Untitled Texas Attorney General Opinion ( 1939 )

NO. 3072
ARTICLE 1&15a, REVISED CIVIL STATUTES, HELD
UNCONSTITUTIONAL
Opinion construing Article 1415a, Revised Civil Sta-
tutes, and holding:
Art. 1415a, R.C.S., which requires commer-
cial colleges organized after its passage
in 1929 to give a bond, and exempting from
Its provisions all commercial colleges then
in existence, is unconstitutional.
OFFICE OF THE ATTORNEY GENERAL
July 13, 1939
Hon. Tom L. Beauchamp
Secretary of State
Austin, Texas
Dear Sir: Opinion No. O-912
Re: Art. 1415a, R.C.S., which re-
quires commercial colleges or-
ganized after its passage in 1929
to give a bond, and exempting from
its provisions all commercial col-
leges then in existence, is uncon-
stitutional.
Your letter of June 1, 1939 received. You submit the fol-
lowing question:
"Is that portion of Article 1415a unconstitu-
tional in requiring a surety bond.to be executed by
business colleges formed after the passage of said
Act and exempting business colleges alreadg doing
business from giving of such bond?"
In order to properly construe said provision of the sta-
tute, we deem it wise to s!:atethe effect of the entire article
from which the above provision is taken.
Article 1415a of the Revised Statutes was passed in 1929.
. .
Hon. Tom L. Beauchamp, July 13, 1939, Page 2.
Section 1 thereof provides that any person, partnership, asso-
ciation or corporation which may desire to open a Commercial
College, or to establish a branch college or school in this
State for the purpose of teaching bookkeeping, stenography,
typing, telegraphy, and other courses which are usually taught
in Commercial Colleges, shall first apply to the Secretary of
State for a permit.
Section 2 of said Article provides that before the Secre-
tary of State shall issue such permit, he shall require a bond
in the sum of ten thousand dollars, signed by a solvent guaranty
company, payable to the County Judge of the County in which the
college is to be opened, 'conditioned that the principal In said
bond will carry out and comply with each and all contracts,
either verbal or written, made and entered into by said college,
or branch college or school, acting by and through its officers
or agents, with any student who desires to enter such college
and to take any course in commercial training, and to pay back
to such student all amounts collected for tuition and fees in
case of failure on the part of the parties obtaining a permit
from the Secretary of State to open and conduct a Commercial
College or branch college or school, to comply with Its con-
tracts to give the instruction contracted for, and for the full
period evidenced by such contract."
Section 3 of said Article provides that in any and all
cases where the party receiving the permit fails to comply
with any contract made with any student, parents or guardian
of such student, such student or his parents or guardian shall
have a cause of action against the sureties on the bond for
the full amount of the payments made to such person, with 109
interest from the date of the payment, and for reasonable at-
torney's fees for instituting and prosecuting such suit.
Section 5 of said Article provid.esthat the provisions of
this Act shall not apply to any University, College or regular
High School which has heretofore adopted or which may hereafter
adopt one or more commercial courses nor to any Commercial Col-
lege heretofore establIshed.
From a careful reading of said statute as a whole, it ap-
pears that a commercial college that was In existence at the
time the law Iaras
passed is exempt from executing any bond;
while a commercial college organizedthereafter must execute
the bond.
The Constitution provides that all persons have equal
privileges and rights. No law can be passed whfch gives one
class of persons an advantage over a similar class. Our courts
have universally held that where the Legislature attenrgtsto
discriminate and exclude any class from the provisions of a
law, there must be a reasonable basis therefor.
The only basis for the discrimination in the statute in
Hon. Tom L..Beauchamp, July 13, 1939, Page 3.
question Is one of time. A commercial college in existence at
the time the law went into.effect could contlntie in business
for sn indefinite period of time and violate any and all of
its contracts that it saw fit. The only penalty that it would
suffer would be a suit at the hands of the Injured party;and
upon a recovery it would be required to pay the judgment and
6s interest thereon. Under Article 1&15a, all those who engaged
in the commercial college business after Its enactment were re-
quired to execute a ten thousand dollar bond, and In the event
they failed to comply with their contract, the injured party
could recoverhis damage, plus 10% interest, plus reasonable at-
torney's fees.
The commercial college In each instance would be perform-
ing Identically the same class-of education, using the same
grade of teachers, with the same qualifications and having the
same financial standing or backing, time alone being the factor
on which the classification was built. No reason could be as-
signed why a commercial college that was existing in 1929 should
be immune from a law which required those established after said
date to execute a bond requiring the contracts made with their
students to be complied with.
In crder for the courts to sustain the constitutionality
of any law, there must be such a reasonable basis for the classl-
ficatlon,that it will not violate the constitutional provisiti
against granting exclusive privileges and immunities.
The question of class legislation has been a source of much
litigation in the United States. Generally speaking, the con-
stitutionality of a law must be governed by the peculiar facts,
conditions, and circumstances surrounding the purpose to be ac-
complished or the evil to be remedied. It would be useless, we
think, to enter into an extended discussion of the various Acts
by the legislative bodies and cite the various authorities, and
attempt to reconcile same.
In Ex Parte Baker, 78 S.W. (2d) 610, the Court of Criminal
Appeals held unconsitutional an ordinance passed by the City of
Temple, which in effect prohibited a person from selling goods
upon the streets of Temple without first obtaining a license
therefor, and exempting from the provisions of said ord~inance
all those who had a permanent place of business within said City..
The court stated:
"An ordinance which attempts to distinguish
between persons engaged in the same or like bsiness
merely on the basis of their residence or the loca-
tion of their business house is in contravention of
Section 19, Article 1, of the Constitution, which
read.8, 'No citizen of this state shall be deprived
of life, liberty, property, privileges, or immuni-
ties, or in any manner disfranchised, except by the
due course of the law of the land."'
Hon. Tom L. Beauchamp, July 13, 1939, Page 4.
In Ex Parte Drelbelbls, 109 S.W. (2d) 476, the Court of
Criminal Appeals held Invalid, because it violated the Consti-
tution, an ordinance passed by the City of Glen Rose under the
terms of which said City levied a tax upon every temporary
merchant doing business In the City and exempting therefrom
all merchants who had been engaged in business for as much as
twelve months prior thereto. The court stated:
"That the ordinance in question Is dlscrlmlna-
tory Is clearly demonstrated by the fact that a per-
son who has been engaged In one of the designated
businesses in said City for a year or more is exempt
from the payment of the tax, while another person
who has not been so engaged for such length of time
Is subject to the payment of the tax, and for his
failure to d.oso, punishable by fine, although both
parties may be engaged In the same kind of business,
carrying the same kind and the ssme amount of merchan-
dise. If this is not discrimination, then what is it?
"An ordinance which attempts to distinguish
between persons engaged In the same or like busl-
nesses, merely on the basis of the length of time
each is engaged In the business, is In contravention
of Sections 3 and 19 of Article I of the Constltu-
tion."
In United States Automobile Service Club vs. Van Winkle,
274 P. 308, the Supreme Court of Oregon held unconstitutional
a statute which provided that no automobile service club could
obtain a license to transact business in that State without
posting's twenty-five thousand dollar cash bond, because it
exempted from the provisions thereof all automobile service
clubs that had been in operation in Oregon for a period of
more than five years and that had a paid membership of more
than five thousand within the state. The court stated:
"We can perceive no substantial distinction
between a corporation which has been engaged In bus-
iness for more than five years, and one which has
been engaged in business for four years or between
a corporation which_Jhascontracted with more than
five thousand persons and one which has contracted
with only three thousand five hundred persons. They
are all engaged in the same pursuit, and at the same
time and place and under identically similar condi-
tions. They enter Into a form of contract which
must first be approved by the State Insurance Com-
missioner, and they all engage to perform the same
kind of service. What basis, therefore, can there
be for any discrimination between them? The Act
does not attempt to regulate the fees they are to
charge, nor does it contain any reference to the ex-
tent of their obligations and liabilities. It recog-
nizes only the length of time they have been engaged
in business Andythe volume of business transacted.
. .
Hon. Tom L. Beauchamp, July 13, 1939, Page 5.
Neither of these things bears any relationship to
the objects and purposes of the statute. If any
distinction Is to be made, it would seem that the
necessity for requiring a bond from the corporation
doing the larger volume of business would be greater
than from one doing a less volume. It Is elementary
that persons engaged In the same pursuit at the same
time and place and under like conditions are entitled
to be governed by a general law applicable to all
who are so engaged.
II
... In order that a statute-be valid which
contains a classification of persona or things for
the purpose of legislation, such classification must
be a reasonable one and must be based on real dis-
tinctions in the subject matter which bears some
relationship to the objects sought to be accomplished
by the statute.
,I
... The classification provided for by the Act
is not founded upon any substantial difference be-
tween the two classes provided for. It denies the
plaintiff the equal protection of the law by impos-
ing upon plaintiff a burden which Is not Imposed
upon one of plaintiff's competitors which is engaged
in the same pursuit at the same time and under like
circumstances, and therefore violates the Fourteenth
Amendment of the Federal Constitution. It also con-
travenes Article I, Section 20, in that it grants to
others 'privileges or immunities which upon the same
terms, shall not equally belong to all citizens."
12 Am.Jur. 165 tersely states the correct rule as follows:
"A statute containing a classification which
attempts to give an economic advantage to those
engaged in a business at an arbitrary date as against
all those who enter the industry after that date is
not a regulation of a business in the interest of the
public, and unless otherwise shown to affect the public
welfare in a manner which will create some reasonable
basis for the distinction, is arbitrary and unreasonable."
Since the Article gives to those who were engaged in the
business of operating a commercial college at the time the law
was passed privileges and immunities that are not given to
those who establish a commercial college after the Act was
passed.,same is, in our opinion, unconst itu%ional.
Yours very truly
ATTORNEY GENERAL OF TEXAS
Hon. Tom L. Beauchamx July 13, 1939, Page 6.
George W. Barcus
Assistant
GWB:PBP
This opinion has been considered In conference, approved,
and ordered recorded.
W. F. Moore
First AsslrtszkAttorney
General of Texas