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SHAW, J., dissenting.
I dissent. There can be no doubt that the legislature possesses the power, in cases where the comfort, health, well-being, or prosperity of the community demand it, to make reasonable regulation of the right of persons to make such contracts with others as they please. In
Holden
v.
Hardy,
169 U. S. 391, the supreme court of the United States says: " This right of contract, however, is itself subject to certain limitations which the state may lawfully impose in the exercise of its police powers.”
(Thorpe
v.
Rutland,,
27 Vt. 140;
1
Dobbins
v.
Los Angeles,
139 Cal. 183;
2
Odd Fellows Cemetery Assn.
v.
San Francisco,
140 Cal. 235;
Commonwealth
v.
Alger,
7 Cush. 104;
Hooper
v.
California,
155 U. S. 648; Cooley on Constitutional Limitations, pp. 837, 887.) In
Holden
v.
Hardy,
169 U. S. 391, the court had under consideration the validity of a law prescribing the number of hours of labor per day of workmen in underground mines. The law was held valid on the ground that it must be presumed that the legislature believed that labor in underground mines for an excess of eight hours per day would be detrimental to health. The police power, however, is not limited in its application to such laws as may be deemed necessary for the preservation of the general health and comfort. It embraces also the preservation and promotion of the general welfare and prosperity. In considering the validity of laws which have no specific relation to health or comfort, but which are enacted in the exercise of the police power, for the general welfare of society, many of the same principles are applicable as in those involving health or comfort. The people can usually be trusted to look after the preservation of their own health in their own way. But, owing to their necessitous circumstances, they are sometimes unable to do so properly, and in such instances the legislature has the power to determine for them what shall be done for that purpose. So, also, people generally may be depended on to make such contracts as their several interests demand, and under all ordinary conditions the right freely to do this cannot be interfered with or controlled by the legislative power. But, under some circumstances, a class of persons may be so situated with respect to another class that they are subject to oppression, and though nominally free and at liberty to do as they please, they
[243]
are in reality compelled to act at the dictation of others whose self-interest leads them to take an undue advantage, and in such cases the legislature may, in the exercise of police powers, declare that certain contracts which, in its judgment, it deems injurious to the general welfare and prosperity of the people, shall not be made, and, if made, shall not be enforceable. In this connection the observations of the United States supreme court in the case last cited concerning the validity of a law prescribing the hours of labor in certain exceptional occupations are pertinent. Speaking of the miners and the mine-owners, the court says: “The proprietors of these establishments and their operatives do not stand upon an equality, and their interests are, to a certain extent, conflicting. The former naturally desire to obtain as much labor as possible from their employees, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce detrimental to their health or strength. In other words, the proprietors lay down the rules and the laborers are practically constrained to obey them. In such cases self-interest is often an unsafe guide, and the legislature may interpose its authority.”
The right of the legislature to enact laws prescribing the rate of interest, usually denominated usury laws, is essentially a part of the police power. I think it is a mistake to say that our heritage from the common law in this respect consists solely of the specific right to pass such laws, without regard either to their wisdom or to the conditions which sanction the exercise of the power. Our heritage is rather the sound principle that, in the performance of its duty to promote the general welfare, a declared object of the constitution of the United States, the legislature may pass such laws as may reasonably be found necessary to protect the helpless and weak from the exactions of the strong. Originally, indeed, the usury laws were said to be founded upon the notion that it was contrary to the law of God to make a charge for the use of money, which was said to be in itself inert and unfruitful. But that has long ceased to be considered as the foundation on which they rest. Eighty years ago Lord Chief Justice Best, in the House of Lords, said: “The supposed policy of usury laws in modern times is to protect necessity against avarice, to fix such a rate of interest as will enable
[244]
industry to employ with advantage a borrowed capital, and thereby to promote labor and increase national wealth.” (3 Bing. 196.) Chancellor Kent, on the same subject, says: " Civil government is continually placing guards on the weaknesses and cheeks upon the passions of men; and many cases might be mentioned in which there is, equally with usury laws, an interference of the lawgiver with the natural liberty of mankind to deal as they please with others.”
(Dunham
v.
Gould,
16 Johns. 380.
1
) In
First National Bank
v.
Plankinton,
27 Wis. 177,
2
the court says that usury laws are ‘‘enacted to protect the weak and necessitous from being overreached and oppressed by the powerful and rich.” Our state law regarding the rate of interest which may be lawfully charged by pawnbrokers is an instance of the exercise of this power for the object of promoting the general welfare. In
Ex parte Lichtenstein,
67 Cal. 359,
3
this law was declared constitutional. It was not disputed that the legislature could thus restrict the power to contract, and the principal ground of attack was, that the law was special and not of uniform-operation. But the court manifestly considered that it was an exercise of police power, saying: ‘‘It is well known that persons frequenting the offices of pawnbrokers are generally the reckless and needy and improvident, who require the protection of the law. To no other class of money lenders do the same reasons apply. Men, driven by the necessities of their situation, resort to the pawnbroker, and pledge any and all articles in their possession in order to raise money, and they are not particular about the rate of interest charged them.
. . . Pawnbrokers are not allowed to do a certain act because the legislature, in its wisdom, deemed it injurious and harmful to the community to permit them to do the prohibited act.”
{Ex parte Lichtenstein, supra.)
I can see no real distinction between laws of the character above considered and the one here involved. If one who desires to borrow money, or the miner in an underground mine, the one having property to pledge and the other being already employed, are likely, from their necessities, to submit to unjust exactions by those with whom they deal, how much more likely to do so is the person who is out of employment,
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who depends on his daily wages or monthly salary for his daily bread, and who sees before him starvation for himself and a dependent family if he does not speedily secure remunerative employment. The number of this class of persons far exceeds the number of those who borrow from the pawnbroker, or those who work underground in the mines. The general welfare and prosperity of the community will be affected in proportion to the numbers of the class which is subject to the oppression and exactions of the more fortunate and prosperous.
It is upon the same principle that authority is found for the power of the legislature to restrict and limit the right of persons to make such contracts as they please in many other respects. Thus, the legislature may provide that oral contracts for the sale or conveyance of real estate, or of personal property above a certain value, or to pay commissions to a real-estate agent for negotiating a sale, shall be void; or that certain classes of contracts for the erection of buildings or other structures, unless put in writing and filed for record, shall be invalid in part, and that certain stipulations in such contracts, although in writing, shall be void as against persons claiming a lien on the premises. All these constitute instances of the exercise of legislative power to interfere with the liberty to make contracts, the reason being that the general welfare will be promoted by such interference.
It is, of course, not to be denied that there are just limitations to the exercise of the power for the protection of the unfortunate and weak. It is not absolutely free from the supervision of the courts. But we cannot hold the law void because we think it may prove ineffectual for the purpose intended, owing to the refusal of those to whom it is directed, or for whose benefit it was designed, to obey its mandates. The validity of a law is to be determined upon the assumption that it will be obeyed. The possibility of its enforcement is a matter solely for the legislature to consider when the law is enacted. Nor can we place our own judgment against that of the legislature in respect to the necessity for the protection which the legislature has seen fit to provide, unless we can clearly see that there can be no such necessity. “Though reasonable doubts may exist as to the power of the legislature to pass a law, or as to whether a law is calculated or adapted
[246]
to promote the health, safety, or comfort of the people, or to secure good order, or promote the general welfare, we must resolve them in favor of that department of the government.' ’
(Holden
v.
Hardy,
169 U. S. 391.) To quote further from the same case (p. 398): “The question in each case is whether the legislature has adopted the statute in the exercise of a reasonable discretion, or whether its action be a mere excuse for an unjust discrimination, or the oppression or spoliation of a particular class. ’ ’
With these rules for our guidance, there can be but one answer to the question as to the constitutionality of this law. In the light of history, and even in the face of present conditions, we cannot say that the law was not passed in the exercise of a reasonable discretion, nor that there may not exist a reasonable necessity for the protection of those classes which are peculiarly liable to be thrown out of employment at every check to the current of industrial progress, from the possible rapacious demands of those to whom they are generally compelled to apply for another opportunity to earn subsistence by their toil.
For these reasons I am of the opinion that the law under consideration is valid.
1
62 Am. Dec. 625.
2
96 Am. St. Rep. 95.
1
Am. Dec. 323.
2
9
Am. Rep. 453.
3
56 Am. Rep. 713.