Morey v. Doud – Oral Argument – April 24, 1957 (Part 2)

Media for Morey v. Doud

Audio Transcription for Oral Argument – April 24, 1957 (Part 1) in Morey v. Doud

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Earl Warren:

Mr. Yowell, you may proceed.

G. Kent Yowell:

Thank you, Your Honor.

This record shows, if the Court please, that we are dealing with the sale of money orders, small money orders from one cent to $100.

Neither American Express Company nor these appellees ever sells a money order for more than $100.

Mr. Smith, the Executive Vice-President of the American Express Company testified in this case that the average amount of money orders sold by American Express Company is in the neighborhood of $15, that’s the average size.

This is obviously not something that is peculiar to Illinois.

All over the United States, you see ads in the paper, full-page ads.

They don’t tell you how much things are anymore.

They tell you how much a week it is and many people don’t have bank accounts and that accounts for the great growth in — in the credit, the transmission of credit, the little folks that have to send money orders because they don’t have bank accounts.

Harold Burton:

Is there any real difference between these and the type of checks that they use in money?

G. Kent Yowell:

Not any real difference except this.

These appellees’ money orders are orders on a bank just like a bank check.

They have an account in the bank, special account to cover these money orders.

It comes in to the bank, the bank pays automatically.

Theoretically, I suppose that they wish they could call up and stop payment on a particular order but that it have to be pretty quick about it because they get right into the bank, the local bank and are paid.

Whereas the American Express money orders are not orders on a bank or on anyone.

They’re a little more like a promise that the American Express Company will pay and as a matter of fact we asked Mr. Smith of the American Express Company, if you ever had some agents that went bad and became dishonest and he said, “Yes, they did occasionally.”

And we asked him if in all cases their money orders were paid and he admitted that they are not, that sometimes they suspect there might have been some chicanery they won’t pay their money orders and he admitted that sometimes their opinion is not in accord with the — the man’s opinion who put up the money and bought the money order and litigation ensues.

And in that connection, the record shows that the American Express Company is not an express company at all.

It is not licensed in Illinois, that’s admitted in the pleadings.

It is a joint stock company under the old Dutch laws in New York.

It has only five in Illinois under the Illinois assumed name statute, a certificate that 25 individuals, all non-residence of Illinois are doing business in Illinois under the assumed name of American Express Company.

And we asked Mr. Smith about those various individuals and we found out that five of them, including Theodore Roosevelt are dead, presumably this (Inaudible) was filed before any of them died but that is the record in this case, that it is not a certainty that when a person in Illinois buys an American Express money order, it is not absolutely certain at all events that he — that that will be paid.

The Court also had reported the fact that there are three cases in Illinois where the American Express Company was sued and they defended on a ground other than the merits of the case which they might — might not have any significance because there are only three of them.

But as a matter of fact, the American Express Company, the Court should know, was in existence before counsel says it was 1882 because the first case in Illinois was in 1865 when they were actually in the express business in Illinois.

Somebody made a shipment of money by way of American Express.

The money was lost and a suit followed and the American Express filed a — an affidavit that the service wasn’t good because it wasn’t a corporation, it wasn’t a legal entity and couldn’t be sued, the Supreme Court of Illinois held that that wasn’t a good plea because they had to give the plaintiff a better rip which has no significance, no claim it has except that it does show that in 1865 there really were an express company.

Now, there were some mention of generic terms expressing exception whether an exception perhaps should be in generic terms rather than singling out someone by name.

New York has a statute that contains an interesting exemption that is generic in its nature and it provides — it’s not the statute referred to in the appellant’s brief which is the New York check-cashing statute that has no exemption in it and nothing to do with this case, but this is Section 180 in Mckinney’s Consolidated Laws of New York, Book 4, part 1, Banking Law, Section 131 and Section 180, “Prohibitions against encroachments upon certain powers of private bankers, saving banks and savings and loan associations.

Except as authorized by this chapter, no individual, either for himself or as trustee and no partnership or unincorporated association shall engage in the business of transmitting money or selling money orders unless he puts up at each place from which his money orders are sold, bonds, the federal, state, municipal or preschool district bonds in the amount of $100,000 for each place at which such business is to be conducted.”

G. Kent Yowell:

Nothing in this paragraph shall apply to an unincorporated express company having a contract with a railroad company.

Mr. Smith, the Executive Vice-President of the American Express Company, testified that American Express Company has a contract — a contract with a railroad in New York.

He said he thought it was — it was the Skaneateles Railroad Company.

The Skaneateles Railroad runs from the town of Skaneateles at the north end of Lake Skaneateles and Onondaga County to Skaneateles junction, a distance of five miles.

Because the American Express Company has that contract, a contract with a railroad, it does not have to put up $100,000 bonds in each one of the — that 2500 places in New York, $250 million in order to sell money orders averaging $15 a piece.

Now, we’re not attacking the New York statute but it was in generic terms and I give it for the purpose of this illustration.

As a matter of fact, the Supreme Court of Missouri had this identical exemption before it and held that it violated the — the Equal Protections Clause of the Fourteenth Amendment as well as the Missouri Constitution of this very statute.

Felix Frankfurter:

Because it’s a very common thing in legislation dealing with — with a state constitutional restriction against passing separate laws for any city —

G. Kent Yowell:

That’s right.

Felix Frankfurter:

— to then define the city abstractly which applies only to one.

G. Kent Yowell:

Well —

Felix Frankfurter:

You can play tricks with this if you think —

G. Kent Yowell:

But, Your Honor —

Felix Frankfurter:

If that’s what you want to do.

G. Kent Yowell:

No, but, Your Honor —

Felix Frankfurter:

I don’t mean you but I mean —

G. Kent Yowell:

No, I don’t.

Felix Frankfurter:

— a way that’s easy enough to —

G. Kent Yowell:

Yes.

Felix Frankfurter:

— beat this by another form of words —

G. Kent Yowell:

But —

Felix Frankfurter:

— perfectly.

G. Kent Yowell:

— that illustrates a point I want to make, if the Court please, if the definition is something — if it applies to cities of 500,000 and over, we have it in Illinois, if it applies to cities of 500,000 and over, it’s good although at the time there’s only one city —

Felix Frankfurter:

Yes.

G. Kent Yowell:

— but if it says all cities now having a population of 500,000 and over, it’s bad.

Felix Frankfurter:

And perhaps that that you wouldn’t —

G. Kent Yowell:

But that’s a special legislation.

Felix Frankfurter:

You wouldn’t give that an illustration as one of the most admirable edifying aspects of law would you?

G. Kent Yowell:

Oh, no, I certainly wouldn’t.

No and I’m not.

G. Kent Yowell:

Now, I’m giving this New York statute as an illustration because the fact is appellee’s licensors in this case has an express company called the Travelers Express Company and it has a contract with a railroad in New York State which runs all the way out of the State, a distance of 11 miles and today there is free competition in New York between the American Express Company money orders on the one hand, Bondified express company money orders on the other hand.

There is today free competition between the Bondified Systems and Mr. Smith of the American Express Company mentioned this in his testimony in Missouri and in New York and in Ohio and in Massachusetts and in California and in Texas and in New Jersey but not in Illinois.

Now, some of the members of the Court asked the question as to a limitation of $5 million.

Well, if the limitation had a reasonable relationship to the objective of the Act, of course it’s good.

If it doesn’t have, of course it’s bad.

Now, it’s one that I think is bad but this is a matter of illustration, Florida passed an Act that nobody can sell a money order in the State of Florida unless he has assets or it has assets that exceed his liabilities by $1 million and unless for a period of five years before they passed the law it sold Travelers checks and money orders in Florida.

Now, that I would say doesn’t necessarily have a reasonable relationship to the purpose of the Act, although it can be argued that it would have.

But that is not the thing we’re dealing with here.

Earl Warren:

That been construed by the —

G. Kent Yowell:

By agreement.

Earl Warren:

Has that been construed by the Supreme Court of Florida?

G. Kent Yowell:

I think not, Your Honor.

I don’t think it has.

Felix Frankfurter:

Mr. Yowell, may I trouble you —

G. Kent Yowell:

Yes, sir.

Felix Frankfurter:

— to tell the — if you can, if the record shows ever if you know, what — what is the scale of this — of this business throughout the State, I don’t mean — to what extent and volume — what’s the volume of dollars to which — for which this kind of thing is used, do you know?

G. Kent Yowell:

I — I tried to get that, Your Honor, from Mr. Smith of the American Express Company —

Felix Frankfurter:

I don’t mean theirs, I mean —

G. Kent Yowell:

Oh, well, ours?

Felix Frankfurter:

— before the legislation was passed.

G. Kent Yowell:

Oh, I couldn’t —

Felix Frankfurter:

To what extent?

G. Kent Yowell:

I — I couldn’t say, Your Honor.

Felix Frankfurter:

Hundred or the millions?

Is this a vast — do people use these checks, whatever they call them.

G. Kent Yowell:

Well, I can say this that American Express Company, the record shows has I think its 13,000 in some outlets.

Some of them make maybe an average of — they sell one a month and they make maybe $3.50 for a year —

Felix Frankfurter:

We have no gross figure.

G. Kent Yowell:

About the gross figures we do not have, Your Honor.

Felix Frankfurter:

Is it sizeable, I mean can you say that?

G. Kent Yowell:

Well —

Felix Frankfurter:

What do people use it for?

Who — who goes to it?

Who — who resorts to this need?

Who has this need?

G. Kent Yowell:

All the people around in the — in the area where they’re selling this money orders, they want to — they want to pay their installment, they want to pay their light bill, they use to pay their taxes more than they do now with the withholding prohibitions.

Felix Frankfurter:

Well, without giving the — without giving dollars in installments, is it as of magnitude.

It’s — it’s not petty business, is it?

G. Kent Yowell:

Oh, in the — in the aggregate it’s not.

Felix Frankfurter:

I mean in the aggregate.

G. Kent Yowell:

In the aggregate, it’s not petty business.

I wouldn’t say.

Of course —

Felix Frankfurter:

It’s non-sizeable amounts, its total?

G. Kent Yowell:

Oh, I don’t think it’s any tremendous amounts.

I tried this, if the Court please, I tried to — to find for Mr. Smith.

We run the offices of the American Express Company and I — I got from them — they put in their financial statements showing the sources of their income.

They had income from their travel operations.

And they had the amount of that and they had income from their foreign exchange business and their international freight forwarding business and the various different ramifications that they have all over the world and their — their collection — utilities collection business they also have and they had some of those but they couldn’t tell me.

They don’t segregate their money order business.

It all goes into the pot and they don’t — they don’t have a — apparently accurate books on it so I couldn’t determine how sizeable it was in the State of Illinois.

Felix Frankfurter:

Have we got any light as to what lead to this legislation, do you — does your legislature print its journal?

Do this —

G. Kent Yowell:

No, they do not, Your Honor.

I tried to get that —

Felix Frankfurter:

Have we got any light on how this came to be, that just some fellow — was it just one of these — these are pieces of legislation?

G. Kent Yowell:

No, Your Honor.

I will say this; Judge Schnackenberg who was the Circuit Judge who presided in this case below was — happened to have been the speaker of the House of — in the House of the Illinois legislature when this statute was passed.

Judge Schnackenberg said this at page 116 of the record, Judge Schnackenberg.

“Let me ask this, with the exemption of this law we are considering, do you know of any Illinois statute which — which exempts any corporation or individual by name?”

G. Kent Yowell:

Mr. Soble – “Well, as I say that blue sky law does.”

Judge Schnackenberg – “That doesn’t exempt the individual by name, it exempts certain securities of their net worth on the New York Stock Exchange and certain exchanges but here the legislature writes into the law itself three organizations that are exempt from the operation of the law and I ask you, has there ever been a statute passed within a law like that before?”

Mr. Soble – “Well, I cannot say that I know the answer to that question one way or the other, I don’t know.”

Judge Schnackenberg, and this gets down to Your Honor’s question, “Now, in the legislature it has been almost a religion with us that if anybody was to be exempted or any laws to be applied to a group, it would be described in abstract terms as a class having certain characteristics.

I have often wondered where this bill came from named A, B and C, those sacred cows who were beyond the pail of the law.”

Felix Frankfurter:

Well, my question was not about the sacred cows but about the law itself.

What — what lead the legislature to deal with this problem?Do we know anything about that?

G. Kent Yowell:

I have nothing about that, Your Honor, except hearsay and I would certainly hesitate to state that in this Court.

But I will say that Judge Tehan, who was one of the judges in the Wisconsin three-judge court, he was a Wisconsin State Senator when that law was passed and I have the record here, he said, “Well, I didn’t know about this law.

I was in the Senate then and I didn’t know that they had put this through that wasn’t — he said, “It wasn’t ever argued on the floor of the House and it was never on any committee that I knew about.”

And Judge Lindley said, “Well, Judge, that wont disqualify it.” And that’s all there was in that record about that.

Felix Frankfurter:

Well, lots of legislation comes here.

Some years ago I had to write an opinion, the substance of — in a statute, the substance of which offended me greatly whereby the male bartenders got a law passed to keep out the female bartenders with exceptions.

G. Kent Yowell:

But —

Felix Frankfurter:

I can assure you that that did not appeal to me as a very chivalrous or even very intrinsically reasonable affair but we sustained it —

G. Kent Yowell:

That’s right.

Felix Frankfurter:

— and we didn’t go behind what one could guess were the motives or the forces behind that legislation.

G. Kent Yowell:

But you —

Felix Frankfurter:

Once you enter that domain we are lost.

G. Kent Yowell:

But you did say, Your Honor, in that case, there is a reasonable relationship in this respect —

Felix Frankfurter:

But I can find a reasonable one —

G. Kent Yowell:

— that if a man — if a man is operating a bar and his own wife and own daughters and now you can count on him to protect them —

Felix Frankfurter:

Yes.

G. Kent Yowell:

— whereas he might not if it was somebody else’s wife and daughter.

Well, that may not be —

Felix Frankfurter:

I’m likely — thought more of that tonight if we’re not — [Laughs]

G. Kent Yowell:

That may not be very chivalrous but at least there was some attempt to have an explanation.

Now, the judges — the three judges in Wisconsin and the three judges in Illinois, they were very aware of the need to defer to the legislative judgment, I think they have as much deference for it as this Court, but they had this record and they have this statute and they could not find that any reasonable relationship of this so-called classification, which actually isn’t much of a classification, to the objectives and the stated purposes of the Act which was not only to — to protect the public but the stated purpose, one of them was to foster currency exchanges.

William J. Brennan, Jr.:

Incidentally, Mr. Yowell, was there a reason you selected the exemption from — for American Express and did not point at the Western Union or the Postal Telegraph and the other one?

G. Kent Yowell:

There was a very good reason, Your Honor.

G. Kent Yowell:

As a matter of fact, I believe it is three-and-half — less than three-and-half months after the Act passed, the Postal Telegraph Company went out of existence.

I think it was swallowed up by the Western Union.

The Western Union Telegraph Company, in order to operate in Illinois, first of all has to get a license as a corporation —

William J. Brennan, Jr.:

Is this under Public Utility Regulation Act?

G. Kent Yowell:

That’s right.

It has to subject itself to the Public Utility Commission of the State and come under the Public Utility law as a public utility as does an express company operating in the State of Illinois.

Not only that but the utility statute provides that if a corporation is operating as a public utility, it must submit for an inspection and regulation to the Commission any other business it may carry on.

So that if the Western Union Company is sending money orders, of course strictly speaking it does, it wires it’s agent to pay somebody some money and he doesn’t pass money orders over-the-counter, but at any rate it is subject to the laws of the State of Illinois.

It is under the —

William J. Brennan, Jr.:

Well, is it — is it actually regulated then in respect to them —

G. Kent Yowell:

No.

William J. Brennan, Jr.:

— I don’t mean that it may be but is it in fact regulated as to its —

G. Kent Yowell:

As to whether they —

William J. Brennan, Jr.:

— money order business?

G. Kent Yowell:

— carry out the law, I don’t know, Your Honor.

I assume —

Felix Frankfurter:

Do the employee — must the employees of the Western Union satisfy this question as to what Justice Brennan referred in the (Voice Overlap) —

G. Kent Yowell:

No, and there exempts —

Felix Frankfurter:

What?

G. Kent Yowell:

Those — whatever the Western Union sells in the way of money orders are not subject to the statute.

Felix Frankfurter:

Well, then what’s the — what’s the relation between regulation of them as a utility to the competition between a little drugstore that sells postal telegraph orders and the big drugstore that doesn’t in it’s regard to —

G. Kent Yowell:

Well, the Act might be very reasonable and permitting them to — not to have to conform to the regulations prescribed by the Act if the State in some other — the — another commission has jurisdiction over them.

In other words, if they are submitting to — to regulation under another statute, I can conceive that it would be a — a reasonable thing for the legislature to say well, we don’t have to make them do it twice —

Felix Frankfurter:

But you — you think it’s unreasonable, so unreasonable it is unconstitutional for them to say, “We know Uncle Sam has trusted its money business enterprise.

We know New York has some oversight.”

They can’t say that but if it were required to take out a utility license unrelated to this very business then it would be all right.

Earl Warren:

Your — the reason you gave is the reason I presume that they didn’t include banks, isn’t that right?

Because they were —

G. Kent Yowell:

They were —

Earl Warren:

They were —

G. Kent Yowell:

— subject to the banking law.

Earl Warren:

— (Voice Overlap) under the banking laws of the State.

G. Kent Yowell:

That’s correct.

Felix Frankfurter:

But banking transactions have — are regulated as banking transaction.

As I understood you, the Western Union isn’t regulated as to these fiduciary transaction, it’s regulated as a utility?

G. Kent Yowell:

Yes, but the Utility Commission regulates these under the law, is suppose to regulate this because it regulates any other business that it covers.

Felix Frankfurter:

Then I — then I misunderstood your answer to Justice Brennan.

G. Kent Yowell:

Yes, sir.

William J. Brennan, Jr.:

Now, one other question.

In these drugstores which are the outlet both for American Express and Bondified, are Western Union money orders sold?

G. Kent Yowell:

No, Your Honor.

William J. Brennan, Jr.:

No?

Are they selling them from their own places of business?

G. Kent Yowell:

No, they don’t sell money orders in the sense that —

William J. Brennan, Jr.:

Well, I — I appreciate but I mean —

G. Kent Yowell:

They (Voice Overlap) —

William J. Brennan, Jr.:

— you get a money order —

G. Kent Yowell:

Perhaps they just said —

William J. Brennan, Jr.:

— but you get that at — at a Western Union place of business (Voice Overlap) —

G. Kent Yowell:

That’s right and you’d have to —

William J. Brennan, Jr.:

Now, what about United States money orders?

Those aren’t sold except at post offices, are they?

G. Kent Yowell:

They’re not as far as I know and of course the State couldn’t very well regulate the sale of United State money orders.

William J. Brennan, Jr.:

No, I just want to know what the fact was.

G. Kent Yowell:

I — I — that’s my understanding.

Felix Frankfurter:

But there’s nothing in the statute that would prevent the Western Union from licensing drugstores or anything else, is it?

G. Kent Yowell:

I suppose not if it wasn’t ultra vires.

Felix Frankfurter:

As far as the statue is concerned, wouldn’t it?

As far as the statute —

G. Kent Yowell:

That is as far as —

Felix Frankfurter:

— is concerned —

G. Kent Yowell:

— the statute is concerned.

Felix Frankfurter:

— they could do their business to a drugstore?

G. Kent Yowell:

I think that’s very correct.

One other thing, Mr. Justice Frankfurter, I meant to —

Earl Warren:

And I suppose if they did, you would consider them in the same category as — as the American Express, wouldn’t you?

G. Kent Yowell:

Well, if —

Earl Warren:

So far as this Act is concerned?

G. Kent Yowell:

— if they did and they were subject to regulation, maybe that is a basic and — and a proper and a reasonable exemption.

But here, Mr. Justice Frankfurter says that the — the Government deposits its money with them, I don’t think this record shows that or maybe —

Felix Frankfurter:

Well, I can make judicial notice of that —

G. Kent Yowell:

Maybe you take judicial notice of that —

Felix Frankfurter:

Vast amounts of money for — I don’t know, in funds.

G. Kent Yowell:

Not in connection with their money order business.

Felix Frankfurter:

But — no, but neither does the Western Union in connection with their money order.

G. Kent Yowell:

No.

That’s right.

Well, I wanted to answer Mr. Justice Frankfurter, I think I should tell you that in the Wisconsin trial, Judge Tehan who had been in the Senate, he wanted to know, “Well, who’s back at this,” he said, “Is it the American Express Company?

Is it somebody who just reamed this up or is — what is the reason for it?”

Well, nobody could tell and I’m not in the position to tell the Court here.

Thank you very much.

But may I ask — just pardon — just one minute.

Earl Warren:

Yes.

G. Kent Yowell:

There — the question of irreparable injury has been raised but not argued, I don’t want to weigh it, maybe Mr. Wines didn’t have time to cover it but I want to say this.

That finding of fact number 10, I think, disposes of that contention and we arrest them.

Thank you.

William C. Wines:

Mr. Chief Justice, I don’t wish to reply but I made an — I made a misleading answer to a question by Mr. Justice Brennan and I would like to correct it.

Earl Warren:

Well, if it doesn’t take — take long, all right.

William C. Wines:

I told Mr. Justice Brennan that the Act limited the number of agency in a given locality in accordance with the finding of needs of the community.

On reflection and recollection, that was done by an amendment to the Act which was not in the original Act and not before the Supreme Court of Illinois when the — they expressed approval of the exemption.

William J. Brennan, Jr.:

I know but it would still be true, would it not, that if American Express Company locations in a given community where they give a number sufficient that no more locations by American Express or anyone else ought to be in that community, Bondified even if it otherwise qualified under the statute could not get a license to locate in that community.

William C. Wines:

Unless it should be held that the — it was the amendment to the Act and not the original Act that was unconstitutional, the amendment limiting the number.

That is the important correction that I wanted to make.

I don’t —

Earl Warren:

Very well.

William C. Wines:

— want to argue — I appreciate it.