COLEMAN, Circuit Judge:
This litigation challenges § 5310.1 of the Mississippi Code of 1942
regulating
and prescribing the procedure for the issuance of charters to non-profit corporations, as being unconstitutional and void. Specifically, it is alleged that the statute vests unconstitutionally broad discretion in the Governor to grant or deny nonprofit corporate charters. To the extent hereinafter indicated, we agree with the challengers.
Section 5310.1 provides that an application for a charter of incorporation for a non-profit corporation must be submitted to the Secretary of State, who in turn submits it to the Attorney General. After receiving the application,
“the Attorney General, or his assistants at his direction, may, in his discretion, make such investigation as he may deem necessary to determine in his opinion whether the issuance of the charter to the corporation as applied for is contrary to the best interest of the State of Mississippi.”
The Attorney General then submits his opinion to the Governor, who has the absolute power to approve or disapprove the charter. The statute includes no guides or standards to regulate this approval or disapproval. Thus it may be said that discretion thus granted by § 5310.1 is unlimited in scope.
I
Courts have repeatedly held that any statute which confers such absolute and arbitrary discretion on a state official to grant or deny a right or privilege is unconstitutional. The landmark case is Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). The Supreme Court there considered a statute granting absolute discretion to a public officer to grant or deny licenses to operate laundry businesses in San Francisco.
The Court said:
“When we consider the nature and theory of our institutions of govern
ment, the principles upon which they are supposed to rest, and review the history of their development, we are constrained to conclude that they do not mean to leave room for the play and action of purely personal and arbitrary power. * * * For, the very idea that one may be compelled to hold his life, or the means of living, or any material right essential to the enjoyment of life, at the mere will of another, seems to be intolerable in any country where freedom prevails, as being the essence of slavery itself.” Id. at 369-370, 6 S.Ct. at 1071.
The Mississippi Supreme Court has held that statutes vesting unlimited discretion in a state official are violative of both the Fourteenth Amendment and the Mississippi Constitution. In Broadhead v. Monaghan, 238 Miss. 239, 117 So.2d 881 (1960) the Court held that :
“In delegating powers to an administrative body with respect to the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for their guidance and must not vest them with an arbitrary and uncontrolled discretion with regard thereto.”
A similar holding was made in State v. Allstate Ins. Co., 231 Miss. 869, 97 So.2d 372 (1957), concerning a licensing statute for insurance companies. See also Louisiana State Board of Embalmers v. Britton, 244 La. 756, 154 So.2d 3,89 (1963); Lee v. Renfro, 257 Ala. 679, 60 So.2d 849 (1952).
Unless there are specific standards for the granting or denying of a charter, all charters which comply with the statutes and Constitution of Mississippi and of the United States must be granted. In Hornsby v. Allen, 5 Cir., 1964, 326 F.2d 605, 612, it was held that in the absence of any standards for the issuance of liquor licenses, the courts must enjoin the denial of licenses to any applicants who comply with existing law.
Similar findings of the unconstitutionality of regulatory statutes for lack of specific standards have been made by state courts. In a recent decision concerning a New York statute much like § 5310.1, requiring judicial approval for charters for non-profit corporations, the New York Court of Appeals held that, in the absence of a clearly expressed legislative standard for approval, approval could only be denied if the charter failed to satisfy some specific requirement of New York law, Association for Preservation of Freedom of Choice, Inc. v. Shapiro, 9 N.Y.2d 376, 214 N.Y.S.2d 388, 174 N.E.2d 487 (1961).
That Court held that a judge could not deny a charter because he found it not to be “in accord with public policy” or to be “injurious to the community.” Otherwise, the court said:
“[the] individual Justice would be at liberty to indulge in his own persona] predilections as to the purpose of a proposed corporation, and impose his own personal views as to the social, political, and economic matters involved.” Id. at 382, 214 N.Y.S.2d at 391, 174 N.E.2d at 489.
II
Even if it is argued that § 5310.1 does not grant absolutely unlimited discretion to the Governor, but that it
limits his
disapproval to those charters which are not in the best interest of the State of Mississippi that standard is so vague as to be unconstitutional on its face.
Many courts have held that similarly vague standards do, in effect, grant unlimited discretion to a licensing officer, and that they are unconstitutional. In Staub v. City of Baxley, 355 U.S. 313, 322, 78 S.Ct. 277, 2 L.Ed.2d 302 (1958) the Supreme Court considered a statute in which the standard was the “effects upon the general welfare of citizens of the City of Baxley.” The Court held that:
“[t]hese criteria are without semblance of definitive standards or other controlling guides governing the action of the Mayor and Council in granting or withholding a permit.”
III
If it is necessary for a state to limit the number of charters granted, all the safeguards of due process must be observed before any applicant for this reason can be denied a charter. Horns-by v. Allen, supra; Glicker v. Michigan Liquor Control Commission, 6 Cir., 1947, 160 F.2d 96. In
Hornsby
the Court held that an applicant for a liquor license was entitled to a hearing at which she could present evidence and cross-examine witnesses, to have the administrative findings disclosed, and to be informed of the specific regulations and statutes governing her application. Id. at 608, 610, of 326 F.2d. In the absence of such procedural safeguards a denial of a license, particularly when other applicants are granted such licenses, violates an applicant’s constitutional rights.
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COLEMAN, Circuit Judge:
This litigation challenges § 5310.1 of the Mississippi Code of 1942
regulating
and prescribing the procedure for the issuance of charters to non-profit corporations, as being unconstitutional and void. Specifically, it is alleged that the statute vests unconstitutionally broad discretion in the Governor to grant or deny nonprofit corporate charters. To the extent hereinafter indicated, we agree with the challengers.
Section 5310.1 provides that an application for a charter of incorporation for a non-profit corporation must be submitted to the Secretary of State, who in turn submits it to the Attorney General. After receiving the application,
“the Attorney General, or his assistants at his direction, may, in his discretion, make such investigation as he may deem necessary to determine in his opinion whether the issuance of the charter to the corporation as applied for is contrary to the best interest of the State of Mississippi.”
The Attorney General then submits his opinion to the Governor, who has the absolute power to approve or disapprove the charter. The statute includes no guides or standards to regulate this approval or disapproval. Thus it may be said that discretion thus granted by § 5310.1 is unlimited in scope.
I
Courts have repeatedly held that any statute which confers such absolute and arbitrary discretion on a state official to grant or deny a right or privilege is unconstitutional. The landmark case is Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). The Supreme Court there considered a statute granting absolute discretion to a public officer to grant or deny licenses to operate laundry businesses in San Francisco.
The Court said:
“When we consider the nature and theory of our institutions of govern
ment, the principles upon which they are supposed to rest, and review the history of their development, we are constrained to conclude that they do not mean to leave room for the play and action of purely personal and arbitrary power. * * * For, the very idea that one may be compelled to hold his life, or the means of living, or any material right essential to the enjoyment of life, at the mere will of another, seems to be intolerable in any country where freedom prevails, as being the essence of slavery itself.” Id. at 369-370, 6 S.Ct. at 1071.
The Mississippi Supreme Court has held that statutes vesting unlimited discretion in a state official are violative of both the Fourteenth Amendment and the Mississippi Constitution. In Broadhead v. Monaghan, 238 Miss. 239, 117 So.2d 881 (1960) the Court held that :
“In delegating powers to an administrative body with respect to the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for their guidance and must not vest them with an arbitrary and uncontrolled discretion with regard thereto.”
A similar holding was made in State v. Allstate Ins. Co., 231 Miss. 869, 97 So.2d 372 (1957), concerning a licensing statute for insurance companies. See also Louisiana State Board of Embalmers v. Britton, 244 La. 756, 154 So.2d 3,89 (1963); Lee v. Renfro, 257 Ala. 679, 60 So.2d 849 (1952).
Unless there are specific standards for the granting or denying of a charter, all charters which comply with the statutes and Constitution of Mississippi and of the United States must be granted. In Hornsby v. Allen, 5 Cir., 1964, 326 F.2d 605, 612, it was held that in the absence of any standards for the issuance of liquor licenses, the courts must enjoin the denial of licenses to any applicants who comply with existing law.
Similar findings of the unconstitutionality of regulatory statutes for lack of specific standards have been made by state courts. In a recent decision concerning a New York statute much like § 5310.1, requiring judicial approval for charters for non-profit corporations, the New York Court of Appeals held that, in the absence of a clearly expressed legislative standard for approval, approval could only be denied if the charter failed to satisfy some specific requirement of New York law, Association for Preservation of Freedom of Choice, Inc. v. Shapiro, 9 N.Y.2d 376, 214 N.Y.S.2d 388, 174 N.E.2d 487 (1961).
That Court held that a judge could not deny a charter because he found it not to be “in accord with public policy” or to be “injurious to the community.” Otherwise, the court said:
“[the] individual Justice would be at liberty to indulge in his own persona] predilections as to the purpose of a proposed corporation, and impose his own personal views as to the social, political, and economic matters involved.” Id. at 382, 214 N.Y.S.2d at 391, 174 N.E.2d at 489.
II
Even if it is argued that § 5310.1 does not grant absolutely unlimited discretion to the Governor, but that it
limits his
disapproval to those charters which are not in the best interest of the State of Mississippi that standard is so vague as to be unconstitutional on its face.
Many courts have held that similarly vague standards do, in effect, grant unlimited discretion to a licensing officer, and that they are unconstitutional. In Staub v. City of Baxley, 355 U.S. 313, 322, 78 S.Ct. 277, 2 L.Ed.2d 302 (1958) the Supreme Court considered a statute in which the standard was the “effects upon the general welfare of citizens of the City of Baxley.” The Court held that:
“[t]hese criteria are without semblance of definitive standards or other controlling guides governing the action of the Mayor and Council in granting or withholding a permit.”
III
If it is necessary for a state to limit the number of charters granted, all the safeguards of due process must be observed before any applicant for this reason can be denied a charter. Horns-by v. Allen, supra; Glicker v. Michigan Liquor Control Commission, 6 Cir., 1947, 160 F.2d 96. In
Hornsby
the Court held that an applicant for a liquor license was entitled to a hearing at which she could present evidence and cross-examine witnesses, to have the administrative findings disclosed, and to be informed of the specific regulations and statutes governing her application. Id. at 608, 610, of 326 F.2d. In the absence of such procedural safeguards a denial of a license, particularly when other applicants are granted such licenses, violates an applicant’s constitutional rights. Although it is clear that an applicant for a charter under § 5310.1 is entitled to the same procedural safeguards as would be an applicant for a liquor license, neither the statute nor any administrative regulation provides any constitutionally sufficient procedure for the denial of charters. The authorization in § 5310.1 for the Attorney General to make an investigation if he so desires does not guarantee that the requirement of due process as outlined in
Hornsby
will be met. Nor are there any administrative regulations setting forth a constitutionally adequate procedure which might cure the defect in the statute. Therefore, it is clear that any denial of a charter, otherwise lawful, to the plaintiffs under the statute as presently written violates the Due Process Clause of the Fourteenth Amendment.
IY
Moreover, § 5310.1 unconstitutionally discriminates against non-profit corporations in comparison to profit corporations. Under §§ 5309-121 et seq. of the Mississippi Code the Secretary of State must issue a certificate of incorporation to any corporation for profit upon a finding that the articles of incorporation “conform to law.” In contrast to this, § 5310.1 provides that the Governor has unlimited discretion to deny a charter to a non-profit corporation.
V
Although legislative distinctions and classifications can always be made on any rational basis, an irrational distinction like that in §§ 5309-121 et seq., and § 5310.1, must be held to violate the Fourteenth Amendment. A classification must bear “a reasonable and just relation to the act in respect to which the classification is proposed,” Frost v. Corporation Commission of State of Oklahoma, 278 U.S. 515, 522-523, 49 S. Ct. 235, 238, 73 L.Ed. 483 (1928). In the
Frost
case the Supreme Court held that a state could not constitutionally allow a corporation to operate a cotton gin without obtaining a certificate of necessity, when an individual was required to have one to operate a cotton gin.
Arbitrary classifications have also been held to violate the Fourteenth Amendment by the Supreme Court in many cases including McLaughlin v. State of Florida, 379 U.S. 184, 190-191, 85 S.Ct. 283, 13 L.Ed.2d 222 (1964), and Yick Wo v. Hopkins, supra. The Mississippi Supreme Court has made similar findings both with respect to the Fourteenth Amendment and also with respect to § 14 of the Mississippi Constitution. See e. g. Moore v. Grillis, 205 Miss. 865, 39 So.2d 505, 10 A.L.R.2d 1425 (1949); Ballard v. Mississippi Cotton Oil Co., 81 Miss. 507, 34 So. 533, 62 L.R.A. 407 (1903).
Since there is no rational basis for the distinction in Mississippi law between the requirement for profit and non-profit corporations in this respect, it is clear that the requirement of approval by the Governor under § 5310.1 is of doubtful validity.
VI
After the present Governor came into office plaintiffs re-submitted a charter application in the spring of 1968. The Attorney General then certified that the re-application was not violative of the
Constitution or the laws of the State of Mississippi and sent it to the Governor’s office. The Governor has taken no action thereon. Under the circumstances inaction is tantamount to a rejection of the application. It has been nearly three years since the original application was filed.
Oral and documentary evidence presented to the Court on the hearing of this cause amply indicates that the Governor has approved charters for nonprofit corporations whose purpose was very similar to, if not exactly identical to that of the proposed Delta Opportunity Corporation of Mississippi, Inc.
In the light of the foregoing considerations, it is amply clear, to the point of being beyond reasonable dispute, that this Court, confronted with the case in this posture, must hold, and it hereby holds, that when and if an application for a non-profit corporation is not violative of the Constitution and laws of the State of Mississippi then it is obligatory that such charter do issue in the manner and form and according to the procedure prescribed by the statute. Any effort to allow the rejection of a charter on the ground that its issuance would not be in the best interest of the State of Mississippi without, at the same time prescribing standards for the determination of such a fact, and without prescribing the procedure by which the parties may be heard and be given the benefit of an appeal to the courts, violates the Federal Constitution and cannot be permitted to stand. Allowing the unfettered authority to approve some charters and to reject others, at sole discretion, free of any standard or review is likewise unconstitutional and cannot be permitted to stand.
VII
Section 5310.1, Mississippi Code 1942 contains the entire legislative provision in this state for the issuance of private charters. The infirmity in this statute so permeates the statutory scheme therefor as to immobilize the entire act, even though the act contains a savings clause. The Court would not be justified under the circumstances in ordering the issuance of a private charter under it. We hold that this statute (§ 5310.1) violates the Fourteenth Amendment to the Constitution of the United States in the respects indicated and is thus void.
There will be no assessment of costs. All other and further relief requested will be denied. Although the complaint assailed the validity of the act, it did not specifically ask that it be declared unconstitutional, but did seek general relief.
A judgment, accordingly, may be presented to one of the judges for entry on behalf of the entire Court.