City of Newnan v. Atlanta Laundries Inc.

162 S.E. 497, 174 Ga. 99, 87 A.L.R. 507, 1932 Ga. LEXIS 4

Opinions

Gilbert, J.

Atlanta Laundries Inc. filed a petition seeking an injunction against the City of Newnan. It appears from the allegations in the petition that the complainant is a corporation with its principal office in Delaware, but that its place of doing business is in the City of Atlanta. The character of its business is that of laundering, cleaning, dyeing, pressing, and doing such other things as are incident to that character of business. The petitioner applied to the municipal authorities of Newnan for a license to carry oil its business there. The application was returned by Mrs. L. P. Williams (official status, if any, not appearing), with the statement that the city clerk was absent, being “confined to the Piedmont hospital, Atlanta, Ga.,” that she was “keeping the office for him, and would prefer that you defer application for license until he returns.” The letter also stated: “I can not accept the check you tender in settlement of the license, for the reason that you have not tendered the correct amount and you have not filed an application for the license as required under the ordinance regulating the same.” The Laundry Company then made similar application to the mayor of the City of Newnan, who returned the check for $100, tendered to cover license for laundry and dry-cleaning business in the City of Newnan. The mayor also called attention to the fact that the application for license was not submitted in accordance with the terms of the city ordinance. Apparently nothing further was done by the Laundry Company with reference to securing license. Subsequently, on May 18, Deck, an agent of the Laundry Company, residing at Newnan, who had been soliciting business of the character done by petitioner within the municipality, was arrested by the chief of police, charged with violating the ordinance of the City of Newnan, which required all persons doing laundry business to-obtain a license according to the municipal ordinance. The schedule of fees fixed by the ordinance are: “Laundry and/or, laundry agents, using one motor-driven vehicle, when the work is done in the City of Newnan, $50. Where the laundry work or substantially all the laundry work is done without the limits of the City of Newnan, $300.” Like fees are fixed in the case of those engaging in the business of dry-cleaning, dyeing, and pressing. Payment of $600, the amount required by the ordinance of those engaging in the business of laundering and that of dry-cleaning, dyeing, and pressing “where the . . work or substantially all the . . work is done without the limits of the 'City of Newnan,” was demanded of Deck.

Before trial of the case against Deck, Atlanta Laundries Inc. filed a petition for injunction against the mayor and aldermen of the City of Newnan, the chief of police and city clerk, alleging that the arrest was unlawful, because the ordinance was null and void, being in contravention of stated clauses of the State and Federal constitutions. The ordinance requires all persons who engage in the City of Newnan in the business of laundering, dry-cleaning, dyeing, and pressing, or agents of either kind of business, to procure a license; that the application for such license shall name “the place where the business to be conducted, if in said, city, will be located, and, if a non-resident, naming the town and county where the principal office of the company is located,” and “shall also set out a schedule of charges to be made for the work proposed to be done in said City of Newnan or for residents of said City of New-nan; and if the applicant, whether principal or agent, resident or non-resident, owns, controls, operates, carries on, and/or engages in said business in more than one locality, within a radius of seventy-five (75) miles of the City of Newnan, the said applicant shall set out a schedule of charges for work similar in kind to that proposed to be carried on in the City of Newnan that is charged in each said locality wherein said applicant as principal or agent owns, controls, and operates, carries on, and/or engages in the business the applicant intends to carry on in said City of Newnan,” and in this connection the ordinance provides that the city clerk shall, from an inspection of such schedule of charges, “determine whether the applicant1 intends to. engage in unfair competition in the said City of Newnan with any person, firm, or corporation licensed or who may be licensed to engage in such business in said city,” and issue or decline to issue the license according to whether the question is determined in the negative or affirmative. Another provision of the ordinance is that “It shall be the duty of every person, firm, or corporation engaged in or carrying on any of the aforesaid businesses in the City of Newnan, who removes or causes to be removed from the City of Newnan any article belonging to residents of the City of Newnan for the purpose of having the said article laundered, cleaned, or dyed, before engaging in business in the said City of Newnan or before removing any article belonging to residents of said city from the said City of Newnan, shall be required to file with the clerk of the City of Newnan a bond in the sum of” two thousand dollars. No question is here raised as to the amount of the bond.

The first headnote does not require elaboration.

That portion of the ordinance which requires the applicant, for a laundry license to give a bond, where articles are taken from the city for the purpose of laundering, is not arbitrary and unreasonable and is not in conflict with the due-process clause of the State constitution or the fourteenth amendment to the constitution of the United States. It is important to bear in mind the precise terms of the ordinance on this question, because it will thus be shown that the bond is required of all persons who wish' to engage in that business in the City of Newnan, provided the work is done outside of the city (see statement preceding). The person or corporation engaged in the business may be domiciled or resident within or without the city, but the classification with respect to the giving of bond applies where the work is done without the city. Therefore it is a classification of the business, and not according to residence of the person. It is a classification based upon the manner of carrying on a business; that is, by receiving the articles in Newnan and taking them without the city for laundering. It is a regulatory provision, and the question is whether it is a reasonable regulation or arbitrary and unreasonable. If the former, it is valid and constitutional; if the latter, it is invalid. In the annotation following the report of the case of People v. Beakes Dairy Co., in 3 A. L. R. 1260 (222 N. Y. 416, 119 N. E. 115), will be found the following clear statement of the law: “Since the State or a municipality may regulate any business, however lawful in itself, which may be so conducted as to become the medium of fraud and dishonesty, a requirement of a bond to insure creditors of the business against financial loss is a valid enactment, and is not class legislation, if the requirement is based on reasonable grounds and is not essentially arbitrary. Hawthorn v. People, (1883), 109 Ill. 302, 50 Am. Rep. 610; State ex rel. Brewster v. Mohler (1916), 98 Kan. 465, 158 Pac. 408; aff. 248 U. S. 112, 63 L. ed. 153, 39 Sup. Ct. Rep. 32; State ex rel. Beek v. Wagener (1899), 77 Minn. 483, 46 L. R. A. 442, 77 Am. St. Rep. 681, 80 N. W. 633, 778, 1134; Portland v. Western U. Tel. Co. (1915), 75 Or. 37, L. R. A. 1915D, 260, 146 Pac. 148; Ferguson-Hendrix Co. v. Fidelity & D. Co. (1914), 79 Wash. 528, 140 Pac. 700; State v. Bowen & Co. (1915), 86 Wash. 23, 149 Pac. 330, Ann. Cas. 1917B, 625.”

The annotator follows this statement with a general discussion of the authorities cited. Particularly to be noted is what is there said with reference to the decisions of the Supreme Court of the State of Michigan, because counsel for the defendants cite, as authority for their contention on this question, Harrigan & Reid Co. v. Burton, 224 Mich. 564 (195 N. W. 60, 33 A. L. R. 142, 145). In their brief they quote from that case. Such quotation shows that the decision therein rendered was based upon another Michigan case, Valentine v. Berrien, 124 Mich. 664 (50 L. R. A. 493, 83 Am. St. R. 352, 83 N. W. 594). In the annotation to the Beakes case, decided by the Court of Appeals of New York, appears a citation of Brewster v. Mohler, 98 Kan. 465 (supra), which was affirmed by the Supreme Court, 248 U. S. 112. The Kansas Supreme Court, referring to the Valentine casé, which furnished authority for the later Harrigan case in the Michigan Supreme Court, said as follows: “Whatever that great court says is always read and studied with great profit; but curiously enough, in that case, the particular clause or clauses of the constitution, State or Federal, which the statute was held to infringe, are not cited nor even hinted at. The case does not cite a single precedent of any sort; and it neither persuades nor convinces, as do the decisions of the Supreme Courts of Minnesota, Illinois, and Washington on this subject.” The decision in Brewster v. Mohler, having been affirmed by the Supreme Court, furnishes us authority on that ques tion by the supreme authority on all Federal questions. “There are always difficulties in drawing the dividing line between that which is within, and that which is without, the constitutional power of the States; and the question in each specific case must be answered by the pertinent facts therein.” Engel v. O’Malley, 219 U. S. 128 (31 Sup. Ct. 190, 55 L. ed. 128).

That portion of the ordinance which requires a schedule of prices to be filed as a condition precedent to the issuance of a license is not in conflict with art. 1, sec. 1, par. 3, of the State constitution (Civil Code (1910), § 6359), or with the fourteenth amendment to the constitution of the United States. Where a statute or an ordinance is capable of two constructions, constitutional under one construction and unconstitutional under the other, it is the duty of the court to adopt that construction which will sustain its constitutionality. The City of Newnan contends that the portion of the ordinance in question is not for the purpose of price-fixing, but is a means of judging, as a condition precedent to the issuance of the license, whether the applicant is undertaking to engage in unfair competition. The petitioner contends that it is' really the means of fixing prices. The proper construction is that it is not price-fixing, and therefore not unconstitutional. Construed as a means of preventing unfair competition or carrying on the business in a manner harmful to the public interests and general welfare, the statute becomes merely regulatory in character. The State, or a municipality under authority of the State, may regulate a business, however honest in itself it may be, if the business as conducted may amount to a fraud or be harmful to the prxblic interests because of unfair competition. “It is not enough to say that the business may be honestly conducted. The State may, to some extent, compel honesty by imposing a license fee, if widespread frauds upon and losses by its people are thereby prevented. Any trade, calling, or occupation may be reasonably regulated if ‘the general nature of the business is such that, unless regulated, many persons may be exposed to misfortunes against which the legislature can properly protect them.’” People v. Beakes Dairy Co., supra, and cit. In that case the opinion cites numerous authorities. Some of them deal with the constitutionality of some features of blue-sky laws; others, where licenses have been required of employment agencies, the business of banking by individuals and partnerships; such statutes being upheld “because fraud could be practiced in it.” Other businesses dealt with are the selling of patent-rights, the standardization of “ice cream,” etc. The annotations following the case deal exhaustively with the subject, concluding with the power to require bonds. The same principle with respect to protecting the character of the business to be conducted was ruled by this court in Saunders v. State, 172 Ga. 770 (8), 773 (158 S. E. 791), and by the Supreme Court of the United States in Payne v. Kansas, 248 U. S. 112 (supra), Hall v. Geiger-Jones Co. 242 U. S. at p. 539 (37 Sup. Ct. 217, 61 L. ed, 480, L. R. A. 1917F, 514, Ann. Cas. 1917C, 643).'

If the ordinance should at any time be so administered, as the Laundry Company contends that its terms authorize, as to become a means of price-fixing, such construction of the ordinance would result in its invalidity, and persons injured thereby would be entitled to injunction. In Central Lumber Co. v. South Dakota, 226 U. S. 157 (33 Sup. Ct. 66, 57 L. ed. 164), a unanimous decision, the Supremo Court upheld the statute of South Dakota which undertook to penalize those engaged in the manufacture, etc., of a commodity in general use, who undertook to destroy competition. In the opinion the court said: “We must assume that the legislature of South Dakota considered that people selling in two places made the prohibited use of tlieir opportunities, and that such use was harmful, although the usual efforts of competitors were desired. It might have been argued to the legislature, with more force than it can be to us, that recoupment in one place of losses in another is merely an instance of financial ability to compete. If the legislature thought that that particular manifestation of ability usually came from great corporations whose power it deemed excessive and for that reason did more harm than good in their State, and that there was no other case of frequent occurrence where the same could be said, we cannot review their economics or their facts. That the law embodies a widespread conviction appears from the decisions in other States. State v. Drayton, 82 Nebraska, 254 [117 N. W. 768, 23 L. R. A. (N. S.) 1287, 130 Am. St. R. 671]; State v. Standard Oil Co., 111 Minnesota, 85, 126 N. W. Rep. 527; State v. Fairmont Creamery, 153 Iowa, 702, 133 N. W. Rep. 895 [42 L. R. A. (N. S.) 821]; State v. Bridgeman & Russell Co., 117 Minnesota, 186, 134 N. W. Rep. 496 [Ann. Cas. 1913D, 41].” An additional basis lor the right of the city to require a schedule of prices to be charged to accompany the application for license is that- by such means the city will be furnished information of importance in arriving at what is a just and reasonable license tax. In former times it was required of millers, operators of ferries, and doubtless a number of other characters of business. The following cases cited by defendant in error are distinguished, because the facts were different from the facts of this case: Tyson v. Banton, 273 U. S. 418 (47 Sup. Ct. 426, 71 L. ed. 718, 58 A. L. R. 1236); Fairmont Creamery Co. v. Minnesota, 274 U. S. 1 (47 Sup. Ct. 506, 71 L. ed. 893, 52 A. L. R. 163; Southwest Utility Ice Co. v. Liebman, 52 Fed. (2d) 349.

The charter of the City of Newnan, granted by the State (Ga. Laws 1893, p. 270, sec. 1), contains the usual general welfare clause found in nearly all municipal charters. Power in this instance is granted to the mayor and board of aldermen to enact such ordinances for the welfare and proper government of the city as to the mayor and said board may seem best, and which shall be consistent with the laws of the State of Georgia and of the United States. Section 17 of that act, which gave specific authority to the city to require license fees for the conduct of designated businesses, was amended by the act of 1925 (Ga. L. 1925, p. 1302). That section, as amended, grants power and authority to the city to license, regulate, control, or prohibit numerous designated kinds of business, “and all other establishments, business callings or vocations, and which under the laws and constitution of this State are subject to license,” so that the charter of the City of Newnan contains specific authority to license, regulate, and control the business falling within the purview of the ordinance, provided, of course, the ordinance is construed as indicated in this decision. The ordinance in question, as now construed with reference to the filing of bond and also schedule of charges, is authorized by the powers granted in the charter. Laundries fall within what is called police power for purposes of regulation and control. 12 C. J. 924, § 432. The control must be reasonable and not arbitrary. There must be no discrimination among all within the same lawful classification, but the manner of doing business may be controlled according to the general welfare, provided such control is not oppres sive. In Barbier v. Connolly, 113 U. S. 27 (5 Sup. Ct. 357, 28 L. ed. 923), it was held that an ordinance prohibiting from washing and ironing in public laundries and wash-houses within defined territorial limits, from ten o’clock at night to six in the morning, is a purely police regulation, within the competency of a municipality possessed of the ordinary powers. In Soon Hing v. Crowley, 113 U. S. 703, 709 (5 Sup. Ct. 730, 28 L. ed. 1145), the Supreme Court held: “The decision in Barbier v. Connolly, ante, 27 — that a municipal ordinance prohibiting from washing and ironing in public laundries and wash-houses within defined territorial limits, from ten o’clock at night to six in the morning, is a police regulation within the competency of a municipality possessed of ordinary powers — affirmed. It is no objection to a municipal ordinance prohibiting one kind of business within certain hours, that it permits other and different kinds'of business to be done within those hours. Municipal restrictions imposed upon one class of persons engaged in a particular business, which are not imposed upon others engaged in the same business and under like conditions, impair the equal right which all can claim in the enforcement of the laws. . . .The discriminations which are open to objection are those where persons engaged in the same business are subjected to different restrictions, or are held entitled to different privileges under the same conditions. [Italics ours.] It is only then that the discrimination can be said to impair that equal right which all can claim in the enforcement of the laws.”

The last five headnotes do not require elaboration. The judgment is affirmed, with direction that it be modified to the extent that the city shall not be enjoined from enforcing the ordinance in question, with the single exception that the petitioner shall not be required to pay the arbitrary and excessive sum of $600 special license fee.

Judgment affirmed, with direction.

All the Justices concur, except