Morris v. Holshouser , 220 N.C. 293 ( 1941 )

Devin, J.

The plaintiff’s appeal presents the question of the constitutionality of chapter 410, Public Laws 1935, as amended, which we quote as follows:

“No employer of labor shall be responsible for any assignment of wages to be earned in the future, executed by an employee, unless and until such assignment of wages is accepted by the employer in a written agreement to pay same.”

The right of an assignee to sue in his own name upon an assignment of wages already earned by the employee and due by the employer was upheld in Rickman v. Holshouser, 217 N. C., 377, 8 S. E. (2d), 199. In that case the question of the effect of an assignment of wages to be earned in the future, under the statute quoted, was not presented or considered. In the case at bar the defendant refused to pay to the plaintiff the amount of wages assigned upon the ground that the wages had not been earned at the time of the assignment, and that the assignment had not been accepted by him. He staked his defense upon the express provisions of tbe quoted statute. Tbe plaintiff’s admission that tbe assignment covered wages to be earned in tbe future, and that it bad not been accepted by tbe defendant employer, would relieve tbe defendant of responsibility therefor, unless tbe Act can be overthrown because of conflict with some provision of tbe State or Federal Constitution.

It is fundamental that tbe power of tbe General Assembly is limited only by tbe restraints imposed upon it by tbe Constitution of North Carolina or by tbe Constitution of tbe United States, and when it undertakes to exercise its power in tbe enactment of a statute, tbe validity of which is attacked, tbe courts will not adjudge tbe statute void on tbe ground that it is violative of a constitutional limitation unless it so appears beyond a reasonable doubt. “If there is any reasonable doubt as to tbe validity of tbe statute, such doubt will be resolved in favor of tbe validity of tbe statute.” S. v. Brockwell, 209 N. C., 209, 183 S. E., 378. In tbe language of Justice Holmes in Tyson v. Benton, 273 U. S., at page 446, “I think tbe proper course is to recognize that a state legislature can do whatever it sees fit to do unless it is restrained by some express prohibition in tbe Constitution of tbe United States or of tbe state.”

Tbe plaintiff challenges tbe validity of tbe statute in question upon tbe ground that it has tbe effect of depriving him of a property right without due process of law in violation of tbe constitutional guaranties contained in tbe Fifth and Fourteenth Amendments to tbe Constitution of tbe United States, and that for tbe same reason tbe statute offends Art. I, sec. 17, of tbe Constitution of North Carolina. His contention is that bis liberty of contract is so restricted by tbe statute as to constitute a deprivation of a constitutional right, in that be is not permitted to contract for tbe purchase of tbe assignment of an employee’s wages to be earned in tbe future, enforceable against tbe employer, unless be secures tbe written acceptance of tbe employer and bis agreement to pay therefor.

Tbe privilege of contracting is both a liberty and a property right. Furniture Co. v. Armour, 345 Ill., 160. Tbe right to contract is recognized as being within tbe protection of tbe Fifth and Fourteenth Amendments to tbe Constitution of tbe United States, Bayside Fish Flour Co. v. Gentry, 297 U. S., 422, 147 Cal., 649; West Coast Hotel Co. v. Parrish, 300 U. S., 379; Highland v. Russell Car & Snow Plow Co., 279 U. S., 253; 11 Am. Jur., 1154, 1156; and protected by state constitutions. McGuire v. Railway, 131 Iowa, 340. “It has been held that tbe right to make contracts is embraced in tbe conception of liberty as guaranteed by tbe Constitution.” Chicago B. & Q. R. Co. v. McGuire, 219 U. S., 549. “Included in tbe right of personal liberty and tbe right of private property — partaking of the nature of each — is the right to make contracts for the acquisition of property.” Coppage v. Kansas, 236 U. S., 1. “The freedom of the right to contract has been universally considered as guaranteed to every citizen.” Stephens v. Hicks, 156 N. C., 239, 72 S. E., 313.

But freedom of contract is a qualified and not an absolute right. The guaranty of liberty does not withdraw the right of legislative supervision, or deny the power to provide restrictive safeguards and reasonable regulations. Chicago B. & Q. R. Co. v. McGuire, supra. Liberty of contract is not violated by legislation, operating as a deterrent, which restricts dealings which may become the subject of contract. “A statute does not become unconstitutional merely because it has created a condition of affairs which renders the making of a related contract, lawful in itself, ineffective.” Bayside Fish Flour Co. v. Gentry, supra.

Undoubtedly the right to make contracts is subject to the power of the Legislature to impose restrictive regulations for the general welfare in matters affected with a public interest, and to prevent practices in business which are deemed harmful. Generally, the right to contract may be regulated as to form, evidence, and validity as to third persons. Chicago B. & Q. R. Co. v. McGuire, supra. In Alaska Packers Asso. v. Industrial Com., 294 U. S., 532, it was said: “Legislation otherwise within the scope of acknowledged state power, not unreasonably or arbitrarily exercised, cannot be condemned because it curtails the power of the individual.to contract.”

The legislative power to impose reasonable restrictions upon the right of contract, deemed conducive to the public good, particularly as to contracts growing out of the relationship of employer and employee, has been upheld by the courts in numerous cases. West Coast Hotel Co. v. Parrish, 300 U. S., 377 (minimum wages for women); U. S. v. Darby Lumber Co., 85 Law. Ed. (Adv.), 395 (Fair Labor Standards Act); Patterson v. The Eudora, 190 U. S., 169 (forbidding payment of seamen’s wages in advance); N. Y. Central R. Co. v. White, 243 U. S., 188 (Workman’s Compensation Laws); Virginian Ry. Co. v. System Federa tion, 300 U. S., 515 (Railway Labor Act); Knoxville Iron Co. v. Harbison, 183 U. S., 13 (requiring redemption in cash of store orders issued in payment for services); McLean v. Arkansas, 211 U. S., 539 (regulating the basis of payment to coal miners). Legislative acts regulating-contracts of insurance (Midkiff v. Ins. Co., 197 N. C., 139, 147 S. E., 812), and trade dealings under the North Carolina Fair Trade Act (Lilly & Co. v. Saunders, 216 N. C., 163, 4 S. E. [2d], 528), were held by this Court not to violate constitutional guaranties.

In many states statutes have been enacted imposing conditions upon the validity of assignments of wages to be earned in the future. These statutes Lave been generally upheld as a valid exercise of the police power of the State. 5 C. J., 870; 6 C. J. S., 1067; 4 Am. Jur., 262; 37 A. L. R., 872 (Annotation); McCallum v. Simplex Elec. Co., 197 Mass., 388; Hellar v. Lutz, 254 Mo., 704; Fay v. Bankers' Surety Co., 125 Minn., 211; Thompson v. Erie R. Co., 207 N. Y., 171; West v. Jefferson Mills Co., 147 Tenn., 100; Wright v. Balt. & Ohio R. Co., 146 Md., 66; Cleveland C. C. & St. R. Co. v. Marshall, 182 Ind., 280; National Finance Co. v. Citizens Loan & Savings Co., 184 Ga., 619.

The particular question, here presented, of the power of the Legislature to impose restrictions upon the assignment of unearned wages was considered by the Supreme Court of the United States in Mutual Loan Co. v. Martell, 222 U. S., 225, where a Massachusetts statute was upheld. It was there decided that restrictions similar to those in the North Carolina statute, rendering the assignment invalid unless accepted in writing by the employer, did not deprive the assignee of due process of law or the equal protection of the laws. This was based upon the broad governmental power of the state. The Court said: “In a sense, the police power is but another name for the power of government; and a contention that a particular exercise of it offends the due process clause of the Constitution is apt to be very intangible to a precise consideration and answer. Certain general principles, however, must be taken for granted. It is certainly the province of the state, by its legislature, to adopt such policy as to it seems best. There are constitutional limitations, of course, but these allow a very comprehensive range of judgment. And within that range the Massachusetts statute can be justified. . . . But if we consider the Massachusetts statute strictly as a limitation upon the power of contract, it still must be held valid.” In Bacon v. Walker, 204 U. S., 311, it was said that the police power was not confined to the suppression of what is disorderly or insanitary, but “extends to so dealing with the conditions which exist in the state as to bring out of them the greatest welfare of the people.”

That the statute inferentially permits the employer to signify his agreement to pay the wages to the assignee of his employee, if he chooses to do so, does not of itself constitute such a discrimination as would invalidate the Act, for unless restrained by some legislative prohibition one engaged in private business may exercise his own pleasure as to the parties with whom he will deal. Green v. Victor Talking Machine Co., 24 F. (2d), 378; Fed. Trade Com. v. Raymond Bros.-Clarke Co., 263 U. S., 565; McNeill v. Hall, ante, 73, 16 S. E. (2d), 456. Nor does the statute tend to impair the obligation of a contract. Bateman v. Sterrett, 201 N. C., 59, 159 S. E., 14; Nash v. Comrs. of St. Pauls, 211 N. C., 301, 190 S. E., 475.

Statutes enacted for tbe purpose of imposing wholesome and reasonable regulations upon tbe relationship of employer and employee, and to prevent practices deemed injurious to those engaged in labor and its employment, are generally held to be with the police power of the State. S. v. Lawrence, 213 N. C., 674, 197 S. E., 586; McGuire v. Railway, 131 Iowa, 340. Obviously the statute we are now considering was enacted to restrict, as having harmful tendencies, the sale or assignment, for a substantial commission, of wages to be earned in the future. The end in view, we may assume, was not only to relieve the employer of unnecessary responsibility, but also to restrain the activities of those who, like the plaintiff, were engaged in the business of buying at a discount the unearned wages of employees.

For the reasons stated, we conclude that ch. 410, Public Laws 1935, as amended, does not contravene any constitutional inhibition, and that it was a valid exercise of legislative power. As the case was made to turn upon the validity of the statute, it follows that the judgment of the Superior Court must be

Affirmed.