[277 U.S. 350, 351] Messrs. John W. Simpson, 2d, and Walter Gordon Merritt, both of New York City, for plaintiff in error.
[277 U.S. 350, 352] Mr. Harry R. Coulomb, of Atlantic City, N. J., for defendant in error.
Mr. Justice SUTHERLAND delivered the opinion of the Court.
Chapter 227, p. 822, Laws of New Jersey 1918, being an act to regulate the keeping of employment agencies, requires that every person operating an employment agency as defined by the statute must procure a license from the commissioner of labor. A penalty is imposed for failure to do so. The application for such license must be made in writing to the commissioner of labor, and, among other requirements, the applicant must 'file with the commissioner of labor, for his approval, a schedule of fees proposed to be charged for any services rendered to employers seeking employees, and persons seeking employment, and all charges must conform thereto. The schedule of fees may be changed only with the approval of the commissioner of labor.' The commissioner of labor may refuse to issue or may revoke any license for any good cause shown within the meaning and purpose of the act.
Plaintiff in error filed with the state commissioner of labor a written application for a license to conduct an employment agency. All conditions of the statute were complied with; but the commissioner rejected the application upon the sole ground that, in his opinion, the fees proposed to be charged in respect of certain permanent positions were excessive and unreasonable. This action of the commissioner was brought up for review to the Supreme Court of the state, and that court construing the statute as empowering the commissioner to fix and limit the charges to be made by the applicant, nevertheless sustained it as constitutional under the due process of law clause of the Fourteenth Amendment. (N. J. Sup.) 133 A. 870. Upon appeal to the state court of errors and appeals, the judgment was affirmed. 137 A. 437. [277 U.S. 350, 355] That the state has power to require a license and regulate the business of an employment agent does not admit of doubt. But the question here presented is whether the due process of law clause is contravened by the legislation attempting to confer upon the commissioner of labor power to fix the prices which the employment agent shall charge for his services. The question calls for an answer under the last of the three categories set forth by this court in Wolff Co. v. Industrial Court, 262 U.S. 522, 535 , 43 S. Ct. 630, 27 A. L. R. 1280; that is to say, Has the business in question been devoted to the public use and an interest in effect granted to the public in that use? Or, in other words, is the business one 'affected with a public interest,' within the meaning of that phrase as heretofore defined by this court? As was recently pointed out in Tyson & Borther v. Banton, 273 U.S. 418, 430 , 47 S. Ct. 426, the phrase is not capable of exact definition; but, nevertheless, under all the decisions of this court from Munn v. Illinois, 94 U.S. 113 , it is the standard by which the validity of price-fixing legislation, in respect of a business like that here under consideration, must be tested.
In the Tyson Case it was said (page 430 (47 S. Ct. 428)) that the interest meant was not 'such as arises from the mere fact that the public derives benefit, accommodation, ease, or enjoyment from the existence or operation of the business; and while the word has not always been limited narrowly as strictly denoting 'a right,' that synonym more nearly than any other expresses the sense in which it is to be understood.' The business must be such (page 434 (47 S. Ct. 429)) 'as to justify the conclusion that it has been devoted to a public use and its use thereby, in effect, granted to the public.' And again (page 438 (47 S. Ct. 431)), after reviewing former decisions, it was said that:
In Wolff Co. v. Industrial Court, supra, page 537 (43 S. Ct. 633), it was said:
In Adkins v. Children's Hospital, 261 U.S. 525 , 43 S. Ct. 394, 24 A. L. R. 1238, this court had under consideration an act of Congress fixing minimum wages for women and children in the District of Columbia. The legislation, so far as it affected women, was held invalid as contravening the due process of law clause of the Fifth Amendment, because it was an arbitrary interference with the right to contract in respect of terms of private employment. It was said (page 546 (43 S. Ct. 397)) that, while there was no such thing as absolute freedom of contract, nevertheless, such freedom of contract was the general rule and restraint the exception, and that 'the exercise of legislative authority to abridge it can be justified only by the existence of exceptional circumstances.'
The business of securing employment for those seeking work and employees for those seeking workers is essentially that of a broker; that is, of an intermediary. While we do not undertake to say that there may not be a deeper concern on the part of the public in the business of an employment agency, that business does not differ in sub- [277 U.S. 350, 357] stantial character from the business of a real estate broker, ship broker, merchandise broker or ticket broker. In the Tyson Case, supra, we declared unconstitutional an act of the New York Legislature which sought to fix the price at which theater tickets should be sold by a ticket broker, and it is not easy to see how, without disregarding that decision, price- fixing legislation in respect of other brokers of like character can be upheld.
An employment agency is essentially a private business. True, it deals with the public, but so do the druggist, the butcher, the baker, the grocer, and the apartment or tenement house owner, and the broker who acts as intermediary between such owner and his tenants. Of course, anything which substantially interferes with employment is a matter of public concern, but in the same sense that interference with the procurement of food and housing and fuel are of public concern. The public is deeply interested in all these things. The welfare of its constituent members depends upon them. The interest of the public in the matter of employment is not different in quality or character from its interest in the other things enumerated; but in none of them is the interest that 'public interest' which the law contemplates as the basis for legislative price control. Wolff Co. v. Industrial Court, supra, page 536 (43 S. Ct. 630). Under the decisions of this court it is no longer fairly open to question that, at least in the absence of a grave emergency (Tyson & Brother v. Banton, supra, pages 431, 437 (47 S. Ct. 426)), the fixing of prices for food or clothing, of house rental or of wages to be paid, whether minimum or maximum, is beyond the legislative power. And we perceive no reason for applying a different rule in the case of legislation controlling prices to be paid for services rendered in securing a place for an employee or an employee for a place.
Brazee v. Michigan, 241 U.S. 340 , 36 S. Ct. 561, cited by defendant in error lends no support to the judgment below. That [277 U.S. 350, 358] case involved the validity of a Michigan statute in respect of employment agencies. Section 5 of the act attempted to limit the fees which should be charged. The state Supreme Court held that the business was one properly subject to police regulation and control, but did not rule concerning the validity of section 5. This court held that it was within the power of the state to require licenses for employment agencies and prescribe reasonable regulations to be enforced by the commissioner of labor. But it was said ( page 344 (36 S. Ct. 562)):
And we since have held definitely that the power to require a license for and to regulate the conduct of a business is distinct from the power to fix prices. 'The latter power is not only a more definite and serious invasion of the rights of property and the freedom of contract, but its exercise cannot always be justified by circumstances which have been held to justify legislative regulation of the manner in which a business shall be carried on.' Tyson & Borther v. Banton, supra, page 431 (47 S. Ct. 428). And see pages 440, 441 (47 S. Ct. 426).
To urge that extortion, fraud, imposition, discrimination, and the like have been practiced to some, or to great, extent in connection with the business here under consideration, or that the business is one lending itself peculiarly to such evils, is simply to restate grounds already fully considered by this court. These are grounds for regulation, but not for price fixing as we have already definitely decided. Tyson & Brother v. Banton, supra, 442-445 (47 S. Ct. 426).
There are a number of states which have statutes like that now under consideration, and we are asked to give weight to that circumstance. It is to be observed, how- [277 U.S. 350, 359] ever, that with the exception of the decision now under review none of these statutes has been judicially considered, except in the state of California, where the legislation was declared unconstitutional. Ex parte Dickey, 144 Cal. 234, 77 P. 924, 66 L. R. A. 928, 103 Am. St. Rep. 82, 1 Ann. Cas. 428; In re Smith, 193 Cal. 337, 223 P. 971. And it was said in oral argument, and not disputed, that, while legislation of this character existed in several states, generally it was not enforced, in some instances because the state's Attorney General had advised that the legislation was unconstitutional. In any event, under all the circumstances, and in the face of our prior decisions, we do not regard the mere existence in other states of statutory provisions like the one now under review as entitled to persuasive force.
Mr. Justice SANFORD (concurring).
I concur in this result upon the controlling authority of Tyson v. Banton, 273 U.S. 418 , 47 S. Ct. 426, which, as applied to the question in this case, I am unable to distinguish.
Mr. Justice STONE (dissenting).
The question is whether a state has constitutional power to require employment agencies to charge only reasonable fees for their services to those seeking employment. As the case is presented we must take it that the New Jersey commissioner of labor was right in holding that Ribnik's list of fees was unreasonably high.
Under the decisions of this court not all price regulation, as distinguished from other forms of regulation, is forbidden. As those decisions have been explained, price regulation is within the constitutional power of a state Legislature when the business concerned is 'affected with a public interest.' That phrase is not to be found in the Constitution. Concededly it is incapable of any precise definition. It has and can have only such meaning as [277 U.S. 350, 360] may be given to it by the decisions of this court. As I read those decisions, such regulation is within a state's power whenever any combination of circumstances seriously curtails the regulative force of competition, so that buyers or sellers are placed at such a disadvantage in the bargaining struggle that a Legislature might reasonably anticipate serious consequences to the community as a whole. Munn v. Illinois, 94 U.S. 113 ; Brass v. North Dakota ex rel. Stoeser, 153 U.S. 391 , 14 S. Ct. 857; German Alliance Insurance Co. v. Lewis, 233 U.S. 389, 409 , 34 S. Ct. 612, L. R. A. 1915C, 1189; Terminal Taxicab Co. v. Kutz, 241 U.S. 252 , 36 S. Ct. 583; Block v. Hirsh, 256 U.S. 135 , 41 S. Ct. 458, 16 A. L. R. 165; Marcus Brown Co. v. Feldman, 256 U.S. 170 , 41 S. Ct. 465; Levy Leasing Co. v. Siegel, 258 U.S. 242 , 42 S. Ct. 289; see, also, Knoxville Iron Co. v. Harbison, 183 U.S. 13 , 22 S. Ct. 1; McLean v. Arkansas, 211 U.S. 539 , 29 S. Ct. 206; Mutual Loan Co. v. Martell, 222 U.S. 225 , 32 S. Ct. 74, Ann. Cas. 1913B, 529; Frisbie v. United States, 157 U.S. 160 , 15 S. Ct. 586. The price regulation may embrace businesses 'which, though not public at their inception, may be fairly said to have risen to be such and have become subject in consequence to some government regulation.' Wolff Co. v. Industrial Court, 262 U.S. 522, 535 , 43 S. Ct. 630, 27 A. L. R. 1280. The use by the public generally of the specific thing or business affected is not the test. The nature of the service rendered, the exorbitance of the charges and the arbitrary control to which the public may be subjected without regulation, are elements to be considered in determining whether the 'public interest' exists. Wolff Co. v. Industrial Court, supra, 538 (43 S. Ct. 630). The economic disadvantage of a class and the attempt to ameliorate its condition may alone be sufficient to give rise to the 'public interest' and to justify the regulation of contracts with its members (Knoxville Iron Co. v. Harbison, supra; McLean v. Arkansas, supra; Mutual Loan Co. v. Martell, supra), and obviously circumstances may so change in point of time or so differ in space as to clothe a business with such an interest which at other [277 U.S. 350, 361] times or in other places would be a matter purely of private concern ( Block v. Hirsh, supra, 155 (41 S. Ct. 458)).
I cannot say a priori that the business of employment agencies in New Jersey lacks the requisite 'public interest.' We are judicially aware that the problem of unemployment is of grave public concern; that the conduct of the employment agency business bears an important relationship to that larger problem and affects vitally the lives of great numbers of the population, not only in New Jersey, but throughout the United States; that employment agencies, admittedly subject to regulation in other respects ( Brazee v. Michigan, 241 U.S. 340 , 36 S. Ct. 561), and in fact very generally regulated, deal with a necessitous class, the members of which are often dependent on them for opportunity to earn a livelihood, are not free to move from place to place, and are often under exceptional economic compulsion to accept such terms as the agencies offer. We are not judicially ignorant of what all human experience teaches, that those so situated are peculiarly the prey of the unscrupulous and designing. In Adams v. Tanner, 244 U.S. 590 , 37 S. Ct. 662, L. R. A. 1917F, 1163, Ann. Cas. 1917D, 973, a statute of Washington which in effect attempted to abolish the business was held unconstitutional because employment agencies were deemed not 'inherently immoral or dangerous to public welfare.' but, as was there emphasized, capable, under regulation, of being conducted in a useful and honest manner. But it was not questioned that the business was subject to grave abuses, involving frauds and impositions upon a peculiarly helpless class, among which the exaction of exorbitant fees was perhaps the least offensive. The Supreme Court of New Jersey, in an opinion in the present case, which was adopted by the Court of Errors and Appeals, said:
In dealing with the question of power to require reasonable prices in this particular business, we should remember what was specifically pointed out by the court in Tyson v. Banton, 273 U.S. 418, 438 , 47 S. Ct. 426, 431 (71 L. Ed. 718), that whether a business is affected with a 'public interest' turns 'upon the existence of conditions, peculiar to the business under consideration.' In the respects mentioned, or most of them, and in others to be pointed out, it seems to me that there is a marked difference between the character of this business and that of real estate brokers, ship brokers, merchandise brokers, and, more than all, of ticket brokers, who were involved in Tyson v. Banton, supra. There the attempt was made to limit the advance which brokers might charge over box office prices for theater tickets, an expedient adopted to break up their monopolistic control of a luxury, not a necessity. Those affected by the practices of the ticket brokers constituted a relatively small part of the population within a comparatively small area of the state of New York. They were not necessitous. The consequences of the fraud and extortion practiced upon them were not visited upon the community as a whole in any such manner as are fraud and imposition practiced upon workers seeking employment. Here the effort is made, as in Knoxville Iron Co. v. Harbison, supra, McLean v. Arkansas, supra, Mutual Loan Co. v. Martell, supra, and Erie R. R. v. Williams, 233 U.S. 685 , 34 S. Ct. 761, 51 L. R. A. (N. S.) 1097, first, to protect from abuses a class unable to protect itself, for whose welfare the police power has often been allowed broad play, and, second, to mitigate the evils which unemployment brings upon the community as a whole.
Some presumption should be indulged that the New Jersey Legislature had an adequate knowledge of such local conditions as the circumstances of those seeking employ- [277 U.S. 350, 363] ment, the number and distribution of employment agencies, the local efficacy of competition, the prevalent practices with respect to fees. On this deserved respect for the judgment of the local lawmaker depends, of course, the presumption in favor of constitutionality, for the validity of a regulation turns 'upon the existence of conditions, peculiar to the business under consideration.' Tyson v. Banton, supra, 438 (47 S. Ct. 431). Moreover, we should not, when the matter is not clear, oppose our notion of the seriousness of the problem or the necessity of the legislation to that of local tribunals. 'This court, by an unbroken line of decisions from Chief Justice Marshall to the present day, has steadily adhered to the rule that every possible presumption is in favor of the validity of an act of Congress until overcome beyond rational doubt.' Adkins v. Children's Hospital, 261 U.S. 525, 544 , 43 S. Ct. 394, 396 (67 L. Ed. 785, 24 A. L. R. 1238). And the enactments of state Legislatures are entitled to no less respect. If, therefore, our consideration of the general conditions surrounding employment agencies, which it was thought in Brazee v. Michigan, supra, made them subject to regulation, was to go no further than that of the court, I should still have supposed that plaintiff in error had not sustained the burden which rests on him to show that this law is unconstitutional. Erie R. R. v. Williams, supra. But even if the presumption is not to be indulged, and the burden no longer to be cast on him who attacks the constitutionality of a law, we need not close our eyes to available data throwing light on the problem with which the Legislature had to deal. See Muller v. Oregon, 208 U.S. 412 , 420-421, 28 S. Ct. 324, 13 Ann. Cas. 957; McLean v. Arkansas, supra, 549 (29 S. Ct. 206).
For 30 years or more the evils found to be connected with the business of employment agencies in the United States have been the subject of repeated investigations, official and unofficial, and of extensive public comment. They have been the primary reason for the [277 U.S. 350, 364] establishment of public employment offices in the various states. 1
Quite apart from the other evils laid at the door of the private agencies, 2 the data supplied by these investigations and reports afford a substantial basis for the conclusion of the New Jersey Legislature that the business is peculiarly subject to abuses relating to fee charging, and [277 U.S. 350, 365] that for the correction of these the restriction to a reasonable maximum charge is the only effective remedy. These data, to be gathered from numerous independent and public investigations, may be briefly summarized as follows:
First. They show that the agencies, left to themselves, very generally charge extortionate fees. The Commission on Industrial Relations, created by Act of August 23, 1912, c. 351, 37 Stat. 415, reported to Congress at a time when prices were materially lower than today:
Exorbitant fees are taken for merely registering the applicants, no effort whatever being made to find them work. 4 To stimulate [277 U.S. 350, 366] the payment of such fees the agencies advertise for classes of laborers for whom no jobs are available. 5 According to the Massachusetts Commission to Investigate Employment Offices, the ordinary forces of competition seem powerless to prevent or remedy this situation, because but little capital is required to open an office, and because the clients of the agencies are constantly new.