Harbison v. Knoxville Iron Co.

• Decision Date: 08 November 1899
• Citation: 53 S.W. 955,103 Tenn. 421
• Parties: HARBISON v. KNOXVILLE IRON CO.
• Court: Tennessee Supreme Court

53 S.W. 955

103 Tenn. 421

HARBISON v. KNOXVILLE IRON CO.

Supreme Court of Tennessee.

November 8, 1899

Appeal from chancery court, Knox county; Hugh G. Kyle, Chancellor.

Action by Sam Harbison against the Knoxville Iron Company. From a decree of the court of chancery appeals affirming a decree for plaintiff, defendant appeals. Affirmed.

Lucky Sanford & Fowler, for appellant.

Green & Shields, for appellee.

CALDWELL J.

The bill in this case was filed to collect an alleged indebtedness of $1,678. The chancellor granted the relief sought, and the court of chancery appeals affirmed his decree. The defendant is a domestic corporation, engaged in the manufacture and sale of iron and in the mining and sale of coal. It employs about 200 laborers, and has one regular pay day each month, being that Saturday which is nearest to the 20th of the particular month. On this day each employé is paid in cash the amount due him up to the 1st day of the month, but never up to the day of payment. On every Saturday in the month, however, the defendant holds itself in readiness to pay all of its employés the full amount then due them if they will receive it in orders for coal at 12 cents per bushel; and the afternoon of every Saturday, from 1 o'clock to 5 o'clock, is set apart for that purpose. About 75 per cent. of all the wages earned by the laborers is paid in these coal orders. The orders are in the following form: "Let bearer have -- bushels of coal, and charge to my account. [Signed] --. Accepted --, 1899. Knoxville Iron Company." The complainant purchased 614 of these orders aggregating $1,678, and thereafter presented them to the defendant on a regular pay day, and demanded payment in cash. Payment being refused, he brought this suit to collect the several orders. He bases his action on sections 1 and 2 of chapter 11 of the Acts of 1899, which are in the following language, viz.:

"Section 1. Be it enacted by the general assembly of the state of Tennessee, that all persons, firms, corporations and companies using coupons, scrip, punchouts, store orders, or other evidences of indebtedness to pay their or its laborers and employees, for labor or otherwise, shall if demanded, redeem the same in the hands of such laborer, employee or bona fide holder, in good and lawful money of the United States: provided, the same is presented and redemption demanded of such person, firm, company or corporation using same as aforesaid, at a regular pay day of such person, firm, company or corporation to laborers or employees, or if presented and redemption demanded as aforesaid by such laborers, employees or bona fide holders at any time not less than thirty days from the issuance or delivery of such coupons, scrip, punchout, store order, or other evidences of indebtedness to such employees, laborers or bona fide holders. Such redemption to be at the face value of said scrip, punchout, coupon, store order or other evidence of indebtedness: provided further, said face value shall be in cash the same as its purchasing power in goods, wares and merchandise at the commissary, company store or other repository of such company, firm, person or corporation aforesaid.

"Sec. 2. Be it further enacted, that any employee, laborer, or bona fide holder referred to in section 1 of this act, upon presentation and demand for redemption of such scrip, coupon, punchout, store order or other evidence of indebtedness aforesaid, and upon refusal of such person, firm, corporation or company to redeem the same in good and lawful money of the United States, may maintain in his, her or their own name an action before any court of competent jurisdiction against such person, firm, corporation or company, using same as aforesaid for the recovery of the value of such coupon, scrip, punchout, store order or other evidence of indebtedness, as defined in section 1 of this act."

The company defends upon three grounds: (1) That the act does not apply to a case like this; (2) that complainant is not a bona fide holder; and (3) that the act is unconstitutional. These defenses will be considered in the order named.

1. The substance of the first contention is that by a correct construction it must be held that "all persons, firms, corporations, and companies using coupons, scrip, punchouts, store orders, or other evidences of indebtedness to pay their or its laborers or employés" means only such persons, firms, corporations, and companies as are accustomed to use coupons, scrip, punchouts, store orders, or other evidences of indebtedness to pay their or its laborers or employés, and as so use them arbitrarily; and that the defendant has no such custom, and is, therefore, not included in the terms of the act. No reason is perceived by the court for so restricting and limiting the broad and unqualified words of the statute. The evident intention of the legislature was to include every person, firm, corporation, and company using coupons, scrips, punchouts, store orders, or other evidences of indebtedness to pay their or its laborers and employés, whether such use be habitual and arbitrary, or only occasional and without constraint. But, if this were not true, the defendant is included by its own construction. The court of chancery appeals found that the defendant is so accustomed to use coal orders that it in that "way pays off about seventy-five per cent. of the wages earned by its employés," and that its course of business in that respect is one "whereby employés are systematically, in the main, settled with in coal orders instead of cash, and where, though there is no compulsion in form, yet in fact, by holding back their wages, such a motive power is brought to bear upon their freedom of choice as to practically amount to coercion"; that "the facts of the case show a species of compulsion whereby the defendant takes advantage of the necessities of the improvidence of its employés, and so places them in a position where they feel compelled to take their wages in coal orders." So that by the true construction, and also by that suggested by the defendant, it is included in the provisions of the statute.

2. It is next contended that complainant is not a bona fide holder, because he purchased the coal orders sued upon at a discount of 15 cents on the dollar. It is true that complainant gave only 85 cents on the dollar for these orders, but that does not prevent him from being a bona fide holder within the meaning of the statute. He made the purchases upon the open market, fairly and honestly, and gave 10 cents more on the dollar for the orders than they had usually sold for. To constitute him a bona fide holder, it is only necessary that he should have bought the orders fairly, honestly, and for a reasonable price, in good faith, as contradistinguished from bad faith. The suggestion that complainant's recovery, if allowed at all, should be limited to the price paid, is conclusively answered by the provisions of the statute that the redemption or recovery shall be for "the face value of such scrips, punchouts, coupons, store orders, or other evidences of indebtedness."

3. Finally, it is said that the act abridges the right of contract, and for that reason it is challenged as repugnant to that part of section 1 of the fourteenth amendment to the constitution of the United States which declares that no state shall "deprive any person of life, liberty or property without due process of law," and to that part of section 8 of article 1 of the constitution of Tennessee which declares that "no man shall be *** deprived of his life, liberty or property but by *** the law of the land." A corporation is a "person," within the provision against deprivation of life, liberty, or property "without due process of law" (Turnpike Road Co. v. Sandford, 164 U.S. 578, 17 S.Ct. 198, 4 L.Ed 560; Railway Co. v. Ellis, 165 U.S. 154, 17 S.Ct. 255, 41 L.Ed. 666; Dugger v. Insurance Co., 95 Tenn. 250, 32 S.W. 5, 28 L. R. A. 796), and it is a "man" within the provision against deprivation of liberty or property otherwise than by "the law of the land" ( Railroad Co. v. Harris, 99 Tenn. 705, 43 S.W. 115). Hence the defendant, which is a corporation, is entitled to the protection guarantied by both provisions. The "liberty" contemplated in each provision means not only the right of freedom from servitude, imprisonment, or physical restraint, but also the right to use one's faculties in all lawful ways, to live and work where he chooses, to pursue any lawful calling, vocation, trade, or profession, to make all proper contracts in relation thereto, and to enjoy the legitimate fruits thereof. In re Jacobs, 98 N.Y. 98; Allgeyer v. Louisiana, 165 U.S. 589, 17 S.Ct. 427, 41 L.Ed. 832; Holden v. Hardy, 169 U.S. 391, 18 S.Ct. 383, 42 L.Ed. 780; Powell v. Pennsylvania, 127 U.S. 684, 8 S.Ct. 992, 1257, 32 L.Ed. 253. "Property," as the word is there used, signifies not only those tangible things of which one may be the owner, but everything he may have of an exchangeable value. It includes the right to acquire and dispose of property, and to make all lawful contracts essential to those ends; and such contracts are entitled to the same protection as the property itself. Holden v. Hardy, 169 U.S. 391, 18 S.Ct. 383, 42 L.Ed. 780; Dugger v. Insurance Co., 95 Tenn. 252, 32 S.W. 5, 28 L. R. A. 796; Third Nat. Bank v. Divine Grocery Co., 97 Tenn. 611, 612, 37 S.W. 390. "In the privilege of pursuing an ordinary calling of trade and of acquiring, holding, and selling property must be embraced the right to make all proper contracts in relation thereto." Allgeyer v. Louisiana, 165 U.S. 591, 17 S.Ct. 432, 41 L.Ed. 836. "Labor is property, and, as such, merits protection. The right to make it available is next in importance to the rights...