In re Blanc

The petitioners were arrested and are detained upon a warrant issued by the municipal court pursuant to a complaint charging them with conducting, operating, and carrying on “a certain plan and scheme and system of merchandising by means of an endless chain for the sale of silk hosiery and ladies’ underwear and men’s furnishing, . . . without first having obtained from the Board of Police Commissioners of the City of Los Angeles a permit so to do.” It is admitted that the acts complained of were contrary to the provisions of a municipal ordinance regularly adopted and approved by the properly constituted authorities, and that it is still in force.

“ . . . any plan or scheme wherein any person, firm, or corporation, sells, transfers, assigns or issues to any person any right, property, ticket, coupon, certificate, contract, or other token, and wherein the purchaser, transferee or assignee thereof or the person to whom the same is issued, undertakes or is required or permitted to undertake, for himself, or as the agent, representative, or attorney of such person, firm, or corporation, to sell, transfer, assign, or issue to another any right, property, ticket, coupon, certificate, contract or other token which may under certain conditions entitle the purchaser or recipient thereof to any right, property, ticket, coupon, certificate, contract, or other token from the original purchasers, transferees, or assignees thereof are also given, as a consideration for their entry into or participation in such plan or scheme and their purchase or receipt of such right, property, ticket, coupon, certificate, contract, or other token, the right, privilege or obligation of making further sales, assignments, or transfers of any right, property, ticket, coupon, certificate, contract, or other token.”

Hence, any person who sells or issues to another a right or contract by the terms of which the latter undertakes or is required or permitted to undertake, either personally or by agent, to issue to a subsequent person any right, property, contract, or token “which may under certain conditions entitle the purchaser or recipient thereof to any right, property . . . contract, or other token and wherein the purchasers, . . . from the original purchasers, ... or from subsequent purchasers, . . . are also given, as a consideration for their entry into or participation in such plan or other token, the right, privilege or obligation of making further sales ... of any right, contract, or other token,” shall, unless previously authorized in writing by permit from the board of police commissioners so to do, be guilty of a misdemeanor. Further, it is required by the ordinance that any person, firm, or corporation desiring such permit shall file with the board a verified or

It is conceded that the petitioners when arrested were conducting, without having procured the permit above mentioned, a merchandising enterprise under the style of Golden State Sales Corporation, by means of contracts the contents, purpose, and effect of which were such as the terms of the ordinance sought to regulate, and this is the offense with the commission of which they have been charged.

The petitioners contend that the ordinance is unconstitutional, in that it is discriminative, vests an arbitrary power in the board, and that by requiring an application, financial statement, and literature from each agent, solicitor, and canvasser, its ultimate object and effect is prohibitive.

They argue that no particular personal qualifications, financial standing, or form of contract is specified as a standard; that there is no duty of the board, or assurance to the merchant, that such information when furnished may or may not, together with, or without, “such further information as said board may require, ’ ’ entitle an applicant to a permit; and that it lies entirely within the arbitrary discretion of the police commissioners to grant one application and to deny another upon the same state of facts.

[1] Each of the respective parties to this proceeding has devoted much argument to assumed conditions which, if they exist, would not assist in determining as to whether or not the questioned enactment is constitutional. A sample of the contract as printed and circulated by particulars is attached to the petition herein, and its various provisions are attempted to be construed and their virtues expounded. Conversely, the endless chain system is attacked by respondent as “mathematically, commercially and financially unsound”; dangers of their use as gambling mediums or swindles are attempted to be demonstrated, and it is asserted generally that the community should protect itself against the machinations of unscrupulous sharpers. But these are considerations dehors the record and foreign to the constitutional question which is alone before us for our determination.

Upon this record inquiry into extrinsic facts is not authorized in habeas corpus, since the only purpose of the writ is to ascertain whether or not under the proofs upon which the prisoners were committed, the lower tribunal had jurisdiction to act.

[2] Therefore the only proposition here is: Is the ordinance a valid exercise of the police power, or is it in violation of the constitutional guaranties by which the petitioners are surrounded f It has been held that if a board be invested with the right not only to determine that a given vocation is unsafe, but to require other methods of conduct and thus control the livelihood of another, legislation which affords such authority is unconstitutional. (Yick Wo v. Hopkins, 118 U. S. 356 [ 30 L. Ed. 220 , 6 Sup. Ct. Rep. 1064 , see also, Rose’s U. S. Notes].) We are not unmindful of the fact that discretion in the proper administration of the police power is permitted all constituted authorities, but a lawful pursuit which is not an infringement upon public health, morals, or safety, or the general welfare, is not a subject of police regulation, and is exempt from governmental concern unless necessarily and properly taxable for revenue. (Ex parte Quarg, 149 Cal. 79 [ 117 Am. St. Rep. 115 , 9 Ann. Cas. 147, 5 L. R. A. (N. S.) 183 , 84 Pac. 766 ]; Sonora v. Curtin, 137 Cal. 583 , 585 [ 70 Pac. 674 ].)

[3] We think that the ordinance before us is incapable of construction as merely a regulatory enactment. It vests full power in the police commissioners, not only to regulate but to destroy. Nowhere within its four corners do we find any standard of business integrity up to which a merchant may measure, any safeguard for the protection of the public which he may supply, any guaranty of honesty and fair dealing which he may furnish, or condition of any character

Here we have an attempt to confer upon a commission the right to arbitrarily decide in any case not only whether or not a chain system is inimical to the public welfare, but even if entirely free from features having any tendency to deceive or defraud, to arbitrarily refuse to allow its operation. It seems impossible to conceive that a law which would thus place it within the power of a single commission to deny a citizen the right to contract, the privilege of earning a living, merely and solely because the commission should not see fit to allow him to do so, can be justified or defended.

The decision in the ease last mentioned is based principally upon the authority of McNamara v. Gargett, 68 Mich. 454 [ 13 Am. St. Rep. 355 , 36 N. W. 218 ]. "What we have said of the dissimilarity of the situations presented in the case at bar and in Hubbard v. Freiburger, supra, is obviously equally applicable here. In the former ease it appeared that the Bohemian Oats Association, which was found to have no legal existence, sold twenty-five bushels of oats, worth little more than ordinary grain, for $125 in cash and a promissory note for $125, upon condition that the buyer should undertake to sell within fourteen months fifty bushels more at $10 per bushel, and receive a commission of ten per cent, or twenty-five per cent, according to the manner in which the sale might be consummated. It was held that such contract

As upholding the right of the police commission to grant or reject applications for permits without other limitation or guidance than that afforded by the ordinance under consideration, respondent refers to several decisions which we will briefly distinguish. In People v. Monterey Fish Products Co., 195 Cal. 548 [ 38 A. L. R. 1186 , 234 Pac. 398 ], it is said, as quoted in respondent’s brief, the discretion of the commission is neither unguided nor uncontrolled, but that its exercise is made dependent upon findings of fact after a hearing. In Leach v. Daugherty, 73 Cal. App. 83 [ 238 Pac. 160 ], the rule is announced that: “It is a well-settled principle of' law in this state that by legislative act a commission or board may be empowered to ascertain the existence of facts, upon the finding of which may depend the right to continue in the practice of a profession or a regulated business.” The act there upheld specifies certain facts to be found and upon the determination of which the ruling of the commission upon application for a permit is required to be based. The same is true of the statute construed in Riley v. Chambers, 181 Cal. 589 [ 8 A. L. R. 418 , 185 Pac. 855 ], and Brecheen v. Riley, 187 Cal. 121 [ 200 Pac. 1042 ], Under the provisions of that statute the showing required to be made to secure a broker’s license was that the applicant be “honest, truthful, and of good reputation.” Here is a definite standard of eligibility. If the facts be established the applicant might demand and secure a license. No such provision is contained in this endless chain ordinance. In both Co-operative Junk Co. of California v. Board of Police Commrs., 38 Cal. App. 676 [ 177 Pac. 308 ], and Goytino v. McAleer, 4 Cal. App. 655 [ 88 Pac. 991 ], the nature of the business involved was such as to be peculiarly appropriate to police supervision, and in each decisions of questions of fact were held to be controlling as to the action of the commission.

[4] In any ease the authority to withhold a permit to engage in lawful business, to be sustained, must be regulated by provisions of the law which are reasonable and which apply to matters of conduct upon the part of the applicant in some way affecting the health, morals, or safety of the

Other provisions of the ordinance are attacked upon constitutional grounds, but since they are not the basis of the prosecution out of which this proceeding has resulted, a discussion of them would be inappropriate.

As a necessary result of the views herein expressed, it is ordered that the petitioners be discharged.

Works, P. J., and Thompson, J., concurred.