Otis v. Parker

delivered the opinion of the court.

This is an action in three counts, for money had and received,

We must take it as established that the plaintiff did enter into transactions prohibited by the constitution of California, and that he had a right to his judgment under that constitution if the clause relied upon is not contrary to the Constitution of the United States. There is no question that the parties were subject to the provisions of the. latter Constitution, and no doubt that the question whether it invalidated the state constitution necessarily was passed upon, and was answered in the negative by the state court. 130 California, 322.

The provision of the state constitution is as follows: “ All contracts for the sales of shares of the capital stock of any corporation or association, on margin, or to be delivered at a future day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent jurisdiction.” There was some suggestion that these words might be narrowed by construction to contracts not contemplating a Iona fide acquisition of the stock, but intended to cover only a wager or contemplated settlement of differences. Of course, if they were construed in that sense there would be no doubt of their validity. Booth v. Illinois, 184 U. S. 425 . But while the Supreme Court of California says

The objection urged against the provision in its literal sense is that this prohibition of all sales on margin bears no reasonable relation to the evil sought to be cured, and therefore falls within the first section of the Fourteenth Amendment. It is said lhat it unduly limits the liberty of adult persons in making contracts which concern only themselves, and cuts down the value of a class of property that often must be disposed of under contracts of the prohibited kind if it is to be disposed of to advantage, thus depriving persons of liberty and property without due process of law;, and that it unjustifiably discriminates against property of that class, while other familiar objects of speculation, such as cotton or grain, are not touched, thus depriving persons of the equal protection of the laws.

It is true, no doubt, that neither a state legislature nor a state constitution can interfere arbitrarily with private business or transactions, and that the mere fact that'an enactment purports to be for the protection of public safety, health or morals, is not conclusive upon the courts. Mugler v. Kansas, 123 U. S. 623 , 661; Lawton v. Steele, 152 U. S. 133 , 137. But general propositions do not carry us far. While the'courts must exercise a judgment of their own-, it by no means is true that every law is void which may seem to the judges who pass upon'it excessive, unsuited to its ostensible end, or based upon conceptions of morality with, which they disagree. Considerable lati

Even if the provision before us should seem to us not to have been justified by the circumstances locally existing in California at the time when it was passed, it is shown by its adoption to have expressed a deep-seated conviction on the part of the people concerned as to what that policy required. Such a deepr. seated conviction is entitled to great respect. If the State thinks that an admitted evil cannot be prevented except by prohibiting a calling or transaction not in itself necessarily objectionable, the courts cannot interfere, unless, in looking at the. substance of the matter, they can see that it “ is a clear, unmistakable infringement of rights secured by the fundamental law.” Booth v. Illinois, 184 U. S. 425 , 429. No court would declare a usury law unconstitutional, even if every member of it believed that Jeremy Bentham had said the last word on that subject, and had shown for all time that such laws did more’ harm than good.. The Sunday laws, no doubt, would be sustained by a bench of judges, even if every one of them thought it superstitious to make any day holy. Or, to take cases, where opinion has moved in the opposite direction; wagers may be declared illegal without the aid of statute, or lotteries forbidden by express enactment, although at an earlier day they were thought pardonable at least. The case would not be decided differently if lotteries had been lawful when the Fourteenth' Amendment became law, as indeed they were in some civilized States. See Ballock v. State, 13 Maryland, 1.

We cannot say that there might not be conditions of public delirium in which at leást a temporary prohibition of sáles on margins would be a salutary thing. Still less can we say that there might not be conditions in which it reasonably might be ■ thought a salutary thing, even if we disagreed with the opinion. Of course, if a man can buy on margin he can launch into a

With regard to the objection that this provision strikes at only some, not all, of the objects of possible speculation, it is enough to say that probably in California the evil sought to be stopped was confined in the main to stocks in corporations. California is a mining State, and mines offer the most striking temptations to people in a hurry to get rich. Mines generally are represented by stocks. Stock is convenient for purposes of speculation, because of the ease with which it is transferred from hand to hand, as well as for other reasons. If stopping the purchase and sale of stocks on margin would stop the gambling which it was desired to prevent, it was proper for the people of California to go no farther in what they forbade. The circumstances disclose a reasonable ground for the classification, and thus distinguish the case from Connolly v. Union Sewer Pipe Co., 184 U. S. 540 . We cannot say that treating-stocks

Judgment affirmed.

Me. Justice Beewee and Me. Justice Peckham dissented.