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Ferguson v. Skrupa

Supreme Court of the United States · 1963 · Constitutional Law

Constitutional LawDue ProcessEqual ProtectionEconomic RegulationDue Process ClauseFourteenth AmendmentEqual Protectioneconomic regulation

Facts

Kansas enacted a statute making it a misdemeanor to engage in the business of debt adjusting except as an incident to the lawful practice of law in the state. The statute defined debt adjusting as contracting with a debtor to receive periodic payments and, for consideration, distribute them among specified creditors according to an agreed plan. Skrupa, doing business as Credit Advisors, admitted he was engaged in debt adjusting as defined by the statute and alleged his business was useful, desirable, and not inherently immoral or dangerous, so Kansas could not absolutely prohibit it. Evidence in the District Court showed both the claimed usefulness of the business and the state's contention that debt adjusting lends itself to grave abuses against distressed debtors, especially those in lower income brackets.

Issue

Does the Fourteenth Amendment's Due Process Clause forbid Kansas from prohibiting nonlawyers from engaging in the business of debt adjusting, and does the statute's exception for lawyers deny equal protection to nonlawyers?

Rule

Courts may not use the Due Process Clause to strike down state economic legislation because they believe it is unwise, improvident, or incompatible with a particular economic or social philosophy. States may legislate against practices found injurious in their internal commercial and business affairs so long as the law does not violate a specific federal constitutional prohibition, and classifications such as limiting a business to lawyers do not violate equal protection unless they amount to invidious discrimination.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Oregon makes it a misdemeanor for any nonattorney to run a paid service in Portland that collects monthly payments from insolvent clients and distributes the money to designated creditors under a payment plan. Nolan Pierce, who operates such a service, sues and offers proof that his business helps families avoid default and is neither immoral nor dangerous.

How should a court rule on Nolan's Fourteenth Amendment due process challenge?

Explanation. The majority held that the Due Process Clause does not authorize courts to strike down economic legislation because judges think the business is useful, legitimate, or insufficiently harmful. Legislatures, not courts, decide the wisdom and utility of such laws. A state may legislate against practices it finds injurious in internal commercial affairs unless some specific federal constitutional prohibition is violated.