Mutual Loan Co. v. Martell

• Decision Date: 06 January 1909
• Citation: 200 Mass. 482,86 N.E. 916
• Parties: MUTUAL LOAN CO. v. MARTELL.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

200 Mass. 482

86 N.E. 916

MUTUAL LOAN CO. v. MARTELL.

Supreme Judicial Court of Massachusetts, Suffolk.

January 6, 1909

COUNSEL

Carver & Carver, for appellant.

Otto C Scales, for appellee.

Guy A Ham, for Mill Men's Assn. of Greater Boston.

OPINION

KNOWLTON C.J.

This is an action of contract to recover the amount of two promissory notes for $27.50 each, which were given by two different persons, with an assignment by each of wages to be earned in the future in the defendant's service. The declaration contains two counts, one for the amount of each note, and in each count it is averred that the assignment was recorded in the clerk's office of the city of Boston and a copy of it served on the defendant, and that the assignor earned wages to the amount of the note in the service of the defendant, which the defendant is bound, under the assignment, to pay to the plaintiff. The case comes before us upon an agreed statement of facts, under which a judgment for the defendant was ordered in the superior court and the plaintiff appealed.

The defense is founded upon St. 1908, p. 714, c. 605, of which sections 7 and 8 are as follows:

'Sec. 7. No assignment of or order for wages to be earned in the future, to secure a loan of less than two hundred dollars, shall be valid against an employer of the person making said assignment or order, until said assignment or order is accepted in writing by the employer, and said assignment or order and the acceptance of the same have been filed and recorded with the clerk of the city or town where the party making said assignment or order resides, if a resident of the commonwealth, or in which he is employed, if not a resident of the commonwealth.

'Sec. 8. No such assignment of or order for wages to be earned in the future shall be valid when made by a married man, unless with the written consent of his wife to the making of such assignment or order attached thereto.'

Section 6 has this provision: 'National banks, all banking institutions which are under the supervision of the bank commissioner, and loan companies and loan associations established by special charters and placed under state supervision, shall be exempt from the provisions of this act.' Neither of these assignments was accepted in writing by the employer as required by section 7, and the assignor in the second assignment was a married man whose wife did not consent in writing to the making of the assignment. The question presented for our consideration is whether sections 7 and 8 are constitutional.

These sections interfere with the rights of the assignor and assignee to contract with each other, which right of contract, in general, is secured to all our citizens under the fourteenth amendment to the Constitution of the United States, as well as under the Constitution of Massachusetts. Such an interference by law with one's right to manage his property and to make contracts in relation to it and to pursue any proper vocation is in violation of the Constitution, unless it can be justified upon an independent ground. The defendant contends that there is such justification, in the present case, in the enactment of this statute by the Legislature in the exercise of the police power.

The state may legislate for the public health, the public safety, the public morals and the public welfare, in the exercise of this power. But, in balancing this right of the state against the constitutional right of the individual to personal liberty, it is often difficult to draw the line between permissible and impermissible legislation. The subject has been considered in many cases. Commonwealth v. Strauss, 191 Mass. 545, 78 N.E. 136, 11 L. R. A. (N. S.) 968; Commonwealth v. Pear, 183 Mass. 242, 66 N.E. 719, 67 L. R. A. 935; Commonwealth v. Interstate Consolidated Street Railway Company, 187 Mass. 436, 73 N.E. 530, 11 L. R. A. (N. S.) 973; Welch v. Swazey, 193 Mass. 365, 79 N.E. 745, 118 Am. St. Rep. 523; Squire v. Tellier, 185 Mass. 18, 69 N.E. 312, 102 Am. St. Rep. 322; Commonwealth v. Perry, 155 Mass. 117, 28 N.E. 1126, 14 L. R. A. 325, 31 Am. St. Rep. 533; Wyeth v. Thomas, 200 Mass. 474, 86 N.E. 925; Field v. Barber Asphalt Paving Company, 194 U.S. 618-621, 24 S.Ct. 784, 48 L.Ed. 1142; Yick Wo v. Hopkins, 118 U.S. 356-369, 6 S.Ct. 1064, 30 L.Ed. 220; Allgeyer v. Louisiana, 165 U.S. 589, 17 S.Ct. 427, 41 L.Ed. 832; Lochner v. New York, 198 U.S. 45-53, 25 S.Ct. 539, 49 L.Ed. 937.

In the present case we have to inquire how far the welfare of the community requires an interference by way of regulation with the right of workmen to dispose of their wages to be earned in the future. For many years statutes have been enacted in this commonwealth, and in other states, with a view to secure such wages against the bankruptcy of employers and other hazards. To a certain amount they are made a preferred claim in statutes relating to insolvency and bankruptcy. Rev. Laws, c. 163, § 118; U.S. Bankruptcy Law of 1898 (Act July 1, 1898, c. 541, 30 Stat. 563 [U. S. Comp. St. 1901, p. 3447]) § 64. To a certain amount they are exempt from attachment by trustee process. Rev. Laws, c. 189, § 27. They are required by law to be paid weekly, and the statute requiring it has been held constitutional. Rev. Laws, c. 106, § 62. Opinion of the Justices, 163 Mass. 589, 40 N.E. 713, 28 L. R. A. 344. It has been deemed important that they be received by the employé regularly and promptly after they are earned.

In International Text-Book Company v. Weissinger, 160 Ind. 349, 65 N.E. 521, 65 L. R. A. 599, 98 Am. St. Rep. 334 the court, in deciding that a statute which forbids altogether the assignment of future earnings of an employé was constitutional, used this language: 'A large proportion of the persons affected by these statutes are dependent upon their daily or weekly wages for the maintenance of themselves and their families. Delay of payment or loss of wages results in deprivation of the necessaries of life, suffering, inability to meet just obligations to others, and in many cases may make the wage-earner a charge upon the public. The situation of these persons renders them peculiarly liable to imposition and injustice at the hands of employers, unscrupulous tradesmen, and others, who are willing to take advantage of their condition. Where future wages may be assigned, the temptation to anticipate their payment and to sacrifice them for an inadequate consideration is often very great. Such assignments would, in many cases, leave the laborer or wageearner without present or future means of support. By removing the strongest incentive to faithful service, anticipation of pecuniary reward in the near future, their effect would be alike injurious to the laborer and his employer.' Without deciding, as the Supreme Court of Indiana did, that these considerations would furnish the Legislature constitutional authority for forbidding all assignments of wages, we think they justify a strict regulation of the right to make such contracts. The requirement that they be recorded is certainly reasonable. It tends to lessen the opportunity of wage-earners to be dishonest in procuring credit on the faith of their expected possession of earnings, as they might be if unrecorded assignments were outstanding. The requirement that the order or assignment be accepted in writing by the employer tends to diminish the risk of his refusal to pay, involving litigation the result of which might be loss of employment by the wage-earner and injury to the...