Doud v. Hodge

PETITIONER:Doud
RESPONDENT:Hodge
LOCATION:Pittsburgh Party Headquarters

DOCKET NO.: 129
DECIDED BY: Warren Court (1955-1956)
LOWER COURT:

CITATION: 350 US 485 (1956)
ARGUED: Feb 29, 1956
DECIDED: Mar 26, 1956

Facts of the case

Question

Audio Transcription for Oral Argument – February 29, 1956 in Doud v. Hodge

Earl Warren:

Number 129, George W. Doud et al., versus Orville Hodge, Auditor of Public Accounts of the State of Illinois.

Mr. Yowell.

John J. Yowell:

Mr. Yowell.

Earl Warren:

Yowell.

John J. Yowell:

May it please the Court.

This appeal is for an order of the three-judge District Court in the Northern District of Illinois, dismissing for one of federal jurisdiction, a suit to enjoin the enforcement of the Illinois Community Currency Exchanges Act on the ground that it is repugnant to the equal rights such Equal Protection Clause of the Fourteenth Amendment.

The material allegations of the amended complaint, which were supported by findings of fact of the District Court or – or admitted in the answer to include to following.

That the action of course arises under the Fourteenth Amendment, Section 1, that the amount in controversy, which this Court said in the Gibbs case in 307 U.S. which is cited in the appellant’s brief, is the value of the right to conduct the business prohibited by the challenged statute, exceed the sum of $3000 exclusive of interest and cost.

And the plaintiffs, Doud, McDonald and Carlson, constitute a partnership doing business under the foreign name of Bondified Systems, that the defendant — that they’re all citizens of Illinois, that the defendant Hodge is a duly qualified and acting Auditor of Public Accounts of the State of Illinois.

The defendant, Latham Castle is a duly qualified and acting Attorney General of the State of Illinois, and the defendant, Gutknecht as a duly qualified an acting State’s Attorney of Cook County, resided in that County in the Northern District.

That’s submitted on the action.

That the partnership is organized for the purpose of, intends to engage and has been engaged not in the ordinary business of a currency exchange, but exclusively in the business of selling and issuing money orders under the firm name, “Bondified Systems” in Cook and other counties in the State of Illinois.

That is supported by finding three, page 509 of the record.

Then, follows a great deal detail as to how the plaintiffs came to get a license to sell this — this particular kind of money orders and how they happen to operate as a partnership and not as a corporation.

And then, at page 13 of the record is the allegation as to the provisions of the statute involved, which the statute of course is submitted in the answer, page 27 of the record.

The Act is an act in relation to the definition, the regulation and licensing of community currency exchanges.

It’s also ambulatory, so-called ambulatory currency exchanges which are not here involved.

The statute purports to regulate the business — I’m reading from the amended complaint, purports to regulate the business of a community currency exchange which is defined to be, one, a person, firm or a corporation engaged in the business of providing facilities or cashing checks, drafts and money orders for a fee or service charge or other consideration or, two, engaged in the business of selling or issuing money orders in his, there or its name or any other money orders or, the third classification, engaged in both such businesses subject to certain exceptions.

At page 14 of the record, the complaint — the amended complaint further alleges, “The statute likewise specifically exempts from a definition” — I should say at first it exempts state and national banks.

The statute likewise specifically exempt from the definition of a community currency exchanged, all persons, firms and corporations engaged in the business of selling or issuing United States Post Office money orders, American Express Company money orders, Postal Telegraph Company money orders, understand those two are now merged or Western Union Telegraph Company money orders.

In other words, the exemption is not only the Post Office, United States Post Office which is, of course, a federal instrumentality, the Western Union Telegraph Company which is regulated by federal law, and also the American Express Company money orders, which is not subject to any regulations whatsoever.

The said statute contains the following provisions, regulating the business of the community currency exchange, no person, firm or corporation which is not exempted from the definition of a community currency exchange shall engage in the business of selling or issuing money orders without first securing a license to do so from the Auditor Public Accounts of the State of Illinois.

The said statute further provides that a community currency exchange shall not be conducted as a department of another business that it must be an entity, financed, and conducted as a separate business unit.

It is then alleged that this classification is unconstitutionally broad in that, one, the American Express Company operates its money order business in substantially the same manner in which said plaintiffs operate.

That is supported by the Court’s finding of fact.

Two, there’s a conclusion that the exemption of the American Express money orders is unwanted, not germane to the purpose of the statute and highly discriminatory.

Then the allegation that the American Express Company is an aggregation of individuals operating under a joint stock company plan.

It is not a corporation but an association of individuals.

That’s submitted in the action.

The answer also admits that the American Express Company sells and issues money orders in the City of Chicago, Illinois through operators of drug and grocery stores, such operators retaining a portion of a fee fixed by the American Express Company for the issuance of its money orders.

John J. Yowell:

That is submitted in the answer.

The answer also, admits that no statutes in the State of Illinois provide for any regulation by any law, a Board Commission or a regulatory body of the operations of the American Express Company in Illinois.

It’s also admitted in the answer, the American Express Company does not operate under any franchise, granted to the State of Illinois and said, “American Express Company is not subject to regulation by any regulatory body from the State of Illinois, and the American Express Company agencies in issuing money orders are in direct competition where the operations by the said plaintiffs.”

That’s supported by the Court’s finding of fact.

There is then this allegation.

The defendant — this is at page 18.

The defendant Orville Hodge, Auditor of Public Accounts of the State of Illinois, the defendant, Latham Castle, Attorney General of the State of Illinois, and the defendant, John Gutknecht, States Attorney of Cook County, Illinois have threatened that any attempt by plaintiffs to operate the business of selling and issuing money orders under their firm name, either through offices wholly owned and operated by them or by means of operators of drug, hardware and grocery stores as agents of the plaintiffs or by both such means will bring down upon plaintiffs action by said defendants in the Courts of the State of Illinois to prevent such continuance of such business and for the enforcement of the provisions of State of Illinois, Community Currency Exchanged Act by criminal prosecution.

That, at page 29 of the record, is this admission and the answer.

They admit they threatened to enforce the said statute against the plaintiffs, if the latter violated the same, but alleged that said threats were general and specifically, and not specifically directed against any particular conduct of the plaintiffs.

That at the time they made said threats, the plaintiffs have either not violated the said statute or these defendants were not apprised of any violation.

That these defendants were not informed of any such violations until the amended complaint informed them of the same.

That these defendants have thus far, taken no legal steps against the plaintiffs to enforce the said statute, and since this suit has been pending in the United States District Court, no proceeding has been brought in the state courts.

The state courts have not now required no jurisdiction over the matter.

Now, that’s the first count.

That’s by the three plaintiffs constituting this partnership.

They’re the ones that alleged that they have this license from the people who have copyrighted and have certain forms that they sell for the purpose of selling this money orders, a system of making reports and — and keeping records etcetera.

Earl Warren:

Is the company operating them, Mr. Yowell?

John J. Yowell:

At this moment, it is not, Your Honor, but it was at the time the suit was filed and for some little time after.

That was one agent in Illinois.

In other words, there was a justiciable controversy, it wasn’t just someone saying —

Earl Warren:

Yes.

John J. Yowell:

— “We like to do it and will you please tell us whether we can do it or not, the case, we should go ahead and do it.”

The second count, the plaintiff is — now, Mr. Derrick, the plaintiff, Derrick who alleges, readopts all the allegations of the first count and he alleges that he has — is now operating and has for many years operate the drug store at Whitten, Illinois.

And that he obtained a lot sublicense from the other plaintiffs.

And as soon as he obtain that sublicense, he wrote a letter to the Auditor of Public Accounts, defendant auditor who is the administrative in charged of the enforcement of the Act, and he told the auditor in his letter, this is submitted and the letter is an exhibit of the record, “That I have got this sublicense to sell these money orders in my drug store, and I understand that this statute would prohibit that, and I think that statute is unconstitutional and deprives me of the equal protection of the law under the United States Constitution.

And as soon as I get my supplies, therefore, I’m going to proceed to sell these money orders in my drug store, just like I used to sell American Express money orders in my drug store.

We didn’t have to have a licence because statute didn’t apply to me then.”

And the evidence is clear, I know I think it’s submitted here that he did proceed to sell them.

A number of the money orders that he actually sold are in the record.

Now, those are the material allegations of the complaint that are either admitted or supported by findings of fact.

Earl Warren:

Is there any response to that letter?

John J. Yowell:

There was not, Your Honor.

Now, in the Court’s opinion, the Court started by saying, after stating who the parties were and that the defendants filed answers and the evidence was aduced for their respective parties.

An amicus curiae makes the contention which has been adapted by the defendants, and incidentally, was adapted by the Court, that this Court has no jurisdiction to decide the question of constitutionality raised by plaintiffs because that question has never been presented to the Illinois Supreme Court.

And hence, the federal courts are without jurisdiction to determine it in the first instance, citing Spector Motor Company versus McLaughlin 323 U.S., and Federation of Labor versus McAdory 325 U.S.

Neither of which was a three-judge court case.

The Spector Motor case was asserted in the District Court of Connecticut, which asked for a declaratory judgment in accordance with the Connecticut law, and also, purported to raise a federal question as to the validity of that Connecticut statute.

The District Court in that case found that the – there was no federal question involved because the statute didn’t apply to the plaintiffs at all.

And on appeal, the Court of Appeal said, “Well, yes, it does apply to the — to the plaintiff, but the statute is valid.”

And the case came here and this Court said, “Well, here is the District Court, may had interpreted one way and the Court of Appeals determines another way and we can’t tell it’s very big and we don’t know what it is if it’s — if it’s so vague and if it doesn’t apply to the plaintiff at all, then there is no federal question.”

They sent it back and they said, “The District Court of course had jurisdiction,” but they should hold it until it find out what the law means in the state court.

Now, the District Court —

Isn’t that your test of Illinois?

John J. Yowell:

Yes, it has Your Honor.

It has been held valid in Illinois that some question as to the character of the business that the plaintiffs were doing in that particular case.

The Illinois Court has flatly said that this Act is valid.

It doesn’t violate the Fourteenth Amendment.

They cited in a case in which two of the plaintiffs were partnership who are engaged only in the check cashing business.

The third plaintiff was engaged in the check cashing business, but he was also engaged in selling checks.

There is a customer coming by, check to pay the light bill and he write his check and send it to the light company.

He said, “That’s not selling money orders, but if it is selling money orders, then this act is discriminatory against me.

Let’s see, American Express Company do things that I can’t do.”

The Supreme Court of Illinois said, “Well, that’s – that’s selling money orders all right.

It didn’t matter the form of it, whether it’s a check or whatever it is.

It’s an order on somebody to pay, and it’s a money order all right.”

But the court said, “This act is valid because there’s a reasonable basis for this classification, because this American Express Company is a nationally big organization and not a community currency exchange.

And therefore, the act is perfectly valid.”

Now, I’ll come to that again.

I don’t want to evade that question, Your Honor, but I’ll come back to that.

Now, the District Court said, after describing these activities with the American Express, the plaintiff and after reciting the statute, pointing out that in effect, that the plaintiff is within the definition of a community currency exchange, whereas American Express is excluded from it.

John J. Yowell:

It does appears that plaintiff’s intend to engage in only one phase of the activities in which a community currency exchange may engage if licensed under the Act in question.

That is, the business of selling or issuing money orders under their name.

It also appears that American Express Company, which is exempt from the operation of this Act, is engaging in the same activity.

It further appears that plaintiffs intend to and American Express Company does engaged in his business through agents operating retail stores of the same types.

Now, the Court proceeded then to say this, at page 506 of the record.

The plaintiffs argued that, “It is the function and duty of this Court to determine whether or not the Act in question violates the Fourteenth Amendment as applied to these plaintiffs.”

On the other hand, the amicus curiae and the defendants argued that it is not the function and duty of this Court to determine that question, unless and until plaintiffs secure an answer to that question from the Illinois Supreme Court.

And the Court then says, “It would seem that a plausible argument could be made on behalf of the plaintiffs to the Illinois Supreme Court predicated upon the fact that the identical similarity of the business conducted by American Express Company, which is exempt from regulation under the Act, and then in which plaintiffs intend to engage and which on its phase, the Act says, “It must be regulated from the State,” is an arbitrary discrimination.

If this argument were made to and accepted as valid by the Illinois Supreme Court, it might well grant the plaintiffs the very relief which they’re seeking in this Court, and hence, a suit of this character would be unnecessary.

In other words, if the plaintiffs went to the Supreme Court of Illinois and they got a decision there that this Act is valid and doesn’t violate the Fourteenth Amendment of the Constitution of United States, I assume from the Court’s opinion they could then come into the three-judge District Court and have a review of the Supreme Court of Illinois, but that is the function of this Court, not a three-judge courts which as I understand it are given by Congress jurisdiction in this very kind of suit.

And I know of no case and the dissenting judge, Judge Hoffman said he was aware of no decision in which the Supreme Court of the United States has held that a Federal District Court must or even should refuse to entertain a suit under the circumstances present here.

Felix Frankfurter:

Suppose the Supreme Court of Illinois should, under the separability clause of this Act say, if the exemption is — would then be — be alright?

You and I, the plaintiff, work it out.

Suppose they say the exception clause and only the Illinois Supreme Court could say that.

Well, this Court has held the question of whether the state statute may be saved by cutting out or challenge the provision of the question from the state court, not with this Court.

John J. Yowell:

If the — if the Court please, Mr. Justice Frankfurter, the — that has been said but that has been said most often, if not, always in cases coming up from the state courts.

And this Court has said that in cases initially filed in their federal courts, we will determine separability, but we will give —

Felix Frankfurter:

I will take that for a state statute —

John J. Yowell:

Yes, Your Honor, but we will give —

Felix Frankfurter:

Yes.

What case that we have —

John J. Yowell:

Well, I’m — I’m sorry, I — I can’t, for the moment, tell you the case but I — I have it here, but I want to say this.

Felix Frankfurter:

It’s some like business.

It doesn’t — it doesn’t seem to me like reasonable judicial administration even to — and cite a case because that for the federal judiciary to tell a state, whether a statute can stand by cutting out some offending position, it doesn’t seem to be (Voice Overlap) —

John J. Yowell:

Well —

Felix Frankfurter:

— for the federal court.

John J. Yowell:

If — if Your Honor please, the State Supreme Court, the Supreme Court of Illinois has already, in the case to which I referred, said that this statute would not have been passed by the legislature.

Felix Frankfurter:

If it was asked, then you say Illinois has already said that that provision is bad, the whole must fall.

That’s a different story.

John J. Yowell:

That’s right.

John J. Yowell:

Well, that’s — that is the case.

Felix Frankfurter:

Is it your —

John J. Yowell:

I — I was approaching it, giving you the wrong answer first and perhaps the weaker answer first, but at any rate, that is the case.

Now, furthermore, Your Honor, I want to answer that just a little bit further.

This – this exemption is set forth in a definition of the word community currency exchange, and that expression, community currency exchange so defined, occurs I think at 62 times in 20 different sections of this Act.

So that when you emasculate a part of this definition, you change the meaning of the word community currency exchanges and at least 20 sections of this Act, so that it couldn’t conceivably be a separable provision that could stand on its own and allow the rest remain without being affected.

And the Supreme Court of Illinois, in the McDougall case has said that surely the legislature would never have passed this Act, if it had applied that they’d meant for it to apply at all to the American Express.

McDougall case.

John J. Yowell:

McDougall versus Lueder, yes Your Honor.

Now, the District Court went on to say, “But whether in a plaintiff situation, the Illinois Supreme Court would hold the exemption of American Express Company from the application of the Act, constitutional or unconstitutional, we do not know.”

And they say that unless, until that’s decided, they don’t know where they are and they say, “Hence, we can not decide the constitutional question presented in the absence of such authoritative determination by the Illinois Supreme Court.”

Then, they said on the next page, “The Illinois Supreme Court might find that to deny the plaintiffs of that right would be to deprive them of the same protection which American Express Company enjoys under the law.”

It well may be that the Illinois Supreme Court would hold the exception of American Express Company unconstitutional as applied to persons in the position of these plaintiffs.

Now, I think it a fair conclusion from the opinion and from statements the Court made at the conclusion of the trial that this Court thought the plaintiffs were entitled to relief.

They favored the plaintiffs on the merits, but they thought that is the majority thoughts that they didn’t have a jurisdiction to give the relief which should be given because the Court said this, “A three-judge, court in a case involving a similar situation arising under the Currency Exchange Act of the State of Wisconsin, held that the exception of American Express Company rendered the statute discriminatory and unconstitutional as applied to the plaintiff in that case, Currency Services verus Matthews, U.F. Supp. 40 at 43, 45.”

However, there, no question was raised as to the federal court’s jurisdiction, such as the question which now confronts us.

In other words, I take it what the Court was intending to say that the Court didn’t pass on the question of jurisdiction, which I had thought, in the very rendering of the decision and necessarily passed on their jurisdiction, but that is the only distinction, otherwise, this Court is disposed to follow that.

Felix Frankfurter:

But if the — if the suggestion that after the McDougall case decided by the Illinois Supreme Court and that — that was decided in January 17, 1945 and after that decision, the Illinois Supreme Court and Wisconsin District Court was rendered, is that right?

John J. Yowell:

That’s right.

That’s correct, Your Honor.

Felix Frankfurter:

It’s the knowledge given.

John J. Yowell:

That’s correct.

Felix Frankfurter:

Now, and the suggestion is that since the exception clause that it seems to be a violation of the Equal Protection Clause that are now has an element, wasn’t before the Supreme Court of Illinois at the time of the refusal to take and confronted with determination by a federal court that that violates the Equal Protection Clause, they may now change their minds, they were – actually, the federal authority stood about it, we will never let – never let that the statute stand.

What about that, isn’t that the suggestion?

John J. Yowell:

That’s the suggestion exactly.

Now, in the – in the Currency Services versus Matthews —

Felix Frankfurter:

And therefore as it were, therefore as it were, the Illinois Supreme Court has not ruled out the merits that he is not a citizen.

John J. Yowell:

Not so far as one in the position of these plaintiffs is concerned.

That’s perfectly true, but in the — in the case in Wisconsin, in which Judge Lindley wrote the opinion, Currency Services versus Matthews, there had been no decision whatsoever of the Supreme Court of Wisconsin construing the Wisconsin’s statute and — but – but this Court says, “Well, that’s — that’s true but then this question of jurisdiction wasn’t raised there.”

In other words, the inferences, if the question had been raised there then, you can’t determine the Constitution now to this because the Wisconsin Court hasn’t passed on the constitutionality, then — then the Court would have had the same thing to do that this Court did here.

John J. Yowell:

They have to say, “Well, we can’t pass on the constitutionality and the state — until the state court does.

Now, we — there’s no question about it, if the statute is not clear as to either its meaning or as to its application.

The state court is the one that determines that, or if there’s some question about its separability and as I say, particularly the case coming from the — from the state courts and I, with all do deference to Mr. Justice Frankfurter, I believe that I can cite the court cases where this Court has undertaken to determine the question of separability and cases coming from the federal court.

Felix Frankfurter:

I’m not suggesting that you can’t, I suggest the confidence that I didn’t know before.

John J. Yowell:

I — well, I — I think I do now and I maybe, Your Honor, have it.

Well, now —

Harold Burton:

But, Mr. Yowell —

John J. Yowell:

Yes, sir.

Harold Burton:

— in that McDougall case, didn’t the party actually raised the constitutionality of this Act under the Fourteenth Amendment?

John J. Yowell:

They did, Your Honor, but —

Harold Burton:

And the party you said they didn’t pass that?

John J. Yowell:

Well, because the — the plaintiff who raised the question was engaged both in the business of selling money orders and cashing checks.

So, the argument is well, that would be different if we had somebody that’s engaged only in the selling money orders.

Now —

Harold Burton:

Well, that’s a double-headed action if one of them engaged in cashing check and the other one was engaging in cashing and issuing.

John J. Yowell:

That’s right.

Harold Burton:

Wouldn’t that come close enough?

John J. Yowell:

I think it comes awfully close.

I think — and the language of the Court as Judge Hoffman said in his dissent, the plaintiffs supported for the decision of another three-judge court in Currency Services versus Matthews, have raised a substantial federal constitutional question.

The application of the challenged statute to the plaintiffs is unquestioned, and the Supreme Court of Illinois has already upheld the exemption of American Express Company without suggesting that its decision in any way rested on the nature of the activities of the plaintiffs in the decided case, McDougall versus Leuder.

Then he says, “The balance between the State and federal relations is not so delicate that it would be upset by this Court’s consideration of the merits of the plaintiffs’ claim that the Illinois Currency Exchange Act has deprived them of the equal protection of the laws.”

Now, I said that their conclusion from the opinion and from the Court’s statements, the conclusion of the trial, I think was just — which is that the Court thought the plaintiff should have relief, the plaintiff should have relief.

At page 97 of the record, Judge Schnackenberg said this, “I have a question I’d like to ask Mr. Wines and his associates from the States Attorney’s Office.

It is a little bit out of order in the way of taking things up seriatim chronologically.

That may take — that may point to some thought that it’s in the Court’s mind which it caused you in your whole argument — oral argument to direct your argument of what you think the Court may be thinking about among other things.

Here is a question I’d like you to listen to very carefully if you will.

Suppose the state legislature enacts a statute, providing for a state inspection of all weighing scales used in retail food shops to be evidenced by adhesive stamp, affixed by the inspector of this scale and providing that the owner should pay a fee for inspection and keep the stamp affixed for public exhibition and use no unstamped scale in his shop, and also providing penalties for violating a statute.

And further providing that the statute should not apply to the Great Atlantic and Pacific Tea Company shops and the scales they’re in.

If an owner of four or five retail food shops challenges the constitutionality of the statute as violative of the Federal Constitution’s due process and equal protection of the law provisions, should the Court sustain that challenge?”

Well, Mr. Wines answered that at page 99, “Now, to come back specifically to the hypothetical case put by Your Honor, Judge Schnackenberg, I would say that if there were only one grocery’s chain of such worldwide establishment that exempting that chain might very well be constitutional.”

John J. Yowell:

Then he says, “I don’t think that that is the situation in the grocery store business.

So, just to answer your question, yes or no, I would say that the question that, Your Honor puts, the Act would be unconstitutional but that it is distinguishable.”

Now, then, the friend of the Court upon whom the Court relied —

Felix Frankfurter:

Who is abstract person?

What was his (Inaudible)

John J. Yowell:

Mr. Soble.

Well, he came in and said —

Felix Frankfurter:

Well, he represented somebody.

John J. Yowell:

Well, it’s — I’m not sure who.

He came in and asked to interplead, Your Honor, and re-oppose this interpleading and —

Felix Frankfurter:

Well, he’s just as — just an individual and —

John J. Yowell:

Just an individual, a friend of the Court.

Felix Frankfurter:

Supposing no interest except interest in the law, is that it?

John J. Yowell:

Technically.

Well, I don’t — I’m not saying that.

Felix Frankfurter:

(Voice Overlap) anything outside the record.

I just wondered if —

John J. Yowell:

So far as the record is concerned, that’s — that I think is correct.

Now, he undertook to answer this question that the Court had propounded about the Great Atlantic — Atlantic and Pacific Tea Company and he says at page 113 of the record, “Now, if for instance, it is a fact that the Great Atlantic and Pacific Tea Company had never had a case where they had been accused of false weighing and they have never, by some ingenious method of their own, they cannot possibly make a mistake in that regard, then that differentiation would be valid because the legislature is not supposed to encompass all degrees of people that it may seek to remedy by its legislation.

If on the other hand, it is fair to presume that the Great Atlantic and Pacific Tea Company is only human and they do make mistakes in their machines, frequently, they are too busy to have their machines corrected.

Why then, it is quite obvious that there is no factual basis for that discrimination, and if there is no factual basis for that discrimination, of course, the discrimination or the classification would be invalid.”

Now, let’s see what about this human element in this case.

At page 361, appears the deposition of Mr. Smith, the Executive Vice President of the American Express Company.

Question, “I believe you said that the creditor of various agents varies some or more responsible perhaps another, is that right?

Answer, “That is right.”

Question, “I suppose human nature being what it is, sometimes an agent goes wrong, is not that right?”

Answer, “Occasionally, yes sir.”

Question, “Suppose, Mr. Smith, an agent in the State of Illinois does go wrong and he disappeared and checks start coming in and out of the float?

I believe that refund was the term and you have reason to believe from some information you receive that perhaps the agent was in cahoots, let’s say, with some people of his and that some of these money orders that are presented for payment are not legitimate.

Has anything like that — ever happened?

Harold Burton:

Mr. Yowell, it all relates to the merits of the case doesn’t it, whether or not the injunction should issue and if — even they and even though you should win this case that’s to go back to that Court for the determination on the merits that they never heard.

John J. Yowell:

Oh, they heard all of this, Your Honor.

They heard all of this and this was a trial on the merits.

Harold Burton:

But they didn’t pass on it, did they?

They — they limited their decision to the jurist, what they call the jurisdictional points.

John J. Yowell:

No, I — I don’t — well —

Harold Burton:

They didn’t pass on (Voice Overlap) —

John J. Yowell:

No.

The late findings of fact, Your Honor, they made findings of fact on the case and they refused to — as the Court — as the — the appellee say in their brief, they refused to make findings of fact that they requested here, and I am getting to another thing that they have alleged, their claim in their brief that the plaintiffs didn’t come into the Court with clean hands here.

Harold Burton:

Well, I’m under the impression.

I maybe wrong about it that they talked about jurisdictions and said they didn’t have a jurisdiction, and therefore, they didn’t pass (Inaudible) and couldn’t pass (Inaudible)

John J. Yowell:

Well, they said that they didn’t have jurisdiction but they proceeded to pass on various things and made findings of fact.

They did make findings of fact as I’ve already gone over with —

Felix Frankfurter:

Conclusion of lawsuits.

John J. Yowell:

I beg your pardon?

Felix Frankfurter:

Conclusion of law.

John J. Yowell:

Conclusion of law, yes Your Honor, they did.

Felix Frankfurter:

The Court did an annual jurisdiction and if they find the fact (Inaudible)

John J. Yowell:

That’s — that’s absolutely correct.

Felix Frankfurter:

(Inaudible)

John J. Yowell:

That’s right.

Harold Burton:

And you’ll notice that if the case is reversed that where to pass on both what they call the jurisdictional point and the merits too.

John J. Yowell:

No.

I’m not asking the Court to pass on the merits except to — to remand the case.

Well, I — I would like the Court to remand the case and direct that the — that the relief prayed for be granted because the case has been tried.

I’m trying to show to Your Honors now that the Court very clearly did believe that the plaintiff was — the plaintiffs should have the relief they were praying for but they have merely got in the wrong court or at least they — they were premature.

They first should have the — the state court to pass on the constitutionality, and then, they were — the state court would have probably given the relief they were seeking here.

Now —

Stanley Reed:

The conclusion of law has been made.

They made it only to the question of the permanent injunction should be denied.

Stanley Reed:

The intended complaint should be dismissed to one of jurisdiction.

John J. Yowell:

That’s correct, Your Honor.

That’s the conclusion.

That’s all the conclusions of law but the conclusions of fact were that —

Stanley Reed:

There’s no conclusion of law under various cases here.

John J. Yowell:

Well, certainly not that the — that the plaintiffs are — should have the relief they’re praying and that’s all right that there was no such conclusion as that.

Stanley Reed:

Just an order that the — the case should be dismissed with one of jurisdiction, is it?

John J. Yowell:

That was the final order.

That’s at page —

Stanley Reed:

510.

John J. Yowell:

510, in accordance of abuse expressed in the Court’s opinion that the case be dismissed for one of this Court’s jurisdiction, but they — the Court certainly indicated in every way they could indicate that — that the plaintiffs should have the relief.

Now, perhaps —

Felix Frankfurter:

In what is before.

John J. Yowell:

What is before —

Felix Frankfurter:

I take that — that what the law indicated, what the merits are, and what is before us, what they’ve given us?

John J. Yowell:

No, Your Honor.

Felix Frankfurter:

And didn’t state it.

John J. Yowell:

No, I didn’t make myself clear.

Strictly speaking, the only question before this Court, the really one question, did the Court have jurisdiction?

And perhaps secondly, and I think this is in it.

Should the Court have exercised the jurisdiction which it had?

Those are the only two questions, as I conceive it, that are before this Court.

And as I say, I would hope that the Court would — would go further in view of the record but I’m not saying that they — that they could on this — that should on this record.

Felix Frankfurter:

Then, that’s your answer and that is the answer that should have been made, but there’s a certain question (Voice Overlap) —

John J. Yowell:

Well, I — I think you’re right and I — I stand corrected.

I think that is the correct answer, Your Honor that I should have made.

Now —

Earl Warren:

Now, would you mind restating that answer to me, please.

I didn’t (Voice Overlap) —

John J. Yowell:

Well, I say that the only questions before this Court are, one, was the Court right or wrong in saying it had no jurisdiction?

John J. Yowell:

And two, assuming it had jurisdiction, should that in this character case exercise that jurisdiction?

Now, the argument was made here that the Court shouldn’t exercise its jurisdiction because it — it’s not time to do it where they say that the — because the state court hasn’t passed on it, but there’s no suggestion anywhere in this record that there’s anything indefinite about this Act, that it isn’t perfectly clear and is to its — that it doesn’t apply to the plaintiffs.

They’ve made the threat against the plaintiffs.

They admitted the file to the complaints.

So, there’s nothing for any state court to do in a way of clarification either the meaning of the application of the statute.

Earl Warren:

And you suggest that we should return it to the District Court through the —

John J. Yowell:

Well —

Earl Warren:

— the instructions to exercise jurisdiction?

John J. Yowell:

Yes, Your Honor.

I would hope that the Court would write an opinion which would clarify the law as to this jurisdictional matter and if the Court would direct the Court to enter a — to take their action in accordance to this opinion.

Now, I suppose technically, the Court could change their minds from what I thought it was and say, “Well, we think that this — this plea here of an — of your not coming in with clean hands is a good plea.”

We perhaps didn’t think so before but we now make a finding that it’s good and so you’re up because of that, and I want to refer just very briefly to that.

Hugo L. Black:

Are there any facts that would have to be added to what’s been done in all for the constitutional questions to be read or as it —

John J. Yowell:

No, Your Honor.

All the facts are here, there’s nothing else.

The case has been tried fully and completely and this question of jurisdiction and the question of whether the Courts have exercised its jurisdiction, and the question where the plaintiffs come in with clean hands or not, have all been argued to the court below and they — they didn’t take those arguments — that argument about to clean hand seriously.

They made no finding and counsel in the brief say that the Court refused to make those findings although requested.

Felix Frankfurter:

But on the question of — of the freedom of Illinois, on the exercise by Illinois, touch this question and may or may not have had under that, in the Constitution or the Fourteenth Amendment, make an exception to the American Express Company.

And that you stated all in the record, one would have to go through the record to see what justification there is for that if any out of a clear sky, something that helps me to say that it couldn’t have made such an exception.

I’m not saying it could.

I’m not saying it wouldn’t be on the denial of equal protection.

I’m saying that on the phase, if I know no more than I now, just on the phase of it, I have to attribute to Illinois some good reasons for the exception as a matter of constitutional law.

I will have to do that.

John J. Yowell:

Well —

Felix Frankfurter:

Now, the only way to not let that general, that abstract attribution of U.S. 2003 follow up Illinois to prevail, would be to go through this whole business and maybe more, is that right?

John J. Yowell:

Well, Your Honor, I have to say this.

You have here findings of fact for this Court that the plaintiff —

Felix Frankfurter:

(Voice Overlap) attention to findings of fact by the Court that this has no jurisdiction to consider and make findings of fact.

I can’t because I don’t think that’s proper.

John J. Yowell:

You — under this —

Felix Frankfurter:

What if it has no jurisdiction and then you say, tells you what I already knew.

John J. Yowell:

I don’t mean to say that.

Felix Frankfurter:

That’s the jurisdiction, would have jurisdiction for me, is that it?

John J. Yowell:

No, Your Honor, I say this.

Under the challenged statute by the definition of community currency exchange, except for United States Post Office money orders and Western Union Telegraph orders which are regulated by the federal law that nobody including the plaintiffs in the State of Illinois can engage in a certain character of business.

They cannot sell money orders in a drug store or in any other retail store, but the American Express Company — not the American Express Company and not the — not the first company can through agents, but the same people, the same druggist, and they – there are two classes that are made.

Those —

Felix Frankfurter:

You’re arguing the merits now?

John J. Yowell:

Well, I’m talking about the statutes, Your Honor.

Felix Frankfurter:

(Voice Overlap) maybe — what about the unfairness of letting Uncle Sam issue these?

John J. Yowell:

Well, I think you’ve got something the State couldn’t possibly regulate that, I think.

Felix Frankfurter:

No, but it may by — by an existence of that fact between a denial of Equal Protection Clause.

John J. Yowell:

Well —

Felix Frankfurter:

They couldn’t regulate it.

John J. Yowell:

They can regulate — they regulate the plaintiff but they don’t regulate the — the people who are selling American Express Company money orders and the thing that —

Felix Frankfurter:

That thing — that is — I’m not saying that that is — wouldn’t if he enter an affidavit, to be something that Illinois couldn’t do it because this — denied equal protection.

I’m saying that that isn’t the question here unless not efficiently, we can clear the matter of course, you don’t have to have any rights.

But of course, they didn’t see what American Express — I don’t think it’s in this Court.

John J. Yowell:

Well, it seems to me, Your Honor that the question is — is presented to this Court on this record whether or not this exemption is valid or invalid —

Felix Frankfurter:

It isn’t on this record because the court below said we can’t consider it as a matter of jurisdiction.

John J. Yowell:

Well, I — I had —

Felix Frankfurter:

Is it your question under that — that Court to decide that question didn’t you and they say to which they had passed on?

Now, you’re arguing the alternative either that they did pass on it, but they say they couldn’t or there’s enough in this record for me now to make up — make up my mind?

John J. Yowell:

Well, I think — I think there is, if the Court please.

Here, the questions are presented by the appeal.

One, whether the Illinois Community Currency Exchanges Act denies the plaintiffs the equal protection of the laws in violation of Section 1 of the Fourteenth Amendment of the Constitution of United States in view of the identical similarity to business conducted by American Express Company in Illinois and that which plaintiffs are engaged and intend to engage in Illinois.

In that, a said statute imposes licensed fees and conditions upon the sale of Bondified Systems money orders in separate business establishments and to exempt such sales of American Express Company money orders from all such requirements.

Felix Frankfurter:

You couldn’t have brought that question here as an original act, could you?

John J. Yowell:

No, Your Honor.

Felix Frankfurter:

Well, you and I has meet (Inaudible) to because the District Court refused to consider the evidence.

John J. Yowell:

Well, all I can say, if the Court please, that the case is — is here on — on an appeal from that Court and I have thought that there was involved in the case, the validity of this statute.

Now, if I’m wrong about that, then I suppose this Court would send it back to the Court and say, “You do have jurisdiction if that the Court finds they do.”

I don’t know that they will, but if this Court finds that the District Court had jurisdiction, it seems to me that the Court might go further than to say, “Now, determine whether or not this statute is valid so that it can come up to us again and we can pass on that.”

I should think the statute is here and it’s presented and the findings of fact are made which presents the very issue, and it’s true the Court said they had no jurisdiction but I think that the Court clearly did have jurisdiction and I think that it would become contrary to every decision that I have read, if you said they do not have, that they did not have.

Now, the — this argument, I didn’t want to stop that.

I — I don’t want to leave that subject if the Court has any further questions.

Now, the — there was this issue here and it’s attempted to be presented to this Court that because on these money orders which were copyrighted or registered form, there was the statement, “license and bonded” that that is somehow a representation to the public that these — these plaintiffs are licensed under the Illinois statute which they have urged statute they’re challenging.

And the form of the money order appears at page 224 of the record and it shows on its phase that these money orders are issued under a license that Bondified money order service operated under license granted to Bondified Systems.

Following the word “Bondified” is an asterisk.

Down at the bottom, it says, abbreviated, registered U.S. patent dollars.

The left of that, it says, “Checks Incorporated Minneapolis, Minnesota,” and above that is this trademark, “Bondified money transfer.”

And that’s all the evidence there is in this record that indicates that there’s anybody that — that anybody has made any representations, and under the decisions we’ve cited in our reply brief, a license, the definition of a license is not limited to a license from the State and these were licensed and these people were bonded, and we say that there was no misrepresentation there in any way and the court below — that did not take that seriously and refused to make the final fact upon it.

Earl Warren:

Very well.

Mr. Wines.

William C. Wines:

May it please the Court.

Your Honors, I should like to begin or rather precede my argument with a narrative exposition of the history of the legislation, the facts in the case, the judicial proceedings ultimating in the judgment in opinion now before Your Honors for review.

I think when that narration is made, the questions properly presented and knows what Your Honors made but would not be obliged to entertain will emerge very clearly.

Your Honors, for some reason which is not only is undisclosed by the record, but which I haven’t been able to learn on or off the record.

In the depression of 1933, currency exchanges have become amazingly more popular in Illinois than in any other state in the union.

Nobody seems to know why that’s true, but it is an interesting economic phenomenon.

They’ve had some unusual vitality in California and New York but it’s become a very large industry in Illinois.

So, Illinois passed a Currency Exchange Act as now amended and is before this Court, it declares currency exchanges to be effective with the public interest and intimately integrated in the economic fabric of Illinois.

It licenses them.

It regulates them.

Provides for revocation of licenses in the case of failure to comply with regulations, and in general, stepped in a particular of this exemption.

The law is not challenged by these appellants as a valid and constitutional regulatory major.

Felix Frankfurter:

Mr. Wine, please forgive me to interrupt you in asking you, what declarative order to meet?

William C. Wines:

Yes.

I’ll be happy to do that, Your Honor.

I plan to argue first that the trial court was correct in remitting the plaintiffs, the appellants to the state courts, although, the expression that it lacked jurisdiction is ambiguous and I don’t intend to concede that the Court meant or if it did mean that it was correct in meaning, that it lacked federal jurisdiction of a Fourteenth Amendment question if substantial or of $3000 or anything of that sort.

William C. Wines:

I plan to argue that they meant that in light of well settled principles they should forbear the exercise of federal equitable jurisdiction in this cause.

I plan that —

Felix Frankfurter:

To reclaim power is vague by waiting to see what Illinois (Voice Overlap) —

William C. Wines:

No, they did not.

Felix Frankfurter:

They threw it out.

William C. Wines:

They did.

Felix Frankfurter:

And they couldn’t — can handle this at all.

William C. Wines:

They did.

Felix Frankfurter:

Are you defending that?

William C. Wines:

Yes, for reasons which — but not entirely on the grounds designed in the opinion.

Now, I’m still answering Your Honor’s question as to what I’m going to argue.

I’m going to argue that if — first is I’m going to insist that the — that they reached the correct result in remitting the cause to the Illinois Court.

I’m going to argue that if the —

Stanley Reed:

They remitted your —

William C. Wines:

I mean remitting the parties, not the cause.

Of course they couldn’t transfer the case as this Court can and the Court of Appeals.

I meant in telling the parties to recur, repair to the Illinois in tribunals.

I’m going to argue that if the merits are before this Court, were before the District Court, this Court can.

This Court has the jurisdiction to decide this case on the merits without remanding, and I’m going to ask with all the earnestness that I can that although ordinarily, this Court won’t do it in this case when I have made my expository merit.

I hope to persuade Your Honors that the — the facts in this case are so clear that it will not require a canvass of this record.

In fact, it will exempt to require an examination of only one page of this record, which I’ll come to later, and that to remand the case to the District Court, three-judge District Court would in this particular case do not generally be a work of pure supererogation, but I can’t support that argument until I’ve made my narrative of that.

Felix Frankfurter:

Would you at this moment and based to what you have indicated, the Court would have to remit it or remand to the District Court, tell him to be ceased of jurisdiction directing the District Court to assert jurisdiction which is now disavowed and having a sense of jurisdiction to this Fourteenth Amendment of a judicial argument.

William C. Wines:

I think so.

Felix Frankfurter:

We’ll have to go through that form because this Court can’t enter 10 cases as now in all three, he — he entered this kind of a judgement —

William C. Wines:

Well —

Felix Frankfurter:

— here in the jurisdiction.

William C. Wines:

I — I think — I think that’s — that’s correct, but that the reasons why I’m knowing for well what’s in Your Honor’s mind in having had the benefit of Your Honor’s colloquy with Mr. Yowell, the reason why I’m still so earnestly asking this will become apparent when I’m through with my narration of the facts, which will put the case, I think, in a different light from what it is now.

Well, now, in enacting this Currency Exchange Act, the general assembly of Illinois defines a currency exchange in substance as any concern that either cashing checks for a fee or issues money orders for a fee or does both of those things.

There are some other provisions in the definition but nobody raises any question about them so that would suffice for this Court’s consideration now.

Stanley Reed:

Was the Illinois bank charged against cashing checks?

William C. Wines:

I beg your pardon?

Stanley Reed:

Illinois’ bank charged in cashing the checks?

William C. Wines:

They don’t charge an Illinois bank.

It doesn’t charge a depositor.

I don’t think it does.

I don’t know of any Illinois bank that charges for cashing a check.

There are some banks that charge you for every check that you write and don’t require you to have a minimum.

But generally speaking, no, the Illinois banks do not charge for cashing checks.

Stanley Reed:

And people go to these exchanges and pay for it?

William C. Wines:

They do.

Nobody knows why, but they do.

Now, I mean why in Illinois but — but they — but they do.

Now, well, it is a convenience and many people don’t have banking facilities and they’re — they operate on — on Saturdays and I don’t think they operate on Sundays.

Now, the Illinois Act does exempt by name, the Western Union Telegraph Company, the Postal Telegraph Company, the American Express Company and of course, the United States Post Office.

I wish to make it very clear that we do not try to collect license fees from the United States Post Office.

Now, when the Act — when the Act was first passed, the operators of currency exchanges and — and not those just engaged in the cashing of checks.

Mr. Yowell’s memory hasn’t served incorrectly in the McDougall case that plaintiffs were engaged in the operation of community currency exchanges in which they sold money orders.

The Illinois Supreme Court did say that the exemption of the American Express Company was constitutional, and did make the observation which was a dictum and which was a dictum, not made in the light of the record that’s been made here, and not made in the light of a subsequent federal decision coming from Wisconsin.

The Illinois Supreme Court did say in the McDougall case that the exemption was constitutional and that the Act would not have been passed had not been possibly exempted.

All right, there had been some amendments to the Act but they don’t intervene here.

Now, the American — now, the American Express Company’s activities would soon —

Harold Burton:

Mr. Wines, you’re taking the position in the McDougall case, did passed on the constitutional (Voice Overlap) —

William C. Wines:

Only by way of a dictum and not in the light of the considerations urged in this case.

I say it is not a definitive authoritative Illinois decision on that point.

That’s what I say about it.

Harold Burton:

Well then, on that theory, why would it not be appropriate or in accordance with the precedent for the federal court to require them to pass on it before the federal court does?

William C. Wines:

Oh, I think it is.

I think it is.

Harold Burton:

They should —

William C. Wines:

Yes.

Harold Burton:

— they should leave it open to the —

William C. Wines:

That’s correct.

Harold Burton:

— to simply pass on.

William C. Wines:

That’s correct.

Felix Frankfurter:

It has to be that the District Court, the Northern District, they will hold this case and subject to a declaratory judgment?

William C. Wines:

They could say that.

I don’t see the —

Felix Frankfurter:

Well then, because clearly —

William C. Wines:

I thought —

Felix Frankfurter:

— what this Court meant, the District Courts had jurisdiction for mentioning the other cases.

William C. Wines:

The Fieldcrest case, yes.

Felix Frankfurter:

And in those cases, I have said about the other conclusions and certainly held (Inaudible)

William C. Wines:

Yes, but don’t you see this difference, Your Honor, if — that’s Your Honors holding it, but it was this three-judge District Court, if these plaintiffs bring their suit in the Illinois and they go to the Illinois Supreme Court, and the Illinois Supreme Court decide adversely to the very direct appeal here, they don’t have to face the problem of this Court’s discretionary grant of certiorari.

If this — if the Supreme Court of Illinois holds that its exemption is constitutional, and it passes on that or if it holds that its — or it holds that it’s inseparable, it will have to hold that it’s constitutional.

Then — then they have a direct — I mean, they’ll have to hold to this constitutional hold or act unconstitutional.

But if it upholds the Act and hold this provision inseparable, the plaintiffs will have a right of direct appeal, not certiorari if Your Honors think of that time if the question is substantial.

If it holds inseparable and knocks it out, the plaintiff said, they wouldn’t want it anyway, so why should the three District — three-judge District Court hold it.

I just suggest that.

Now —

Hugo L. Black:

They might — they might uphold it just for three years, it might be the Supreme Court — Court of Illinois would have decided on it.

William C. Wines:

We can start —

Hugo L. Black:

I’m thinking the Magnolia Petroleum case, we held our direction to hold it under (Inaudible) they could an action, they could.

William C. Wines:

Frankly, I don’t see that it makes much difference —

Hugo L. Black:

I don’t see —

William C. Wines:

— where they dismiss it or hold it because the case will come here on direct appeal or certainly, they would dismiss it for failure to exhaust that right.

I really don’t — I really don’t think it makes practical a difference whether — whether they dismiss it or hold it.

Now, I would like to call Your Honors —

Felix Frankfurter:

It doesn’t make a difference does it?

It doesn’t make a difference that they said it has a jurisdiction attributing it.

I should like to go over it as your facts — I think I should that present this noble case, how can you (Inaudible) in this langugation particularly, this character in a case like this.

Felix Frankfurter:

Saying that even if — if this is — if this is involved maybe, the question of public law separability.

We think federal forum is not an appropriate forum.

You can get all you want by going to the court and say you don’t get what you want in both the Supreme Court in the United States —

William C. Wines:

Yes.

Felix Frankfurter:

— and therefore, this is civil intermediary set.

William C. Wines:

Yes.

Felix Frankfurter:

He’s got jurisdiction in the sense that he has power including the appropriate relationship in federal and state court, we don’t think he should exercise it.

And what you’re doing is to reading this disposition (Inaudible)

William C. Wines:

That’s right.

Now, Your Honors, there are some specific facts in this case, very specific in the record that had not been called to Your Honor’s attention.

And in some respect, Mr. Yowell has quite unintentionally and because of the limits of time, misled you, as perhaps I should also dutifully, unintentionally and for the same reason.

He said —

Earl Warren:

I think Mr. Yowell was cut short in — in attempting to talk from the record if I remember it correctly.

I — I thought he tried two or three times to state from the record and questions from the Court to stop him.

William C. Wines:

I think that may be true.

Earl Warren:

I beg your pardon?

But I wouldn’t say he misled us.

William C. Wines:

I shouldn’t — I — I didn’t — I withdraw that.

In his —

Felix Frankfurter:

What is the point of — what is the point —

William C. Wines:

He has said —

Felix Frankfurter:

(Voice Overlap) —

William C. Wines:

— that the American Express Company is not —

Felix Frankfurter:

(Voice Overlap).

Are you arguing the merits?

William C. Wines:

Yes.

Felix Frankfurter:

There is no jurisdictional difference.

William C. Wines:

Yes, Your Honor.

Felix Frankfurter:

It would have an effect that says error in respect to both —

William C. Wines:

I have finished my argument on the jurisdictional.

Felix Frankfurter:

(Voice Overlap) that this is a case for which the state court might divulge that the exception has been cut out, and therefore, that rule speculate the things, (Inaudible) is that right?

William C. Wines:

That’s right.

Felix Frankfurter:

And are you going to argue that — that the exemption is a proper one, it’s not — it doesn’t offend the Equal Protection Clause, is that right?

William C. Wines:

I wasn’t going to come to that point yet, Your Honor.

Felix Frankfurter:

So, when are you coming?

William C. Wines:

I’m coming to the point that — mystery in — in which the facts have not yet been stated.

Felix Frankfurter:

But is that — to what — to what proposition?

William C. Wines:

That the facts alleged in the — in the complaint amount to a confession that the plaintiffs are using the mails to defraud and that they come into equity without clean hands.

Felix Frankfurter:

(Inaudible)

Earl Warren:

When our —

Felix Frankfurter:

(Voice Overlap) can make that judge.

Earl Warren:

And you may have two — you may have two more minutes to argue the facts of the case to — to Mr. Yowell.

I tell you that now so you could prepare yourself for it.

Felix Frankfurter:

(Voice Overlap) —

Earl Warren:

You may proceed —

Felix Frankfurter:

(Voice Overlap) —

Earl Warren:

You may proceed now.

Felix Frankfurter:

— the unclean hands?

William C. Wines:

In five minutes or three.

Felix Frankfurter:

Well, that is your — and this Court knows that but you didn’t —

William C. Wines:

Yes, Your Honor.

Felix Frankfurter:

And did it exists, the court order to look into that.

William C. Wines:

In this case, yes.

And I’ll be glad to tell Your Honor why.

Felix Frankfurter:

And not to mean to shut anybody off, I — just that exemption to allege into the (Inaudible) whether his argument were irrelevant facts.

Earl Warren:

Well, both of you may have some time to discuss that.

William C. Wines:

If Your Honors will be good enough to look at the exhibits, photo static exhibits on pages — on page 224 of the transcript of the record.

Earl Warren:

What page Mr. —

William C. Wines:

Page 224 of the transcript.

That’s all that I — I would like to have the Court to look at.

William C. Wines:

Your Honors will see reproduced, the photo stats of the type of money orders that these plaintiffs aver and avow and proclaim that they’re going to sell if this injunction is not granted.

At the bottom, you will see, it’s a little hard, the sort of elliptical ring money transfer to the — that’s — that’s black with white letters.

To the immediate left is the word “licensed” and to the immediate right is the word “bonded.”

I just like to repeat that.

To the immediate left of that black elliptical ring is the word “licensed.”

To the immediate right is the word “bonded.”

These are — these money orders are to be sold in Illinois.

In Illinois, we have a statute licensing and requiring bonds of all companies, selling money orders except the American Express Company.

These plaintiffs are not licensed in Illinois by any Illinois authority and that is admitted in the record and I’m sure Mr. Yowell will admit it here if you ask him.

They are not — they have not filed any bond anywhere to disapprove by any kind of Illinois State surveillance or supervision.

Now, to – and that if these checks in the State were the public known generally, that licenses are required and that means a state license and bonds are required and that means a bond approved by the State.

When they have no state license, county license, city license, precinct license, federal license or any other kind of license, when they posted no bond with any public official, he is such a gross rod on the public that they ought to be dismissed for want of equity and not coming in with clean hands.

Their defense makes it even worst.

They say that the word “license” means that they have a licensed to use the trademark, the copyrighted trademark, Bondified, that’s their defense.

It isn’t copyrighted.

It isn’t trademarked and they have not valid license from the propriety to use it.

I will now demonstrate that from the record.

They do have a written agreement.

It’s set forth in the record.

When in a western outfit that has registered or in some way or other, they registered the name Bondified as a trademark on a form of check, and they have made a written agreement which is called a license to the plaintiffs, permitting them to use that name but that’s a violation of the federal law, because as we explained very clearly in our brief, this Court has held that for the proprietor or trademark to permit another person to use it without guaranteeing the product, if it is a product or the financial responsibility, if it is a business is contrary to the public policy of the United States in trademark, copyright and postal money orders.

The pleading case on that and it is not as clearly set forth in our brief as I would — as I might wish is a — is the Manhattan Medicine Company case.

The facts in that very briefly were these, Your Honor.

I can state it briefly but it’s all important.

The proprietor of a trademark for a medicine, we’ll call him Jones, for a consideration allowed Smith to use the trademark.

He didn’t sell the business.

If Mr. Jones had been making Manhattan medicine and sold the business, sold the assets, he wouldn’t personally have had to guarantee their continued integrity, but he merely licensed the use of the name without in anyway transferring the business, assuming responsibility for the product either by way of supervising its manufacture and damnifying people for its defect.

He attempted to sell goodwill without selling the business and you can’t do it as a matter of federal public policy, and there just isn’t any question about it.

A contract by which one who has built up a trade name undertakes the reward to let another use that name without transferring and apart from the business is — has been held fraudulent so many times that we say that it isn’t necessary to remand it to the District Court or technically, as Mr. Justice Frankfurter suggest, remand it with an instructions to dismiss for want of equity and lack of clean hands.

Felix Frankfurter:

Mr. Wines.

William C. Wines:

Yes.

Felix Frankfurter:

I’m confident with this.

William C. Wines:

Yes.

Felix Frankfurter:

You’re a very experienced lawyer insofar as this Court.

William C. Wines:

Yes.

Felix Frankfurter:

In your motion to affirm, you say 10 reasons why the judgment below should be affirmed.

The only — the only one of the 10 reasons that comes within 1000 miles of what you’re now arguing is – is a defense of unclean hands was raised and that’s the question whether the hands are clean or unclean in order to (Inaudible) even the local questions.

And I want to argue and ask this forum on the merits, defense on whether or not this defense is good or bad, whether the argument (Inaudible) material in the state underlying, take out what you say (Inaudible).

And I call it the most irregular and inadmissible way of dealing with litigation before this Court.

William C. Wines:

I’m very sorry.

Felix Frankfurter:

When we come in — I’m not saying it’s improper.

I’m saying it’s not the way cases should be argued to this Court with all the modern freedom of argument from — from the (Inaudible)

Intermission that was joined on jurisdiction, and we’re asked to pass on the 1001 questions that haven’t been passed on by the lower court, do not appear in the brief or any appeals before this Court and those are the reply.

There’s no pleading procedure, practice relevant all goes by the Board.

William C. Wines:

Your Honor.

Felix Frankfurter:

It didn’t raise — you couldn’t say this should be affirmed because of the face of the — this fellow comes in with unclean hands.

William C. Wines:

That’s in our brief —

Felix Frankfurter:

(Voice Overlap) —

William C. Wines:

That’s in our brief, Your Honor.

Felix Frankfurter:

I’m not talking about your brief.

I’m talking about your motion to affirm, 10 arguments you gave, why we shouldn’t take those?

What do they want if there was an issue of unclean hands which ought to be left with a local tribunal and want the Supreme Court of the United States to pass on this necessarily argumentative conflict, de novo, original?

I don’t call that — I don’t call that referring to the business, the Supreme Court of United States other than this, that’s my view, and very strongly.

William O. Douglas:

I thought you (Inaudible)

William C. Wines:

No, sir.

I think it’s a question of federal public policy that clearly emerges from the record.

Felix Frankfurter:

I’m not contesting that.

I’m not passing.

I’m not having anything.

My mind was to the direction on this.

When you asked us not to take the case, that wasn’t one of the ground you took and I say it’s not for the likelihood to free my mind to bear on something that the District Court if anybody should pass.

William C. Wines:

Very well, Your Honor.

Felix Frankfurter:

Well, I — I thought your experience is (Inaudible) to know in mind to this kind of case was —

William C. Wines:

I’m very happy that Your Honor has expressed it candidly, but I want to say that nothing in my experience, the bar indicated anything improper.

Felix Frankfurter:

I didn’t say — I didn’t use the word “improper.”

I was very careful not to use that.

William O. Douglas:

I’d like to hear (Inaudible)

William C. Wines:

Well, I’ve —

William O. Douglas:

Have you any?

William C. Wines:

I’ve just about finished it at the (Voice Overlap) —

Felix Frankfurter:

Are we here witnesses on the subject?

William O. Douglas:

You tendered this —

William C. Wines:

Yes.

William O. Douglas:

— in your (Inaudible)

William C. Wines:

They receive the exhibits on which we rely and which were not — not contested.

Felix Frankfurter:

Well, the issue wasn’t going into by the Court.

William C. Wines:

It was not, it was not.

Felix Frankfurter:

Then we’ll have original jurisdiction.

William C. Wines:

I should not think so.

As with my understanding, Your Honor, that an appellee can rely on any grounds of affirmance which does not require the Court to weigh evidence and where the facts are admitted, they are either found by unchallenged findings which these facts were not or are admitted which these facts are.

Felix Frankfurter:

I’m not really challenging that part of it.

You didn’t assume the judgment on any ground who gave 10 grounds in your motion to affirm that this wasn’t one of them.

William C. Wines:

Well, I had just about completed my argument on that question, Mr. Justice Douglas, that these checks are on their face misleading, and so clearly, it’s shockingly so that any Court, that however, a later date to whose attention, it comes ought to declare a new force, the federal postal policies.

I think it’s a matter that can be suggested at anytime or at under any condition and even the Court might wish do it sua sponte rather than leave some illegitimate, but nevertheless potent inference that what the matter in which it could have been presented was not promptly scratched by a judicial expression when the fact is so claimed.

Tom C. Clark:

(Inaudible)

William C. Wines:

There have not, Your Honor.

Tom C. Clark:

(Inaudible)

William C. Wines:

It does.

It is not generally the policy.

They’re not making any promises or representations as to what the Attorney General would do or what another Attorney General would do if my chief should retire, but it is not — not generally the policy of the Attorney General to prosecute cases where there is a litigation, testing the validity of licensing provisions and that is shown by the fact that no prosecutions have been brought against — against these claims.

Hugo L. Black:

Are they engaging in this?

William C. Wines:

They’re not but they have within the time fixed by the statute of limitations.

It was only a token engagement and I think it’s – well, at least about — I shouldn’t say token as reading their minds.

It was a very limited engagement by one druggist.

Now —

Hugo L. Black:

Well then, there’s no reason so far as Illinois is to serve an apportionment law is — it should exercise the power if we have exercised it in the Constitution base on the case for that same effect.”

William C. Wines:

I didn’t hear that lecture, Your Honor.

Hugo L. Black:

There’s no reason that you advance by Illinois with the inference on why the — the laws should be thrown if the Court should bring about whatever delay it might be necessary and sent it back to be tried first by this Court.

William C. Wines:

That’s correct.

That’s certainly correct.

Now, Mr. Yowell has passed on the — as — as I asked Your Honors to pass on and has said something about the merits of this exemption.

I think that the merits of this exemption are such that they can and should be passed upon in this Court even though the District Court did not pass upon it.

Harold Burton:

Mr. — Mr. Wines, do you distinguish to Wisconsin, statute from this statute?

William C. Wines:

No, we do not.

We do not.

We — we do not distinguished it.

I’m requested to but decline to.

The —

Harold Burton:

Therefore, you disagree with the federal decision on this — on this subject.

William C. Wines:

We — we disagree with the — we disagree with the Wisconsin decision and our — our reasons are these.

The impressive materials that are in this record were not before the Wisconsin Court.

The record shows in this case the extent of the American Express Companies’ operations that were not shown by any evidence there.

It was of world — it’s a worldwide — the evidence isn’t contradicted.

It’s an enterprise of worldwide dimensions.

It is supervised closely by the United States Government.

It is – it is the depository of federal funds.

It is supervised by the State of New York, and even if there were no other difference between the American Express Company and the plaintiffs, a grandfather clause alone would support — would suffice to support it.

These considerations are impressive.

One other point that I wish to make and then I conclude, there is a suggestion in the Wisconsin case that there’s something unconstitutional about exempting the American Express Company by name instead of by a set of standards and apparatus such that although, in fact, only the American Express Company might comply with it.

In theory, it wouldn’t be any reason why you or I couldn’t accept that we’re a little short of the money or of the connections in foreign countries or some other prerequisite.

It’s argued that there’s something in any — in the Wisconsin case, there’s something unconstitutional about exempting the American Express Company by name.

William C. Wines:

We say that it must presumed and it is the fact that at the present time there is in fact only one concern, the American Express Company that might possibly comply with these standards, that if the time ever comes when these plaintiffs or even some third person complies with the standards and of the American Express Company and is subject to the Act where the American Express Company is exempt because of its name.

If that time ever comes, which it’s possible to conceive but difficult to believe, the — that will be the time to say that a question of discrimination has been raised.

Now, we respectfully submit that the Court should affirm the trial court’s decision in this case.

Earl Warren:

Mr. Yowell.

John J. Yowell:

If the Court — this discrimination is not just plaintiffs on the one hand and the American Express Company on the other.

This is the agents of the Express Company on the one hand and plaintiffs’ agents on the other.

Mr. Derrick used to sell American Express money orders.

He didn’t have to have a license.

He didn’t have to be inspected.

He didn’t have to do anything.

He wasn’t subject to the Act.

The minute he starts selling the plaintiffs’ money orders, he is absolutely prohibited by the Act from selling, and the result is that the American Express Company has an absolute monopoly in the State of Illinois of the sale of money orders in retail establishments.

That —

Hugo L. Black:

Do you think — do you think this law that has to be — has any bearing on that?

John J. Yowell:

No, I don’t think it does, Your Honor.

I must say though that I’m not as familiar with the problems, Your Honor, but I don’t think it does because I think here, you have got an absolute monopoly given by name to one corporation that’s singled out.

Felix Frankfurter:

Who has — who can conduct the Express Company case with the United States, the whole United States?

John J. Yowell:

Well, I’m —

Felix Frankfurter:

(Voice Overlap) were express companies, an absolute monopoly by act of Congress.

John J. Yowell:

Well, that’s correct.

Felix Frankfurter:

Is that all right?

John J. Yowell:

That’s all right.

Felix Frankfurter:

That’s all right.

John J. Yowell:

That’s right, Your Honor.

Felix Frankfurter:

That money order isn’t all wrong.

John J. Yowell:

No, Your Honor.

The — we’re talking about little money orders here that averaged $5 or $10, if people pay their light bills already, and the maximum is a $100.

The average of all the money orders in American Express sales is $10 according to the — their chief officer.

And this Bonafide System sales money orders in various different states as the record shows and Illinois is the only one now that has this prohibition and regulates the business of money order sales and it exempts the American Express Company, and all the other states, they use the same money order which says that they’re licensed here from these checks incorporated and they are bonded and they are licensed.

And I was about to read the evidence on that, but I’m not going to go into that because we have said in our reply brief that this Court is asked to weigh evidence and make findings which the District Court refused to make and fail to make and made in contrary to have in findings that it did make.

John J. Yowell:

And that this Court has asked to draw inferences which the District Court refused to draw on this question of — of coming in with clean hands.

Now, I want to call the Court’s attention to — of the decision in the Toomer case which was the fishery case where the shippers were of Georgia for complaining to cross South Carolina, wouldn’t let them.

Well, they imposed a very large license fees on their shrimping in the waters of North Carolina.

And they challenged that statute and this Court said that statute deprived them of the equal protection of the laws, and the — the claim was made to that case by the Attorney General of North Carolina.

It’s North Carolina or South Carolina that these plaintiffs, these shrimpers are coming in here, saying that their shrimping business was being discriminated against that were convicts.

They had repeatedly been convicted of shrimping contrary to the — to the law and they — they have served sentences for it.

And this Court said this, “Some of the individual appellants have previously been convicted of shrimping out of season and into waters.

The District Court held that this previous misconduct, not have any relation to the constitutionality of the challenged statutes did not call for application of the clean hands maxim.

We agree.”

Now, that’s all what I want to say on that point.

I want to say so far as the — the exercise of federal equity jurisdiction is concerned, of course, this Court has always held that the Court will not come in just to — to enjoin the — the enforcement of the federal statute, but the exception is, if there is danger, immediate danger of irreparable injury, they will do so.

That’s what they did in this Toomer versus Witsell case which is cited in our brief and we cited number of other cases at pages 11 and 12 of the brief for the appellants.

Here are men engaged, the citizens of Illinois engaged in a business.

During the year before this trial, they showed that they’ve sold a $1,400,000 worth of these money orders in Northern Indiana under the same licensure operating under in Chicago.

Sure, they only got one agent.

They had to have a case.

They had to — have a justiciable case.

They couldn’t get in as a corporation because there was an arrangement made between the Secretary of State Office and this Audito, this is in the record.

So, they’ve — they couldn’t stop it from acting as individuals.

They couldn’t give — wouldn’t give them corporate license in Illinois so they couldn’t get in, couldn’t have any standard, but they operated as individuals and they did the best they could.

And we submit, Your Honor that the — the jurisdiction is clear.

These people have been deprived and everyday they’re prevented from operating.

They’re losing money, and now, it said they have to go to the state court or the State Supreme Court and again come up here, in the meantime that the laws is irremedial because you never could get it back from the State or anyone else, and it does come within the exception and is supported by the cases, we contend that is cited in our brief.

Thank you very much.