Sweat v. Commonwealth

• Decision Date: 13 June 1929
• Citation: 148 S.E. 774
• Parties: SWEAT. v. COMMONWEALTH.
• Court: Virginia Supreme Court

148 S.E. 774

SWEAT.

v.COMMONWEALTH.

Supreme Court of Appeals of Virginia.

June 13, 1929.

Error to Corporation Court of Norfolk.

Edward B. Sweat was convicted of unlawfully purchasing and taking an assignment of salary at a rate of discount exceeding 10 per cent, per annum, and he brings error. Affirmed.

Tazewell Taylor, of Norfolk, for plaintiff in error.

John R. Saunders, Atty. Gen., for the Commonwealth.

WEST, J. E. B. Sweat was convicted of unlawfully purchasing and taking an assignment of the salary of Geo. A. Benedict at a rate of discount in excess of 10 per cent, per annum, and sentenced to pay a fine of $25 and costs. This is a writ of error to that judgment.

That portion of subsection 14, § 1, chapter 300, of the Acts of the General Assembly of Virginia of 1922, as amended by chapter 152 of the Acts of 1928, under which the prosecution was conducted, reads as follows:

"The payment of three hundred dollars or less, in money, credit, goods or choses in action as the consideration for any sale, assignment, transfer or order for the payment of any wages, salary, commission or other compensation whatever for services, whether earned or to be earned, shall be deemed a loan within the provisions of this act, secured by such assignment, and the amount by which such assigned compensation exceeds such payment shall be deemed interest upon such loan from the date of such payment to the date such compensation is payable, which amount shall not, in any case, be more than may be sufficient to yield to the person making such loan, interest on his investment at the rate of ten per centum per annum. Such loan and such assignment shall, in all other respects, be governed by and subject to the provisions of this act.

"If judgment be obtained on any loan made under any of the provisions of this act, such judgment shall carry interest at the rate of six per centum per annum and no more.

"The violation of any provision of this act shall be a misdemeanor, punishment for which shall be as prescribed in section eighteen of chapter three hundred of the Acts of Assembly of nineteen hundred and twenty-two.

"All acts or parts of acts inconsistent with this act are hereby repealed."

That portion of section 14 not quoted is admitted to be constitutional.

The case was tried upon an agreed statement of facts entered into between the attorney for the commonwealth and counsel for the accused, as follows:

"George A. Benedict, witness for the commonwealth, being first duly sworn, states that on June 18, 1928, he signed the paper hereto attached as Exhibit A, entitled 'Offer to Sell Account Due Me for Salary or Wages, ' and on the same day signed the paper hereto attached as Exhibit B, entitled 'Bill of Sale of Earned Salary or Wage Account'; that the sum of $20 mentioned in said exhibits as due him for account of salary or wages represented the amount of said salary or wages earned by him for the period of June 11, 1928, to June 16, 1928, both inclusive, as an employee of the Tidewater Creditors' Bureau; that the said wages or salary were due and payable by the said Tidewater Creditors' Bureau to him on the 23d day of June, 1928; that the consideration paid him by the Southern Purchasing Company for the assignment of said salary or wages was $19.75; that by said assignment he relinquishes all interest in and to said wages or salary for the period designated, and the said Southern Purchasing Company became the absolute owner thereof.

"The entire transaction as above outlinedwas conducted, so far as the Southern Purchasing Company is concerned, by E. B. Sweat, who was acting as the manager thereof. The said application was made to the said manager, who informed him that the same was accepted, and the assignment of said wages or salary, when executed by him, was likewise delivered to said manager, who in turn delivered to him the consideration for said assignment, namely, $19.75, the entire transaction from beginning to end taking place in the city of Norfolk, Virginia, on June 18, 1928.

"E. B. Sweat, the accused, being first duly sworn, says that he is manager of the Southern Purchasing Company, whose place of business is located at Norfolk, Virginia, and as such manager he is familiar with the operation of said business, which is one of purchasing salary assignments; that the said company has been located and doing business in Norfolk approximately four (4) years, and that the average discounts for which salaries are purchased are necessary for the maintenance and operation of the said business, and to charge a less rate would be to operate the said business at a loss rather than a profit."

The only assignment of error relied on by the plaintiff in error, Sweat, is that subsection 14 of the act is unconstitutional, and that it violates the Fourteenth Amendment to the Constitution of the United States, and in that the state of Virginia thereby deprives him of his liberty and property without due process of law, and also denies him the equal protection of the law.

For some time prior to 1918 the money loan sharks and salary buyers were doing business in Virginia and elsewhere, and often imposed upon the ignorant and the needy by making small loans to them upon unfair and unjust terms. In 1918 Virginia enacted her first Uniform Small Loan Law (Acts 1918, c. 402) to regulate the manner of conducting this business. Similar legislation has been adopted in more than one-half the states.

Except when salary or wages were assigned as security for small loans, not until the amendment of subsection 14, chapter 152, of the Acts of 192S, page 563, had the statute made any reference in express terms to salary buying. The object of this amendment was to regulate the business of salary buying in this state.

Plaintiff in error admits that the first paragraph of subsection 14, as amended, which restricts the interest charged on loans of the character covered by the act, is constitutional and valid, but contends that the second clause of this section, which provides that "any sale, assignment, transfer or order for the payment of any wages, salary, commission or other compensation whatever for services, " the payment for which is $300 or less, shall be deemed a loan within the provisions of the act, secured by such assignment, and the amount by which such assigned compensation exceeds such payment shall be deemed interest upon such loan from the date of such payment to the date such compensation is payable, which amount should not in any case be more than 10 per cent, per annum, and that such assignment should in all other respects be governed by and subject to the provisions of this act, violates the Fourteenth Amendment to the Constitution of the United States.

Succinctly stated, the plaintiff in error contends that the effect of this amendment is to prevent a person to whom salary or wages are due from making a free and untrammeled disposition of the same, thereby depriving the person of his liberty and property without due process of law.

It is true that the Constitution guarantees the citizen the right to make contracts by which he acquires or disposes of his property.

In Coppage v. Kansas, 236 U. S. 14, 35 S. Ct. 243, 59 L. Ed. 441, L. R. A. 1915C, 960, the court said: "Included in the right of personal liberty and the right of private property—partaking of the nature of each—is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long-established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich; for the vast majority of persons have no other honest way to begin to acquire property, save by working for money."

The opinion in the Coppage Case, supra, concedes, however, that there are many cases in which legislative interference with contracts is upheld.

In Tyson & Bro. v. Banton, 273 U. S. 418, 47 S. Ct. 426, 71 L. Ed. 718, 58 A. L. R. 1236, the question involved was the validity of' an act of the Legislature of the state of New York prescribing the price at which theater tickets should be sold. The court held that the sale of theater tickets was a private transaction not affected with a public interest, and that there was no justification for legislative regulation of the price at which the tickets were sold, and that the act was invalid. In the course of the opinion the court said:

"In the endeavor to reach a correct conclusion in respect of this inquiry, it will be helpful, by way of preface, to state certain pertinent considerations. The first of these is that the right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself (State Freight Tax Case, 15 Wall. 232, 278, 21 L. Ed. 146, 162), and, as such, within the protection of the due process clauses of the Fifth and Fourteenth Amendments. See Carrollton v. Bazzette, 159 111. 284, 294, 42 N. E. 837, 31 L. R. A. 522. The power to regulate property, services, or business can be invoked only under special circumstances; and it does not follow that, because the power may exist to regulate in some particulars, it exists to regulate in others or in all.

"The authority to regulate the conduct of a business or to require a license comes from a branch of the police power and which may be quite distinct from the power to fix prices. The latter, ordinarily, does not exist in respect of merely private property or business (Chesapeake & P. Teleph. Co. v. Manning, 1S6 U. S. 238, 246, 22 S. Ct. 881, 40 L. Ed. 1144, 1147), but exists only where the business or the property involved has become 'affected with a public interest.' "

In Charles Wolff Packing Co. v. Court of Industrial Relations of State of Kansas, 262 U. S....