(216 S.W.) sue his general reputation, as affecting | criminatory provisions as to service, coupled which evidence of convictions for offenses with the further provision that judgments not involving moral turpitude is admissible. against persons engaged in the loan business Williams v. State, 74 Tex. Cr. R. 289, 167 S. shall be collectible out of the required bond, W. 300. denying persons engaged in such business of their property and privileges without due process of law. For the error indicated, the judgment of the trial court is reversed, and the cause remanded. (86 Tex. Cr. R. 63) JUHAN v. STATE. (No. 4544.) Appeal from Collin County Court; R. L Moulden, Judge. C. O. Juhan was convicted of violating Acts of 34 Leg. 1915, c. 28, defining loan brokers, and providing regulations therefor, (Court of Criminal Appeals of Texas. June 5, and punishment for violation thereof, and he 1918. On Motion for Rehearing, Oct. 22, 1919.) 1. CONSTITUTIONAL LAW 81-SCOPE OF POLICE POWER. While the courts do not undertake to catalogue the subjects on which police power may operate, such power, which is not arbitrary, is commensurate with the duty to provide for the people in their health, safety, comfort, and convenience, as consistently as may be with private property rights. 2. CONSTITUTIONAL LAW appeals. Reversed, and proceedings ordered dismissed. Charles F. Greenwood and John W. Pope, both of Dallas, for appellant. Sam Neathery, Co. Atty., of McKinney, and E. B. Hendricks, Asst. Atty. Gen., for the State. lation of the act of the 34th Legislature, MORROW, J. The prosecution is for viochapter 28 (Vernon's Ann. Civ. St. Supp. 81-REGULATION 1918, arts. 6171a-61717), defining "Loan Brokers," and providing regulations therefor and punishment for violations thereof. OF BUSINESS UNDER POLICE POWER. The state under its police power has the right to regulate the conduct of business to protect the public health, morals; and welfare, observing constitutional limitations, reasonable classification, and terms of control. 3. LICENSES 11(1)-OCCUPATIONS LIABLE. Callings that cannot be regulated except by license tax are those which cannot in their operation be dangerous to the public, but all others may be restricted. 4. INTEREST 27—REGULATION OF LOANING MONEY. 6. CONSTITUTIONAL LAW OF DUE PROCESS OF LAW. Acts 34th Leg. 1915, c. 28 (Vernon's Ann. Civ. St. Supp. 1918, arts. 6171a-61717), defining loan brokers, providing regulations therefor, and punishment for violation thereof, which requires every private citizen engaged in such business not only to give a bond, but to file a written irrevocable power of attorney, naming the county judge of the county as his duly A loan broker is defined in the act as follows: "A loan broker' is a person, firm or corporation who pursues the business of lending money upon interest and taking as security for the payment of such loan and interest an assignment of wages, or an assignment of wages with power of attorney to collect the same or other order for unpaid chattel mortfurniture." Section 1 (article 6171a). gage or bill of sale upon household or kitchen Other provisions, making conditions precedent to the engagement in the business, require a bond of $5,000, prescribing its terms; that a book registering the transactions shall be kept open to inspection; the filing of power of attorney, making the county judge the agent upon whom service of process may be had; penalizing the continuance of the pursuit of the business when in default of the payment of the judgment rendered on the bond; requiring that in securities pledged by a married man the wife shall join; fixing an annual tax; declaring compromises for usury void; and prescribing a penalty. The appeal is maintained on the proposition that appellant, in lending money at the legal rate on chattel mortgage security, was exercising an inalienable right, and that the act abridging it is void for want of power in the legislative department of the government, and its terms unreasonable. [1] He urges various reasons for his con tentions. These cannot, within the limits of authorized agent, for the purpose of accepting service and consenting that service of any an opinion, be followed in detail. All of civil process upon such judge shall be valid, them are referable to the scope and limits of is unconstitutional, the unreasonable and dis- the police power of the state. This power For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes has been the subject of much comment by text-writers and judges, so much that it would be futile to attempt its review. No more satisfactory statement of it has been found than that made by Justice Williams of the Supreme Court of this state in the opinion in H. & T. C. Ry. Co. v. Dallas, 98 Tex. 415, 84 S. W. 653, 70 L. R. A. 850, from which we quote as follows: "The power is not an arbitrary one, but has its limitations. It is commensurate with, but does not exceed, the duty to provide for the real needs of the people in their health, safety, comfort, and convenience, as consistently as may be with private property rights. As those needs are extensive, various, and indefinite, the power to deal with them is likewise broad, indefinite, and impracticable of precise definition or limitation." Courts have not undertaken to catalogue the subjects upon which the police power may operate, nor to define in precise terms the measures that may be lawfully taken, but are guided by previous decisions, and pass upon particular cases as they arise, and determine whether they fall within or without the proper limits. See Hudson v. McCarter, 209 U. S. 349, 28 Sup. Ct. 529, 52 L. Ed. 828, 14 Ann. Cas. 560; Chicago R. R. v. State, 47 Neb. 549, 66 N. W. 624, 41 L. R. A. 481, 53 Am. St. Rep. 557; State v. Harrington, 68 Vt. 622, 35 Atl. 515, 34 L. R. A. 100; Ives v. South Buffalo Ry. Co., 201 N. Y. 271, 94 N. E. 431, 34 L. R. A. (N. S.) 162, Ann. Cas. 1912B, 156; Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079; Dunn v. Commonwealth, 105 Ky. 834, 49 S. W. 813, 43 L. R. A. 701, 88 Am. St. Rep. 344; Aubrey's Case, 36 Wash. 308, 78 Pac. 900, 104 Am. St. Rep. 952, 1 Ann. Cas. 927; People v. Budd, 117 N. Y. 1, 22 N. E. 670, 682, 5 L. R. A. 559, 15 Am. St. Rep. 460. It follows that the decisions of courts passing upon laws similar to those before it in a given case become important subjects of investigation. [2-4] It cannot be questioned that the state, under its police power, has the right to regulate the conduct of business to protect the public health, morals, and welfare, observing constitutional limitations, reasonable classification, and terms of control. This is recognized in constructions of both the federal and state Constitutions. Tiedeman on Lim. Police Power, § 102; Mugler v. Kansas, 123 U. S. 623, 8 Sup. Ct. 273, 31 L. Ed. 205; Murphy v. People of Cal., 225 U. S. 623, 32 Sup. Ct. 697, 56 L. Ed. 1229, 41 L. R. A. (N. S.) 153; St. Louis v. Fischer, 167 Mo. 654, 67 S. W. 872, 64 L. R. A. 679, 99 Am. St. Rep. 614; Id., 194 U. S. 361, 24 Sup. Ct. 673, 48 L. Ed. 1018; and other cases listed in Ruling Case Law, vol. 6, p. 198. Callings that cannot be regulated except by license tax are those which cannot in their operation be dangerous to the public. parte Dickey, 144 Cal. 234, 77 Pac. 924, 05 L. R. A. 928, 103 Am. St. Rep. 82, 1 Ann. Cas. 428. All others may be restricted. Tiedeman on Lim. Police Power, § 102; Ex parte Drexel, 147 Cal. 763, 82 Pac. 429, 2 L. R. A. (N. S.) 588, 3 Ann. Cas. 878; Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079, notes 15 and 16, and other cases listed in 6 Ruling Case Law, p. 218, note 16. And those essentially harmful may be prohibited. Commonwealth v. Vrooman, 164 Pa. 306, 30 Atl. 217, 25 L. R. A. 250, 44 Am. St. Rep. 603; Ruling Case Law, vol. 6, p. 194, note 6 and cases cited. The calling of lending money at interest is subject to regulation. From 22 Cyc. 1471, we quote the following: "The taking of interest, or, as it was then called, 'usury,' was looked upon in early times with great disfavor, and actually prohibited, not only by the Mosaic law among the Jews, but also under severe penalties by the old English laws. The church uttered its anathema, and the state leveled its forfeitures, against the taking of any interest, great or small. But, notwithstanding the denunciations and punishments to which it was subjected, it could not be suppressed, and it was finally, in 1545, sanctioned in England by 37 Henry VIII, c. 9." [5] The right to lend money at interest is a creature of statute, not an inherent right, and in our Constitution there is a limitation of the right prohibiting contracts for interMany est exceeding 10 per cent. per annum. restrictions and regulations with reference to lending money and touching the security that may be taken therefor will be found in the banking laws of the United States and the several states. Laws identical in purpose and similar in detail to that involved in this appeal have been passed by more than 30 of the states of the Union and in the District of Columbia. So far as we have examined the authorities they have except in the case of Massie v. Cessna, 239 Ill. 352, 88 N. E. 152, 28 L. R. A. (N. S.) 1108, 130 Am. St. Rep. 234, been sustained. People v. Stokes, 281 Ill. 159, 118 N. E. 87; Mutual Loan Co. v. Martell, 200 Mass. 482, 86 N. E. 916, 43 L. R. A. (N. S.) 746, 128 Am. St. Rep. 446; Knoxville v. Harbison, 183 U. S. 13, 22 Sup. Ct. 1, 46 L. Ed. 55; Hancock v. Yaden, 121 Ind. 366, 23 N. E. 253, 6 L. R. A. 576, 16 Am. St. Rep. 396; State v. Peel, 36 W. Va. 802, 15 S. E. 1000, 17 L. R. A. 385; State v. Wear, 79 Or. 367, 154 Pac. 905, 155 Pac. 364; Commonwealth v. Grossman, 248 Pa. 11, 93 Atl. 781; In re Stephan, 170 Cal. 48, 148 Pac. 196, Ann. Cas. 1916E, 617; Heath & Milligan Mfg. Co. v. Worst, 207 U. S. 338, 28 Sup. Ct. 114, 52 L. Ed. 236; Telephone Co. v. Los Angeles, 211 U. S. 265, 29 Sup. Ct. 50, 53 L. Ed. 176; Edwards v. State, 62 Fla. 40, 56 South. 401; King v. State, 136 Ga. 709, 71 (216 S.W.) 105 Pac. 299, 27 L. R. A. (N. S.) 898, Ann. in that the statute was an unauthorized and Cas. 1912C, 819; Wessell v. Timberlake, 95 unreasonable exercise of the police power. Ohio, 21, 116 N. E. 43, Ann. Cas. 1918B, 402; Commonwealth v. Puder, 261 Pa. 129, 104 Atl. 505, Supreme Court of Pennsylvania, decided April, 1918. In the case of People v. Stokes, 281 Ill. 159, 118 N. E. 87, that of Massie v. Cessna, 239 III. 352, 88 N. E. 152, 28 L. R. A. (N. S.) 1108, 130 Am. St. Rep. 234, is distinguished; and in Mutual Loan Co. v. Martell, supra, the Supreme Court of Massachusetts and the Supreme Court of the United States (222 U. S. 231, 32 Sup. Ct. 74, 56 L. Ed. 178, Ann. Cas. 1913B, 529) refused to follow it. By fixing the license tax at $5,000 annually, to be collected by the state, and $2,500 additional by the county, it manifestly prohibited the pursuit of the business at which it was directed. The right to license and regulate an occupation which may under such restrictions be conducted in a manner not harmful to the public does not include the right to prohibit its pursuit. Tiedeman on Lim. Police Power, § 102; Freund on Police Power, §§ 492, 494, 498; Hirshfield v. City of Dallas, 29 Tex. App. 242, 15 S. W. 124; 8 Cyc. 886; Carrigan v. Lycoming Fire Ins. Co., 53 Vt. The states having similar laws are as fol- 418, 38 Am. Rep. 689; Milliken v. Weatherlows: California, Colorado, Connecticut, Del- ford, 54 Tex. 388, 38 Am. Rep. 629; Commonaware, District of Columbia, Florida, Geor- wealth v. Atlantic Coast Ry., 106 Va. 61, 55 gia, Illinois, Indiana, Iowa, Kentucky, Maine, S. E. 572, 7 L. R. A. (N. S.) 1086, 117 Am. Maryland, Massachusetts, Michigan, Minne- St. Rep. 983, 9 Ann. Cas. 1124; State v. sota, Mississippi, Missouri, Nebraska, New Phelps, 144 Wis. 1, 128 N. W. 1041, 35 L. R. Hampshire, New Jersey, New York, Ohio, | A. (N. S.) 353. The restrictions upon the Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming. The major portion of them require a bond as a condition precedent for the pursuit of the business, and other regulations varying in terms, but not different in substance, from those in our statute. The law on the subject enacted by Congress for the District of Columbia varies from ours in no essential particular, and contains the criticised requirement that an agent upon whom service of process may be made shall be appointed, requires a bond in the sum of $5,000, and is more restrictive than the Texas statute, in that it requires the bond shall be made by a surety company. U. S. Statutes at Large, vol. 37, part 1, p. 657, c. 26. In amount of bond and other provisions this statute is not unlike that in many of the other states. The classification of occupations for the purpose of police regulation, based upon the character of security taken for loans, is declared legal in Griffith v. Conn., 218 U. S. 563, 31 Sup. Ct. 132, 54 L. Ed. 1151, and the principle recognized in the decisions construing our Constitution, art. 8, § 2. See Fahey v. State, 27 Tex. App. 146, 11 S. W. 108, 11 Am. St. Rep. 182; Texas v. Stephens, 100 Tex. 628, 103 S. W. 481; Craddock v. Express Co., 58 Tex. Civ. App. 551, 125 S. W. 60; Fahey v. State, 27 Tex. App. 160. The case of Owens v. State, 53 Tex. Cr. R. 105, 112 S. W. 1075, 126 Am. St. Rep. 772, is relied on by appellant as sustaining his contention throughout. The decision condemned the statute concerning the pursuit of the business of procuring and purchasing assignments of wages. Its terms were a manifest discrimination in excepting from its operation persons of the same class as others who were affected by its restrictions. We think it was also correctly determined there wage-earner and the purchaser were unreasonable in that they put a prohibitive tax upon the purchaser, and made one subject to the tax who took as many as three assignments of wages. The distinction between that case and this one is obvious. Here the license tax is $150 a year. The obligation in the bond is contingent, and not absolute. It creates no liability against one who pursues the occupation in accordance with the law. It regulates, but does not prohibit, the business. A bond, in substance such as that required by this statute, was required by the state of Michigan as a condition precedent to engaging in the business of pawnbroker. A pawnbroker's occupation is lending money upon personal property pledged. That of a loan broker, under our statute, is lending money upon personal property mortgaged and upon wages assigned. The principles applicable in the control of pawnbrokers by similar statutes are obviously applicable to those in the instant case. The Supreme Court of Michigan, in a pawnbroker's case, held the bond, which was for $5,000-very like that in our statute-valid, and the law not obnoxious to the various constitutional provisions urged. See Grand Rapids v. Braudy, 105 Mich. 670, 64 N. W. 29, 32 L. R. A. 116, 55 Am. St. Rep. 472, and note. Our statutes regulate pawnbrokers in a manner quite similar to the statute here in question. See Title 103 Vernon's Sayles' Civil Statutes. The validity of these regulations has been recognized by this court in Heitzelman v. State, 26 S. W. 729. Other cases upon the subject will be found in 30 Cyc. 1165; Solomon v. Denver, 12 Colo. App. 179, 55 Pac. 199; Butt v. Paltrovich, 30 Mont. 18, 75 Pac. 521, 104 Am. St. Rep. 698; Elsner v. Hawkins, 113 Va. 47, 73 S. E. 479, Ann. Cas. 1913D, 1278, and note. The pawnbrokers' statute embraces prac in Marbury v. Madison, 5 U. S. (1 Cranch) 137, 176, 2 L. Ed. 60, 70, 'are powers limited, and to what purpose is that limitation committed to writing, if these limits may, at any time, be passed by those intended to be restrained? The distinction between a government with limited and unlimited powers is abolished, if those limits do not confine the tically the same elements that are the basis of complaint against the loan brokers' statute, and render the right to regulate and furnish an example of an approved method therefor. In street traffic regulations in this and other states the requirement of a bond of indemnity against violations has been held not unreasonable. See Ex parte Card-persons on whom they are imposed, and if nell, 170 Cal. 519, 150 Pac. 348, L. R. A. 1915F, 850; Memphis v. State, 133 Tenn. 83, 179 S. W. 631, L. R. A. 1916B, 1151, Ann. Cas. 1917C, 1056; Willis v. Ft. Smith, 121 Ark. 606, 182 S. W. 275; La Blanc v. New Orleans, 138 La. 243, 70 South. 212; Dickey v. Davis, 76 W. Va. 576, 85 S. E. 781, L. R. A. 1915F, 841; Greene v. City of San Antonio, 178 S. W. 6; Ex parte Parr, 200 S. W. 404; and other Texas cases there listed. A provision permitting revocation of licenses has often been held not unreasonable. Abend v. Terre Haute & Indianapolis R. R. Co., 111 Ill. 203, 53 Am. Rep. 620; Renegar v. United States, 172 Fed. 646, 97 C. C. A. 172, 26 L. R. A. (N. S.) 686, 19 Ann. Cas. 1117; Lane v. Chappell, 159 S. W. 905; Fischer v. St. Louis, 194 U. S. 361, 24 Sup. Ct. 673, 48 L. Ed. 1018; Davis v. Mass., 167 U. S. 43, 17 Sup. Ct. 731, 42 L. Ed. 31; Kissinger v. Hay, 52 Tex. Civ. App. 295, 113 S. W. 1008. The United States Supreme Court has held that, as a condition precedent for a license to do business, a foreign corporation may be required to designate an agent within the state upon whom process may be served, and that such requirement may be applied to an individual stockholder who is a nonresident. Wilson v. Seligman, 144 U. S. 41, 12 Sup. Ct. 541, 36 L. Ed. 338. It would seem a fair analogy that the state, having authority to prescribe regulations as a condition precedent to the pursuit of a given avocation, would have the right to include as a part of the regulation the requirement that an agent upon whom process might be served be designated as a condition precedent to the issuance of the license. Concerning the police power of the state and the relation of the courts to its exercise, we take the following quotation from the opinion of the Supreme Court of the United States in Mugler v. Kansas City, 123 U. S. 623, 8 Sup. Ct. 273, 31 L. Ed. 210: "It does not at all follow that every statute enacted ostensibly for the promotion of these ends is to be accepted as a legitimate exertion of the police powers of the state. There are, of necessity, limits beyond which legislation cannot rightfully go. While every possible presumption is to be indulged in favor of the validity of a statute (Sinking Fund Cases, 99 U. S. 718, 25 L. Ed. 501), the courts must acts prohibited and acts allowed are of equal obligation.' The courts are not bound by mere forms, nor are they to be misled by mere under a solemn duty-to look at the substance pretenses. They are at liberty-indeed, are of things, whenever they enter upon the inquiry whether the Legislature has transcended the limits of its authority. If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution. "No one may rightfully do that which the declares to be prejudicial to the general wellawmaking power, upon reasonable grounds, fare. "This conclusion is unavoidable, unless the Fourteenth Amendment of the Constitution takes from the states of the Union those powers of police that were reserved at the time the original Constitution was adopted. But in Barbier v. Connolly, 113 U. S. 31 [5 Sup. this court has declared, upon full consideration, Ct. 357], 28 L. Ed. 924, that the Fourteenth Amendment had no such effect. After observing, among other things, that that amendment forbade the arbitrary deprivation of life or liberty, and the arbitrary spoliation of property, and secured equal protection to all under like circumstances, in respect as well to their personal and civil rights as to their acquisition and enjoyment of property, the court said: 'But neither the amendment-broad and comprehensive as it is nor any other amendof the state, sometimes termed its police ment was designed to interfere with the power power, to prescribe regulations to promote the health, peace, morals, education, and good order of the people, and to legislate so as to increase the industries of the state, develop its resources, and add to its wealth and prosperity.' Numerous cases applying the principles be found in Ruling Case Law, vol. 6, p. 240, herein announced to particular statutes will note 20, p. 241, notes 1, 2, and 3; page 243, note 13. Having no precise limits defined in advance, the unrestrained exercise of the police power would endanger constitutional ful attribute of government, the courts can government. It being an essential and useno more arbitrarily deny its proper exercise than they can tolerate its aribtrary application. The statutes regulating loan brokers are obey the Constitution rather than the law-founded on the idea that there exists a real making department of government, and must, upon their own responsibility, determine wheth- basis for the classification adopted, and that er, in any particular case, these limits have in the conduct of the business of lending (216.S.W.) assignment of wages there are abuses, both on the part of the lender and the borrower, which require restrictions in the public interest. striction thereof may be provided by the Leglature; but under our Constitution such restriction may not be such as to make it impossible to conduct a legitimate business, or to arbitrarily deprive a citizen engaged in such business of his right to that equal pro by our bill of rights, nor take from him his right to the due course and process of law, which is also guaranteed him by our Consti Giving scope to the presumption in favor of the validity of laws, having regard for the numerous instances in which the law-tection under our laws which is guaranteed making power of the state and nation have found it expedient to enact laws with the same object as that under consideration, observing that the courts in numerous instances | tution. have upheld these laws as a legitimate and Giving particular attention to the language proper exercise of the police power of the and requirements of chapter 28, Acts of the state, we regard ourselves unauthorized to Regular Session of the 34th Legislature, declare that the Legislature of this state which contains the law on this subject, we was inhibited by the state or federal Consti- concede that the requirement of a bond as a tution from embracing the subject within its prerequisite to engaging in business as a loan police regulations, or that the conditions ex- broker is proper, provided the amount and isting did not furnish occasion therefor, or conditions of such bond be not improper. Nor that the provisions of the act are unreason-would it be unreasonable for such a law to reable. quire an artificial person, such as a corporaThe fact that the record discloses that the tion, to appoint an agent or attorney in fact appellant has not been able to make the bond upon whom service of legal process may be required cannot, in view of the finding of had, though we are unaware of any law in the trial court against him, nor in view of this state making such provision in the case the general application of similar laws of a domestic corporation, in case of any throughout the country, as pointed out above, other corporation than that described in this be taken as conclusive that the requirement act. In our opinion, however, to single out is unreasonable. Similar bonds have been the loan broker, and to define him as one who held reasonable requirements; statutes de lends money upon personal securities, who manding them have been enforced for years. takes assignments of wages, and chattel mortThe object of the demand is primarily to fur-gages upon household goods, and to then renish assurance that the individual who seeks the license is of a type that will conduct the business permitted in a legal manner, and, secondarily, to furnish indemnity to those injured by his failure to do so. This court upheld the same statute in the case of Ex parte Hutsell, 78 Tex. Cr. R. 589, 182 S. W. 458. The opinion was not unanimous, though there was no dissenting opinion written. There has been development of the subject since that time, and in view of the dissent of the Presiding Judge, for whose opinion the writer has great respect, the subject has been gone into with as great detail as practicable, with the result that our conclusion is that the law is not shown invalid, and that the judgment entered should be affirmed. quire him to give a bond for $5,000, made renewable every year, and conditioned that he will faithfully comply with each and every requirement of the law governing such business, and pay any judgment which may be obtained against him, as is provided in sections 2 and 3 of the act under consideration (articles 6171b, 6171c), and then to further write in section 7 of said act (article 6171g), as a part of "the law governing such business," that such private citizen shall file with the county clerk of each county where he does business a written, irrevocable power of attorney, naming the county judge of such county as his duly authorized agent and attorney in fact, for the purpose of accepting service for him or it, or being served with citation in any suit brought against him or it, in any court of this state, "and consenting that the service of any civil process upon such county judge as his or its attorney for such purpose, in any suit or proceeding, shall be taken and held to be valid, waiving all claim and right to object to such service or to any On Motion for Rehearing. error by reason of such service," is to attempt LATTIMORE, J. [6] The original opinion to place such obligation in said bond as to in this case is devoted mainly to a discussion make it unreasonable and discriminatory. No and decision of the question as to whether the citizen of this state can be compelled to relinbusiness of appellant is such as is properly quish or waive his right to his day in court within the regulatory control of the state in as a condition to engaging in any lawful busithe exercise of its police power. We have no ness. Nor will a law requiring a bond seekdoubt that the business of the appellant is ing to impose such condition be upheld by us. one whose regulation is within the police We are not surprised that the bonding compower of the state, and that reasonable re-panies and solvent citizens, as is disclosed by DAVIDSON, P. J. That the Legislature may regulate "loan brokers" is not questioned. But I cannot concur in sustaining this act of that body. I may later write. |