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KNOXVILLE IRON CO. v. HARBISON, 183 U.S. 13 (1901)

U.S. Supreme Court

KNOXVILLE IRON CO. v. HARBISON, 183 U.S. 13 (1901)

183 U.S. 13

No. 22.

Argued and Submitted March 7, 1901.
Decided October 21, 1901.

In the chancery court of Knox county, Tennessee, Samuel Harbison, a citizen of said state, on June 2, 1899, filed a bill of complaint against the Knoxville Iron Company, a corporation organized under the laws of the state of Tennessee, alleging [183 U.S. 13, 14]   that he was the bona fide holder by purchase in due course of trade of certain specified accepted orders for coal that had been issued by the defendant company in payment of wages due to its employees; that he had made due demand for their redemption in cash according to law, which demand had been refused; and that he was entitled to a decree for the amount of said orders, with interest. The company filed an answer denying that the complainant was a bona fide holder of the orders in question, and alleging an agreement between the company and its employees that the latter would accept coal in payment of said orders, etc.

Proof was taken and the case heard by the chancellor, who rendered a decree in favor of the complainant for $1,702.66 as principal and interest of said orders, with costs. An appeal was taken by the defendant company to the court of chancery appeals of Tennessee, an intermediate court of reference in equity causes, where the decree of the chancery court of Knox county was affirmed.

The facts as found by the court of chancery appeals are as follows:

The orders sued on in this case were issued after the passage of the act of March 17, 1899.

From the decree of the chancery court of appeals an appeal was taken by the company to the supreme court of Tennessee, by which court the decrees of the courts below were affirmed. The case was then brought to this court by a writ of error allowed by the chief justice of the supreme court of Tennessee.

Messrs. E. T. Sanford, Cornelius E. Lucky, and James A. Fowler for plaintiff in error.

Mr. John W. Green submitted the case for defendant in error, and Mr. Samuel G. Shields was with him on the brief.

Mr. Justice Shiras delivered the opinion of the court:

This is a suit in equity brought to this court by a writ of error to the supreme court of the state of Tennessee, involving the validity, under the Federal Constitution, of an act of the legislature of Tennessee passed March 17, 1899, requiring the redemption in cash of store orders or other evidences of indebtedness issued by employers in payment of wages due to employees.

The caption and material portions of this act are as follows:

The views of the supreme court of Tennessee, sustaining the validity of the enactment in question, sufficiently appear in the following extracts from its opinion, a copy of which is found in the record:

The supreme court of Tennessee justified its conclusions by so full and satisfactory a refcrence to the decisions of this court as to render it unnecessary for us to travel over the same ground. It will be sufficient to briefly notice two or three of the latest cases.

In Holden v. Hardy, 169 U.S. 366 , 42 L. ed. 780, 18 Sup. Ct. Rep. 383, the validity of an act of the state of Utah, regulating the employment of workingmen in underground mines, and fixing the period of employment at eight hours per day, was in question. There, as here, it was contended that the legislation deprived the employers and employees of the right to make contracts in a lawful way and for lawful purposes; that it was class legislation, and not equal or uniform in its provisions; that it deprived the parties of the equal protection of the laws, abridged the privileges and immunities of the defendant as a citizen of the United States, and deprived him of his property and liberty without due process of law. But it was held, after full review of the previous cases, that the act in question was a valid exercise of the police power of the state, and the judgment of the supreme court of Utah, sustaining the legislation was affirmed.

Where a contract of insurance provided that the insurance company should not be liable beyond the actual cash value of the property at the time of its loss, and where a statute of the state of Missouri provided that, in all suits brought upon policies of insurance against loss or damage by fire, the insurance company should not be permitted to deny that the property insured was worth at the time of issuing the policy the full [183 U.S. 13, 22]   amount of the insurance, this court held that it was competent for the legislature of Missouri to pass such a law, even though it places a limitation upon the right of contract. Orient Ins. Co. v. Daggs, 172 U.S. 557 , 43 L. ed. 552, 19 Sup. Ct. Rep. 281.

In St. Louis, I. M. & S. R. Co. v. Paul, 173 U.S. 404 , 43 L. ed. 746, 19 Sup. Ct. Rep. 419, a judgment of the supreme court of Arkansas sustaining the validity of an act of the legislature of that state, which provided that whenever any corporation or person engaged in operating a railroad should discharge, with or without cause, any employee or servant, the unpaid wages of any such servant then earned should become due and payable on the date of such discharge without abatement or deduction, was affirmed. It is true that stress was laid in the opinion in that case on the fact that, in the Constitution of the state, the power to amend corporation charters was reserved to the state, and it is asserted that no such power exists in the present case. But it is also true that, inasmuch as the right to contract is not absolute in respect to every matter, but may be subjected to the restraints demanded by the safety and welfare of the state and its inhabitants, the police power of the state may, within defined limitations, extend over corporations outside of and regardless of the power to amend charters. Atchison, T. & S. F. R. Co. v. Matthews, 174 U.S. 96 , 43 L. ed. 909, 19 Sup. Ct. Rep. 609.

The judgment of the Supreme Court of Tennessee is affirmed.

Mr. Justice Brewer and Mr. Justice Peckham dissent.

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