the facts renders it unnecessary to enter upon any dissertation upon the police power of the state, or upon constituí Lonal law, or to review the numerous authorities cited relating to these subjects. In City of Little Rock v. Barton, 33 Ark. 443, which was a proceeding against a broker, that court say: “The authority of the legislature to regulate the exercise of the privileges or the following of pursuits or occupations, does not fall properly within its taxing power, hut within its police power. Pursuits which are detrimental may be prohibited altogether, or licensed for a compensation to the public. So persons desiring to exercise privileges and engage in callings really useful to society may be required to obtain licenses, and pay a reasonable compensation therefor.” Mr. Justice Bradley, in Live-Stock Dealers' & Butchers’ Ass’n v. Crescent City Live-Stock Landing Slaughter-House Co., 1 Abb. (U. S.) 398, Fed. Cas. No. 8,408, said: “We may safely say that it is one of the privileges of every American citizen to adopt and follow such lawful industrial pursuits, not injurious to the community, as he may see fit, without unreasonable regulation or molestation.” It would lluis appear that the supreme court of the United States excepts from the operation of the fourteenth amendment pursuits “injurious to the community.” It recognizes the principle that such occupations or pursuits as fall within the police powers of the states are not affected „by the fourteenth amendment. Mugler v. Kansas, 123 U. S. 623, 8 Sup. Ct. 273. Manifestly, the legislature of the state regarded this gift enterprise business as detrimental to the community. I do myself. I do not regard it as a legitimate business. The legislature might have prohibited it altogether, in the exercise- of its police power; but it chose to license it, and make it a source of revenue to the city, as it does some other deleterious occupations, with which, in my opinion, the gift enterprise business should be classed. If right in this, the act of the city council, being clearly within the act of the legislature, is valid and binding, and neither the one nor the other infringes, I think, the provisions of the fourteenth amendment t:o the constitution of the United States. In Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 700, 16 Sup. Ct. 714, 723 (which is a case the facts of which are entirely different from the ones in the case at bar), the supreme court of the United States said: “These cases Freferring to various cases referred to in the opinion], however, do not infringe upon the general principles, so frequently declared, that, where the police power is invoked in good faith for the prohibition of a practice which llie legislature has declared to be detrimental to the public inierests, it will be sustained, wherever it can be done without the impairment of vested rights. Notwithstanding these cases, the general rule holds good that whatever is contrary to public policy or inimical to the public interests is subject to the police power of the state, and within legislative control; and in the'exercise of such power the legislature is vested with a large discretion, which, [864] if exercised bona fide for the protection of the public, is beyond the reach of judicial inquiry.” Illustrations of the exercise of this power are found in the cases cited in Crutcher v. Kentucky, 141 U. S. 61, 11 Sup. Ct. 851, and in the cases cited in Louisville & N. R. Co. v. Kentucky, supra. I am content, however, to rest my decision upon the reasoning and conclusions of the court in the case of Lansburgh v. District of Columbia, decided by the court of appeals of the District of Columbia and reported in 56 Alb. Law J. 493. While the details of that case are different from the details in this, the substantial facts are the same. That court, in summing up the facts, stated this: “In like manner, we think the case may be decided without reference to the numerous decisions' cited by counsel for the District, in each of which the element of chance in the distribution of gifts and prizes was the controlling fSet. Without the necessity of declaring that the acts proved in this case constitute the conduct of a lottery or gift enterprise, as those words are commonly understood, or even of finding that the element of chance operates intentionally and distinctively in the scheme of the trading stamp company, we think, nevertheless, that they come within the prohibition of the statute, which, as,before said, furnishes its own definition of ‘gift enterprise.’ Although one of the most shrewdly planned of the many devices to obtain something for nothing, and one apparently entirely novel, it could' hardly have come more clearly within the scope of the statute had it been well known, and expressly in the contemplation of congress, at the time of the enactment. The Washington Trading Stamp Company and its agents are not merchants engaged in business as that term is commonly understood. They are not dealers in ordinary merchandise, engaged in a legitimate attempt to obtain purchasers for their goods by offering fair and lawful inducements to trade. Their business is the exploitation of nothing more or less than a cunning device. With no stock in trade hut that device, and the necessary books and stamps, and so-called ‘premiums’ with which to operate it successfully, they have intervened in the legitimate business carried on in the District of Columbia between seller and buyer, not for the advantage of either, but to prey upon both. They sell nothing to the person to whom they furnish the premiums. They pretend sinrply to act for his benefit and advantage by forcing their stamps upon a perhaps unwilling merchant, who pays them in cash at the rate of $5 a thousand. The merchant who yields to their persuasion does so partly in the hope of obtaining the customers of another, and partly through fear 'of losing his own if he declines. Again, a limited number only (an apparently necessary feature of the scheme) are included in the list for the distribution of the stamps, and other merchants and dealers who cannot enter must ruu the risk of losing their trade, or else devise some other scheme to counteract the adverse agency. The stamps are sold at the rate of fifty cents per hundred to the contracting merchants, and yet purport to he redeemable with premium gifts at the assumed value of one dollar per hundred. Unless, therefore, the so-called ‘premiums’ to he distributed among the diligent collectors of the stamps are. grossly overvalued, the scheme cannot maintain itself, for, in addition to the actual cost of the premiums, it has to bear the cost of the books and stamps, and the maintenance of its office and exhibition room. If the premiums should have any fair value, then the stamp company must inevitably rely upon the failure of the presentation of tickets for redemption by reason of its requirement that not less than 990 tickets — representing cash purchases of $99.90— shall be pasted in a hook, and produced at one time, to entitle the holder .to his premium. In this event the company, if it actually contemplates making good its contracts, is relying upon a lottery; that is to say, the chances and advantages of its game for its expectations of profit or gain. There is not a shadow of rational foundation for the stamp company’s claim that it confers a benefit upon buyers by procuring for them an actual discount. If its business were continued, and its contracts faithfully performed, its inevitable result would be, as in all unnecessary interventions of third persons or ‘middle men’ [865] between producer and consumer, an increase of cost to the latter. The prohibition of such a scheme is clearly within the power of congress, within this District, and the statute under which the prosecution has been maintained malees anqile provision for its exercise.” I am unable to improve upon this statement as to nature and character of the eomplainaut’s business. It is insisted by counsel that the power of congress in the District of Columbia is not restrained by the fourteenth amendment. That contention is disposed of by what has already preceded. But the court of appeals of the District of Columbia, in the Lansburgh Case, 56 Alb. La,w J. 490, said: “It is not denied that the power of cod gross to legislate in respect of matters affecting the public health, safety, peace, and morals within the District of Columbia is the same as that of the state legislatures within their several jurisdictions. It is neither greater nor less: for ‘all of the guaranties of the constitution respecting life, liberty, and property are equally for the benefit of all citizens of the United States residing permanently or temporarily in the District of Columbia as of those residing in the several states of the Union,’ ” —citing U. S. v. Ross, 5 App. D. C. 241, 247, 248, 23 Wash. Law Rep. 86; Callan v. Wilson, 127 U. S. 510, 8 Sup. Ct. 1301. I conclude that wherever the thing Bought to be regulated is of such a nature as that the legislature might prohibit it outright, because detrimental to the public interests, or against the public health or public morals, the maimer of dealing wiih it is a matter solely addressed to the legislature, and is beyond judicial inquiry. The temporary restraining order is dissolved, and the bill dismissed, with costs.