Lee v. O'Malley

The learned court below has found the act to be unconstitutional, on the ground of unjust and unequal classification, in that bankers whose clients’ deposits are of an annual average of less than $500 only are subject to the restrictive provisions of the act. He says:

“I think that depositors of such small sums are no less intelligent, able, or zealous in protecting their interests than are other depositors.”

The court was also of the opinion that the objection that the statute invests the Comptroller with a purely arbitrary discretion in issuing the license was good.

We decline to pass upon the constitutionality of the act, for we are convinced that no cause of action is stated of which a court of equity has jurisdiction, and hence no injunction can be allowed.

The Special Term bases its authority to act on Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429 , 15 Sup. Ct. 673 , 39 L. Ed. 759 . That case did not involve the question here under consideration. It was not brought against the executive officers of the government to enjoin proceedings under a law of the United States, but it was brought by a stockholder, on behalf of himself and all other stockholders of the defendant company, to enjoin the voluntary payment of the income tax by it, and Chief Justice Fuller, at the commencement of his opinion, said:

“The jurisdiction of a court of equity to prevent any threatened breach of trust in the misapplication or diversion of the funds of a corporation by illegal payments out of its capital or profits has been frequently sustained. Dodge v. Woolsey, 59 U. S. 331 [ 15 L. Ed. 401 ]; Hawes v. Contra Costa Water Co., 104 U. S. 450 [ 26 L. Ed. 827 ]. As in Dodge v. Woolsey, this bill proceeds on the ground that the defendants would be guilty of such breach of

trust or duty in voluntarily making returns for the imposition of and paying an unconstitutional tax, and also on allegations of threatened multiplicity of suits and irreparable injury. The objection of adequate remedy at law was not raised below, nor is it now raised by appellees, if it could be entertained at all at this stage of the proceedings, and so far as it was in the power of the government to do so the question of jurisdiction, for the purposes of the case, was explicitly waived on the argument. The relief sought was in respect of the voluntary action by the defendant company, and not in respect of the assessment and collection themselves. Under these circumstances, we should not be justified in declining to proceed to judgment upon the merits.”

Wallack v. Society for Reformation of Juvenile Delinquents, 67 N. Y. 23 , seems to me to be a direct and controlling authority. The complaint there alleged that the plaintiff was engaged in the theatrical business, managing Wallack’s Theater; that under and by color of the provisions of chapter 836 of the Daws of 1872, which provisions plaintiff averred were illegal, void, and unconstitutional, the defendant society pretends and claims that plaintiff, before managing and conducting said place of amusement, shall apply for and receive from the mayor a license as required by said act, and under penalty, after refusal or neglect to take out said license and pay said fee, sued by said society to recover $100 for each performance, and that the said defendant threatens the legal proceedings mentioned in said act to restrain the exercise of plaintiff’s business, and is about' to institute said proceedings, unless the license be applied for and obtained. He claimed that he would suffer great and irreparable damage, and prayed an injunction. Andrews, J., writing for a unanimous court, said:

“We are not at liberty to enter into the consideration of the general question of the validity of the legislation in question. We are precluded from doing so by the objection taken in limine by the defendant, and which is fatal to the plaintiff’s action, that, assuming the unconstitutionality of the act of 1872, the plaintiff is'not, upon the facts stated in the complaint, entitled to an injunction. The general rule is that the court will not restrain a prosecution at law, when the question is the same at law and in equity. Wolfe v. Burke, 56 N. Y. 118 . * * * The unconstitutionality of the act of 1872 would be a perfect defense to a prosecution for the penalties given by it, and the question as to the constitutionality of the act has not been determined. It would, doubtless, be convenient for the plaintiff to have the judgment of the court upon the constitutionality of the act before subjecting himself to liability for accumulated penalties. But this is not a ground for equitable interference, and to make it a ground of jurisdiction in such cases would, in the general result, encourage, rather than restrain litigation. Nor can the prosecution for the penalties be restrained in this action, on the ground that it is a suit in the nature of a bill of peace.”

. In Davis v. American Society for Prevention of Cruelty to Animals, 75 N. Y. 362 , the court, by Earl, J., said:

“Whether a person accused of a crime be guilty or innocent is to be determined in a common-law court by a jury; and the people, as well as the accused, have the right to have it thus determined. If this action could be maintained in this case, then it could in every case of a person accused of a crime, where the same serious consequences would follow an arrest; and the trial of offenders, in the constitutional mode prescribed by law, could forever be prohibited. A person threatened with arrest for keeping a bawdy house, or for violating the excise laws, or even for the crime of murder, upon the allegation of his innocence of the crime charged and of the irreparable mischief which would follow his arrest, could always draw the question of

his guilt or innocence from trial in the proper forum. An innocent person, upon- an accusation of crime, may he arrested and ruined in his character and property, and the damage he thus sustains, is damnum absque injuria, unless the case is such that he can maintain an action for malicious prosecution or false imprisonment. He is exposed to the risks-of such damage by being a member of an organized society, and his compensation for such risks may be found in the general welfare which society is organized to promote. This action is absolutely without sanction in precedents or principles of equity.”

In Delaney v. Flood, 183 N. Y. 323 , 76 N. E. 209 , 2 L. R. A. (N. S.) 678 , 111 Am. St. Rep. 759 , Werner, J., speaking for the whole court, after referring to the Davis Case, supra, said:

“If equity will not intervene in behalf of a concededly lawful business of a fixed and unchanging character to prevent the criminal prosecution of some alleged unlawful act in its conduct, how can such intervention be justified in a case where the business itself, even when lawfully conducted; exists by mere sufferance of law, or where it is of such a character that it may be law-* ful.or unlawful of him who conducts it? Such a situation as is presented in the case at bar is one which in its very nature cannot be adequately dealt with by a court of equity. * * *, The whole subject may be briefly summed up on the statement that we see nothing in the case at bar to take it out of the ordinary rule that equity will not interfere to prevent the enforcement of the criminal law.”

See, also, Eden Musee Am. Co., Ltd., v. Bingham, 125 App. Div. 780 , 110 N. Y. Supp. 210 , and cases there cited.

In Fitts v. McGhee, 172 U. S. 516 , 19 Sup. Ct. 269 , 43 L. Ed. 535 , where an action was brought against the Attorney General of Alabama and the solicitor of the Eleventh judicial circuit to enjoin their taking any steps under a statute of Alabama providing penalties in case of violation, on the ground that the said statute was repugnant to the federal Constitution, Mr. Justice Harlan said:

“It remains only to consider the case so far as the final decree assumes to enjoin the officers of the state from instituting or prosecutiñg any indictment or criminal proceedings having for their object the enforcement of the statute of 1895. We are of opinion that the Circuit Court of the United States, sitting in equity, was without jurisdiction to enjoin the institution or prosecution of these criminal proceedings commenced in the state court. This view is sustained by In re Sawyer, 124 U. S. 200 [ 8 Sup. Ct. 482 , 31 L. Ed. 402 ], It was there said: ‘Under the Constitution and laws of the United States, the distinction between common law and equity, as existing in England at the time of the separation of the two countries, has been maintained, although both jurisdictions are vested in the same courts.’ * * * Again: ‘The office and jurisdiction of a court of equity, unless enlarged by express statute, are limited to the protection of rights of property. It has no jurisdiction over the prosecution, the punishment, or the pardon of crimes and misder meanors, or over the appointment and removal of public officers. To assume such a jurisdiction or to sustain a bill in equity to restrain or relieve against proceedings for the punishment of offenses, or for the removal of public officers, is to invade the domain of the courts of common law, or of the executive and administrative departments of the government’ At. the present term of the court, in Harkrader v. Wadley, 172 U. S. 148 [ 19 Sup. Ct. 119 , 43 L. Ed. 399 ], we said: ‘In proceeding by indictment to enforce a criminal statute, the state can only act by officers or attorneys, and to enjoin the latter is to enjoin the state.’ Again: ‘Much more are we of opinion that a Circuit Court of the United States, sitting in equity in the administration of civil remedies, has no jurisdiction to stay by injunction proceedings pending in a state court in the name of a state to enforce the criminal laws of such state.’ Undoubtedly, the courts of the United States have the power,

under existing legislation, by writ of habeas corpus to discharge from custody any person held by state authorities under criminal proceedings instituted under state enactments, if such enactments are void for repugnancy to the Constitution, laws, or treaties of the United States. * * * But the existence of the power in the courts of the United States to discharge upon habeas corpus by no means implies that they may, in the exercise of their equity powers, interrupt or enjoin proceedings of a criminal character in a state court.”

The objection that a court of equity had no jurisdiction to grant the relief prayed for was taken at the Special Term and is urged before this court. It follows, therefore, that the order appealed from should be reversed, with $10 costs and disbursements, the motion denied, and the injunction vacated, with $10 costs. All concur.