Engel v. O'MALLEY, 219 U.S. 128 (1911)

219 U.S.
128
31 S.Ct. 190
55 L.Ed. 128
MORRIS ENGEL, Appt.,

v.
EDWARD R. O'MALLEY, Frank Moss, Clark Williams, and
William F. Baker.
No. 703.
Argued December 15, 16, 1910.
Decided January 3, 1911.
Mr. Charles Dushkind for appellant.

[Argument of Counsel from pages 129-131 intentionally omitted]
Messrs. Louis Marshall, Edward H. Letchworth, Robert C. Taylor,
Archibald R. Watson, and Theodore Connoly for appellees.
[Argument of Counsel from pages 131-134 intentionally omitted]
Mr. Justice Holmes delivered the opinion of the court:
This is a bill in equity to prevent the carrying out of chapter 348 of the Laws of
New York for 1910, which forbids individuals or partnerships to engage in the
business of receiving deposits of money for safe-keeping, or for the purpose of
transmission to another, or for any other purpose, without a license from the
comptroller. The requirements for obtaining the license, so far as they affect the
plaintiff, are that the applicant shall deposit $10,000 with the comptroller, and
present a bond with a penalty of not more than $50,000 or less than $10,000, to
be fixed by the comptroller, conditioned upon the faithful performance of the
duties undertaken. After notice shall have been posted for two weeks, the
comptroller may approve or disapprove the application, in his discretion, and
licensees are to pay a fee of $50. 25. The license is revocable at all times by
the comptroller for cause shown. 26. Carrying on the business specified, or
using the word 'banking' or 'banker' on signs, letter heads, or advertisements in
connection with any business, without a license, is made a misdemeanor. 27.
The foregoing provisions do not apply to any corporation or 'individual banker'

authorized to do business under the banking law, or to national banks; to any
hotel keeper who shall receive money for safe-keeping from a guest; to any
express or telegraph company receiving money for transmission; to individuals
or partnerships where the average amount of each sum received on deposit or
for transmission in the ordinary course of business shall have been not less than
$500 during the fiscal year preceding an affidavit to that effect; or, finally, to
any individual or partnership filing a bond approved by the comptroller for
$100,000 when the business is in a city having a million inhabitants, or, if
elsewhere, for $50,000; or money or securities that the comptroller approves.
29d.
2
The plaintiff alleges that he is a citizen of the United States, and has been
engaged in the business specified in the statute for twenty years; that by good
reputation and considerable expenditure he has made his business of great
value, and that it chiefly consists in receiving deposits in very small sums from
time to time until they reach an amount sufficient to be sent to other states and
mainly to foreign countries. The plaintiff further alleges that he has not the
means that would enable him to make the deposit and give the bond required,
and that the enforcement of the law against him will compel him to close. He
avers that the statute is unconstitutional as against him under the 14th
Amendment and under the commerce clause of the Constitution of the United
States. Article 1, 8. The bill was demurred to and the demurrer was sustained
by the circuit court.
The first objection urged by the plaintiff in argument is to a requirement that

we have not mentioned,that the applicant must have been continuously for
five years immediately preceding his application a resident of the United
States. As the plaintiff alleges that he satisfies this requirement, he has nothing
to complain of. And therefore, without intimating any doubt as to the validity of
the clause, we pass at once to the matters in which he is concerned. Southern R.
Co. v. King, 217 U. S. 524, 534, 54 L. ed. 868, 871, 30 Sup. Ct. Rep. 594. As a
preliminary to his argument, the plaintiff denies that he is in any sense a
banker, and even goes so far as to treat the receipt of money for safe-keeping or
transmission within the meaning of the act as a case of bailment, in which the
very coins received must be returned or sent on. Of course, this is not a true
construction of the statute, as is sufficiently indicated by the title 'Private
Banking.' The receipt of money by a bank, although it only creates a debt, is in
a popular sense the receipt of money for safe-keeping, since the depositor can
draw it out again at such time and in such sums as he chooses. It is safe to
assume that the transmission of money contemplated very generally is
accomplished by a draft, and practically never by sending on the identical
currency received. One form, at least, of the business aimed at, and, on the face
of the bill, that carried on by the plaintiff, is a branch of the banking business.
Furthermore, it is a business largely done with poor and ignorant immigrants,
especially on their first arrival here.
4
We presume that the money deposited with the plaintiff is not drawn upon by
checks, so that a part of the argument in Noble State Bank v. Haskell, just
decided [219 U. S. 104, 55 L. ed. , 31 Sup. Ct. Rep. 186], may not apply.
On the other hand, experience has shown that the protection of such depositors
against fraud, which is the purpose running through the statute, is especially
needed by at least that class of them with whom the persons hit by the statute
largely deal. The case cited establishes that the state may regulate that business,
and may take strong measures to render it secure. It also establishes that the
plaintiff has no such constitutional right to carry it on at will as to raise him
above state laws not manifestly unfit to accomplish the supposed end, greatly in
excess of the need, or arbitrary and capricious in discrimination. The quasi
paternal relations shown in argument and by documents to exist between those
following the plaintiff's calling and newly-arrived immigrants justifies a
supervision more paternal than is needed in ordinary affairs. Whether the court
thinks them wise or not, such laws are within the scope of the discretion which
belongs to legislatures, and which it is usual for them to exert.
This appeal seems to have been taken upon the notion that the plaintiff had a
business which, under the 14th Amendment, the state could not touch. But
although cut off from that broad proposition, his counsel presents other more
specific objections to the act with earnestness and force. It is said that even if
the plaintiff could furnish the money and bond required, the comptroller might
refuse a license upon his arbitrary whim. No guides are given in 25 for the
discretion that he is to exercise, and a provision in 29e that nothing in the
article shall be construed to require the comptroller to make any inquiry as to
the solvency of any applicant is thought to exclude solvency as the test, and to
leave the matter at sea. We do not so understand the purpose and purport of
29e, and should suppose that the discretion to be exercised in the refusal to
grant the license under 25 was similar to that exercised under 26 in revoking
one; and that in each case the comptroller was expected to act for cause. But
the nature and extent of the remedy, if any, for a breach of duty on his part, we
think it unnecessary to consider; for the power of the state to make the pursuit
of a calling dependent upon obtaining a license is well established, where safety
seems to require it, and what we have said before sufficiently indicates that this
calling is one to which the requirement may be attached. See Gundling v.
Chicago, 177 U. S. 183, 44 L. ed. 725, 20 Sup. Ct. Rep. 633; New York ex rel.
Lieberman v. Van de Carr. 199 U. S. 552, 50 L. ed. 305, 26 Sup. Ct. Rep. 144.
Again, it is argued that the statute makes unconstitutional discriminations by

excepting the classes mentioned in 29d above, especially those in whose
business the average amount of each sum received is not less than $500, and
those who give a bond of $100,000 or $50,000. But the former of these
exceptions has the manifest purpose to confine the law as nearly as may be to
the class thought by the legislature to need protection, and the latter merely
substitutes a different form of security, as it well may. 'Legislation which
regulates business may well make distinctions depend upon the degree of evil.'
Heath & M. Mfg. Co. v. Worst, 207 U. S. 338, 355, 356, 52 L. ed. 236, 244, 28
Sup. Ct. Rep. 114. It is true, no doubt, that where size is not an index to an
admitted evil, the law cannot discriminate between the great and small. But in
this case size is an index. Where the average amount of each sum received is
not less than $500, we know that we have not before us the class of ignorant
and helpless depositors, largely foreign, whom the law seeks to protect. See
Musco v. United Surety Co. 196 N. Y. 459, 465, 134 Am. St. Rep. 851, 90 N.
E. 171; McLean v. Arkansas, 211 U. S. 539, 551, 53 L. ed. 315, 321, 29 Sup.
Ct. Rep. 206.
We come to the final objection, that this statute is an attempt to regulate

commerce with other states. When, as in this matter, the Constitution takes
from the states only a portion of their otherwise absolute control, there may be
expected difficulties in drawing the dividing line, because where it shall be put
is a question of more or less. The trouble is inherent in the situation, but it is the
same in kind that meets us everywhere else in the law. The question is whether
the state law creates a direct burden upon what it is for Congress to control, and
the facts of the specific case must be weighed. In doing so we recur to what we
have said above,that we cannot regard the statement of the plaintiff's
business in his bill as describing the receipt of bailments for the transmission of
the identical objects received to other states. Neither do we regard the law as
having has such bailments primarily in mind. Under the statement in the bill
and the words of the law, we must take it that the money received, even when
received for transmission, becomes the money of the depositary, and his
obligation that of a debtor under contract to pay as may be directed. Presumably
the depositor retains the right to call for his money himself, or to change any
direction that may have been given, until the money has left the 'private
banker's' hands. The law, as was said of a similar one by the New York court of
appeals, was passed for the purpose of regulating and safeguarding the business
of receiving deposits which precedes and is not to be confounded with the later
transmission of money, although leading to it. Musco v. United Surety Co. 196
N. Y. 459, 466, 467, 134 Am. St. Rep. 851, 90 N. E. 171. The fact that it is
very likely to lead to it does not change the result. Diamond Glue Co. v. United
States Glue Co. 187 U. S. 611, 616, 47 L. ed. 328, 332, 23 Sup. Ct. Rep. 206.
The case is similar in principle to Ware v. Mobile County, 209 U. S. 405, 52 L.

ed. 855, 28 Sup. Ct. Rep. 526, 14 A. & E. Ann. Cas. 1031, where the nearest
cases on the other side are distinguished. See further Williams v. Fears, 179 U.
S. 270, 45 L. ed. 186, 21 Sup. Ct. Rep. 128. We are of opinion that the
commerce clause of the Constitution is not infringed, and, on the whole case,
that the decree of the Circuit Court was right.
8
Decree affirmed.

Engel v. O'MALLEY, 219 U.S. 128 (1911)

Uploaded by

Copyright:

Available Formats

Engel v. O'MALLEY, 219 U.S. 128 (1911)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Engel v. O'MALLEY, 219 U.S. 128 (1911)

Uploaded by

Copyright:

Available Formats

219 U.S.

MORRIS ENGEL, Appt.,

Mr. Charles Dushkind for appellant.

The foregoing provisions do not apply to any corporation or 'individual banker'

The first objection urged by the plaintiff in argument is to a requirement that

Again, it is argued that the statute makes unconstitutional discriminations by

We come to the final objection, that this statute is an attempt to regulate

The case is similar in principle to Ware v. Mobile County, 209 U. S. 405, 52 L.

You might also like